New Source Energy Partners Reports Second Quarter 2013 Results

Before you go, we thought you'd like these...
Before you go close icon

New Source Energy Partners Reports Second Quarter 2013 Results

OKLAHOMA CITY--(BUSINESS WIRE)-- New Source Energy Partners L.P., a Delaware limited partnership (NYS: NSLP) (the "Partnership" or "New Source"), today announced financial and operating results for the quarter ended June 30, 2013.

Second Quarter 2013 Highlights

  • Average net daily production for the quarter ended June 30, 2013 was 3,523 Boe/d, impacted by flooding in June. For comparison purposes, average net daily production for July was 3,832 Boe/d.
  • The cash distribution for the second quarter of 2013 will be $0.55 per unit, or $2.20 per year on an annualized basis, which represents a 5% increase from the Partnership's minimum quarterly distribution.
  • The coverage ratio for the second quarter of 2013 was 1.0x.

Second Quarter Results

Adjusted EBITDA was $6.0 million for the quarter ended June 30, 2013. Net income allocable to all units, which includes the common, subordinated, and general partner units, was $8.2 million, or $0.89 per basic and diluted unit for the quarter ended June 30, 2013. Net income for the second quarter of 2013 includes realized derivative gains of $6.2 million as commodity contract prices fell significantly on New Source's longer-term contracts.

Distributable Cash Flow was $5.02 million for the quarter ended June 30, 2013. The coverage ratio for the quarter ended June 30, 2013 was 1.0x.

Revenues for the quarter ended June 30, 2013 totaled $10.6 million, while expenses from oil and natural gas operations were approximately $3.3 million including taxes.

Total crude oil production was 18,059 Bbls for the quarter ended June 30, 2013; an increase of 7.6% compared to 16,788 Bbls produced by the Partnership's predecessors for the quarter ended June 30, 2012. Natural gas production was 658,792 Mcf for the quarter ended June 30, 2013, an increase of 20.3% compared to 547,623 Mcf for the quarter ended June 30, 2012. Natural gas liquids production was 192,740 Bbls for the quarter ended June 30, 2013, an increase of 6.3% compared to 181,242 Bbls for the quarter ended June 30, 2012. Production costs were $8.81 Per Boe for the quarter ended June 30, 2013, an increase of 33% compared to $6.62 Per Boe for the quarter ended June 30, 2012. The increases in production in the 2013 period were primarily due to acquisitions of oil and gas properties completed in 2013. The increase in production costs per Boe produced in the 2013 period were primarily attributable to a focus on workovers in 2013 to increase production from existing wells and higher production tax incentives received in the 2012 period.

"While our second quarter average net daily production was below our intended forecast due to the June flooding, we ended the quarter well and are continuing to see production increases resulting from our current drilling program. In short we are moving forward," said Kristian Kos, President and Chief Executive Officer of New Source. "During the second quarter, we increased our borrowing base, raised our distribution per common unit, and added low-cost reserves to our portfolio. We continue to pursue sustainable growth for our unit holders."

Cash Distributions

The Board of Directors of New Source's general partner has declared a cash distribution for the second quarter 2013 of $0.55 per unit, or $2.20 per year on an annualized basis. This distribution corresponds to a 5% increase above the minimum quarterly distribution of $0.525 per unit, or $2.10 on an annualized basis, which was the rate used to calculate the distribution paid for the first quarter. The second quarter distribution will be paid on August 15, 2013 to all unit holders of record on August 1, 2013.

Conference Call

A conference call for investors will be held today at 10:00 a.m. Central Time (11:00 a.m. Eastern Time) to discuss New Source's second quarter 2013 results. Hosting the call will be Kristian B. Kos, President and Chief Executive Officer, and Richard D. Finley, Treasurer and Chief Financial Officer.

The call can be accessed live over the telephone by dialing (877) 705-6003, or for international callers, (201) 493-6725. A replay will be available shortly after the call and can be accessed by dialing (877) 870-5176, or for international callers, (858) 384-5517. The passcode for the replay is 418044. The replay will be available until August 21, 2013.

Interested parties may also listen to a simultaneous webcast of the conference call by logging onto New Source's website at www.newsource.com in the Investors- Events section. A replay of the webcast will also be available for approximately 30 days following the call.

About New Source Energy Partners L.P.

New Source Energy Partners L.P. is an independent energy company focusing on delivery through streamlined operations and vertically integrated infrastructure. The Partnership is actively engaged in the development and production of our onshore oil and liquids-rich portfolio that extends across conventional resource reservoirs in east-central Oklahoma. For more information on the Partnership please visit www.newsource.com.

Forward-Looking Statements

This news release contains "forward-looking statements" which are based on current plans and expectations and involve a number of risks and uncertainties that could cause actual results and events to vary materially from the results and other statements contained in this press release. For a full discussion of these risks and uncertainties, please refer to the "Risk Factors" section of the Partnership's Annual Report on Form 10-K for the year ended December 31, 2012 and the information included in the Partnership's quarterly and current reports and other public filings. These forward-looking statements are based on and include the Partnership's expectations as of the date hereof. Subsequent events and market developments could cause the Partnership's expectations to change. While the Partnership may elect to update these forward-looking statements at some point in the future, the Partnership specifically disclaims any obligation to do so, even if new information becomes available, except as may be required by applicable law.

Use of Non-GAAP Financial Measures

New Source reports its financial results in accordance with generally accepted accounting principles in the United States, or GAAP. New Source also presents the non-GAAP financial measures of Adjusted EBITDA, Distributable Cash Flow and coverage ratio. New Source defines Adjusted EBITDA as earnings before interest expense, income taxes, depreciation, depletion and amortization, accretion expense, non-cash compensation expense and unrealized derivative gains and losses. New Source defines Distributable Cash Flow as net income plus depreciation, depletion and amortization, accretion, workover costs, non-recurring lease operating expenses, and acquisition related general and administrative costs minus unrealized gains and estimated maintenance capital expenditures. The workover costs and non-recurring lease operating expenses added back in determining Distributable Cash Flow are otherwise included within our deduction for maintenance capital expenditures. New Source adjusts its estimate of maintenance capital expenditures whenever an event occurs that is likely to result in a material adjustment to the amount of our maintenance capital expenditures, such as a major acquisition, and makes such adjustment with respect to the quarter following the quarter during which the event giving rise to the adjustment occurs. New Source defines coverage ratio as the ratio of Distributable Cash Flow per outstanding unit (as of the end of the fiscal quarter) to cash distributions per outstanding unit with respect to the fiscal quarter.

New Source believes that the presentation of these non-GAAP financial measures provides useful information to investors in assessing our results of operations. Reconciliations of Adjusted EBITDA and Distributable Cash Flow to net income, the most directly comparable GAAP measure, are included in this release. Adjusted EBITDA and Distributable Cash Flow should not be considered as alternatives to the most directly comparable GAAP financial measure, because they exclude some but not all items that affect the most directly comparable GAAP financial measure, net income. You should not consider Adjusted EBITDA, Distributable Cash Flow or coverage ratio in isolation or as a substitute for analysis of our results as reported under GAAP. Because Adjusted EBITDA, Distributable Cash Flow and coverage ratio may be defined differently by other companies in our industry, New Source's definitions may not be comparable to similarly titled measures of other companies, thereby diminishing their utility.

New Source Energy Partners L.P.
Condensed Statements of Operations
(unaudited, in thousands, except per unit amounts)
  

Three months ended
June 30,

Six months ended
June 30,

2013  2012 2013  2012 
REVENUES

Oil sales

1,6361,5222,8342,981
Natural gas sales2,6421,1594,4492,569
Natural gas liquids sales 6,371  5,475  12,726  12,636 
Total revenues$10,649 $8,156 $20,009 $18,186 
OPERATING COSTS AND EXPENSES

Oil and natural gas production expenses

2,8271,9145,2743,656
Oil and natural gas production taxes4863061,439651
General and administrative1,2464,12610,1008,452
Depreciation, depletion and amortization3,5773,7006,7727,643
Accretion expense 57  29  86  57 
Total operating costs and expenses 8,193  10,075  23,671  20,459 
Operating income (loss)2,456(1,919)(3,662)(2,273)
OTHER INCOME (EXPENSE)
Interest expense(487)(786)(2,566)(1,598)
Realized gain (loss) from derivatives, net(120)1,031(341)1,207
Unrealized gain from derivatives, net 6,302  6,466  1,197  7,205 
Income before income taxes8,1514,792(5,372)4,541
Income tax benefit (expense) -  (1,871) 12,126  (1,728)
Net income$8,151 $2,921 $6,754 $2,813 
 
ALLOCATION OF NET INCOME FOR THREE AND SIX MONTHS
ENDED JUNE 30, 2013:
Net income$6,754 
Net income prior to purchase of properties from New Source Energy
on February 13, 2013$5,303 

Net income subsequent to purchase of properties from New Source

Energy on February 13, 2013

$1,451 
Net income allocable to general partner from February 13, 2013
to June 30, 2013$5 
Net income allocable to subordinated units from February 13, 2013
to June 30, 2013$49 
Net income allocable to common units from February 13, 2013
to June 30, 2013$1,397 
Net income per common unit from February 13, 2013 to June 30, 2013$0.22 
Net income allocable to general partner for the three months
ended June 30, 2013$138 
Net income allocable to subordinated units for the three months
ended June 30, 2013$1,968 
Net income allocable to common units for the three months
ended June 30, 2013$6,045 
Net income per common unit$0.89 
 
New Source Energy Partners L.P.

Reconciliation of Net Income (loss) to Adjusted EBITDA

(Unaudited in thousands)
    

Three months
ended June 30,
2013

Six months
ended June 30,
2013

 
NET INCOME$8,151$6,754

 

Adjustments to reconcile net income to Adjusted EBITDA
Depreciation, depletion and amortization3,5776,772
Accretion expense5786
Interest expense4872,566
Unrealized gains from derivatives, net(6,302)(1,197)
Income tax benefit-(12,126)
Equity based compensation-7,738
  
Adjusted EBITDA$5,970 $10,593 
 
New Source Energy Partners L.P.

Reconciliation of Net Income to Distributable Cash Flow

(Unaudited in thousands, except per unit amounts)
 

Three Months
ended June 30,
2013

 
Net Income8,151
 
Add Back:
Depreciation, depletion and amortization3,577
Accretion expense57
Workover cost808
Non recurring lease operating expenses318
Acquisition related general and administrative expenses461
 
Subtract:
Unrealized derivative gains, net 6,302
Subtotal7,070
 
Estimated maintenance capital expenditure 2,050
 
Distributable Cash Flow 5,020
 
Units outstanding 9,134
 
Net Distributable Cash Flow per unit$0.55
 

Distribution per unit

$

0.55

Coverage Ratio 

1.0

 
New Source Energy Partners L.P.
Condensed Balance Sheets
(unaudited, in thousands, except unit amounts)
  
June 30,December 31,
2013 2012 
ASSETS
Current assets:
Cash$865$-
Oil and natural gas sales receivable7,0675,621
Oil and natural gas sales receivable-related parties15042
Derivative assets 1,067  25 
Total current assets 9,149  5,688 
Property and equipment:
Oil and natural gas properties, at cost, using full cost method:
Proved oil and natural gas properties245,016202,795
Accumulated depreciation, depletion, and amortization (119,144) (112,372)
Total property and equipment, net 125,872  90,423 
Prepaid drilling and completion costs9671,000
Loan fees, net1,5781,508
Deferred offering costs-1,315
Derivative assets 1,393  - 
Total assets$138,959 $99,934 
 
LIABILITIES, PARENT NET INVESTMENT AND PARTNERS' CAPITAL:
Current liabilities:
Accounts payable$6$-
Accounts payable-related parties3,5141,564
Accrued liabilities129259
Accrued income taxes-103
Derivative obligations 58  47 
Total current liabilities 3,707  1,973 
Long-term related party payables358345
Credit facility48,000
Read Full Story

Want more news like this?

Sign up for Finance Report by AOL and get everything from business news to personal finance tips delivered directly to your inbox daily!

Subscribe to our other newsletters

Emails may offer personalized content or ads. Learn more. You may unsubscribe any time.

From Our Partners

Gift Finder Promo
More to Explore
Sat, Jan 21
Set Your Location
City, State, or Zip