Encore Energy Partners LP Announces Second Quarter Results and Quarterly Distribution of $0.6881 per Unit
FORT WORTH, Texas--(Business Wire)--
Encore Energy Partners LP (NYSE: ENP) (the "Partnership" or "ENP")
today announced its quarterly distribution and second quarter results.
Distribution
The Partnership announced a distribution of $0.6881 per unit for
the quarter ended June 30, 2008, or $2.7524 per unit on an annualized
basis. The Board of Directors of Encore Energy Partners GP LLC has
approved the distribution to be paid on or about August 14, 2008 to
unitholders of record on August 11, 2008.
Summary of Second Quarter 2008 Results
The following table highlights certain reported amounts for the
second quarter of 2008 (common units and $ in millions):
-0-
*T
Three Months
Ended June 30,
2008
--------------
Adjusted EBITDAX $ 42.5
Net loss $ (45.0)
Net income excluding certain charges $ 29.4
Distributable cash flow $ 35.3
Total distributions to be paid $ 23.1
Coverage ratio 1.53
Weighted average diluted common units outstanding 31.3
Oil and natural gas revenues $ 58.9
Average daily production volumes (BOE/D) 6,600
Oil as a percentage of total production volumes 70%
Oil and natural gas capital costs (excl acquisitions) $ 5.7
Oil and natural gas acquisition costs $ 5.8
Quarterly distribution $ 0.6881
*T
Adjusted earnings before interest, income taxes, depletion,
depreciation, and amortization, non-cash unit-based compensation,
non-cash derivative fair value loss, and exploration expense
("Adjusted EBITDAX") totaled $42.5 million for the second quarter of
2008. For the second quarter of 2008, distributable cash flow totaled
$35.3 million. Adjusted EBITDAX and distributable cash flow are
reconciled to their most directly comparable GAAP measures in the
attached financial schedules.
Jon S. Brumley, Chief Executive Officer of Encore Energy Partners
GP LLC, stated, "These quarterly results emphasize the quality of
ENP's properties, operating strategy, and hedging strategy. All three
of these factors are interconnected and enable the Partnership to
distribute a robust $0.69 per unit to our partners during this time of
high commodity prices. We are pleased with the results of beating
production guidance, paying off $14 million of debt, and having the
Partnership implement its operating plan. Our variable distribution
strategy allows our investors to participate in the high commodity
price environment by receiving increased distributions as prices
increase. We are proud of our properties and our plan."
ENP's net loss for the second quarter of 2008 was $45.0 million
($1.45 per diluted common unit). The second quarter results included a
net derivative fair value loss of $76.4 million which comprises a loss
of $2.2 million related to derivative premium amortization, a $73.2
million loss related to non-cash change in derivative fair value
related to future periods, and a loss of $1.0 million related to cash
settlements. The second quarter of 2008 also included a charge of $1.3
million for non-cash compensation expense. Net income excluding
certain charges for the second quarter of 2008 was $29.4 million
($0.88 per diluted common unit). Net income excluding certain charges
for the second quarter of 2008 excludes derivative gains and losses
not related to the current period and non-cash compensation expense.
Net income excluding certain charges is reconciled to its most
directly comparable GAAP measure of net loss in the attached financial
schedules.
For the second quarter of 2008, the Partnership's average realized
oil price was $111.53 per barrel ("Bbl"), and the average realized
natural gas price was $11.06 per thousand cubic feet ("Mcf"). These
quarterly average prices were the highest realized by the Partnership
since its initial public offering in September 2007. During the second
quarter of 2008, the Partnership's oil and natural gas differentials
to NYMEX averaged a negative 10 percent ($12.77 per Bbl) and positive
one percent ($0.12 per Mcf), respectively, both of which are better
than the Partnership's previously released second quarter guidance of
negative 13 percent for oil and negative 11 percent for natural gas.
This resulted as the markets in which the Partnership operates
continue to improve. The average NYMEX oil price was $124.30 per Bbl
in the second quarter of 2008, and the average NYMEX natural gas price
was $10.94 per Mcf.
Lease operations expense for the second quarter of 2008 was $6.9
million ($11.53 per BOE), which was in line with previously released
guidance of $10.75 to $11.75 per BOE.
G&A expense excluding $1.1 million of non-cash compensation
related to management incentive units for the second quarter of 2008
was $1.9 million ($3.12 per BOE), which was lower than previously
released guidance of $3.40 to $3.85 per BOE.
Depletion, depreciation, and amortization expense for the second
quarter of 2008 was $9.2 million ($15.34 per BOE), which was slightly
lower than the previously released guidance of $15.75 to $16.25 per
BOE due to better than expected drilling results.
Net marketing revenue and expense was a loss of $0.7 million in
the second quarter of 2008. Marketing expenses in the second quarter
of 2008 include pipeline tariffs, storage, truck facility fees, and
tank bottom costs used to support the sale of equity crude and natural
gas, the revenues of which are included in oil and natural gas
revenues on the Partnership's income statement versus marketing
revenues.
The Partnership invested $5.7 million in its capital programs
during the second quarter of 2008, drilling eight gross wells (2.3
net), all of which were successful.
Operations Update
West Texas
Two new operated wells in Crockett County, Texas were turned over
to production in the second quarter of 2008. The wells continue to
extend the Canyon/Strawn development program in ENP's Henderson
leases. The J.L. Henderson, Jr. B 11-20.5 well had an initial
production rate of 3.9 MMcf/D, which is the largest well drilled on
ENP's acreage in Crockett County since the property was originally
acquired by Encore Acquisition Company ("EAC") in 2000. The other
well, the J.L. Henderson, Jr. 2-17, had an initial production rate of
1.5 MMcf/D, which also exceeded the Partnership's expectations. On
average, these two wells cost approximately $950,000 each to drill and
complete, and the Partnership has a 100 percent working interest and
85 percent net revenue interest in these wells. The Partnership is
currently planning to offset these locations in 2009.
Elk Basin
During the third quarter of 2008, the Partnership will be
installing two nitrogen membrane units at the Elk Basin gas plant at a
net cost to the Partnership of $0.7 million. These units will remove
nitrogen from the recycled gas stream, enhancing the BTU content of
the gas for plant fuel. This installation will reduce the amount of
purchased fuel gas required for plant operations by approximately
half. The original net cost savings to the Partnership were projected
to be $0.4 million per quarter, or $1.6 million on an annual basis,
but due to the rise in natural gas prices, the expected net cost
savings will be approximately $0.6 million per quarter, or $2.5
million on an annual basis.
Sulfur prices continued to strengthen in the second quarter of
2008, resulting in increased revenue in Elk Basin. The sulfur is
extracted at the Elk Basin gas plant from the gas produced from the
Tensleep formation. The Partnership's second quarter net sulfur
revenue of $0.4 million was twice as much as the first quarter net
sulfur revenue of $0.2 million and significantly more than net sulfur
revenue of $0.1 million in the fourth quarter of 2007.
Acquisitions Update
During the second quarter of 2008, the Partnership acquired an
existing net profits interest in its Crockett County properties in
exchange for 283,700 common units of ENP valued at $5.8 million,
subject to customary closing adjustments. The deal closed on May 1,
2008.
Liquidity Update
At June 30, 2008, ENP had $151 million outstanding under its
revolving credit facility. The amount outstanding on the revolving
credit facility decreased $14 million during the second quarter of
2008, reflecting the strong operating results and commodity price
environment experienced during the quarter.
Third Quarter 2008 Outlook
The Partnership expects the following for the third quarter of
2008:
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*T
Average daily production volumes 6,000 to 6,600 BOE/D
----------------------------------------------------------------------
Oil and natural gas related capital
(third quarter 2008) $1.5 to $2.5 million
----------------------------------------------------------------------
Maintenance capital requirements per year
- Long-term $15.7 million
----------------------------------------------------------------------
Lease operations expense $12.00 to $13.00 per BOE
----------------------------------------------------------------------
G&A expenses (excl non-cash comp) $2.85 to $3.25 per BOE
----------------------------------------------------------------------
Depletion, depreciation, and amortization $15.50 to $16.25 per BOE
----------------------------------------------------------------------
Production, ad valorem, and severance 11.0% of oil and natural
taxes gas revenues
----------------------------------------------------------------------
Oil differential -11% of NYMEX oil price
----------------------------------------------------------------------
Natural gas differential 8% of NYMEX natural gas
price
----------------------------------------------------------------------
*T
In February 2008, the Partnership acquired certain assets in the
Permian and Williston Basins from EAC. Because the assets acquired
from EAC in February 2008 were acquired from an affiliate, the
acquisition was accounted for as a transaction between entities under
common control, similar to a pooling, whereby the assets and
liabilities were recorded at EAC's historical cost and the historical
financial information was recast to include the acquired properties.
As a result, the historical financial information of the Partnership
has been recast to include the historical operating results and
related production volumes of the Permian and Williston Basin assets
throughout the periods presented.
Conference Call Details
Title: Encore Acquisition Company and Encore Energy Partners LP
Conference Call
Date and Time: Thursday, August 7, 2008 at 9:30 AM Central Time
Webcast: Listen to the live broadcast via http://www.encoreenp.com
Telephone: Dial 877-356-9552 ten minutes prior to the scheduled
time and request the conference call by supplying the title specified
above or ID 58376724.
A replay of the conference call will be archived and available via
ENP's website at the above web address or by dialing 800-642-1687 and
entering conference ID 58376724. The replay will be available through
August 21, 2008. International callers can dial 706-679-0419 for the
live broadcast or 706-645-9291 for the replay.
About the Partnership
Encore Energy Partners LP was formed by Encore Acquisition Company
to acquire, exploit, and develop oil and natural gas properties and to
acquire, own, and operate related assets. ENP's assets consist
primarily of producing and non-producing oil and natural gas
properties in the Big Horn Basin of Wyoming and Montana, the Williston
Basin of North Dakota, and the Permian Basin of West Texas.
Cautionary Statement
This press release includes forward-looking statements, which give
ENP's current expectations or forecasts of future events based on
currently available information. Forward-looking statements in this
press release relate to, among other things, expected distributions,
the benefits, timing and mix of acquisitions, expected production
volumes, expected expenses, expected taxes, expected capital
expenditures, expected differentials, drilling plans, expected cost
savings, and any other statements that are not historical facts. The
assumptions of management and the future performance of ENP are
subject to a wide range of business risks and uncertainties and there
is no assurance that these statements and projections will be met.
Factors that could affect ENP's business include, but are not limited
to: the risks associated with drilling of oil and natural gas wells;
ENP's ability to find, acquire, market, develop, and produce new
properties; the risk of drilling dry holes; oil and natural gas price
volatility; derivative transactions (including the costs associated
therewith); uncertainties in the estimation of proved, probable, and
potential reserves and in the projection of future rates of production
and reserve growth; inaccuracies in ENP's assumptions regarding items
of income and expense and the level of capital expenditures;
uncertainties in the timing of exploitation expenditures; operating
hazards attendant to the oil and natural gas business; drilling and
completion losses that are generally not recoverable from third
parties or insurance; potential mechanical failure or underperformance
of significant wells; climatic conditions; availability and cost of
material and equipment; the risks associated with operating in a
limited number of geographic areas; actions or inactions of
third-party operators of ENP's properties; diversion of management's
attention from existing operations while pursuing acquisitions;
availability of capital; the strength and financial resources of ENP's
competitors; regulatory developments; environmental risks;
uncertainties in the capital markets; uncertainties with respect to
asset sales; general economic and business conditions; industry
trends; and other factors detailed in ENP's 2007 Annual Report on Form
10-K and other filings with the Securities and Exchange Commission. If
one or more of these risks or uncertainties materialize (or the
consequences of such a development changes), or should underlying
assumptions prove incorrect, actual outcomes may vary materially from
those forecasted or expected. ENP undertakes no obligation to publicly
update or revise any forward-looking statements.
-0-
*T
Encore Energy Partners LP
Condensed Consolidated Statements of Operations
(in thousands, except per unit amounts)
(unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
------------------ ------------------
2008 2007 (a) 2008 2007 (a)
--------- -------- --------- --------
Revenues:
Oil $ 47,141 $22,212 $ 84,336 $30,372
Natural gas 11,808 5,689 18,810 10,302
Marketing 903 3,614 3,762 4,852
--------- -------- --------- --------
Total revenues 59,852 31,515 106,908 45,526
--------- -------- --------- --------
Expenses:
Production:
Lease operations 6,922 5,728 12,980 8,419
Production, ad valorem,
and severance taxes 5,782 3,134 10,580 4,609
Depletion, depreciation, and
amortization 9,215 9,173 18,335 12,879
Exploration 38 31 67 62
General and administrative 2,933 1,011 5,855 1,566
Marketing 1,609 3,275 4,002 4,355
Derivative fair value loss 76,428 2,814 92,015 6,497
Other operating 331 288 682 433
--------- -------- --------- --------
Total operating expenses 103,258 25,454 144,516 38,820
--------- -------- --------- --------
Operating income (loss) (43,406) 6,061 (37,608) 6,706
--------- -------- --------- --------
Other income (expenses):
Interest (1,909) (5,342) (3,549) (6,444)
Other 65 27 82 27
--------- -------- --------- --------
Total other income (expenses) (1,844) (5,315) (3,467) (6,417)
--------- -------- --------- --------
Income (loss) before income
taxes (45,250) 746 (41,075) 289
Income tax benefit
(provision) 252 (33) 162 (65)
--------- -------- --------- --------
Net income (loss) $(44,998) $ 713 $(40,913) $ 224
========= ======== ========= ========
Net loss allocation (b):
Limited partners' interest
in net loss $(45,233) $(44,808)
========= =========
General partner's interest
in net loss $ (731) $ (739)
========= =========
Net loss per common unit (b):
Basic $ (1.45) $ (1.51)
Diluted $ (1.45) $ (1.51)
Weighted average common units
outstanding (b):
Basic 31,260 29,766
Diluted 31,260 29,766
*T
(a) In February 2008, the Partnership acquired certain assets in
the Permian and Williston Basins from EAC. Because the assets acquired
from EAC were acquired from an affiliate, the acquisition was
accounted for as a transaction between entities under common control,
similar to a pooling, whereby the assets and liabilities were recorded
at EAC's historical cost and the historical financial information was
recast to include the acquired properties. As a result, the historical
financial information of the Partnership has been recast to include
the historical operating results and related production volumes of the
Permian and Williston Basin assets throughout the periods presented.
(b) The Partnership completed its initial public offering in
September 2007. Prior to the initial public offering, the Partnership
was wholly owned by EAC, other than management incentive units owned
by certain executive officers of the Partnership's general partner.
Accordingly, the earnings allocation and earnings per unit information
is not presented for the three and six months ended June 30, 2007.
-0-
*T
Encore Energy Partners LP
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
Six Months Ended
June 30,
--------------------------
2008 2007 (a)
------------ ------------
Net income (loss) $ (40,913) $ 224
Adjustments to reconcile net income (loss)
to net cash provided by operating
activities:
Non-cash and other items 112,234 23,486
Changes in operating assets and
liabilities (7,685) (10,081)
------------ ------------
Net cash provided by operating activities 63,636 13,629
------------ ------------
------------ ------------
Net cash used in investing activities (12,348) (361,430)
------------ ------------
Financing activities:
Net proceeds from long-term debt 103,310 233,383
Deemed distributions to affiliates in
connection with acquisition of Permian
and Williston Basin assets (124,838) -
Distributions to unitholders (29,137) -
Net contributions from owner - 115,766
------------ ------------
Net cash provided by (used in) financing
activities (50,665) 349,149
------------ ------------
Increase in cash and cash equivalents 623 1,348
Cash and cash equivalents, beginning of
period 3 -
------------ ------------
Cash and cash equivalents, end of period $ 626 $ 1,348
============ ============
Encore Energy Partners LP
Condensed Consolidated Balance Sheets
(in thousands)
(unaudited)
June 30, December 31,
2008 2007 (a)
------------ ------------
Total assets $ 485,072 $ 497,719
============ ============
Liabilities (excluding long-term debt) $ 125,035 $ 55,206
Long-term debt 151,000 47,500
Partners' equity 209,037 395,013
------------ ------------
Total liabilities and partners' equity $ 485,072 $ 497,719
============ ============
Working capital (c) $ (14,241) $ 2,750
*T
(a) In February 2008, the Partnership acquired certain assets in
the Permian and Williston Basins from EAC. Because the assets acquired
from EAC were acquired from an affiliate, the acquisition was
accounted for as a transaction between entities under common control,
similar to a pooling, whereby the assets and liabilities were recorded
at EAC's historical cost and the historical financial information was
recast to include the acquired properties. As a result, the historical
financial information of the Partnership has been recast to include
the historical operating results and related production volumes of the
Permian and Williston Basin assets throughout the periods presented.
(c) Working capital is defined as current assets minus current
liabilities.
-0-
*T
Encore Energy Partners LP
Selected Operating Results
(unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
------------------- -----------------
2008 2007 (a) 2008 2007 (a)
-------- --------- ------- --------
Production volumes:
Oil (MBbls) 423 426 849 601
Natural gas (MMcf) 1,067 764 1,956 1,429
Combined (MBOE) 601 554 1,175 839
Daily production:
Oil (Bbls/D) 4,645 4,686 4,663 4,639
Natural gas (Mcf/D) 11,729 8,393 10,745 8,186
Combined (BOE/D) 6,600 6,085 6,454 6,004
Average realized prices:
Oil (per Bbl) $ 111.53 $ 52.09 $ 99.37 $ 50.57
Natural gas (per Mcf) 11.06 7.45 9.62 7.21
Combined (per BOE) 98.15 50.39 87.81 48.49
Average costs per BOE:
Lease operations expense $ 11.53 $ 10.34 $ 11.05 $ 10.04
Production, ad valorem, and
severance taxes 9.63 5.66 9.01 5.49
Depletion, depreciation,
and amortization 15.34 16.57 15.61 15.35
Exploration 0.06 0.06 0.06 0.07
General and administrative 4.88 1.83 4.98 1.87
Derivative fair value loss 127.26 5.08 78.33 7.75
Other operating 0.55 0.52 0.58 0.52
Marketing loss (gain) 1.18 (0.61) 0.20 (0.59)
*T
(a) In February 2008, the Partnership acquired certain assets in
the Permian and Williston Basins from EAC. Because the assets acquired
from EAC were acquired from an affiliate, the acquisition was
accounted for as a transaction between entities under common control,
similar to a pooling, whereby the assets and liabilities were recorded
at EAC's historical cost and the historical financial information was
recast to include the acquired properties. As a result, the historical
financial information of the Partnership has been recast to include
the historical operating results and related production volumes of the
Permian and Williston Basin assets throughout the periods presented.
-0-
*T
Encore Energy Partners LP
Derivative Summary as of August 4, 2008
(unaudited)
Oil Derivative Contracts
(d)
------------------------
Average Weighted Average Weighted Average Weighted
Daily Average Daily Average Daily Average
Floor Floor Cap Cap Swap Swap
Period Volume Price Volume Price Volume Price
------------ ----------- --------- ------- --------- ------- ---------
(Bbls) (per Bbl) (Bbls) (per Bbl) (Bbls) (per Bbl)
Aug. - Dec.
2008
880 $ 80.00 440 $ 107.60 - $ -
2,000 75.00 - - - -
500 65.00 - - - -
2009
880 80.00 440 97.75 - -
2,250 74.11 - - 1,000 68.70
2010
880 80.00 440 93.80 - -
2,000 75.00 1,000 77.23 - -
2011
1,880 80.00 1,440 95.41 - -
1,000 70.00 - - - -
Natural Gas Derivative
Contracts (d)
------------------------
Average Weighted Average Weighted Average Weighted
Daily Average Daily Average Daily Average
Floor Floor Cap Cap Swap Swap
Period Volume Price Volume Price Volume Price
------------ ----------- --------- ------- --------- ------- ---------
(Mcf) (per Mcf) (Mcf) (per Mcf) (Mcf) (per Mcf)
Aug. - Dec.
2008
3,800 $ 8.20 3,800 $ 9.83 - $ -
3,800 7.20 - - - -
2009
3,800 8.20 3,800 9.83 - -
3,800 7.20 - - - -
2010
3,800 8.20 3,800 9.58 - -
3,800 7.20 - - - -
Interest Rate Swap
Agreements
------------------------
Notional Fixed Floating
Period Amount Rate Rate
------------ ----------- --------- -----------------
(in
thousands)
Aug. 2008 -
Jan. 2011 $ 50,000 3.1610% 1 month LIBOR
Aug. 2008 -
Jan. 2011 25,000 2.9650% 1 month LIBOR
Aug. 2008 -
Jan. 2011 25,000 2.9613% 1 month LIBOR
*T
(d) Oil prices represent NYMEX WTI monthly average prices, while
gas prices represent IF Houston Ship Channel prices. The differential
between IF HSC and NYMEX Henry Hub is approximately $0.20 per Mcf.
-0-
*T
Encore Energy Partners LP
Non-GAAP Financial Measures
(in thousands)
(unaudited)
This press release includes a discussion of Adjusted EBITDAX, which is
a non-GAAP financial measure. The following table provides
reconciliations of Adjusted EBITDAX to net loss and net cash provided
by operating activities, the Partnership's most directly comparable
financial performance and liquidity measures calculated and presented
in accordance with GAAP.
Three Months Six Months
Ended June 30, Ended June 30,
2008 2008
-------------- --------------
Net loss $ (44,998) $ (40,913)
Depletion, depreciation, and
amortization 9,215 18,335
Non-cash unit-based compensation
expense 1,250 2,380
Exploration 38 67
Interest expense and other 1,844 3,467
Income taxes (252) (162)
Non-cash derivative fair value loss 75,445 91,203
-------------- --------------
Adjusted EBITDAX 42,542 74,377
Change in other operating assets and
liabilities (164) (6,489)
Other non-cash expenses 247 565
Interest expense and other (1,844) (3,467)
Cash exploration expense (17) (26)
Current income taxes (76) (128)
Purchased options - (1,196)
-------------- --------------
Net cash provided by operating
activities $ 40,688 $ 63,636
============== ==============
*T
Adjusted EBITDAX is used as a supplemental financial measure by
the Partnership's management and by external users of the
Partnership's financial statements, such as investors, commercial
banks, research analysts, and others, to assess (1) the financial
performance of the Partnership's assets without regard to financing
methods, capital structure, or historical cost basis; (2) the ability
of the Partnership's assets to generate cash sufficient to pay
interest costs and support its indebtedness; (3) the Partnership's
operating performance and return on capital as compared to those of
other entities in the oil and natural gas industry, without regard to
financing or capital structure; and (4) the viability of acquisitions
and capital expenditure projects and the overall rates of return on
alternative investment opportunities.
Adjusted EBITDAX should not be considered an alternative to net
loss, operating loss, net cash provided by operating activities, or
any other measure of financial performance presented in accordance
with GAAP. The Partnership's definition of Adjusted EBITDAX may not be
comparable to similarly titled measures of another entity because all
companies may not calculate Adjusted EBITDAX in the same manner.
This press release also includes a discussion of "Distributable
cash flow", which is a non-GAAP financial measure. The following table
provides a reconciliation of distributable cash flow to net loss and
net cash provided by operating activities, the Partnership's most
directly comparable financial performance and liquidity measures
calculated and presented in accordance with GAAP.
-0-
*T
Three Months Six Months
Ended June 30, Ended June 30,
2008 2008
-------------- --------------
Net loss $ (44,998) $ (40,913)
Depletion, depreciation, and
amortization 9,215 18,335
Non-cash unit-based compensation
expense 1,250 2,380
Non-cash derivative fair value loss 75,445 91,203
Exploration 38 67
Development capital (5,668) (11,517)
Capital maintenance reserves - 2,424
-------------- --------------
Distributable cash flow 35,282 61,979
Change in other operating assets
and liabilities (164) (6,489)
Other non-cash expenses (81) 275
Cash exploration expense (17) (26)
Purchased options - (1,196)
Development capital 5,668 11,517
Capital maintenance reserves - (2,424)
-------------- --------------
Net cash provided by operating
activities $ 40,688 $ 63,636
============== ==============
*T
The Partnership believes that distributable cash flow is a useful
measure of the Partnership's financial and operating performance and
its ability to continue to make quarterly distributions.
Distributable cash flow should not be considered an alternative to
net loss, operating loss, net cash provided by operating activities,
or any other measure of financial performance presented in accordance
with GAAP. The Partnership's definition of distributable cash flow may
not be comparable to similarly titled measures of another entity
because all entities may not calculate distributable cash flow in the
same manner.
-0-
*T
Encore Energy Partners LP
Non-GAAP Financial Measures (continued)
(in thousands, except per unit amounts)
(unaudited)
This press release also includes a discussion of "Net income excluding
certain charges", which is a non-GAAP financial measure. The
following table provides a reconciliation of net income excluding
certain charges to net loss, the Partnership's most directly
comparable financial measure calculated and presented in accordance
with GAAP.
Three Months Ended Six Months Ended
June 30, 2008 June 30, 2008
--------------------- ---------------------
Per Diluted Per Diluted
Total Unit Total Unit
--------- ----------- --------- -----------
Net loss $(44,998) $ (1.45) $(40,913) $ (1.51)
Add:
Non-cash unit-based
compensation expense 1,250 0.04 2,380 0.08
Non-cash derivative
fair value loss
excluding premium
amortization 73,195 2.29 86,815 2.86
--------- ----------- --------- -----------
Net income excluding
certain charges $ 29,447 $ 0.88 $ 48,282 $ 1.43
========= =========== ========= ===========
*T
The Partnership believes that the exclusion of these charges
enables it to evaluate operations more effectively period-over-period
and to identify operating trends that could otherwise be masked by the
excluded items.
Net income excluding certain charges should not be considered an
alternative to net loss, operating loss, net cash provided by
operating activities, or any other measure of financial performance
presented in accordance with GAAP. The Partnership's definition of net
income excluding certain charges may not be comparable to similarly
titled measures of another entity because all entities may not
calculate net income excluding certain charges in the same manner.
Encore Energy Partners LP, Fort Worth, TX
Bob Reeves, 817-339-0918
rcreeves@encoreacq.com
or
Diane Weaver, 817-339-0803
dweaver@encoreacq.com
Copyright Business Wire 2008
