EV Energy Partners Investors Talk at IPAA OGIS San Francisco

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Slides from a talk delivered by Mark Houser, president & CEO of EV Energy Partners (a master limited partnership or MLP) on Sept. 30, 2013 at the IPAA Oil & Gas Investment Symposium in San Francisco. Slides #8-#18 in particular are of interest to Marcellus Drilling News readers as they deal with EVEP's Utica Shale investments and plans. Some great charts, maps and pictures of operations in the Ohio Utica Shale!

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EV Energy Partners Investors Talk at IPAA OGIS San Francisco

  1. 1. IPAA’s Oil & Gas Symposium San Francisco September 30, 2013
  2. 2. Forward-Looking Statement Statements made in this presentation that are not historical facts are “forward-looking statements” within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. These statements include information about the sale of our Utica Shale assets, our midstream investments, future plans and other statements which include words such as “anticipates,” “plans,” “projects,” “expects,” “intends,” “believes,” ”should,” and similar expressions of forward-looking information. Forward-looking statements are inherently uncertain and necessarily involve risks that may affect the business prospects and performance of EV Energy Partners, L.P. Actual results may differ materially from those discussed in this presentation. Such risks and uncertainties include, but are not limited to, changes in commodity prices, changes in reserve estimates, requirements and actions of purchasers of properties (including the Utica Shale), changes in the metrics and procedures used to value midstream assets, exploration and development activities in the Utica Shale and elsewhere, the availability and cost of financing, the returns on our capital investments and acquisition strategies, the availability of sufficient cash flow to pay distributions and execute our business plan and general economic conditions. Additional information on risks and uncertainties that could affect our business prospects and performance are provided in the most recent reports of EV Energy Partners with the Securities and Exchange Commission. All forward-looking statements included in this presentation are expressly qualified in their entirety by the foregoing cautionary statements. Any forward-looking statement speaks only as of the date on which such statement is made and EVEP undertakes no obligation to correct or update any forward-looking statement, whether as a result of new information, future events or otherwise. 2
  3. 3. EVEP Overview Note: Current yield based on $0.769/unit 2Q13 distribution paid on August 14, 2013. Unit price as of September 24, 2013. ▶ Upstream MLP delivering solid returns since IPO September 2006 ▶ GP Ownership ♦ EnerVest & Management (76.25%) ♦ Encap (23.75%) ▶ 42.6 million outstanding units ♦ $2.6 billion enterprise value ▶ Current yield of 8.3% 3
  4. 4. Why Invest in EVEP? ▶ Solid, long-lived asset base ▶ Synergistic relationship with EnerVest ▶ Significant Utica Shale upside ♦ Acreage, overriding royalty interests, and midstream ▶ Hedging strategy designed to reduce cash flow volatility ▶ Strong long-term performance and growth 4
  5. 5. Long-lived, Diverse Asset Base Total Proved Reserves: 905 Bcfe Percent Developed: 76% Percent Gas: 67% Reserve-Life Index: 15 years 2013E Avg. Production: 166 Mmcfe/d* Central and East Texas Proved Reserves: 49.4 Bcfe 2012 Production: 18.1 Mmcfe/d Michigan Proved Reserves: 24.4 Bcfe 2012 Production: 6.5 Mmcfe/d Mid-Continent Proved Reserves: 70.0 Bcfe 2012 Production: 21.6 Mmcfe/d San Juan Basin Proved Reserves: 53.5 Bcfe 2012 Production: 8.2 Mmcfe/d Permian Basin Proved Reserves: 43.2 Bcfe 2012 Production: 6.1 Mmcfe/d Monroe Field Proved Reserves: 30.7 Bcfe 2012 Production: 7.1 Mmcfe/d Appalachian Basin Proved Reserves: 100.9 Bcfe 2012 Production: 24.9 Mmcfe/d Barnett Shale Proved Reserves: 532.5 Bcfe 2012 Production: 70.5 Mmcfe/d 5* 2013E based on 1H13 actuals and midpoints of 3Q-4Q13 guidance
  6. 6. 2013 E&P Capital = $90 - $110 Million Reserves & Capital Spending 6 Estimated Proved Reserves
  7. 7. ▶ Base business is performing well ▶ Austin Chalk ♦ Production: ~ 13 Mmcfe/d ♦ Horizontal multistage reentries looking encouraging ♦ A-zone multi stage projects – good results  2 wells drilled  3 additional wells planned by year end ▶ Barnett Shale ♦ Production: ~ 78 Mmcfe/d  Purchase agreement for ~13 Mmcf/d additional production ♦ Dropped from 3 to 2 rigs with same expected exit rate for 2013  Reduced refracs, lowered cost on overall drilling  Drilling and completion costs 9% lower  Recent initial production rates over 20% higher than AFE ♦ ~ 70 gross wells planned for 2013  46 drilled Operational Performance 7
  8. 8. Recent Developments in the Utica 8 ▶ Overall Utica Activity * ♦ 870 wells permitted ♦ 526 wells drilled ♦ 125 wells producing ▶ CHK/EV/Total Joint Venture ♦ 9 rigs expected to run through end of year ♦ Completing wells with more stages, shorter cluster spacing, fewer clusters per stage ♦ Initial production rates significantly improving ♦ 540 total wells projected to be drilled through 2014 ▶ Midstream bottleneck disappearing ♦ Natrium plant online in May +200 MMCFED ♦ Initial Utica East Ohio capacity online in July +200 MMCFED ♦ Other midstream capacity forthcoming * Source: Ohio Department of Natural Resources as of July 31, 2013
  9. 9. Our Position in the Utica Shale 9 ▶ EVEP and EnerVest combined have one of the largest positions in Ohio ♦ > 900,000 HBP acres ♦ Participation in CHK/EV/Total Joint Venture ▶ EVEP’s diversified interest ♦ 177,000 net working interest acres ♦ Overriding royalty interests ♦ Participation in midstream projects through Utica East Ohio and Cardinal Gas Services investments CHK/EV/TOT Joint Venture Black Oil Volatile Oil Wet Gas Dry Gas Black Oil Volatile Oil Wet Gas Dry Gas EVEP WI Acreage CHK/EV/Total JV
  10. 10. EVEP’s Appalachian Evolution Pre-Utica Appalachia Utica East Ohio Midstream Overriding Royalty Interest Conventional Production Cardinal Gas Services Midstream Working Interest Acreage Current Appalachia Conventional Production 10
  11. 11. Utica Working Interest Acreage 11Note: The total combined EnerVest and EVEP net acreage is 769,700 in Ohio and 156,600 in Pennsylvania. Acreage in pending sale is included in totals. Black Oil Volatile Oil Wet Gas Dry Gas EVEP Net Acres (In thousands) County Wet Gas Vol. Oil Other Total ASHTABULA 21 21 CARROLL 11 11 CUYAHOGA 1 1 GEAUGA 2 2 GUERNSEY 3 2 5 HARRISON 2 2 LAWRENCE 7 7 MAHONING 4 4 MUSKINGUM 6 6 NOBLE 1 1 PORTAGE 3 1 4 STARK 3 38 41 SUMMIT 2 2 TRUMBULL 2 8 2 12 TUSCARAWAS 6 18 24 WASHINGTON 5 5 Other OH 1 3 9 13 TOTAL OH 45 78 38 161 CRAWFORD, PA 1 1 ERIE, PA 3 3 MCKEAN, PA 2 2 MERCER, PA 8 8 WARREN, PA 1 1 Other PA 1 1 TOTAL PA 9 1 6 16 Total 54 79 44 177 Black Oil Volatile Oil Wet Gas Dry Gas EVEP WI Acreage CHK/EV/Total JV Marketing wet gas window acres & pursuing JV opportunities in volatile oil window
  12. 12. ▶ Agreement signed for 22,535 net EnerVest acres in the southern Utica wet-gas window ♦ Includes 4,345 net EVEP acres ▶ EVEP will receive $56 million, subject to purchase price adjustments ♦ Average price of $12,900 per acre ▶ Initial closing at end of third quarter 12 Utica Acreage Sale Overview EVEP Acreage
  13. 13. Utica Overriding Royalty Interest Acreage ▶ Overriding Royalty Interest (ORRI) acreage is mostly in wet gas and oil windows ♦ ~880,000 gross acres ▶ Average 2.7% ORRI on ~ 415,000 operated gross acres ▶ Average 1.3% ORRI on ~ 465,000 non-operated gross acres ▶ Significant future cash flow potential as Utica acreage is developed 13
  14. 14. Utica Midstream Activity 14
  15. 15. Utica Midstream Investments Utica East Ohio Midstream – EVEP owns 21% ▶ Gather, process and fractionate wet gas from CHK/EV/Total JV production ♦ 800 MMcf/d of processing & 135 MBbls/d of fractionation capacity ♦ Onsite working storage of ~870 MBbls of purity components ♦ ~ 1 million dedicated working interest acres ▶ Initially online July 2013 ♦ Kensington – 200 MMcf/d of gas processing capacity ♦ Harrison – 45 MBbls/d of fractionation capacity ▶ Upside potential as development drilling expands Cardinal Gas Services – EVEP owns 9% ▶ Low-pressure gathering and compression of wet gas from JV production into Utica East Ohio infrastructure ♦ JV firm drilling schedule calls for 540 wells by year end 2014 ♦ Plans for ~ 4,600 gross wells over 18 years ♦ Over 1 Bcf/d expected within 5 years ♦ Over 200 wells connected to date ▶ Upside potential as development drilling expands 15
  16. 16. Utica Midstream Capital and EBITDAX ▶ Capital investment of $335-395 million, net to EVEP, over 5 years ▶ Stable, long-term cash flow stream ▶ UEO has fee structure defined by contract ♦ Fees for gathering, compression, processing, NGL transport, fractionation and storage ▶ CGS has cost-of-services arrangement with fixed IRR ♦ Gathering fee re-calculated annually to provide target IRR ♦ Operating costs are pass-through costs not subject to IRR calculation ▶ Financed to date with bank debt 16 Midstream EBITDAX RangeMidstream Capital Range
  17. 17. UEO – Kensington – July 2013 17 Inlet Metering and Liquid Handling Facilities Processing Train #3 Processing Train #2 Future Processing Train #4 Processing Train #1 Facility Sub-station Residue Compressors Inlet Compressors Condensate Stabilizer
  18. 18. UEO – Harrison Hub – June 2013 18 (20) 90,000 gallon C3 & C4 bullet tanks (2) 60,000 barrel floating roof natural gasoline tanks 50,000 barrel pressurized C4 sphere (4) 750 barrel C5+tanks (2) 200,000 barrel refrigerated C3 tanks (2) 125,000 barrel refrigerated C4 tanks 16 total loading racks (8 C3, 4 C4, 4 C5+) 10 total tracks (4 loading tracks, 3 storage tracks, 3 inbound / outbound / runaround tracks) Rail cars on site Flare Fractionation trains 2 & 3 site work Fractionation train 1 Fire water tank
  19. 19. Barnett Shale Acquisition 19 ▶ Joint purchase with EnerVest Institutional Partnerships ♦ EVEP purchase price of $67.6 million for 31% of total assets purchased ♦ Qualifies for like-kind exchange toward recent Utica acreage sale ♦ Expected to close by October 31 ▶ Reserves ♦ Located primarily in Tarrant Co. ♦ 62.3 Bcf proved and 30.7 Bcf probable reserves* ♦ 100% natural gas ♦ 58% proved developed ♦ ~ 13 Mmcf/d current net production ♦ 82 active wells; 90% operated ♦ 71 PUD and probable drilling locations ▶ Total Acreage Position ♦ ~ 17,000 gross acres ♦ ~ 9,500 net acres (~ 2950 net to EVEP) * Based on recent strip prices. Existing Acreage Acquisition Acreage Dry Gas Wet Gas Oil
  20. 20. Long-term Performance & Growth Average Daily Production (Mmcfe/d) Capital ($ million) Adjusted EBITDAX ($ million) Distribution Coverage 20Note: 2013E based on 1H13 actuals and midpoints of 3Q-4Q13 guidance.
  21. 21. Capital Structure ($ millions) Bank Debt @ 6/30 $ 520 Senior Notes Due 2019 $ 500 Equity Market Capitalization $ 1,605 Enterprise Value $ 2,625 Note: Equity market capitalization based on unit price at September 24, 2013. 21
  22. 22. ▶ Hedges used to reduce the effects of commodity price volatility and support initial acquisition economics ▶ Hedged approximately 90% for 2013, 80% for 2014 and 70% for 2015 Active Commodity Hedging Strategy 22Note: Percentage hedged based on the midpoint of 3Q-4Q 2013 annual production guidance.
  23. 23. Gas Prices Hedged ($/MMbtu)Gas Volume Hedged (MMbtu/d) Note: Estimated NYMEX Henry Hub equivalent with basis differentials of: Dominion Appalachia ($0.50), MichCon Citygate $0.26, Houston Ship Channel $0.04 and El Paso Permian ($0.02), El Paso San Juan ($0.03), NGPL TX/OK ($0.04) and TCO ($0.04). Commodity Hedging: Natural Gas 23
  24. 24. Oil Prices Hedged ($/Bbl)Oil Volume Hedged (Bbl/d) Commodity Hedging: Oil 24
  25. 25. Why Invest in EVEP? ▶ Solid, long-lived asset base ▶ Synergistic relationship with EnerVest ▶ Significant Utica Shale upside ♦ Acreage, overriding royalty interests, and midstream ▶ Hedging strategy designed to reduce cash flow volatility ▶ Strong long-term performance and growth 25
  26. 26. IPAA’s Oil & Gas Symposium San Francisco September 30, 2013

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