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8-K/A - FORM 8-K AMENDMENT NO. 1 - New Source Energy Partners L.P.d523322d8ka.htm

Exhibit 99.1

 

LOGO

FOR IMMEDIATE RELEASE

CORRECTING and REPLACING New Source Energy Partners Reports Year-End 2012 Results, Reiterates 2013 Guidance

OKLAHOMA CITY, April 17, 2013 —(BUSINESS WIRE)— Third graph, first sentence following the 2012 Results heading had a typographical error. The sentence should read: Total crude oil production was 61,010 Bbls during the year ended December 31, 2012, an increase of 25% from the year ended December 31, 2011, primarily as a result of development and production from a portion of the Hunton reservoir containing a higher concentration of oil (sted: Crude oil production was 61,010 Bbls per day during the year ended December 31, 2012, an increase of 25% from the year ended December 31, 2011, primarily as a result of development and production from a portion of the Hunton reservoir containing a higher concentration of oil).

The corrected release reads:

NEW SOURCE ENERGY PARTNERS REPORTS YEAR-END 2012 RESULTS, REITERATES 2013 GUIDANCE

New Source Energy Partners L.P., a Delaware limited partnership (NYSE: NSLP) (the “Partnership” or “New Source”), today announced financial and operating results for the year ended December 31, 2012. New Source closed its initial public offering of common units on February 13, 2013, and the results expressed herein are those attributable to the properties contributed to New Source in connection with its initial public offering.

2012 Highlights

 

   

Average net daily production during the year ended December 31, 2012 was 3,147 Boe/d.

 

   

Average daily oil production was 167 Bbl/d during the year ended December 31, 2012, an increase of 25% from the year ended December 31, 2011

 

   

Estimated proved reserves were approximately 14.2 MMBoe as of December 31, 2012, an increase of 3% from the year ended December 31, 2011

 

   

Production costs decreased on an equivalent basis from $6.76 per Boe in 2011 to $5.40 per Boe in 2012

 

   

Net income was $3.1 million for the year ended December 31, 2012, compared to a loss of $1.1 million reported for the year ended December 31, 2011

Adjusted EBITDA (as defined below) was $29.8 million for the year ended December 31, 2012 “We are pleased with the successful completion of our initial public offering in February and are encouraged by our rapid progress to grow the partnership since that time,” said Kristian Kos, President and Chief Executive Officer of New Source Energy GP, LLC, the general partner of the Partnership. “We have a solid asset base in the Hunton reservoir and multiple growth opportunities in front of us. We look forward to continuing to grow and shape our partnership for the benefit of our unit holders.”

2013 Guidance Highlights

The second quarter 2013 guidance included below is subject to the cautionary statements and limitations described under the “Forward-Looking Statements” caption at the end of this press release. The Partnership’s second quarter 2013 guidance for production levels is based on assumptions of capital expenditure levels and the assumption that market demand and prices for oil and natural gas will continue at levels that allow for economic production of these products.


New Source is reiterating guidance of

 

   

Second quarter production in a range of 3,900 Boe/d to 4,100 Boe/d

 

   

Second quarter maintenance capital expenditures of $2.6 million

 

   

Recommendation to increase second quarter distribution to $0.55 per unit, and third quarter distribution to $.575 per unit, or $2.30 per year on an annualized basis, for all outstanding units, following the completion of the acquisition announced on April 1, 2013

2012 Results

Adjusted EBITDA was $29.8 million for the year ended December 31, 2012 as compared to $32.3 million for the year ended December 31, 2011. Net income was $3.1 million for the year ended December 31, 2012 compared to a loss of $1.1 million for the year ended December 31, 2011. Net income in 2012 was primarily due to derivative gains, partially offset by lower revenues and by higher administrative costs.

For the year ended December 31, 2012, revenues from oil and natural gas operations were approximately $35.6 million, a decrease of 23% compared to the year ended December 31, 2011. The decrease in revenues during 2012 was largely the result of significantly lower average prices of natural gas and NGLs, which were 28% and 26% lower, respectively, than those for 2011.

Total crude oil production was 61,010 Bbls during the year ended December 31, 2012, an increase of 25% from the year ended December 31, 2011, primarily as a result of development and production from a portion of the Hunton reservoir containing a higher concentration of oil . Natural gas production amounted to 2.3 Bcf during the year ended December 31, 2012, a decrease of 4% from the year ended December 31, 2011. Natural gas liquids production was 711,195 Bbls for the year ended December 31, 2012, a decrease of 1% from the year ended December 31, 2011. Production costs decreased on an equivalent basis from $6.76 per Boe to $5.40 per Boe primarily as a result of fewer required workovers in 2012.

Cash Distributions

The Board of Directors has declared a prorated cash distribution for the first quarter of 2013 of $0.27417 per unit. This distribution is the first declared by the partnership and corresponds to the minimum quarterly distribution of $0.525 per unit, or $2.10 on an annualized basis, prorated from the February 13, 2013 closing of the Partnership’s initial public offering through March 31, 2013. The distribution will be paid on May 15, 2013 to all unit holders of record on May 1, 2013.

In addition, following completion of the acquisition announced on April 1, 2013, management intends to recommend to the Board of Directors of the general partner to increase the second quarter 2013 distribution to $0.55 per unit, or $2.20 per year on an annualized basis, for all outstanding units and the third quarter 2013 distribution to $0.575 per unit, or $2.30 per year on an annualized basis, for all outstanding units.


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 fourth quarter and year-end 2012 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) 407-0789, or for international callers, (201) 689-8562. 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 412222. The replay will be available until April 24, 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–Presentations 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.

The SEC permits oil and gas companies, in their filings with the SEC, to disclose only “reserves” as defined by SEC rules. Estimates of reserves in this press release are based on various assumptions, including assumptions related to oil and natural gas prices, drilling and operating expenses, capital expenditures, taxes and availability of funds.

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. 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 believes that the presentation of these non-GAAP financial measures will provide useful information to investors in assessing our results of operations. A reconciliation of Adjusted EBITDA to net income, the most directly comparable GAAP measure, is included in this release. Adjusted EBITDA should not be considered as an alternative to the most directly comparable GAAP financial measure, because it excludes some but not all items that affect the most directly comparable GAAP financial measure, net income. You should not consider Adjusted EBITDA or distributable cash flow in isolation or as a substitute for analysis of our results as reported under GAAP. Because Adjusted EBITDA may be defined differently by other companies in our industry, New Source’s definition may not be comparable to similarly titled measures of other companies, thereby diminishing their utility.

New Source Energy Partners L.P. - Investor & Media Contact

Nick Hodapp

Director of Investor Relations

(405) 272-3028

nhodapp@newsource.com

Properties Contributed to New Source Energy Partners, L.P.

Results of Operations

(in thousands)

 

     Year Ended December 31,  
     2011     2012  

Statement of Operations

    

Oil sales

   $ 4,489      $ 5,570   

Natural gas sales

     8,713        6,030   

Natural gas liquids sales

     33,058        23,996   
  

 

 

   

 

 

 

Total revenues

     46,260        35,596   
  

 

 

   

 

 

 

Lease operating expenses

     5,551        4,965   

Workover expenses

     2,324        1,252   

Production taxes

     2,155        1,144   
  

 

 

   

 

 

 

Total production expenses

     10,030        7,361   

General and administrative

     6,928        12,660   

Depreciation, depletion, and amortization

     14,738        14,409   

Accretion expense

     55        116   
  

 

 

   

 

 

 

Total operating expenses

     31,751        34,546   
  

 

 

   

 

 

 

Operating income

     14,509        1,050   

Other income (expense):

    

Interest expense

     (3,735     (3,202

Realized and unrealized gains

    

(losses) from derivatives

     (1,349     7,057   
  

 

 

   

 

 

 

Income before income taxes

     9,425        4,905   

Income tax expense

     (10,502     (1,796
  

 

 

   

 

 

 

Net income (loss)

   $ (1,077   $ 3,109   
  

 

 

   

 

 

 


Properties Contributed to New Source Energy Partners L.P.

Summary of Balance Sheet Data

(in thousands)

 

     Year Ended December 31,  
     2011      2012  

Balance Sheet Data:

     

Oil and natural gas sales receivables

   $ 6,544       $ 5,663   

Other current assets

     1,134         25   

Total property and equipment, net

     94,468         91,423   

Other assets

     2,674         2,823   
  

 

 

    

 

 

 

Total assets

   $ 104,820         99,934   
  

 

 

    

 

 

 

Current liabilities

   $ 4,076       $ 1,973   

Long-term debt

     68,500         68,000   

Other long-term liabilities

     13,824         13,986   

Total parent net investment

     18,420         15,975   
  

 

 

    

 

 

 

Total liabilities and parent net investment

   $ 104,820       $ 99,934   
  

 

 

    

 

 

 

Properties Contributed to New Source Energy Partners L.P.

Summary of Cash Flow Data

(in thousands)

 

     Year Ended December 31,  
     2011     2012  

Cash Flow Data:

    

Net cash provided by operating activities

   $ 30,133      $ 27,799   

Net cash used in investing activities

   $ (23,818   $ (12,162

Net cash used in financing activities

   $ (6,315   $ (15,637


Reconciliation of Non-GAAP Financial Measures

 

     Year Ended December 31,  
     2011     2012  
     (in thousands)  

Adjusted EBITDA Reconciliation to Net Income

    

(loss):

    

Net income (loss)

   $ (1,077   $ 3,109   

Unrealized (gain) loss on derivatives

     (150     (1,070

Non-cash compensation expense

     4,470        8,204   

Accretion expense

     55        116   

Interest expense

     3,735        3,202   

Depreciation, depletion and amortization

     14,738        14,409   

Income tax expense

     10,502        1,796   
  

 

 

   

 

 

 

Adjusted EBITDA

   $ 32,273      $ 29,766   
  

 

 

   

 

 

 

Adjusted EBITDA Reconciliation to Net Cash Provided By Operating Activities:

    

Net cash provided by operating activities

   $ 30,133      $ 27,799   

Cash interest expense

     2,250        2,553   

Current income tax liability assumed by parent

     —          172   

Changes in operating assets and liabilities

     (110     (758
  

 

 

   

 

 

 

Adjusted EBITDA

   $ 32,273      $ 29,766   
  

 

 

   

 

 

 

Properties Contributed to New Source Energy Partners, L.P.

Total Proved Reserves

 

     Oil     Natural Gas     Liquids     Total  
     (Bbls)     (Mcf)     (Bbls)     (Boe)  

Balance, January 1, 2011

     286,260        21,549,260        7,487,970        11,365,773   

Revisions

     88,170        (4,568,868     (562,175     (1,235,483

Extensions and discoveries

     627,770        7,003,650        3,102,760        4,897,805   

Production

     (48,770     (2,378,232     (720,615     (1,165,757
  

 

 

   

 

 

   

 

 

   

 

 

 

Balance, December 31, 2011

     953,430        21,605,810        9,307,940        13,862,338   
  

 

 

   

 

 

   

 

 

   

 

 

 

Proved developed reserves

     276,240        11,125,330        5,323,650        7,454,112   

Proved undeveloped reserves

     677,190        10,480,480        3,984,290        6,408,227   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total proved reserves

     953,430        21,605,810        9,307,940        13,862,339   
  

 

 

   

 

 

   

 

 

   

 

 

 

Balance, January 1, 2012

     953,430        21,605,810        9,307,940        13,862,339   

Revisions

     (469,630     1,295,502        57,825        (195,888

Extensions and discoveries

     106,400        3,512,130        1,049,350        1,741,105   

Production

     (61,010     (2,278,342     (711,195     (1,151,929
  

 

 

   

 

 

   

 

 

   

 

 

 

Balance, December 31, 2012

     529,190        24,135,100        9,703,920        14,255,627   
  

 

 

   

 

 

   

 

 

   

 

 

 

Proved developed reserves

     249,140        11,980,390        6,182,620        8,428,492   

Proved undeveloped reserves

     280,050        12,154,710        3,521,300        5,827,135   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total proved reserves

     529,190        24,135,100        9,703,920        14,255,627