Harvest Oil & Gas Corp. - FORM 8-K - EX-99.1 - EXHIBIT 99.1

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8-K - FORM 8-K - Harvest Oil & Gas Corp.	v352556_8-k.htm

EV Energy Partners Announces First Agreement to Sell Utica Shale Acres and Reports Second Quarter 2013 Results

Company also announces opening of Utica East Ohio midstream facilities and amendment of credit facility

HOUSTON, TX – August 9, 2013 -- (PR Newswire) -- EV Energy Partners, L.P., (Nasdaq: EVEP) today announced that it, along with certain institutional partnerships managed by EnerVest, Ltd., has signed an agreement to divest certain acreage in Ohio’s Utica Shale for $284.3 million to an undisclosed buyer. The total acreage associated with this sale includes 22,535 acres in Guernsey, Harrison and Noble counties. Of that total, EVEP is selling 4,345 acres for approximately $56 million, net to its ownership interest. EVEP will retain its overriding royalty interests in these acres. The transaction is expected to close by the end of the third quarter and is subject to customary closing conditions and purchase price adjustments.

A map depicting the acreage location is available on the Investor Relations page under Presentations on the EVEP website at http://www.evenergypartners.com. As previously disclosed, Jefferies LLC is advising EVEP as it continues to market its Utica acreage.

“This is a good first step in our revised Utica acreage sale process,” said John B. Walker, EVEP Chairman. “The value of this sale averages $12,900 per acre. We look forward to announcing additional deals as they occur.”

In addition to the acreage sale, EVEP is pleased to announce the opening of the Utica East Ohio (UEO) midstream facilities, which started processing gas in July. The facility is processing more than 85 mmcf/d of wet gas, has a capacity of 200 mmcf/d, and throughput is expected to increase steadily over the next few weeks as additional wells are turned in line. With UEO and other processing facilities now available, more Utica wells are being turned in line, which is increasing the flow of gas through the Cardinal Gas gathering system. Increased volumes and cash flow are anticipated for the rest of this year and into 2014.

Recently, EVEP entered into an amendment to its credit facility to change the senior secured debt to EBITDAX ratio to be no greater than 3.5 to 1 through March 30, 2015 and to include certain updates related to the Dodd-Frank Act eligibility requirements for guarantors of hedging transactions.

Second Quarter 2013 Results

EVEP also announced results for the second quarter 2013 and filed its Form 10-Q with the Securities and Exchange Commission.

Adjusted EBITDAX for the quarter was $52.6 million, a 9 percent increase over the first quarter of 2013 and a 20 percent decrease from the second quarter of 2012. Distributable Cash Flow for the quarter was $26.1 million, a 20 percent increase over the first quarter of 2013 and a 24 percent decrease from the second quarter of 2012. The changes in Adjusted EBITDAX and Distributable Cash Flow, which are described in the attached table under "Non-GAAP Measures," are primarily attributable to the decreases in realized gains in commodity derivatives and in sales price per unit of natural gas liquids, partially offset by an increase in natural gas production.

Production for the second quarter of 2013 was 11.1 Bcf of natural gas, 245 MBbls of crude oil and 526 MBbls of natural gas liquids, or 172.3 Mmcfe/day. This represents a 4 percent increase over the first quarter 2013 production of 165.2 Mmcfe/day and a 6 percent increase over second quarter 2012 production of 162.9 Mmcfe/day.

For the second quarter of 2013, EVEP reported a net income of $32.9 million, or $0.74 per basic and diluted weighted average limited partner unit outstanding. Included in net income were:

$30.3 million of unrealized gains on commodity and interest rate derivatives,

$0.5 million of non-cash realized losses related to terminated interest rate swaps,

$0.9 million of dry hole and exploration costs,

$2.8 million of non-cash leasehold impairment charges,

$0.2 million of non-cash deferred income taxes, and

$4.3 million of non-cash costs contained in general and administrative expenses.

For the first quarter of 2013, EVEP reported a net loss of $46.6 million, or $(1.08) per basic and diluted weighted average limited partner unit outstanding. For the second quarter of 2012, EVEP reported net income of $15.0 million, or $0.35 and $0.34 per basic and diluted weighted average limited partner unit outstanding, respectively.

Mark Houser, President and CEO, said, "Our base business is running strong, and UEO is coming online as scheduled. We are pleased with our first Utica acreage sale and are gaining traction on other potential sales as we continue our marketing process.”

Quarterly Report on Form 10-Q

EVEP’s financial statements and related footnotes are available on our second quarter 2013 Form 10-Q, which was filed today and is available through the Investor Relations/SEC Filings section of the EVEP website at http://www.evenergypartners.com.

Conference Call

As announced on July 31, 2013, EV Energy Partners, L.P. will host an investor conference call Friday, August 9, 2013 at 9 a.m. EDT. Investors interested in participating in the call may dial (877) 941-9205 (quote conference ID 4634241) at least five minutes prior to the start time, or may listen live over the Internet through the Investor Relations section of the EVEP website at http://www.evenergypartners.com.

EV Energy Partners, L.P. is a master limited partnership engaged in acquiring, producing and developing oil and gas properties. More information about EVEP is available at http://www.evenergypartners.com.

(code #: EVEP/G)

This press release may include statements that are not historical facts which 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 contained in the press release. 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 press release 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.

Operating Statistics

	Three Months Ended June 30,				Six Months Ended June 30,
	2013		2012		2013		2012
Production data:
Oil (MBbls)		245		282		508		567
Natural gas liquids (MBbls)		526		403		1,029		826
Natural gas (MMcf)		11,057		10,722		21,324		20,985
Net production (MMcfe)		15,683		14,828		30,547		29,341
Average sales price per unit: (1)
Oil (Bbl)	$	92.56	$	90.74	$	93.03	$	95.43
Natural gas liquids (Bbl)		28.83		34.48		29.59		40.59
Natural gas (Mcf)		3.84		2.18		3.53		2.48
Mcfe		5.12		4.23		5.01		4.76
Average unit cost per Mcfe:
Production costs:
Lease operating expenses (2)	$	1.67	$	1.68	$	1.71	$	1.82
Production taxes		0.19		0.17		0.19		0.20
Total		1.86		1.85		1.90		2.02
Asset retirement obligations accretion expense		0.08		0.08		0.08		0.08
Depreciation, depletion and amortization		1.76		1.91		1.92		1.81
General and administrative expenses		0.58		0.68		0.71		0.76

(1) Prior to $5.8 million and $36.3 million of net hedge gains and settlements on commodity derivatives for the three months ended June 30, 2013 and June 30, 2012, respectively and $18.1 and $62.3 for the six months ended June 30, 2013 and June 30, 2012.

(2) Lease operating expenses for the three and six months ended June 30, 2012 contains $0.5 million ($0.04 per Mcfe) and $1.7 million ($0.06 per Mcfe), respectively of non-cash charges related to oil in tanks purchased in connection with 2011 acquisitions.

Condensed Consolidated Balance Sheets
(In $ thousands, except number of units)
(Unaudited)
	June 30, 2013			December 31, 2012
ASSETS
Current assets:
Cash and cash equivalents	$	8,277		$	7,486
Accounts receivable:
Oil, natural gas and natural gas liquids revenues		37,927			34,909
Related party		5,002			1,422
Other		1,740			11,263
Derivative asset		31,251			40,771
Other current assets		4,051			1,750
Total current assets		88,248			97,601

Oil and natural gas properties, net of accumulated
depreciation, depletion and amortization; June 30,
2013, $447,641; December 31, 2012, $389,206		1,862,710			1,875,890
Other property, net of accumulated depreciation
and amortization; June 30, 2013, $675;
December 31, 2012, $598		1,295			1,325
Long–term derivative asset		46,204			45,839
Investments in unconsolidated affiliates		153,187			34,545
Other assets		9,048			10,214
Total assets	$	2,160,692		$	2,065,414


LIABILITIES AND OWNERS’ EQUITY

Current liabilities - Accounts payable and accrued liabilities	$	44,814		$	40,171

Asset retirement obligations		105,266			102,707
Long–term debt		1,019,256			859,218
Other long–term liabilities		1,680			3,494

Commitments and contingencies

Owners’ equity:
Common unitholders - 42,599,080 units and
42,320,707 units issued and outstanding as of
June 30, 2013 and December 31, 2012,
respectively		1,003,131			1,072,175
General partner interest		(13,455	)		(12,351	)
Total owners' equity		989,676			1,059,824
Total liabilities and owners' equity	$	2,160,692		$	2,065,414

Condensed Consolidated Statements of Operations
(In $ thousands, except per unit data)
(Unaudited)
	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2013			2012			2013			2012
Revenues:
Oil, natural gas and natural gas liquids revenues	$	80,332		$	62,793		$	153,001		$	139,594
Transportation and marketing–related revenues		1,270			759			2,303			1,689
Total revenues		81,602			63,552			155,304			141,283

Operating costs and expenses:
Lease operating expenses		26,217			24,850			52,311			53,450
Cost of purchased natural gas		951			501			1,694			1,146
Dry hole and exploration costs		902			1,682			1,319			3,855
Production taxes		2,924			2,525			5,840			5,807
Asset retirement obligations accretion expense		1,205			1,220			2,559			2,428
Depreciation, depletion and amortization		27,670			28,395			58,503			52,986
General and administrative expenses		9,121			10,149			21,743			22,266
Impairment of oil and natural gas properties		2,829			16,264			7,998			16,899
Total operating costs and expenses		71,819			85,586			151,967			158,837

Operating income (loss)		9,783			(22,034	)		3,337			(17,554	)

Other income (expense), net:
Realized gains on derivatives, net		4,461			34,603			15,220			58,793
Unrealized gains (losses) on derivatives, net		30,286			15,537			(7,987	)		27,198
Interest expense		(11,604	)		(12,595	)		(24,433	)		(23,679	)
Other income (expense), net		55			(30	)		242			(26	)
Total other income (expense), net		23,198			37,515			(16,958	)		62,286

Income (loss) before income taxes and equity in income (losses) of unconsolidated affiliates		32,981			15,481			(13,621	)		44,732
Income taxes		(216	)		(439	)		(393	)		(1,097	)
Income (loss) before equity in income (losses) of unconsolidated affiliates		32,765			15,042			(14,014	)		43,635
Equity in income (losses) of unconsolidated affiliates		89			(86	)		287			(86	)
Net income (loss)	$	32,854		$	14,956		($	13,727	)	$	43,549

Net income (loss) per limited partner unit:
Basic	$	0.74		$	0.35		($	0.34	)	$	1.03
Diluted	$	0.74		$	0.34		($	0.34	)	$	1.02
Weighted average limited partner units outstanding:
Basic		42,599			42,452			42,578			41,446
Diluted		42,659			42,678			42,578			41,739

Distributions declared per unit	$	0.769		$	0.765		$	1.537		$	1.529

Condensed Consolidated Statements of Cash Flows
(In $ thousands)
(Unaudited)	Six Months Ended
	June 30,
	2013			2012
Cash flows from operating activities:
Net (loss) income	$	(13,727	)	$	43,549
Adjustments to reconcile net (loss) income to net cash flows provided by operating activities:
Asset retirement obligations accretion expense		2,559			2,428
Depreciation, depletion and amortization		58,503			52,986
Equity–based compensation cost		8,783			8,096
Impairment of oil and natural gas properties		7,998			16,899
Non-cash derivative activity		9,155			(27,198	)
Equity in (income) losses of unconsolidated affiliates		(287	)		86
Distributions from unconsolidated affiliates		62			-
Other		1,411			3,948
Changes in operating assets and liabilities:
Accounts receivable		(5,044	)		4,225
Other current assets		(2,300	)		365
Accounts payable and accrued liabilities		3,494			9,758
Other, net		(200	)		(2,102	)
Net cash flows provided by operating activities		70,407			113,040

Cash flows from investing activities:
Acquisitions of oil and natural gas properties		-			(35,728	)
Final settlement of purchase price of oil and natural gas properties		7,998			-
Additions to oil and natural gas properties		(51,808	)		(62,566	)
Proceeds from sale of oil and natural gas properties		-			5,489
Investments in unconsolidated affiliates		(118,446	)		(11,947	)
Distributions from unconsolidated affiliates		27			-
Settlements from acquired derivatives		-			3,676
Net cash flows used in investing activities		(162,229	)		(101,076	)

Cash flows from financing activities:
Long-term debt borrowings		160,000			40,000
Repayment of long-term debt borrowings		-			(460,000	)
Proceeds from debt offering		-			206,000
Loan costs incurred		-			(4,078	)
Proceeds from public equity offering		-			262,833
Offering costs		-			(304	)
Contributions from general partner		334			5,714
Distributions paid		(67,721	)		(62,809	)
Net cash flows provided by (used in) financing activities		92,613			(12,644	)

Increase (decrease) in cash and cash equivalents		791			(680	)
Cash and cash equivalents – beginning of period		7,486			30,312
Cash and cash equivalents – end of period	$	8,277		$	29,632

Non-GAAP Measures

We define Adjusted EBITDAX as net income (loss) plus income taxes, interest expense, net, realized losses on interest rate swaps, depreciation, depletion and amortization, asset retirement obligations accretion expense, non-cash realized losses on derivatives, unrealized (gains) losses on derivatives, non-cash equity compensation expense, impairment of oil and natural gas properties, non-cash inventory write down expense, and dry hole and exploration costs. Distributable Cash Flow is defined as Adjusted EBITDAX less cash income taxes, cash interest expense, net, realized losses on interest rate swaps, and estimated maintenance capital expenditures.

Adjusted EBITDAX and Distributable Cash Flow are used by our management to provide additional information and statistics relative to the performance of our business, including (prior to the creation of any reserves) the cash available to pay distributions to our unitholders. These financial measures indicate to investors whether or not we are generating cash flow at a level that can sustain or support an increase in our quarterly distribution rates. Adjusted EBITDAX and Distributable Cash Flow are also quantitative standards used throughout the investment community with respect to performance of publicly-traded partnerships. Adjusted EBITDAX and Distributable Cash Flow should not be considered as alternatives to net income, operating income, cash flows from operating activities or any other measure of financial performance or liquidity presented in accordance with GAAP. Adjusted EBITDAX and Distributable Cash Flow exclude some, but not all, items that affect net income and operating income and these measures may vary among companies. Therefore, our Adjusted EBITDAX and Distributable Cash Flow may not be comparable to similarly titled measures of other companies.

Reconciliation of Net Income to Adjusted EBITDAX and Distributable Cash Flow
(In $ thousands)
(Unaudited)
	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2013			2012			2013			2012

Net income (loss)	$	32,854		$	14,956		$	(13,727	)	$	43,549
Add:
Income taxes		216			439			393			1,097
Interest expense, net		11,603			12,589			24,431			23,666
Realized losses on interest rate swaps		867			1,043			1,732			2,159
Depreciation, depletion and amortization		27,670			28,395			58,503			52,986
Asset retirement obligations accretion expense		1,205			1,220			2,559			2,428
Non-cash realized losses on derivatives		488			720			1,168			1,304
Unrealized (gains) losses on derivatives		(30,286	)		(15,537	)		7,987			(27,198	)
Non-cash equity compensation expense		4,297			3,815			8,783			8,096
Impairment of oil and natural gas properties		2,829			16,264			7,998			16,899
Non-cash inventory write down expense		-			527			-			1,729
Dry hole and exploration costs		902			1,682			1,319			3,855
Adjusted EBITDAX	$	52,645		$	66,113		$	101,145		$	130,570


Less:
Cash income taxes		(20	)		49			24			126
Cash interest expense, net		11,001			11,993			23,277			22,491
Realized losses on interest rate swaps		867			1,043			1,732			2,159
Estimated maintenance capital expenditures (1)		14,741			18,535			28,321			36,297
Distributable Cash Flow	$	26,057		$	34,493		$	47,792		$	69,497

(1) Estimated maintenance capital expenditures are those expenditures estimated to be necessary to maintain the production levels of our oil and gas properties over the long term and the operating capacity of our other assets over the long term.

EV Energy Partners, L.P., Houston

Michael E. Mercer

713-651-1144

http://www.evenergypartners.com

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