UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

~~☒ Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934~~

~~For the quarterly period ended June~~
☒
Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the quarterly period ended September 30, 2019

☐

☐ Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from to .

Commission File Number 0-19279

EVERFLOW EASTERN PARTNERS, L.P.

(Exact name of registrant as specified in its charter)

Delaware		34-1659910
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		~~(I.R.S. Employer~~ Identification No.)

585 West Main Street
P.O. Box 629
Canfield, Ohio		44406
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code: (330) 533-2692

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this Chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes X No _____

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

	Large accelerated filer ________	Accelerated filer
	Non-accelerated filer ________	Smaller reporting company X
	Emerging growth company ________

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ______

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No X

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

None

There were 5,492,967 Units of limited partnership interest of the registrant as of ~~August~~November 10, 2019. The Units generally do not have any voting rights, but, in certain circumstances, the Units are entitled to one vote per Unit.

Except as otherwise indicated, the information contained in this report is as of ~~June~~September 30, 2019.

Table of Contents

Note 1.

Organization and Summary of Significant Accounting Policies

Interim Financial Statements - The interim consolidated financial statements included herein have been prepared by the management of Everflow Eastern Partners, L.P., without audit. In the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position and results of operations have been made.

The accompanying condensed consolidated financial statements are presented in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 8-03 of Regulation S-X. Accordingly, they do not include all of the disclosures normally required by GAAP, or those normally made in an Annual Report on Form 10-K, although the Company believes that the disclosures made are adequate to make the information not misleading. It is suggested that these financial statements be read in conjunction with the financial statements and notes thereto which are incorporated in Everflow Eastern Partners, L.P.’s annual report on Form 10-K filed with the Securities and Exchange Commission (“SEC”) on March 27, 2019.

The results of operations for the interim periods may not necessarily be indicative of the results to be expected for the full year.

Use of Estimates - The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant estimates impacting the Company’s financial statements include revenue and expense accruals and oil and gas reserve quantities. In the oil and gas industry, and especially as related to the Company’s natural gas sales, the processing of actual transactions generally occurs 60-90 days after the month of delivery of its product. Consequently, accounts receivable from production and oil and gas sales are recorded using estimated production volumes and market or contract prices. Differences between estimated and actual amounts are recorded in subsequent period’s financial results. As is typical in the oil and gas industry, a significant portion of the Company’s accounts receivable from production and oil and gas sales consists of unbilled receivables. Oil and gas reserve quantities are utilized in the calculation of depreciation, depletion and amortization and the impairment of oil and gas wells and also impact the timing and costs associated with asset retirement obligations. The Company’s estimates, especially those related to oil and gas reserves, could change in the near term and could significantly impact the Company’s results of operations and financial position.

F-6

Table of Contents

EVERFLOW EASTERN PARTNERS, L.P.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Note 1.

Organization and Summary of Significant Accounting Policies

Organization - Everflow Eastern Partners, L.P. (“Everflow”) is a Delaware limited partnership which was organized in September 1990 to engage in the business of oil and gas acquisition, exploration, development and production. Everflow was formed to consolidate the business and oil and gas properties of Everflow Eastern, Inc. (“EEI”) and subsidiaries and the oil and gas properties owned by certain limited partnership and working interest programs managed or sponsored by EEI (“EEI Programs” or the “Programs”).

Everflow Management Limited, LLC (“EML”), an Ohio limited liability company, is the general partner of Everflow and, as such, is authorized to perform all acts necessary or desirable to carry out the purposes and conduct of the business of Everflow. The members of EML include Everflow Management Corporation ("EMC"), two individuals who are officers and directors of EEI, one individual who is the Chairman of the Board of EEI, and a private limited liability company which also serves as Everflow’s largest ~~limited partner, and an individual~~ limited partner. EMC is an Ohio corporation formed in September 1990 and is the managing member of EML.

Principles of Consolidation - The consolidated financial statements include the accounts of Everflow, its wholly-owned subsidiaries, including EEI, and interests with joint venture partners (collectively, the “Company”), which are accounted for under the proportional consolidation method. All significant accounts and transactions between the consolidated entities have been eliminated.

Cash and Equivalents - The Company considers all highly liquid debt instruments purchased with an original maturity of three months or less to be cash equivalents. The Company maintains, at various financial institutions, cash and equivalents which may exceed federally insured amounts and which may, at times, significantly exceed balance sheet amounts due to float.

Investments – The Company’s investments consist of shares held in a mutual fund that invests primarily in investment grade, U.S. dollar denominated short-term fixed and floating rate debt securities. The mutual fund seeks current income while seeking to maintain a low volatility of principal.

F-7

Table of Contents

EVERFLOW EASTERN PARTNERS, L.P.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Note 1.

Organization and Summary of Significant Accounting Policies

Investments (continued)

The Financial Accounting Standards Board established a framework for measuring fair value and expanded disclosures about fair value measurements by establishing a fair value hierarchy that prioritizes the inputs and defines valuation techniques used to measure fair value. The hierarchy gives highest priority to Level I inputs and lowest priority to Level III inputs. The three levels of the fair value hierarchy are described below:

Level I – Quoted prices are available in active markets for identical financial instruments as of the reporting date.

Level II – Pricing inputs are other than quoted prices in active markets, which are either directly or indirectly observable as of the reporting date, and fair value is determined through the use of models or other valuation methodologies.

Level III – Pricing inputs are unobservable for the financial instrument and include situations where there is little, if any, market activity for the financial instrument. The inputs into the determination of fair value require significant management judgment or estimation.

The Company’s investments are carried at fair market value based on quoted prices available in active markets and are therefore classified as Level 1.

Operational Advances - The Company collects and maintains funds on behalf of joint venture partners who own working interests in wells of which the Company operates for their anticipated share of future plugging and abandonment costs. As of ~~June~~September 30, 2019 and December 31, 2018, cash and equivalents include ~~$2,376,437~~$2,437,898 and $2,135,632, respectively, of operational advances. Operational advances held on behalf of employees, including officers, and directors were approximately ~~$379,400~~$385,200 and $307,800 as of ~~June~~September 30, 2019 and December 31, 2018, respectively.

Asset Retirement Obligations - GAAP requires the fair value of a liability for an asset retirement obligation to be recognized in the period in which it is incurred if a reasonable estimate of fair value can be made. For the Company, these obligations include dismantlement, plugging and abandonment of oil and gas wells and associated pipelines and equipment. The associated asset retirement costs are capitalized as part of the carrying amount of the long-lived asset. The liability is accreted to its then present value each period, and the capitalized cost is depleted over the estimated useful life of the related asset.

F-8

Table of Contents

EVERFLOW EASTERN PARTNERS, L.P.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Note 1.

Organization and Summary of Significant Accounting Policies

Asset Retirement Obligations (continued)

The estimated liability is based on historical experience in dismantling, plugging and abandoning wells, estimated remaining lives of those wells based on reserves estimates, estimates of the external cost to dismantle, plug and abandon the wells in the future and federal and state regulatory requirements. The liability is discounted using an assumed credit-adjusted, risk-free interest rate.

~~Loss on disposal of property and equipment includes approximately $900 associated with non-cash settlements of asset retirement obligations during the three month period ended June 30, 2019.~~ Gain on disposal of property and equipment includes approximately ~~$5,100 associated with non-cash settlements of asset retirement obligations during the six month period ended June 30, 2019. Gain on disposal of property~~$2,100 and ~~equipment includes approximately $449,700 and $559,800~~$7,200 associated with non-cash settlements of asset retirement obligations during the three and ~~six~~nine month periods ended ~~June~~September 30, 2019, respectively. Gain on disposal of property and equipment includes approximately $81,500 and $641,300 associated with non-cash settlements of asset retirement obligations during the three and nine month periods ended September 30, 2018, respectively.

Revenue Recognition – The Company accounts for revenue from contracts in accordance with Accounting Standards Update No. 2014-09, “Revenue from Contracts with Customers (Topic 606)”. Revenues from contracts with customers are recognized when performance obligations are satisfied in accordance with contractual terms.

For the sale of crude oil and natural gas from operated properties, the Company generally considers each unit (BBL or MCF) to be a separate performance obligation. The transaction price may consist of fixed and variable consideration, in which the variable amount is determinable each production period and is recognized as revenue upon pickup/delivery of the crude oil or natural gas, which is the point in time that the customer obtains control of the crude oil or natural gas and the Company's performance obligation is satisfied.

Crude oil and natural gas sales derived from third party operated wells are recognized under similar terms as sales of crude oil and natural gas from operated properties and revenue is recognized at a point in time when the product is delivered, the purchaser obtains control and the Company's performance obligation is satisfied.

Crude oil and natural gas sales represent the Company's share of revenues, net of royalties and other revenue interests owned by other parties. When settling crude oil and natural gas on behalf of royalty owners or working interest owners, the Company is acting as an agent and thus reports the revenue on a net basis.

Based on the Company's judgment, the Company's performance obligations have been satisfied and an unconditional right to consideration exists at ~~June~~September 30, 2019 and December 31, 2018, respectively; therefore, the Company recognized amounts due from contracts with customers as production accounts receivable within the Company’s consolidated balance sheets at ~~June~~September 30, 2019 and December 31, 2018, respectively.

F-9

Table of Contents

EVERFLOW EASTERN PARTNERS, L.P.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Note 1.

Organization and Summary of Significant Accounting Policies

Revenue Recognition (continued)

The Company utilizes the sales method to account for gas production volume imbalances. Under this method, revenue is recognized only when gas is produced and sold on the Company’s behalf. The Company had no material gas imbalances at ~~June~~September 30, 2019 and December 31, 2018, respectively.

The Company participates (and may act as drilling contractor) with unaffiliated and affiliated joint venture partners, employees, including officers, and directors in the drilling, development and operation of jointly owned oil and gas properties. Each owner, including the Company, has an undivided interest in the jointly owned properties. Generally, the joint venture partners, employees and directors participate on the same drilling/development cost basis as the Company and, therefore, no revenue, expense or income is recognized on the drilling and development of the properties. Well management and operating revenues are derived from a variety of both verbal and written operating agreements with joint venture partners and are recognized monthly as services are provided and properties are managed and operated. Other revenues consist of miscellaneous revenues that are recognized at the time services are rendered, the Company has a contractual right to such revenue and collection is reasonably assured.

Income Taxes - Everflow is not a tax-paying entity and the net taxable income or loss, other than the taxable income or loss allocable to EEI, which is a C corporation owned by Everflow, will be allocated directly to its respective partners. The Company is not able to determine the net difference between the tax bases and the reported amounts of Everflow’s assets and liabilities due to separate elections that were made by owners of the working interests and limited partnership interests that comprised the Programs.

The Company believes that it has appropriate support for any tax positions taken and, as such, does not have any uncertain tax positions that are material to the financial statements.

Allocation of Income and Per Unit Data - Under the terms of the limited partnership agreement, initially, 99% of revenues and costs were allocated to the Unitholders (the limited partners) and 1% of revenues and costs were allocated to the General Partner. Such allocation has changed and may change in the future due to Unitholders electing to exercise the Repurchase Right and select officers and employees electing to exercise options (see Note 3).

Earnings per limited partner Unit have been computed based on the weighted average number of Units outstanding during each period presented.

F-10

Table of Contents

EVERFLOW EASTERN PARTNERS, L.P.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Note 1.

Organization and Summary of Significant Accounting Policies

New Accounting Standards - The Company has reviewed all recently issued accounting standards in order to determine their effects, if any, on the consolidated financial statements. Based on that review, the Company believes that none of these standards will have a significant effect on current or future earnings or results of operations.

Note 3.

Partners’ Equity

Units represent limited partnership interests in Everflow. The Units are transferable subject to the approval of EML and to the laws governing the transfer of securities. The Units are not listed for trading on any securities exchange nor are they quoted in the automated quotation system of a registered securities association. However, Unitholders may have an opportunity to require Everflow to repurchase their Units pursuant to the Repurchase Right.

The partnership agreement provides that Everflow will repurchase for cash up to 10% of the then outstanding Units, to the extent Unitholders offer Units to Everflow for repurchase pursuant to the Repurchase Right. The Repurchase Right entitles any Unitholder, between May 1 and June 30 of each year, to notify Everflow that the Unitholder elects to exercise the Repurchase Right and have Everflow acquire certain or all Units. The price to be paid for any such Units is calculated based upon the audited financial statements of the Company as of December 31 of the year prior to the year in which the Repurchase Right is to be effective and independently prepared reserve reports. The price per Unit equals 66% of the adjusted book value of the Company allocable to the Units, divided by the number of Units outstanding at the beginning of the year in which the applicable Repurchase Right is to be effective less interim cash distributions received by a Unitholder. The adjusted book value is calculated by adding partners’ equity, the Standardized Measure of Discounted Future Net Cash Flows and the tax effect included in the Standardized Measure and subtracting from that sum the carrying value of oil and gas properties (net of undeveloped lease costs). If more than 10% of the then outstanding Units are tendered during any period during which the Repurchase Right is to be effective, the Investors’ Units tendered shall be prorated for purposes of calculating the actual number of Units to be acquired during any such period. The price associated with the 2019 Repurchase Right, based upon the December 31, 2018 calculation, was $1.50 per Unit, net of a $0.30 per Unit distribution made in April 2019.

In June 2019, the Company repurchased 86,388 Units pursuant to the Repurchase Right at a price of $1.50 per Unit. In June 2018, the Company repurchased 68,261 Units pursuant to the Repurchase Right at a price of $0.11 per Unit. The Company did not offer to repurchase any Units pursuant to the Repurchase Right during 2017 because the price associated with the Repurchase ~~Rights~~Right was negative.

The Company has an Option Repurchase Plan (the “Option Plan”) which permits the grant of options to select officers and employees to purchase certain Units acquired by the Company pursuant to the Repurchase Right. The purpose of the Option Plan is to assist the Company to attract and retain officers and other key employees and to enable those individuals to acquire or increase their ownership interest in the Company in order to encourage them to promote the growth and profitability of the Company. The Option Plan is designed to align directly the financial interests of the participants with the financial interests of the Unitholders. The Company granted 30,000 options to officers and key employees in June 2019 and 2018, respectively. All options granted were exercised on the same date. The Company did not grant any options in 2017.

F-12

Table of Contents

EVERFLOW EASTERN PARTNERS, L.P.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Note 3.

Partners’ Equity (continued)

All Units repurchased pursuant to the Repurchase Right are retired except for those Units issued through the exercise of options pursuant to the Option Plan. There were 5,492,967 and 5,549,355 outstanding Units following the Company’s repurchase of Units and issuance of options in June 2019 and 2018, respectively. There were no instruments outstanding at ~~June~~September 30, 2019 or 2018 that would potentially dilute net income per Unit.

The following discussion is intended to assist in the understanding of the Company’s liquidity, capital resources and results of operations. It is suggested that this information be read in conjunction with the Company’s interim consolidated financial statements, the related notes to consolidated financial statements and the Company’s 2018 Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 27, 2019.

The following table summarizes the Company's financial position at ~~June~~September 30, 2019 and December 31, 2018:

Working capital of ~~$29.3~~$29.8 million as of ~~June~~September 30, 2019 represented an increase of ~~$937,000~~$1.4 million from December 31, 2018, due primarily to ~~increases~~an increase in ~~cash~~investments and ~~equivalents and investments, as well as~~ a decrease in accrued expenses; offset somewhat by ~~a decrease~~decreases in cash and equivalents and production accounts receivable and an increase in accounts payable. The increase in investments was primarily the result of additional purchases of shares in a mutual fund during the ~~six~~nine months ended ~~June~~September 30, 2019 that invests primarily in investment grade, short-term fixed and floating rate debt securities. The decrease in accrued expenses iswas primarily the result of all payroll and retirement contributions accrued at December 31, 2018 being paid during the ~~six~~nine months ended ~~June~~September 30, ~~2019, offset somewhat by an accrued expense recognized at June 30, 2019 for the repurchase of Units in association with the Company’s 2019 Repurchase Right.~~2019. The decrease in production accounts receivable iswas primarily the result of lower average natural gas and crude oil prices received on production, as well as less natural gas volumes produced, during the current receivable period as compared to the prior comparable receivable period. The effect of lower average natural gas and crude oil prices received and less natural gas volumes produced was offset somewhat by additional natural gas and crude oil volumes recognized from third party operators during the current receivable period as compared to the prior comparable receivable period. The decrease in natural gas volumes produced was primarily the result of more Company operated properties being voluntarily shut-in during the current receivable period as compared to the prior comparable receivable period. The increase in accounts payable iswas primarily the result of additional production and related other payables outstanding at ~~June~~September 30, 2019 as compared to the prior comparable reporting date.

The Company funds its operations with cash generated by operations and/or existing cash and equivalent balances. The Company has had no borrowings since 2003 and no principal indebtedness was outstanding as of ~~August~~November 10, 2019. The Company used cash provided by operating activities and existing cash and equivalents to fund the purchase of $2.9 million of investments during the nine month period ending September 30, 2019, the payment of a distribution amounting to approximately $1.7 million in April 2019, and $130,000 in payments in July 2019 associated with the repurchase of Units tendered in conjunction with the Company’s 2019 Repurchase Right.

The Company’s cash flow provided by operations before the change in working capital was ~~$2.8~~$3.3 million during the ~~six~~nine months ended ~~June~~September 30, 2019, a decrease of ~~$140,000~~$748,000 as compared to ~~$2.7~~$4.0 million of cash flow provided by operations before the change in working capital during the prior comparable period. Changes in working capital from operations other than cash and equivalents increased cash by ~~$197,000~~$604,000 during the ~~six~~nine months ended ~~June~~September 30, 2019. Cash flows provided by operating activities was ~~$3.0~~$3.9 million for the ~~six~~nine months ended ~~June~~September 30, 2019.

Management of the Company believes cash flows and existing cash and equivalents should be sufficient to meet the current funding requirements of ongoing operations, capital investments to develop and/or purchase oil and gas properties and the repurchase of Units pursuant to the 2020 Repurchase Right.

The Company has multiple contracts with Dominion Field Services (“Dominion”) which obligate Dominion to purchase, and the Company to sell and deliver, certain quantities of natural gas production from the Company’s oil and gas properties throughout the contract periods. Management believes the Company can meet its delivery commitments based on estimated production.

The following table and discussion is a review of the results of operations of the Company for the three and ~~six~~nine month periods ended ~~June~~September 30, 2019 and 2018. All items in the table are calculated as a percentage of total revenues. This table should be read in conjunction with the discussions of select items below:

Revenues for the three month period ended ~~June~~September 30, 2019 decreased ~~$506,000,~~$1.3 million, or ~~21%~~48%, as compared to the prior comparable period. Revenues for the ~~six~~nine month period ended ~~June~~September 30, 2019 ~~increased $182,000,~~decreased $1.2 million, or 4%16%, as compared to the prior comparable period. Both revenue variances were primarily the result of variances in crude oil and natural gas sales from the current period in comparison to the prior comparable periods.

Crude oil and natural gas sales decreased ~~$506,000,~~$1.3 million, or ~~22%~~50%, during the three months ended ~~June~~September 30, 2019 as compared to the prior comparable period. The decrease was primarily the result of less natural gas and crude oil volumes produced ~~as well as~~and lower average crude oil and natural gas ~~and crude oil~~ prices received during the three ~~months~~month period ended ~~June~~September 30, 2019 as compared to the prior comparable period. Crude oil and natural gas sales ~~increased $179,000,~~decreased $1.2 million, or 4%16%, during the ~~six~~nine months ended ~~June~~September 30, 2019 as compared to the prior comparable period. The ~~increase~~decrease was primarily the result of less natural gas and crude oil volumes produced and lower average crude oil prices received, offset somewhat by the effect of higher average natural gas prices received, during the ~~six months ended June 30, 2019 as compared to the prior comparable period, offset somewhat by the effect of lower average crude oil prices received during the six~~nine month period ended ~~June 30, 2019 as compared to the prior comparable period.~~

~~Production costs increased $146,000, or 12%, during the six months ended June~~September 30, 2019 as compared to the prior comparable period. The ~~increase was primarily the result of additional costs associated with less Company operated properties being voluntarily shut-in~~decreases in natural gas and crude oil volumes produced during the ~~six~~three and nine month ~~period~~periods ended ~~June~~September 30, 2019 ~~as well as higher ad valorem taxes and additional production costs recognized in association with third party operated properties during the six month period ended June 30, 2019, each~~ as compared to the prior comparable periods were primarily the result of more Company operated properties being voluntarily shut-in. Another contributing factor to the decreases in crude oil and natural gas sales for the three and nine month periods ended September 30, 2019 as compared to the prior comparable periods was the recognition of $956,000 of crude oil and natural gas sales reported by a third party operator significantly in arrears during the three and nine month periods ended September 30, 2018.

Production costs decreased $581,000, or 51%, during the three months ended September 30, 2019 as compared to the prior comparable period. Production costs decreased $435,000, or 18%, during the nine months ended September 30, 2019 as compared to the prior comparable period. The decreases were primarily the result of one-time recognition of $637,000 of production costs reported by a third party operator significantly in arrears during the three and nine months ended September 30, 2018, respectively, offset somewhat by additional costs associated with third party operated wells during the three and nine month periods ended September 30, 2019 as compared to the prior comparable periods.

Other income decreased ~~$381,000,~~$67,000, or ~~70%~~33%, during the three month period ended ~~June~~September 30, 2019 as compared to the prior comparable period. Other income decreased ~~$347,000,~~$414,000, or ~~48%~~45%, during the ~~six~~nine month period ended ~~June~~September 30, 2019 as compared to the prior comparable period. The primary reason for the decreases was the result of less gain recognized on the disposal of property and equipment. The Company had a substantial decrease in the number of properties disposed during the three and ~~six~~nine month periods ended ~~June~~September 30, 2019 as compared to the prior comparable periods. The majority of the gains on disposal of property and equipment during the three and ~~six~~nine month periods ended ~~June~~September 2018 were associated with settlements of the properties’ related asset retirement obligations. The effect of less gain recognized on the disposal of property and equipment was offset somewhat by additional interest and dividend income recognized during the three and ~~six~~nine month periods ended ~~June~~September 30, 2019 as compared to the prior comparable periods. The increase in interest and dividend income was primarily the result of additional investments held and the related dividends yielded on investments during the three and ~~six~~nine month periods ended ~~June~~September 30, 2019 as compared to the prior comparable periods.

The Company reported net income of ~~$806,000~~$178,000 and ~~$1.6~~$1.0 million during the three months ended ~~June~~September 30, 2019 and 2018, respectively, representing ~~42%~~12% and ~~67%~~38% of total revenues during the three month periods ended ~~June~~September 30, 2019 and 2018, respectively. The ~~decrease~~Company reported net income of $2.4 million and $3.4 million during the nine months ended September 30, 2019 and 2018, respectively, representing 38% and 47% of total revenues during the nine month periods ended September 30, 2019 and 2018, respectively. The decreases in net income ~~was~~were primarily the result of decreases in crude oil and natural gas sales and other income. The Company reported net income of $2.2 million and $2.4 million during the six months ended June 30, 2019 and 2018, respectively, representing 45% and 52% of total revenues during the six month periods ended June 30, 2019 and 2018, respectively. The decrease in net income was primarily the result of an increase in production costs and decrease in other income, offset somewhat by ~~an increase~~decreases in ~~crude oil and natural gas sales.~~production costs.

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The critical accounting policies that affect the Company’s more complex judgments and estimates are described in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2018.

Except for historical financial information contained in this Form 10-Q, the statements made in this report are forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended (“Exchange Act”). In addition, words such as “expects,” “anticipate,” “intends,” “plans,” “believes,” “estimates,” variations of such words and similar expressions are intended to identify forward-looking statements. Factors that may cause actual results to differ materially from those in the forward-looking statements include price fluctuations in the gas market in the Appalachian Basin, actual oil and gas production and the ability to locate economically productive oil and gas prospects for development by the Company. In addition, any forward-looking statements speak only as of the date on which such statement is made and the Company does not undertake any obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise.

This information has been omitted, as the Company qualifies as a smaller reporting company.

(a) Disclosure Controls and Procedures. As of the end of the period covered by this report, management performed, with the participation of our Principal Executive Officer (the “CEO”) and Principal Financial and Accounting Officer (the “CFO”), an evaluation of the effectiveness of our disclosure controls and procedures as defined in Exchange Act Rules 13a-15 (the “evaluation”). Our disclosure controls and procedures are designed to provide reasonable assurance that information required to be disclosed in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our CEO and CFO, to allow timely decisions regarding required disclosures. Based on the evaluation, management, including our CEO and CFO, concluded that our disclosure controls and procedures were effective as of the end of the period covered by this report.

The certifications of the Company’s CEO and CFO are attached as Exhibits 31.1 and 31.2 to this Quarterly Report on Form 10-Q and include, in paragraph 4 of such certifications, information concerning the Company’s disclosure controls and procedures and internal control over financial reporting. Such certifications should be read in conjunction with the information contained in this Item 4., including the information incorporated by reference to our filing on Form 10-K for the year ended December 31, 2018, for a more complete understanding of the matters covered by such certifications.

(b) Changes in internal control over financial reporting. No change in our internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) occurred during our most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	DESCRIPTION		PAGE NO.

Part I.	Financial Information


~~Part I.~~	~~Financial Information~~

	Item 1.	Financial Statements

		Consolidated Balance Sheets ~~June~~September 30, 2019 and December 31, 2018	F-1

		Consolidated Statements of Operations Three and ~~Six~~Nine Months Ended ~~June~~September 30, 2019 and 2018	F-3

		Consolidated Statements of Partners’ Equity ~~Six~~Nine Months Ended ~~June~~September 30, 2019 and 2018	F-4

		Consolidated Statements of Cash Flows ~~Six~~Nine Months Ended ~~June~~September 30, 2019 and 2018	F-5

		Notes to Unaudited Consolidated Financial Statements	F-6

	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	3

	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	5 7

	Item 4.	Controls and Procedures	57

Part II.	Other Information

	Item 6.	Exhibits	68

		Signature	79

	June 30,		December 31,		September 30,		December 31,
	2019		2018		2019		2018
	(Unaudited)		(Audited)		(Unaudited)		(Audited)
ASSETS

CURRENT ASSETS
Cash and equivalents	$	13,524,933	$	12,566,868	$	11,649,472	$	12,566,868
Investments		17,379,591		17,064,136		20,004,505		17,064,136
Production accounts receivable		1,284,063		1,661,669		1,045,864		1,661,669
Other		8,150		64,681		8,150		64,681
Total current assets		32,196,737		31,357,354		32,707,991		31,357,354

PROPERTY AND EQUIPMENT
Proved properties (successful efforts accounting method)		174,919,377		175,062,777		174,803,277		175,062,777
Pipeline and support equipment		786,011		762,440		786,011		762,440
Corporate and other		2,090,250		2,094,423		2,090,250		2,094,423
Gross property and equipment		177,795,638		177,919,640		177,679,538		177,919,640

Less accumulated depreciation, depletion, amortization and write down		168,786,310		168,754,778		168,836,853		168,754,778
Net property and equipment		9,009,328		9,164,862		8,842,685		9,164,862

OTHER ASSETS		126,291		125,796		127,028		125,796

TOTAL ASSETS	$	41,332,356	$	40,648,012	$	41,677,704	$	40,648,012

	June 30,		December 31,		September 30,		December 31,
	2019		2018		2019		2018
	(Unaudited)		(Audited)		(Unaudited)		(Audited)
LIABILITIES AND PARTNERS' EQUITY

CURRENT LIABILITIES
Accounts payable	$	2,085,986	$	1,869,885	$	2,152,464	$	1,869,885
Accrued expenses		771,355		1,084,347		763,011		1,084,347
Total current liabilities		2,857,341		2,954,232		2,915,475		2,954,232

DEFERRED INCOME TAXES		40,700		40,700		40,700		40,700

OPERATIONAL ADVANCES		2,376,437		2,135,632		2,437,898		2,135,632

ASSET RETIREMENT OBLIGATIONS		16,937,886		16,807,486		16,985,986		16,807,486

COMMITMENTS AND CONTINGENCIES

LIMITED PARTNERS' EQUITY, SUBJECT TO REPURCHASE RIGHT
Authorized - 8,000,000 Units Issued and outstanding - 5,492,967 and 5,549,355 Units, respectively		18,889,255		18,486,440
Authorized - 8,000,000 Units
Issued and outstanding - 5,492,967 and 5,549,355 Units, respectively						19,064,764		18,486,440

GENERAL PARTNER'S EQUITY		230,737		223,522		232,881		223,522
Total partners' equity		19,119,992		18,709,962		19,297,645		18,709,962

TOTAL LIABILITIES AND PARTNERS' EQUITY	$	41,332,356	$	40,648,012	$	41,677,704	$	40,648,012

	Three Months Ended					Six Months Ended				Three Months Ended				Nine Months Ended
	June 30,					June 30,				September 30,				September 30,

	2019			2018		2019		2018		2019		2018		2019		2018
REVENUES
Crude oil and natural gas sales	$	1,788,101		$	2,293,924	$	4,529,297	$	4,350,103	$	1,309,638	$	2,642,422	$	5,838,935	$	6,992,525
Well management and operating		145,039			145,129		294,861		292,765		117,264		120,591		412,125		413,356
Other		1,952			1,586		4,246		3,813		2,096		1,817		6,342		5,630
Total revenues		1,935,092			2,440,639		4,828,404		4,646,681		1,428,998		2,764,830		6,257,402		7,411,511

DIRECT COST OF REVENUES
Production costs		527,307			505,126		1,384,482		1,238,906		557,408		1,138,454		1,941,890		2,377,360
Well management and operating		86,955			84,761		174,854		170,947		70,241		73,320		245,095		244,267
Depreciation, depletion and amortization		112,268			143,645		226,812		283,618		146,422		116,860		373,234		400,478
Accretion expense		71,900			80,800		146,600		167,400		68,300		79,100		214,900		246,500
Total direct cost of revenues		798,430			814,332		1,932,748		1,860,871		842,371		1,407,734		2,775,119		3,268,605

GENERAL AND ADMINISTRATIVE EXPENSE		493,100			523,167		1,095,964		1,109,968		545,825		518,493		1,641,789		1,628,461
Total cost of revenues		1,291,530			1,337,499		3,028,712		2,970,839		1,388,196		1,926,227		4,416,908		4,897,066

INCOME FROM OPERATIONS		643,562			1,103,140		1,799,692		1,675,842		40,802		838,603		1,840,494		2,514,445

OTHER INCOME
Interest and dividend income		163,387			107,838		342,556		164,196		136,451		122,772		479,007		286,968
Gain (Loss) on disposal of property and equipment		(1,300	)		426,300		37,300		553,765
Gain on disposal of property and equipment											400		81,400		37,700		635,165
Gain on sale of other assets		-			8,960		-		8,960		-		-		-		8,960
Total other income		162,087			543,098		379,856		726,921		136,851		204,172		516,707		931,093

NET INCOME	$	805,649		$	1,646,238	$	2,179,548	$	2,402,763	$	177,653	$	1,042,775	$	2,357,201	$	3,445,538


Allocation of Partnership Net Income
Limited Partners	$	796,025		$	1,626,705	$	2,153,510	$	2,374,253	$	175,436	$	1,030,308	$	2,328,946	$	3,404,561
General Partner		9,624			19,533		26,038		28,510		2,217		12,467		28,255		40,977

Net income	$	805,649		$	1,646,238	$	2,179,548	$	2,402,763	$	177,653	$	1,042,775	$	2,357,201	$	3,445,538

Net income per unit	$	0.15		$	0.29	$	0.39	$	0.42
Net income per Unit										$	0.03	$	0.19	$	0.42	$	0.61

	2019			2018			2019			2018

PARTNERS' EQUITY - BEGINNING OF PERIOD	$	18,709,962		$	14,273,208		$	18,709,962		$	14,273,208

Net income		2,179,548			2,402,763			2,357,201			3,445,538

Cash distributions ($0.30 per unit in 2019)		(1,684,936	)		-			(1,684,936	)		-

Repurchase of Units		(129,582	)		(7,509	)		(129,582	)		(7,509	)

Options exercised		45,000			3,300			45,000			3,300

PARTNERS' EQUITY - END OF PERIOD	$	19,119,992		$	16,671,762		$	19,297,645		$	17,714,537

	June 30, 2019					December 31, 2018					September 30, 2019					December 31, 2018
	Amount		%			Amount		%			Amount		%			Amount		%
	(Amounts in Thousands)					(Amounts in Thousands)					(Amounts in Thousands)					(Amounts in Thousands)

Working capital	$	29,340		76	%	$	28,403		76	%	$	29,793		77	%	$	28,403		76	%
Property and equipment (net)		9,009		24			9,165		24			8,843		23			9,165		24
Other		126		-			126		-			127		-			126		-
Total	$	38,475		100	%	$	37,694		100	%	$	38,763		100	%	$	37,694		100	%

Deferred income taxes	$	41		-	%	$	41		-	%	$	41		-	%	$	41		-	%
Long-term liabilities		19,314		50			18,943		50			19,424		50			18,943		50
Partners' equity		19,120		50			18,710		50			19,298		50			18,710		50
Total	$	38,475		100	%	$	37,694		100	%	$	38,763		100	%	$	37,694		100	%

	Three Months						Six Months						Three Months						Nine Months
	Ended June 30,						Ended June 30,						Ended September 30,						Ended September 30,
	2019			2018			2019			2018			2019			2018			2019			2018

Revenues:
Crude oil and natural gas sales		92	%		94	%		94	%		94	%		92	%		96	%		93	%		94	%
Well management and operating		8			6			6			6			8			4			7			6
Total revenues		100	%		100	%		100	%		100	%		100	%		100	%		100	%		100	%

Expenses:
Production costs		27			21			29			27			39			41			31			32
Well management and operating		4			3			4			4			5			3			4			3
Depreciation, depletion and amortization		6			6			5			6			10			4			6			6
Accretion expense		4			3			3			4			5			3			3			3
General and administrative expense		25			21			22			23			38			19			26			22
Total expenses		66	%		54	%		63	%		64	%		97	%		70	%		70	%		66	%

Other income:
Interest and dividend income		8			4			7			4			9			5			8			4
Gain on disposal of property and equipment		-			17			1			12			-			3			-			9
Total other income		8	%		21	%		8	%		16	%		9	%		8	%		8	%		13	%

Net income		42	%		67	%		45	%		52	%		12	%		38	%		38	%		47	%

EVERFLOW EASTERN PARTNERS, L.P.

~~By:~~	~~everflow management limited, llc~~
	~~General Partner~~

By:	everflow management ~~corporation~~	limited, llc
	~~Managing Member~~	General Partner

By:	everflow management corporation
	Managing Member

Dated: ~~August~~November 13, 2019	By:	/s/ Brian A. Staebler
		Brian A. Staebler
		~~Brian A. Staebler~~
		Vice President, Secretary-Treasurer and Principal Financial and Accounting Officer
		(Duly Authorized Officer)