Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

OR

Commission File Number 0-19279

EVERFLOW EASTERN PARTNERS, L.P.

(Exact name of registrant as specified in its charter)

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”company��� and “emerging growth company” in Rule 12b-2 of the Exchange Act.

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:

None     

There were 5,492,9675,441,928 Units of limited partnership interest of the registrant as of November 10, 2019.2020. 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 September 30, 2019.2020.

EVERFLOW EASTERN PARTNERS, L.P.

INDEX

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.

EVERFLOW EASTERN PARTNERS, L.P.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

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. EMC is an Ohio corporation formed in September 1990 and is the managing member of EML.

EVERFLOW EASTERN PARTNERS, L.P.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

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.

EVERFLOW EASTERN PARTNERS, L.P.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

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.

Gain on disposal of property and equipment includes approximately $2,100 and $7,200 associated with non-cash settlements of asset retirement obligations during the three and nine month periods ended 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.

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 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 September 30, 2019 and December 31, 2018, respectively.

EVERFLOW EASTERN PARTNERS, L.P.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

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 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.

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. 

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     L. 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. 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 M. Reclassifications – Certain prior period amounts have been reclassified to conform with the current period’s presentation.     Note 2. Current Liabilities The Company’s current liabilities consist of the following at September 30, 2020 and December 31, 2019:     September 30,     December 31,       2020     2019                     Accounts Payable:                 Production and related other   $ 1,640,057     $ 1,768,723   Other     761,705       304,488   Joint venture partner deposits     63,379       63,379                     Total accounts payable   $ 2,465,141     $ 2,136,590                     Accrued Expenses:                 Payroll and retirement plan contributions   $ 406,673     $ 651,856   Paycheck Protection Program loan     326,932       -   Current portion of asset retirement obligations     121,000       581,000   Drilling     96,419       96,419   Federal, state and local taxes     27,115       35,917   Other     -       60,300                     Total accrued expenses   $ 978,139     $ 1,425,492   In March 2020, the Coronavirus Aid, Relief and Economic Security Act was enacted into law. The Paycheck Protection Program Flexibility Act (the “Flexibility Act”) was enacted into law in June 2020. Among several other economic stimulus benefits, these laws established the United States Small Business Administration’s F-11 Table of Contents EVERFLOW EASTERN PARTNERS, L.P. NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS Note 2. Current Liabilities (Continued)   The Company’s current liabilities consist of the following at September 30, 2019 and December 31, 2018: Paycheck Protection Program (the “PPP”). In April 2020, EEI received a $326,932 unsecured PPP loan through a commercial bank. Provisions of the PPP allow the Company to apply for partial or full forgiveness of the loan provided the proceeds are used for covered expenditures and certain other requirements are satisfied. The unforgiven portion of the loan, if any, is payable in eighteen monthly installments (plus interest at a rate of 0.98% per annum). Under the Flexibility Act, certain provisions of the PPP loan are eligible to be modified and the Company is currently evaluating the impact of these provisions.       September 30,     December 31,       2019     2018                     Accounts Payable:                 Production and related other   $ 1,808,741     $ 1,522,106   Other     293,699       299,150   Joint venture partner deposits     50,024       48,629                     Total accounts payable   $ 2,152,464     $ 1,869,885                     Accrued Expenses:                 Payroll and retirement plan contributions   $ 412,798     $ 692,083   Current portion of asset retirement obligations     196,000       196,000   Drilling     106,100       106,100   Federal, state and local taxes     30,513       35,064   Other     17,600       55,100                     Total accrued expenses   $ 763,011     $ 1,084,347   Disposals of property and equipment reflect changes to accounts payable. F-11 Table of Contents EVERFLOW EASTERN PARTNERS, L.P. NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS     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. 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 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. 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 2020 Repurchase Right, based upon the December 31, 2019 calculation, was $0.86 per Unit, net of a $0.25 per Unit distribution made in April 2020.   F-12 Table of Contents   EVERFLOW EASTERN PARTNERS, L.P. NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS     Note 3. Partners’ Equity (continued)(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 September 30, 2019 or 2018 that would potentially dilute net income In June 2020, the Company repurchased 81,039 Units pursuant to the Repurchase Right at a price of $0.86 per Unit. 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 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 2020, 2019 and 2018, respectively. All options granted were exercised on the same date. 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 5,441,928 outstanding Units following the Company’s repurchase of Units and issuance of options in June 2020. There were no instruments outstanding at September 30, 2020 or 2019 that would potentially dilute net income per Unit.     Note 4. Commitments and Contingencies   The Company operates exclusively in Ohio and Pennsylvania of the United States in the business of oil and gas acquisition, exploration, development and production. The Company operates in an environment with many financial risks, including, but not limited to, the ability to acquire additional economically recoverable oil and gas reserves, the inherent risks of the search for, development of and production of oil and gas, the ability to sell oil and gas at prices which will provide attractive rates of return, the volatility and seasonality of oil and gas production and prices, and the highly competitive and, at times, seasonal nature of the industry and worldwide economic conditions. The Company’s ability to expand its reserve base and diversify its operations is also dependent upon the Company’s ability to obtain the necessary capital through operating cash flow, borrowings or equity offerings. Various federal, state and governmental agencies are considering, and some have adopted, laws and regulations regarding environmental protection which could adversely affect the proposed business activities of the Company. The Company cannot predict what effect, if any, current and future regulations may have on the operations of the Company. 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 Company is party to various legal proceedings and claims in the ordinary course of its business. The Company believes that the outcome of these matters will not have a material adverse effect on its consolidated financial position, results of operations, or liquidity. The Company operates exclusively in Ohio and Pennsylvania of the United States in the business of oil and gas acquisition, exploration, development and production. The Company operates in an environment with many financial risks, including, but not limited to, the ability to acquire additional economically recoverable oil and gas reserves, the inherent risks of the search for, development of and production of oil and gas, the ability to sell oil and gas at prices which will provide attractive rates of return, the volatility and seasonality of oil and gas production and prices, and the highly competitive and, at times, seasonal nature of the industry and worldwide economic conditions. The Company’s ability to expand its reserve base and diversify its operations is also dependent upon the Company’s ability to obtain the necessary capital through operating cash flow, borrowings or equity offerings. Various federal, state and governmental agencies are considering, and some have adopted, laws and regulations regarding environmental protection which could adversely affect the proposed business activities of the Company. The Company cannot predict what effect, if any, current and future regulations may have on the operations of the Company.   F-13 Table of Contents EVERFLOW EASTERN PARTNERS, L.P. NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS Note 4. Commitments and Contingencies (Continued) The Company has multiple contracts with a gas purchaser which obligate the gas purchaser 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. In March 2020, the World Health Organization declared the outbreak of the novel strain of the coronavirus (“COVID-19”) a global pandemic. COVID-19 has led to global shutdowns as governments imposed regulations in efforts to control the spread of COVID-19. As a result, physical and economic uncertainties have arisen which have negatively impacted the Company’s operations, cash flows and financial position. F-14 Table of Contents     Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS   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 20182019 Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 27, 2019.26, 2020. On March 11, 2020, the World Health Organization declared the outbreak of the novel strain of the coronavirus (“COVID-19”) a global pandemic. COVID-19 has led to global shutdowns as governments imposed regulations in efforts to control the spread of COVID-19. As a result, physical and economic uncertainties have arisen which have negatively impacted the Company’s operations, cash flows and financial condition.   Liquidity and Capital Resources   The following table summarizes the Company's financial position at September 30, 20192020 and December 31, 2018:2019:     September 30, 2019     December 31, 2018     September 30, 2020     December 31, 2019     Amount     %     Amount     %     Amount     %     Amount     %     (Amounts in Thousands)     (Amounts in Thousands)     (Amounts in Thousands)     (Amounts in Thousands)                                                                   Working capital   $ 29,793       77 %   $ 28,403       76 %   $ 27,585       78 %   $ 29,519       77 % Property and equipment (net)     8,843       23       9,165       24       7,729       22       8,795       23   Other     127       -       126       -       132       -       132       -   Total   $ 38,763       100 %   $ 37,694       100 %   $ 35,446       100 %   $ 38,446       100 %                                                                 Deferred income taxes   $ 41       - %   $ 41       - % Long-term liabilities     19,424       50       18,943       50     $ 17,396       49 %   $ 19,150       50 % Partners' equity     19,298       50       18,710       50       18,050       51       19,296       50   Total   $ 38,763       100 %   $ 37,694       100 %   $ 35,446       100 %   $ 38,446       100 % 3 Table of Contents   Working capital of $29.8$27.6 million as of September 30, 20192020 represented an increasea decrease of $1.4$1.9 million from December 31, 2018,2019, due primarily to decreases in cash and equivalents and production accounts receivable, as well as an increase in accounts payable; offset somewhat by an increase in investments and a decrease in accrued expenses;expenses. The decrease in cash and equivalents is primarily the result of cash provided by operating activities and existing cash and equivalents being used in investing and financing activities. The decrease in production accounts receivable is the combined result of decreases in natural gas volumes produced, crude oil volumes sold, lower natural gas and crude oil prices received and receipt of an arrears balance from a third party operator during the current receivable production period as compared to the prior comparable period, offset somewhat by decreases in cash and equivalentsproduction costs incurred during the current receivable period as compared to the prior comparable receivable period. The decreases in natural gas volumes produced and production accountscosts are primarily the result of additional Company operated properties being shut-in during the current receivable period that were otherwise producing during the prior comparable receivable period. The decrease in crude oil volumes sold during the current receivable period as compared to the prior comparable receivable period is primarily the result of the Company strategically holding much of its crude oil production in field tanks and andelaying shipment during the COVID-19 pandemic while extreme market price volatility has been prevalent. The arrears balance receipt from a third party operator represented payment for several production periods for which crude oil and natural gas sales, net of production expenses, had been recognized in prior periods. The increase in accounts payable.payable is primarily the result of additional other payables outstanding at September 30, 2020 as compared to the prior comparable reporting date associated with disposal of various oil and gas properties made during the nine month period ending September 30, 2020, offset somewhat by less production and related other payables outstanding at September 30, 2020 as compared to the prior comparable reporting period. The increase in investments was primarily the result of additional purchases of shares in a mutual fund during the nine months ended September 30, 2019 that invests primarily in investment grade, short-term fixed and floating rate debt securities. The decrease in accrued expenses wasis primarily the result of less current asset retirement obligations at September 30, 2020 as compared to the prior comparable reporting period, and all payroll and retirement plan contributions accrued at December 31, 20182019 being paid during the nine months ended September 30, 2019. The decrease in production accounts receivable was 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 was2020; offset somewhat by additional natural gas and crude oil volumes recognized from third party operators during the current receivable period as compared tobalance of a loan obtained through 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 was primarily the result of additional production and related other payables outstanding at September 30, 2019 as compared to the prior comparable reporting date.United States Small Business Administration’s Paycheck Protection Program which is further described below. 3 Table of Contents   The Company generally funds its operations with cash generated by operations and/or existing cash and equivalent balances. In April 2020, the Company obtained a $327,000 loan through the United States Small Business Administration’s Paycheck Protection Program. The Company has had no other borrowings since 2003 and no other principal indebtedness was outstanding as of 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.2020.   The Company’s cash flow providedused by operations before the change in working capital was $3.3 million$45,000 during the nine months ended September 30, 2019,2020, a decrease of $748,000$3.3 million as compared to $4.0$3.3 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 $604,000$180,000 during the nine months ended September 30, 2019.2020. Cash flows provided by operating activities was $3.9 million$135,000 for the nine months ended September 30, 2019.2020. The Company used cash provided by operating activities as well as existing cash and equivalents to fund the payment of a distribution amounting to approximately $1.4 million in April 2020.   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 20202021 Repurchase Right.Right, if necessary.   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.   4 Table of Contents   Results of Operations   The following table and discussion is a review of the results of operations of the Company for the three and nine month periods ended September 30, 20192020 and 2018.2019. 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:     Three Months     Nine Months     Three Months     Nine Months     Ended September 30,     Ended September 30,     Ended September 30,     Ended September 30,     2019     2018     2019     2018     2020     2019     2020     2019                                                                   Revenues:                                                                 Crude oil and natural gas sales     92 %     96 %     93 %     94 %     89 %     92 %     89 %     93 % Well management and operating     8       4       7       6       11       8       11       7   Total revenues     100 %     100 %     100 %     100 %     100 %     100 %     100 %     100 %                                                                 Expenses:                                                                 Production costs     39       41       31       32       53       39       52       31   Well management and operating     5       3       4       3       7       5       7       4   Depreciation, depletion and amortization     10       4       6       6       25       10       19       6   Accretion expense     5       3       3       3       9       5       7       3   General and administrative expense     38       19       26       22       58       38       56       26   Total expenses     97 %     70 %     70 %     66 %     152 %     97 %     141 %     70 %                                                                 Other income:                                                                 Interest and dividend income     9       5       8       4   Investment income     7       9       10       8   Gain on disposal of property and equipment     -       3       -       9       74       -       38       -   Total other income     9 %     8 %     8 %     13 %     81 %     9 %     48 %     8 %                                                                 Net income     12 %     38 %     38 %     47 %     29 %     12 %     7 %     38 %     Revenues for the three month period ended September 30, 20192020 decreased $1.3 million,$705,000, or 48%49%, as compared to the prior comparable period. Revenues for the nine month period ended September 30, 20192020 decreased $1.2$3.6 million, or 16%57%, as compared to the prior comparable period. Both revenue variances were primarily the result of variancesdecreases in crude oil and natural gas sales from the current period in comparison to the prior comparable periods.sales.   Crude oil and natural gas sales decreased $1.3 million,$666,000, or 50%51%, during the three months ended 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 and lower average crude oil and natural gas prices received during the three month period ended September 30, 20192020 as compared to the prior comparable period. Crude oil and natural gas sales decreased $1.2$3.5 million, or 16%59%, during the nine months ended 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 and lower average crude oil prices received, offset somewhat by the effect of higher average natural gas prices received, during the nine month period ended September 30, 2019 as compared to the prior comparable period. The decreases in natural gas and crude oil volumes produced during the three and nine month periods ended September 30, 2019 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. 5 Table of Contents 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, 20192020 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 threeless natural gas volumes produced and nine months ended September 30, 2018, respectively, offset somewhat by additional costs associated with third party operated wellsless crude oil volumes sold, as well as lower average natural gas and crude oil prices received, during the three and nine month periods ended September 30, 20192020 as compared to the prior comparable periods. The decrease in natural gas volumes produced during the three and nine month periods ended September 30, 2020 as compared to the prior comparable periods was primarily the result of Company operated properties being voluntarily shut-in during the three and nine month periods ended September 30, 2020 that were not shut-in during the prior comparable periods. The decrease in crude oil volumes sold during the three and nine month periods ended September 30, 2020 as compared to the prior comparable periods was primarily the result of the Company strategically holding much of its crude oil production in field tanks and delaying shipment during the COVID-19 pandemic while extreme market price volatility was prevalent. 5 Table of Contents Production costs decreased $173,000, or 31%, during the three months ended September 30, 2020 as compared to the prior comparable period. Production costs decreased $542,000, or 28% during the nine months ended September 30, 2020 as compared to the prior comparable period. The primary reasons for the decreases are the result of less costs recognized in association with third party operated properties and decreased costs associated with Company operated properties as more Company operated properties were voluntarily shut-in during the three and nine month periods ended September 30, 2020 as compared to the prior comparable periods, offset somewhat by increased insurance costs during the three and nine month periods ended September 30, 2020 as compared to the prior comparable periods.   Other incomeDepreciation, depletion and amortization (“DD&A”) increased $31,000, or 21% during the three months ended September 30, 2020 as compared to the prior comparable period. DD&A increased $139,000, or 37% during the nine months ended September 30, 2020 as compared to the prior comparable period. The primary reasons for the increases are lower projected crude oil and natural gas reserves during the three and nine month periods ended September 30, 2020 as compared to the prior comparable periods. The decrease in projected crude oil and natural gas reserves is primarily the result of lower benchmark crude oil and natural gas prices indexed throughout the first three and nine months of 2020 as compared to the benchmark prices indexed throughout the prior comparable periods. The lower 2020 benchmark prices project to decrease reserves at December 31, 2020, the next scheduled valuation date, which will decrease the average economic life of the Company’s oil and gas properties as compared to December 31, 2019, the prior valuation date. The effect that lower projected crude oil and natural gas reserves had on DD&A was offset somewhat by less crude oil and natural gas volumes produced during the three and nine month periods ended September 30, 2020 as compared to the prior comparable periods. General and administrative expense decreased $67,000,$116,000, or 33%21%, during the three month periodmonths ended September 30, 20192020 as compared to the prior comparable period. General and administrative expense decreased $148,000, or 9%, during the nine months ended September 30, 2020 as compared to the prior comparable period. The primary reasons for the decreases are less legal costs and information technology costs incurred during the three and nine month periods ended September 30, 2020 as compared to the prior comparable periods, as well as various cost-cutting measures management has implemented during the three and nine month periods ended September 30, 2020 in response to operational challenges caused by the COVID-19 pandemic. Other income increased $451,000, or 329%, during the three months ended September 30, 2020 as compared to the prior comparable period. Other income decreased $414,000,increased $774,000, or 45%150%, during the nine month periodmonths ended September 30, 20192020 as compared to the prior comparable period. The primary reason for the decreasesincreases was the result of lessan increase in 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 nine month periods ended 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 nine month periods ended 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 dividenda decrease in investment income recognized during the three and nine month periods ended September 30, 20192020 as compared to the prior comparable periods. The increase in interestgain on disposal of property and dividend incomeequipment was primarily the result of additional investments heldthe Company having a substantial increase in the number of properties disposed during the three and nine months ended September 30, 2020 as compared to the relatedprior comparable periods. The decrease in investment income is primarily due to the Company having received less dividends yielded onfrom its investments during the three and nine month periods ended September 30, 20192020 as compared to the prior comparable periods. Additionally, the Company recognized less unrealized gains on investments during the nine month period ended September 30, 2020 as compared to the prior comparable period. 6 Table of Contents   The Company reported net income of $178,000$210,000 and $1.0 million$178,000 during the three months ended September 30, 20192020 and 2018,2019, respectively, representing 12%29% and 38%12% of total revenues during the three month periods ended September 30, 2020 and 2019, respectively. The increase in net income was primarily the result of an increase in other income and 2018, respectively.decreases in production costs and general and administrative expenses, offset somewhat by a decrease in crude oil and natural gas sales and an increase in DD&A. The Company reported net income of $2.4 million$188,000 and $3.4$2.4 million during the nine months ended September 30, 20192020 and 2018,2019, respectively, representing 38%7% and 47%38% of total revenues during the nine month periods ended September 30, 20192020 and 2018,2019, respectively. The decreasesdecrease in net income werewas primarily the result of decreasesa decrease in crude oil and natural gas sales and other income,an increase in DD&A, offset somewhat by decreases in production costs.costs and general and administrative expenses and an increase in other income.   Critical Accounting Policies   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, 2018.2019. 6 Table of Contents   Forward-Looking Statements   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.Company and the impact of COVID-19 on the Company’s business and global economy generally. 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.   Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK   This information has been omitted, as the Company qualifies as a smaller reporting company.   7 Table of Contents   Item 4. CONTROLS AND PROCEDURES   (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, 2018,2019, 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.   7 8 Table of Contents   Part II: OTHER INFORMATION   Item 6. EXHIBITS     Exhibit 31.1 Certification of CEO Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002     Exhibit 31.2 Certification of CFO Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002     Exhibit 32.1 Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002     101.INS Instance Document     101.SCH XBRL Taxonomy Extension Schema Document     101.CAL XBRL Taxonomy Extension Calculation Linkbase Document     101.LAB XBRL Taxonomy Extension Label Linkbase Document     101.PRE XBRL Taxonomy Extension Presentation Linkbase Document     101.DEF XBRL Taxonomy Definition Linkbase Document   8 9 Table of Contents   SIGNATURE   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.     EVERFLOW EASTERN PARTNERS, L.P. By: everflow management limited, llc General Partner  By: everflow management corporation     General Partner Managing Member         By: everflow management corporation Dated: November 12, 2020 By: /s/ Brian A. Staebler     Managing Member Dated:  November 13, 2019 By: /s/ Brian A. Staebler     Brian A. Staebler Vice President, Secretary-Treasurer and     Vice President, Secretary-Treasurer and Principal Financial and Accounting Officer     (Duly Authorized Officer)     9 10