Constellation Energy Partners LLC Annual Meeting Company Overview December 14, 2012 Exhibit 99.1 |
2 Forward-looking Statements Disclaimer This presentation contains forward–looking statements that are subject to a number of risks and uncertainties, many of which are beyond our control, which may include statements about: the volatility of realized oil and natural gas prices; the conditions of the capital markets, inflation, interest rates, availability of a credit facility to support business requirements, liquidity, and general economic and political conditions; the discovery, estimation, development and replacement of oil and natural gas reserves; our business, financial, and operational strategy; our drilling locations; technology; our cash flow, liquidity and financial position; the ability to extend or refinance our reserve-based credit facility; the level of our borrowing base under our reserve-based credit facility; the resumption or amount of our cash distributions; our hedging program and our derivative positions; our production volumes; our lease operating expenses, general and administrative costs and finding and development costs; the availability of drilling and production equipment, labor and other services; our future operating results; our prospect development and property acquisitions; the marketing of oil and natural gas; competition in the oil and natural gas industry; the impact of the current global credit and economic environment; the impact of weather and the occurrence of natural disasters such as fires, floods, hurricanes, tornados, earthquakes, snow and ice storms and other catastrophic events and natural disasters; governmental regulation, including environmental regulation, and taxation of the oil and natural gas industry; developments in oil-producing and natural gas producing countries; lack of support from a sponsor or a change in sponsor; and our strategic plans, objectives, expectations, forecasts, budgets, estimates and intentions for future operations. In some cases, forward–looking statements can be identified by terminology such as “may,” “could,” “should,” “expect,” “plan,” “project,” “intend,” “anticipate,” “believe,” “estimate,” “predict,” “potential,” “pursue,” “target,” “continue,” the negative of such terms or other comparable terminology. The forward–looking statements contained in this presentation are largely based on our expectations, which reflect estimates and assumptions made by our management. These estimates and assumptions reflect our best judgment based on currently known market conditions and other factors. Although we believe such estimates and assumptions to be reasonable, they are inherently uncertain and involve a number of risks and uncertainties that are beyond our control. In addition, management’s assumptions about future events may prove to be inaccurate. Management cautions all readers that the forward–looking statements contained in this presentation are not guarantees of future performance, and we cannot assure any reader that such statements will be realized or the forward–looking events and circumstances will occur. Actual results may differ materially from those anticipated or implied in the forward–looking statements due to factors listed in the “Risk Factors” section in our SEC filings and elsewhere in those filings. All forward–looking statements speak only as of the date of this presentation. We do not intend to publicly update or revise any forward–looking statements as a result of new information, future events or otherwise. These cautionary statements qualify all forward-looking statements attributable to us or persons acting on our behalf. |
3 CEP’s Operating Environment 3 |
4 CEP’s Strategic Focus, 2008-Present • Integrate asset acquisitions Substantial focus in 2008 due to the 2007 acquisition of operated assets in the Cherokee Basin Non-operated assets added in Mar-08 (Woodford Shale) and Dec-10 (Central Kansas Uplift) • Manage CEG transition Efforts initiated by CEP in 2008 as a result of CEG’s decision to sell its upstream natural gas assets Substantial focus for CEP in 2009 leading up to CEG’s termination of the Master Services Agreement in Dec-09 • Achieve cost reductions CEP’s continuing focus on controllable costs (LOE, G&A, and interest) has achieved results Our goal is to further reduce structural G&A costs by 25% |
5 CEP’s Strategic Focus, 2008 to Present (con’t) 5 • Use cash flow from operations to Reduce debt levels: Function of (1) borrowing base pressure in an environment characterized by weak natural gas prices and (2) structural issues that tend to limit CEP’s ability to tap capital markets for preferred or mezzanine financing Debt outstanding has been reduced by 60% since Q309 Invest in capital efficient projects CEP’s drilling efforts were suspended in mid- 2009, when declining gas prices and uncertainty in the capital markets lead to a $40MM reduction in our borrowing base Since drilling resumed in Q210, the company has invested $29.7 million to complete 177 net wells and recompletions At the end of Q312, an additional 55 net wells and recompletions were in progress Our capital program targets oil opportunities with rates of return that exceed 20% |
6 CEP’s Strategic Focus, 2008 to Present (con’t) • Pursue organic growth opportunities – Our focus on oil opportunities in our Mid- Continent asset base has shown progress and forms the basis of our near-term drilling and capital plan – Were natural gas prices to recover, we’re well positioned to capitalize on the gas resource potential in our Mid-Continent asset base, which we believe is substantial – We believe there are advantages to consolidation in the Cherokee Basin – CEP is uniquely positioned to capitalize on these consolidation opportunities due to our scale, the nature of our asset base (including the Osage Concession), and existing infrastructure – Our Q312 market price of $1.27/unit compares to an $8.98/unit net asset value ** – We continue to look for merger and acquisition opportunities that accelerate growth and enhance unitholder value * Excludes hedge settlements, gains (losses) on mark-to-market activities, and other revenue ** Additional detail can be found on slide 6 of CEP’s Third Quarter Earnings Presentation dated November 9, 2012 |
Appendix |
8 CEP Ownership * * As of October 25, 2012 • As a result of two transactions executed in 2011, our largest unitholder is PostRock Energy Corporation (“PostRock”), which indirectly owns a 26.4% LLC interest (including our Class A units) • Exelon Corp. indirectly owns all of our Class D units and the MIIs • Insider holdings total 6.1% of our outstanding common (or Class B) units |