Constellation Energy Partners LLC (NYSE Arca: CEP) today reported third quarter 2011 results.
The company produced 3,414 MMcfe during the third quarter, for average daily net production of 37.1 MMcfe during the quarter and 38.0 MMcfe for the nine months ended September 30, 2011, which includes average net oil production for the year-to-date of approximately 278 barrels per day. Operating costs, which include lease operating expenses, production taxes and general and administrative expenses, net of certain non-cash items, averaged $3.63 per Mcfe during the third quarter and $3.41 for the year-to-date.
Adjusted EBITDA for the third quarter was $12.7 million. Year-to-date, Adjusted EBITDA was $82.8 million, which includes $41.3 million in hedge settlements related to the hedge restructuring that the company announced in June 2011.
On a GAAP basis, the company recorded net income of $7.5 million for the third quarter 2011 and $5.6 million for the year-to-date.The company completed 28 net wells and recompletions with total capital spending of $4.5 million during the third quarter 2011. For the year-to-date, the company has completed 67 net wells and recompletions, and the company finished the third quarter 2011 with an additional 16 net wells and recompletions in progress. Drilling activities in 2011 have been focused primarily on exploiting oil potential in the company’s existing asset base as well as capital efficient recompletions. The company’s capital investment year-to-date totals $8.9 million, with drilling in both the Cherokee and Black Warrior Basins. “We’re working to create long-term value for our unitholders,” said Stephen R. Brunner, President and Chief Executive Officer of Constellation Energy Partners. “Until natural gas prices show a sustained pattern of improvement, we believe the best drilling opportunities for us, especially in the Cherokee Basin, will be those that target oil potential in addition to gas. We’ve seen some real success with that aspect of our operations, and look to build upon that the remainder of this year and into 2012.”