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Memorial Production Partners LP Announces First Quarter 2013 Results, Updated Commodity Hedge Positions And Updated 2013 Guidance

Stocks in this article: MEMP

The following table reflects the volumes of MEMP's production covered by commodity derivative contracts and the average fixed or floor prices at which production is hedged. Targeted average net production estimate represents the production required to reach the lower boundary of the annual production range in MEMP's 2013 updated full year guidance.

Hedge Summary Table

   
  Year Ending December 31,
  2013 2014 2015 2016 2017 2018
Natural Gas Derivative Contracts:          
Total weighted-average fixed/floor price $4.55 $4.48 $4.42 $4.51 $4.33 $4.67
Percent of target production hedged 92% 87% 77% 71% 65% 61%
             
Crude Oil Derivative Contracts:          
Total weighted-average fixed/floor price $103.09 $98.09 $95.65 $93.31 $90.99 $90.66
Percent of target production hedged 79% 84% 78% 71% 66% 54%
             
Natural Gas Liquids Derivative Contracts:          
Total weighted-average fixed/floor price $41.37 $42.00
Percent of target production hedged 67% 56%
             
Wtd Avg Fixed/Floor Price Per Mcfe $6.72 $6.73 $6.64 $6.63 $6.44 $6.46
Percent of Target Production Hedged 85% 80% 62% 57% 52% 48%

As of May 1, 2013, MEMP has entered into the following interest rate derivative hedging transactions as it relates to its $118 million debt outstanding under its revolving credit facility which currently has a $505 million borrowing base:

  • MEMP has hedged $110 million, or 93%, of its variable rate exposure on its $118.0 million debt outstanding under its revolving credit facility as of May 1, 2013 extending through October 2013 at a weighted average fixed annual LIBOR rate of 1.15%;  
  • MEMP has hedges of $265 million of variable rate notional amounts from November 2013 through April 2014 at a weighted average fixed annual LIBOR rate of 1.31%;  
  • MEMP has hedges of $225 million of variable rate notional amounts from May 2014 through October 2014 at a weighted average fixed annual LIBOR rate of 1.34%; and  
  • MEMP has hedges of $150 million of variable rate notional amounts from November 2014 through December 2016 at a weighted average fixed annual LIBOR rate of 1.19%.

Additional information regarding MEMP's hedging summary can be found on its website, www.memorialpp.com , under the Investor Relations section.

Updated 2013 Guidance      

The updated 2013 guidance included in this press release is subject to the cautionary statements and limitations described under the "Forward-Looking Statements" caption at the end of this press release. MEMP's updated 2013 guidance is based on assumptions of capital expenditure levels, the assumption that market demand and prices for oil and natural gas will continue at levels that allow for economic production of these products and also reflects the impact of forecasted growth capital spending. A summary of the guidance, assuming no additional acquisitions, is presented below:

Full Year 2013 Guidance  
Annual Production (Bcfe)  37 – 39
Adjusted EBITDA ($MM) (2)  $154 – $158
Distributable Cash Flow ($MM) (2) $92 – $96
DCF Coverage 1.0x – 1.1x 
Maintenance Capex ($MM)  $37
Growth Capex ($MM)  $40 – $50

These estimates reflect management's best judgment based on current expectations about the future and anticipated market conditions based upon both stated and unstated assumptions and other factors. Although management believes such estimates to be reasonable, they are inherently uncertain and involve a number of risks that are beyond MEMP's control. Actual conditions and assumptions may change over the course of the year.

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