Constellation Energy Partners LLC (NYSE Arca: CEP) today reported first quarter 2010 results.

The company produced 3,860 MMcfe for the first quarter 2010 for average daily net production of 42.9 MMcfe. Operating costs, which include lease operating expenses, production taxes and general and administrative expenses, net of certain non-cash items, averaged $3.55 per Mcfe during the quarter.

On a GAAP basis, the company reported net income of $18.1 million for the first quarter 2010. Adjusted EBITDA for the quarter was $14.9 million.

“Overall, this was another good quarter for us,” said Stephen R. Brunner, President and Chief Executive Officer of Constellation Energy Partners. “Our assets performed in line with our expectations and 2010 business plan.”

Liquidity Update

The company announced last week that its borrowing base was reaffirmed by its lenders at $205 million. The company's borrowing base is scheduled for semi-annual redetermination again in the fourth quarter of 2010.

Outstanding debt under the company’s credit facility currently totals $185 million, leaving the company with $20 million in available borrowing capacity. The company had a cash balance of $8.4 million as of Mar. 31, 2010.

Financial Outlook for 2010

The company announced earlier this year that it anticipates total capital spending for 2010 to range between $10 million and $12 million. "At this level of capital spending, we expect to complete approximately 25 net wells, which will consist of a mix of horizontal, vertical and recompletion wells," said Brunner. "We expect to spend substantially all of our capital in the Cherokee Basin, with the bulk of our drilling activity completed in the second and third quarters of this year."

Net production is forecast to range between 14.5 and 15.5 Bcfe for 2010, with operating costs expected to range between $52 million and $56 million for the year.

The company entered 2010 with approximately 9.5 Bcfe of its 2010 Mid-Continent production hedged at an average price of $7.49 per Mcfe and an additional 2.4 Bcfe of its remaining production hedged at an average price of $8.21 per Mcfe. Included in these totals for 2010 are hedges on 6.9 Bcfe of the company’s Mid-Continent production for the balance of the year at an average price of $7.46 per Mcfe and an additional 1.9 Bcfe of production for the balance of the year at an average price of $8.17 per Mcfe. The remainder of the company’s production for 2010 is subject to market conditions and pricing.