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» Vanguard Natural Resources CEO Discusses Q1 2011 Results - Earnings Call Transcript
This information was also provided in this morning's earnings release. Please note the information reported on this call speaks only as of today May 2nd, 2012, and therefore you are advised that time sensitive information may no longer be accurate as of the time of any replay.Before we get started, please note that some of the comments today could be considered forward-looking statements and are based on certain assumptions and expectations of management. For a detailed list of all the Risk Factors associated with our business, please refer to our 10-Q that will be filed later this week and will be available on our website under the Investor Relations tab and on EDGAR. Also on the Investor Relations tab of our website under "Presentation" you can find the Q1 earnings result supplemental presentation. As a remainder to you, our next record date for our quarterly cash distribution is May 8th, 2012, with a May 15th, 2012, payable date. Unitholders will receive $0.5925 for each unit held or $2.37 per unit on an annualized basis. Now, I would like to turn the call over to Scott Smith, President and CEO of Vanguard Natural Resources, LLC. Scott Smith Thank you, Lisa, and thanks to everyone for joining us this morning on the call to review our results for the first quarter of 2012. Joining me are Richard Robert, our Executive Vice President and Chief Financial Officer; and Britt Pence our Senior Vice President, Operations. This morning I'll start with a summary of our results for the quarter, briefly discuss what we have accomplished in the field, and then review capital spending and acquisition activity. Richard will then takeover the call for financial review and will open the line up for Q&A. Before we get started, I want to remind everyone that because of the Appalachian Exchange closed on March the 30 th, in accordance with GAAP Accounting Rules our reported results are consolidated with the full contribution of the Appalachian. Now I'll provide a summary of the production and capital spending, which took place in the quarter. On a production basis our average daily production for the first quarter was 13,569 BOE per day, which is up 2% over the 13,273 barrels per day produced in the first quarter of 2011, and down slightly over the fourth quarter of 2011 production of 13,686 barrels per day. On a product basis, average daily production was just over 7600 barrels of oil, just over 1500 barrels of NGLs per day, and 26,684 MMcf per day.
Pleased with the level of production we saw in the first quarter, considering that much of the capital spending was focused on projects where production gains will come in the third -- will come in the second or third quarter. Furthermore as we stated before, our capital program is not designed to maintain production but to maintain cash flow. Simply because of the nature of our capital program, which is liquids focused, our cash flow may actually while our production on unit base may decrease. This is a function of reporting production on a conventional six to 1 GAAP overall ratio when it's back to oil prices as you all know we are trading at more than 45 times that of GAAP. Over the course of the year, absent any acquisition, we would expect our GAAP production to decrease or we would expect our liquids production to increase.Respect to the CapEx program, during the first quarter we spent $8.2 million, which compares to $3.5 million that we spent in the first quarter of 2011. Approximately $3.7 million was spent on operated properties primarily focused on workovers; download pumps, facilities, and returning wells to production. The remaining $4.5 million or 55% of the total capital spent was related to our non-operated properties. $2.5 million of those funds were spent on drilling in the Bakken, Cleveland, and Rock Springs wells, and $1.3 million on projects related to our Gold Coast acquisition, which we completed in 2011. The balance of the spending was on water floods in the Permian basin and other miscellaneous work. Read the rest of this transcript for free on seekingalpha.com