EVEP

EV Energy Partners, L.P. (EVEP)

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EV Energy Partners, L.P. (EVEP)

Citi 2011 North American Credit Conference

November 16, 2012 4:15 PM ET

Executives

Mark Houser – President and COO

Mike Mercer – SVP and CFO

Presentation

Unidentified Participant

I'm pleased to have Mark Houser and Mike Mercer from EV. Mark is President and Chief Executive Officer and Mike is Chief Financial Officer. We've got probably a 25-ish, 30-minute presentation and then we'll allow for 10 minutes of Q&A once that's done.

With that, I'll turn it over to Mark.

Mark Houser

Good afternoon, everybody and I guess the one thing I know starting out is that we are the last presentation before happy hour. So, I'll – we'll try to make it maybe at least entertaining. Also, maybe we should put the Spyro Gyra music back on, that might make it a little bit funnier to do, but I don't know if they can do that and (inaudible). And we'll try to make this about 20 minutes. But in usual fashion, I'll take about 18 and I'll give Mike two to cover our whole balance sheet.

So, just a little bit of background on EV Energy Partners, just in summary and this is what we'll try to talk about. When we are talking to investors, both on the debt or equity side, what we try to explain is that there are a few advantages EV Energy has.

We've got a relationship with EnerVest, which provides us a really nice scale and operating expertise. We've been doing acquisitions a really long time, 20 years next – as of this coming year. We have a lot of different sources of acquisitions, which drive our business. We have a diverse set of properties which lowers our risk. Mike helps keep our balance sheet in order and we have some Utica Shale upside and probably most of you who are here – at least some about what's going on with the Utica.

A little bit of background on EV Energy. It was created in 2006; we celebrated our five-year anniversary in September. It's a conventional master limited partnership structure. EnerVest and the management team own 76% of the GP, EnCap owns 23% of the GP. The GP has conventional splits, except that they are capped at 25%.

We have about 34 million outstanding units as we speak and almost $3 billion of enterprise value. We are currently yielding about 4.2%, which is much lower than the rest of our peer group. A lot of that obviously is tied to our Utica upside we'll talk about. And our returns have been quite good. If you look at it over the last three years, our compound annual returns have been about 84%, which is compared to a good run by the overall upstream MLP market and by MLPs in general. So, we've had excellent returns. We are really excited and thankful about that.

A little bit of background on EnerVest. EnerVest essentially formed EVEP with one thing in mind and that was to – or a couple of things in mind. The main thing was to provide a public – the public ability to invest in a business plan that had worked with us in the private equity business for a long time.

EnerVest was originally created in 1992 and the purpose of EnerVest was to raise private equity and to acquire assets. Basically it's a flip-that-house model; acquire assets, develop them, fix them up, enhance them, and then sell them. We had a great track record of doing that. We've generated, on the private equity side, annualized returns of around 35% on our closed fund.

But one thing we wanted to do is we wanted to have more staying power. We would tend to buy ourselves in assets, generate good returns, and then sell out basins. And when you do that you lose a lot of your expertise, you lose a lot of your leverage with service providers and others in those basins. And so, we created EVEP as more of a long-term play in some of these basins.

If you combine EnerVest, the private equity business, with the public company, we have about 2.4 Tcf of proved reserves, about 370 million cubic feet, and about 3.6 million of acres under lease. That's actually prior to some acquisitions that we announced just about a week and a half ago, and we've done over $4.5 billion of acquisitions since inception. So there is a lot of size and lot of scale tied to EnerVest. And again, EVEP is one of the partnerships that EnerVest manages.

Our most recent private equity fund raised $1.5 billion in equity and if you put some debt with that, we have about $2.2 billion of spending power on the private equity side. Well, that's a private equity business. How does that benefit EVEP? One of the ways is that EVEP benefits from a lot of different deal sources. Of course, EVEP gets – it gets deals from the industry. It's out in the market every day looking at opportunities.

As I mentioned, EnerVest, the private equity business, sells properties rather systematically and EVEP basically gets a first shot at looking at those deals. So we get a lot of drop-downs from EnerVest. There are also times when EVEP is able to joint-bid with EnerVest. The most recent example of that is in the Barnett Shale, where we just announced a deal that I'll talk about in a few minutes. And then EnCap also provides sources of deals. They are a very successful private equity firm in their right and as they sell opportunities, we are made aware of those as well.

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