Form 8-K LRR Energy, L.P. For: Oct 30

�

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.� 20549

�

FORM�8-K

�

CURRENT REPORT

Pursuant to Section�13 OR 15(d)�of The Securities Exchange Act of 1934

�

Date of Report (Date of earliest event reported): October�30, 2014

�

LRR Energy, L.P.

(Exact name of registrant as specified in its charter)

�

�

Heritage Plaza

1111 Bagby Street, Suite�4600

Houston, Texas 77002

(Address of principal executive offices)

�

Registrant�s Telephone Number, including Area Code: (713) 292-9510

�

Not Applicable
(Former name or former address, if changed since last report.)

�

Check the appropriate box below if the Form�8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

�

o Written communications pursuant to Rule�425 under the Securities Act (17 CFR 230.425)

�

o Soliciting material pursuant to Rule�14a-12 under the Exchange Act (17 CFR 240.14a-12)

�

o Pre-commencement communications pursuant to Rule�14d-2(b)�under the Exchange Act (17 CFR 240.14d-2(b))

�

o Pre-commencement communications pursuant to Rule�13e-4(c)�under the Exchange Act (17 CFR 240.13e-4(c))

�

�

�

Item 2.02� Results of Operations and Financial Condition.

�

On October�30, 2014, LRR Energy, L.P. (the �Partnership�) issued a press release announcing its financial results for the three and nine months ended September�30, 2014.� This press release is being furnished with this Current Report on Form�8-K as Exhibit�99.1 and is incorporated herein by reference.

�

The information provided in this Item 2.02 (including Exhibit�99.1) shall not be deemed to be �filed� for the purposes of Section�18 of the Securities and Exchange Act of 1934, as amended (the �Exchange Act�), nor shall it be incorporated by reference in any filing made by the Partnership pursuant to the Securities Act of 1933, as amended, or the Exchange Act, other than to the extent that such filing incorporates by reference any or all of such information by express reference thereto.

�

Item 9.01� Financial Statements and Exhibits.

�

(d)� Exhibits.

�

�

2

�

SIGNATURES

�

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

�

�

3

�

Exhibit�Index

�

�

4

Exhibit 99.1

�

�

LRR Energy, L.P. Announces Third Quarter 2014 Results

�

Houston, Texas (October�30, 2014) - LRR Energy, L.P. (NYSE: LRE) (�LRR Energy�) announced today its operating and financial results for the three and nine months ended September�30, 2014.

�

Eric Mullins, Chairman and Co-Chief Executive Officer, commented, �Overall we are pleased with our third quarter 2014 results. Despite slightly lower production volumes during the quarter, adjusted EBITDA, distributable cash flow and distribution coverage ratio increased as compared to the second quarter of 2014.�

�

Selected Financial and Operating Information

�

A summary of selected financial and operating information follows. For consolidated financial statements for the three and nine months ended September�30, 2014, please see the accompanying tables on pages�7-9.

�

�

(1)�������� See commodity derivative settlements on page�6.

(2)�������� Non-GAAP financial measure. See reconciliation of non-GAAP financial measures beginning on page�10.

�

�

�

LRR Energy�s average net production for the three and nine months ended September�30, 2014 was negatively impacted by flaring at our Red Lake field of approximately 25 Boe/d and 40 Boe/d, respectively. During the third quarter, production at our non-operated Putnam field was approximately 85 Boe/d below our expectations because of delayed drilling activity and new well production performance. Due to flooding, production at our Corral Canyon field was negatively impacted by approximately 25 Boe/d during the third quarter. Finally, production at our non-operated Corral Canyon field was approximately 20 Boe/d below our third quarter expectations because of the deferment of drilling a well. Normal operations at our Corral Canyon field resumed on October�9, 2014. LRR Energy�s October�2014 average net production through October�24, 2014 was approximately 6,525 Boe/d.

�

Recent Events

�

As of October�30, 2014, LRR Energy had $233 million of outstanding borrowings under its revolving credit facility and $50 million of outstanding borrowings under its term loan. LRR Energy�s current liquidity position is approximately $39 million consisting of $27 million of availability under our revolving credit facility and approximately $12 million of available cash on hand. Management believes cash flow from operations, the capacity under the revolving credit facility and the proceeds from its current At-the-Market Offering Program will provide ample financial flexibility to execute its 2014 capital program and distribution strategy.

�

On October�17, 2014, LRR Energy announced that the Board of Directors of its general partner declared an increased cash distribution for the third quarter of 2014 of $0.4975 per outstanding unit, or $1.99 on an annualized basis. The distribution will be paid on November�14, 2014 to all unitholders of record as of the close of business on October�31, 2014. The declaration represents the ninth consecutive increase to LRR Energy�s quarterly distribution.

�

Revised 2014 Guidance

�

LRR Energy has revised its full year 2014 guidance based on actual results for the nine months ended September�30, 2014 and a decreased capital development program for the second half of 2014. The majority of the $2.5 million capital decrease is due to expected lower non-operated development activity at our Putnam and Corral Canyon fields. Based on current estimates, and assuming no future acquisitions, LRR Energy�s revised full year 2014 guidance is as follows:

�

2

�

�

The guidance above sets forth management�s best estimate based on current and anticipated market conditions and other factors. While management believes that these estimates and assumptions are reasonable, they are inherently uncertain and are subject to, among other things, significant business, economic, regulatory, environmental and competitive risks and uncertainties that could cause actual results to differ materially from those management anticipates, as set forth under �Forward-Looking Statements.�

�

Commodity Derivative Contracts

�

As of September�30, 2014, LRR Energy had the following outstanding derivative contracts.

�

�

(1)�������� Our natural gas basis swaps are traded on the following indices: Centerpoint East, Houston Ship Channel, WAHA and TEXOK.

�

Subsequent to September�30, 2014, LRR Energy acquired the following commodity hedges.

�

Quarterly Report on Form�10-Q

�

LRR Energy expects to file its Quarterly Report on Form�10-Q with the Securities and Exchange Commission no later than November�10, 2014. The 10-Q will be available on the Investor

�

3

�

Relations page�of LRR Energy�s website, www.lrrenergy.com, or from the Securities and Exchange Commission website, www.sec.gov.

�

Webcast and Conference Call

�

LRR Energy will host a webcast and conference call on Friday, October�31, 2014, at 10:00�a.m. Eastern time (9:00�a.m. Central time) to discuss these results. Interested parties are invited to participate in the call by dialing 1-877-493-8071 (conference ID: 14656771). It is recommended that participants dial in approximately 10 minutes prior to the start of the conference call. Participants may access the webcast from LRR Energy�s website, www.lrrenergy.com, under the tab for �Investor Relations.�

�

A telephonic replay will be available after the call through November�14, 2014. Participants may access this replay by dialing 1-800-585-8367 (conference ID: 14656771).

�

About LRR Energy, L.P.

�

LRR Energy is a Delaware limited partnership formed in April�2011 by affiliates of Lime Rock Resources to operate, acquire, exploit and develop producing oil and natural gas properties in North America. LRR Energy�s properties are located in the Permian Basin region in West Texas and Southeast New Mexico, the Mid-Continent region in Oklahoma and East Texas and the Gulf Coast region in Texas.

�

Forward-Looking Statements

�

This press release includes �forward-looking statements� � that is, statements related to future events. Forward-looking statements are based on the current expectations of LRR Energy and include any statement that does not directly relate to a current or historical fact. In this context, forward-looking statements often address expected future business, operational and financial performance, and often contain words such as �may,� �predict,� �pursue,� �expect,� �estimate,� �project,� �plan,� �believe,� �intend,� �achievable,� �anticipate,� �target,� �continue,� �potential,� �should,� �could� and other similar words. Forward-looking statements involve certain risks and uncertainties, and ultimately may not prove to be accurate. These risks and uncertainties include, among other things, a decline in oil, natural gas or NGL prices, the risk and uncertainties involved in producing oil and natural gas, competition in the oil and natural gas industry, governmental regulations and other factors. Actual results and future events could differ materially from those anticipated or implied in the forward-looking statements due to the factors described under the captions �Risk Factors� in LRR Energy�s Annual Report on Form�10-K for the year ended December�31, 2013 and LRR Energy�s subsequent filings with the SEC. All forward-looking statements speak only as of the date of this press release. LRR Energy does not intend to update or revise any forward-looking statements as a result of new information, future events or otherwise. All forward-looking statements are qualified in their entirety by this cautionary statement.

�

Investor Contacts:

�

Angelique Brou

Financial Reporting Manager

(713) 345-2145

[email protected]

�

Jaime Casas

Chief Financial Officer

(713) 345-2126

[email protected]

�

4

�

LRR Energy, L.P.

Selected Operating Data

(unaudited)

�

�

5

�

LRR Energy, L.P.

Consolidated Condensed Statement of Operations

�(in thousands, except per unit amounts)

(unaudited)

�

�

6

�

LRR Energy, L.P.

Consolidated Condensed Statement of Cash Flows

(in thousands)

(unaudited)

�

�

7

�

LRR Energy, L.P.

Consolidated Condensed Balance Sheet

(in thousands, except unit amounts)

(unaudited)

�

�

8

�

LRR Energy, L.P.

Non-GAAP Reconciliation

(in thousands)

(unaudited)

�

LRR Energy defines Adjusted EBITDA as net income (loss) plus or minus income tax expense; interest expense-net, including loss (gain) on interest rate derivative instruments, net; depletion and depreciation; accretion of asset retirement obligations; amortization of equity awards; loss (gain) on settlement of asset retirement obligations; loss (gain) on commodity derivative instruments, net; commodity derivative instrument net cash settlements; impairment of oil and natural gas properties; and other non-recurring items that LRR Energy deems appropriate.

�

Adjusted EBITDA is used as a supplemental financial measure by LRR Energy�s management and by external users of its financial statements, such as investors, commercial banks, research analysts and others, to assess LRR Energy�s financial performance as compared to that of other companies and partnerships in the industry, without regard to financing methods, capital structure or historical cost basis.

�

Distributable Cash Flow is defined as Adjusted EBITDA less cash income tax expense; cash interest expense; and estimated maintenance capital. Distribution Coverage Ratio-common unitholders is defined as the ratio of Distributable Cash Flow to the total quarterly distribution payable on all of LRR Energy�s outstanding common units. Distribution Coverage Ratio-all unitholders is defined as the ratio of Distributable Cash Flow to the total quarterly distribution payable on all of LRR Energy�s outstanding common, subordinated and general partner units.

�

Distributable Cash Flow and the Distribution Coverage Ratio-common and all unitholders are used as supplemental financial measures by LRR Energy�s management and by external users of its financial statements, such as investors, commercial banks, research analysts and others to compare basic cash flows generated by LRR Energy (prior to the establishment of any retained cash reserve by its general partner) to the cash distributions it expects to pay its unitholders. Distributable Cash Flow and the Distribution Coverage Ratio-common and all unitholders are also important financial measures for LRR Energy�s unitholders as they serve as indicators of its success in providing a cash return on investment. Specifically, these metrics indicate to investors whether or not LRR Energy is generating cash flow at a level that can sustain or support an increase in its quarterly distribution rates. Distributable Cash Flow and the Distribution Coverage Ratio-common and all unitholders are quantitative standards used throughout the investment community with respect to publicly traded partnerships and limited liability companies because the yield is based on the amount of cash distributions the entity pays to a unitholder compared to the unit price.

�

LRR Energy�s management believes that Adjusted EBITDA, Distributable Cash Flow and the Distribution Coverage Ratio-common and all unitholders are useful to investors because these measures are used by many partnerships in the industry as measures of operating and financial performance and are commonly employed by financial analysts and others to evaluate its operating and financial performance from period to period and to compare it with the performance of other publicly traded partnerships within the industry. Adjusted EBITDA, Distributable Cash Flow and the Distribution Coverage Ratio-common and all unitholders should not be considered alternatives to net income, operating income or any other measures of financial performance presented in accordance with GAAP. LRR Energy�s Adjusted EBITDA, Distributable Cash Flow and Distribution Coverage Ratio-common and all unitholders may not be comparable to similarly titled measures of another company because all companies may not calculate Adjusted EBITDA, Distributable Cash Flow or the Distribution Coverage Ratio-common and all unitholders in the same manner. The following table presents a reconciliation of Adjusted EBITDA, Distributable Cash Flow and Distribution Coverage Ratio-common and all unitholders to net income (loss), LRR Energy�s most directly comparable GAAP financial performance measure, for the three and nine months ended September�30, 2014 and 2013.

�

9

�

LRR Energy, L.P.

Non-GAAP Reconciliation

(continued)

(in thousands, except distribution coverage ratio)

(unaudited)

�

�

(1)�������� Amount represents pro-rated capital for the period. Estimated maintenance capital expenditures as defined by our partnership agreement represent our estimate of the amount of capital required on average per year to maintain our production over the long term.

�

10