##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 Form 10-Q
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIESEXCHANGE ACT OF 1934
 For the quarterly period ended September 30, 2006
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIESEXCHANGE ACT OF
1934
 Commission File Number
001-33024
 EV Energy Partners, L.P.
  Delaware
    
    204745690(State or other jurisdiction
    
    (I.R.S. Employer Identification No.)of incorporation or organization)1001 Fannin, Suite 800, Houston, Texas
    
    77002(Address of principal executive offices)
    
    (Zip Code)
 (713) 659-3500
  o þ
  o o þ
  o þ




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##### 



Table of Contents
 PART I. FINANCIAL INFORMATIONItem 1. Financial Statements (unaudited)
    
    
    3Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    14Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    21Item 4. Controls and Procedures
    
    
    23PART II. OTHER INFORMATIONItem 1. Legal Proceedings
    
    
    24Item 1A. Risk Factors
    
    
    24Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    26Item 3. Defaults Upon Senior Securities
    
    
    26Item 4. Submission of Matters to a Vote of Security Holders
    
    
    26Item 5. Other Information
    
    
    26Item 6. Exhibits
    
    
    27Signatures
    
    
    28Rule 13a-14(a) / 15d-14(a) Certification of CEORule 13a-14(a) / 15d-14(a) Certification of CFOSection 1350 Certification of CEOSection 1350 Certification of CFO
  1




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##### Table of Contents



PART I. FINANCIAL INFORMATION
    
    
    our predecessors incurred substantial expenses related to exploration activities, which
we do not plan to do;
    
    the contracts under which our predecessors reimbursed EnerVest for general and
administrative costs were different than the contracts under which we will reimburse
EnerVest in the future; and
    
    our predecessors did not incur additional costs of being a public company.
  2




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##### Table of Contents



ITEM 1. FINANCIAL STATEMENTS
 The Combined Predecessor Entities
Condensed Combined Balance Sheets  (In thousands)
(Unaudited)
 September 30,
    
    
    December 31,2006
    
    
    2005ASSETSCurrent assets:Cash and cash equivalents
    
    $
    2,902
    
    
    $
    7,159Accounts receivable:Oil and natural gas sales
    
    
    6,786
    
    
    
    8,798Other
    
    
    1,284
    
    
    
    530Interest and
commodity hedge asset  related party
    
    
    3,115
    
    
    
    61Commodity
hedge asset  third party
    
    
    5,252
    
    
    
    Deferred income taxes
    
    
    
    
    
    
    1,875Prepaid and other current assets
    
    
    4,226
    
    
    
    617Total current assets
    
    
    23,565
    
    
    
    19,040Oil and natural gas properties, net of accumulated depreciation,
depletion and amortization; September 30, 2006, $13,958;
December 31, 2005, $9,706
    
    
    66,836
    
    
    
    57,037Other property, net of accumulated depreciation and amortization;
September 30, 2006, $725; December 31, 2005, $785
    
    
    266
    
    
    
    563Longterm commodity hedge asset  related party
    
    
    1,917
    
    
    
    Longterm commodity hedge asset  third party
    
    
    3,106
    
    
    
    Other assets
    
    
    59
    
    
    
    1,427Total assets
    
    $
    95,749
    
    
    $
    78,067LIABILITIES AND OWNERS EQUITYCurrent liabilities:Accounts payable and accrued liabilities
    
    $
    2,723
    
    
    $
    5,968Due to affiliates
    
    
    5,037
    
    
    
    6,291Commodity
hedge liability  related party
    
    
    266
    
    
    
    5,228Commodity
hedge liability  third party
    
    
    
    
    
    
    954Income taxes
    
    
    4,163
    
    
    
    1,171Deferred income taxes
    
    
    2,162
    
    
    
    Other current liabilities
    
    
    24
    
    
    
    70Total current liabilities
    
    
    14,375
    
    
    
    19,682Asset retirement obligations
    
    
    2,832
    
    
    
    2,752Longterm debt
    
    
    10,350
    
    
    
    10,500Deferred income taxes
    
    
    4,952
    
    
    
    4,205Longterm commodity hedge liability  related party
    
    
    
    
    
    
    18Commitments and contingenciesOwners equity
    
    
    53,569
    
    
    
    45,178Accumulated
other comprehensive income (loss)
    
    
    9,671
    
    
    
    (4,268
    )Total owners equity
    
    
    63,240
    
    
    
    40,910Total liabilities and owners equity
    
    $
    95,749
    
    
    $
    78,067
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The Combined Predecessor Entities
Condensed Combined Statements of Operations  (In thousands)
(Unaudited)
 Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2006
    
    
    2005
    
    
    2006
    
    
    2005Revenues:Oil and natural gas revenues
    
    $
    11,204
    
    
    $
    11,172
    
    
    $
    34,379
    
    
    $
    29,097Realized gain (loss) on oil and natural gas
derivatives
    
    
    1,252
    
    
    
    (1,704
    )
    
    
    1,254
    
    
    
    (1,658
    )Transportation and marketingrelated revenues
    
    
    1,424
    
    
    
    1,634
    
    
    
    4,458
    
    
    
    3,956Total revenues
    
    
    13,880
    
    
    
    11,102
    
    
    
    40,091
    
    
    
    31,395Operating costs and expenses:Lease operating expenses
    
    
    2,207
    
    
    
    1,906
    
    
    
    6,085
    
    
    
    5,165Cost of purchased natural gas
    
    
    1,170
    
    
    
    1,489
    
    
    
    3,860
    
    
    
    3,515Production taxes
    
    
    63
    
    
    
    73
    
    
    
    185
    
    
    
    194Exploration expenses
    
    
    708
    
    
    
    363
    
    
    
    1,061
    
    
    
    2,229Dry hole costs
    
    
    128
    
    
    
    
    
    
    
    354
    
    
    
    212Impairment
of unproved oil and natural gas properties
    
    
    
    
    
    
    51
    
    
    
    90
    
    
    
    51Asset retirement obligations accretion expense
    
    
    42
    
    
    
    49
    
    
    
    129
    
    
    
    141Depreciation, depletion and amortization
    
    
    2,030
    
    
    
    1,100
    
    
    
    4,388
    
    
    
    3,262General and administrative expenses
    
    
    610
    
    
    
    200
    
    
    
    1,449
    
    
    
    711Management fees
    
    
    
    
    
    
    28
    
    
    
    42
    
    
    
    85Total operating costs and expenses
    
    
    6,958
    
    
    
    5,259
    
    
    
    17,643
    
    
    
    15,565Operating income
    
    
    6,922
    
    
    
    5,843
    
    
    
    22,448
    
    
    
    15,830Other expense, net:Interest
expense
    
    
    (189
    )
    
    
    (184
    )
    
    
    (573
    )
    
    
    (384
    )Other income, net
    
    
    78
    
    
    
    107
    
    
    
    344
    
    
    
    88Total other expense, net
    
    
    (111
    )
    
    
    (77
    )
    
    
    (229
    )
    
    
    (296
    )Income before income taxes and equity in income
(loss) of affiliates
    
    
    6,811
    
    
    
    5,766
    
    
    
    22,219
    
    
    
    15,534Income taxes
    
    
    (1,310
    )
    
    
    (1,481
    )
    
    
    (5,809
    )
    
    
    (4,314
    )Equity in income (loss) of affiliates
    
    
    
    
    
    
    (94
    )
    
    
    164
    
    
    
    (170
    )Net income
    
    $
    5,501
    
    
    $
    4,191
    
    
    $
    16,574
    
    
    $
    11,050
  4




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The Combined Predecessor Entities
Condensed Combined Statements of Cash Flows  (In thousands)
(Unaudited)
 Nine Months EndedSeptember 30,2006
    
    
    2005Cash flows from operating activities:Net income
    
    $
    16,574
    
    
    $
    11,050Adjustments to reconcile net income to net cash flows
provided by operating activities:Asset retirement obligations accretion expense
    
    
    129
    
    
    
    141Dry hole costs
    
    
    354
    
    
    
    212Impairment of unproved oil and natural gas properties
    
    
    90
    
    
    
    51Depreciation, depletion and amortization
    
    
    4,388
    
    
    
    3,262Benefit for deferred income taxes
    
    
    (540
    )
    
    
    (541
    )Equity in (income) loss of affiliates, net of distributions
    
    
    94
    
    
    
    196Changes in operating assets and liabilities:Accounts receivable
    
    
    1,258
    
    
    
    (186
    )Income tax receivable
    
    
    
    
    
    
    463Prepaid and other current assets
    
    
    392
    
    
    
    61Other assets
    
    
    3
    
    
    
    Accounts payable and accrued liabilities
    
    
    (3,487
    )
    
    
    (1,303
    )Due to affiliates
    
    
    (2,089
    )
    
    
    805Income taxes
    
    
    2,993
    
    
    
    1,381Other current liabilities
    
    
    (45
    )
    
    
    (265
    )Net cash flows provided by operating activities
    
    
    20,114
    
    
    
    15,327Cash flows from investing activities:Acquisition of oil and natural gas properties
    
    
    
    
    
    
    (10,872
    )Development of oil and natural gas properties
    
    
    (6,911
    )
    
    
    (3,859
    )Acquisition of other property
    
    
    
    
    
    
    (5
    )Investment in equity investee
    
    
    (130
    )
    
    
    (542
    )Net cash flows used in investing activities
    
    
    (7,041
    )
    
    
    (15,278
    )Cash flows from financing activities:Repayment of
advances  related party
    
    
    
    
    
    
    (1,136
    )Debt borrowings
    
    
    
    
    
    
    8,650Contributions by partners
    
    
    16,000
    
    
    
    2,029Distributions to partners and dividends paid
    
    
    (33,330
    )
    
    
    (8,968
    )Net cash flows (used in) provided by financing activities
    
    
    (17,330
    )
    
    
    575(Decrease) increase in cash and cash equivalents
    
    
    (4,257
    )
    
    
    624Cash and
cash equivalents  beginning of period
    
    
    7,159
    
    
    
    1,672Cash and
cash equivalents  end of period
    
    $
    2,902
    
    
    $
    2,296
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The Combined Predecessor Entities
Notes to Unaudited Condensed Combined Financial Statements
 NOTE 1. GENERAL
  
    
    EV Properties, L.P. (EV Properties) is a limited partnership that owns oil and natural gas properties
and related assets in the Monroe field in Northern Louisiana and in the Appalachian
Basin in West Virginia, and
    
    CGAS Exploration, Inc. (CGAS Exploration) is a corporation that owns oil and natural gas properties and
related assets in the Appalachian Basin in Ohio.
  
    
    EnerVest Production Partners, Ltd. (EnerVest Production
Partners), which owned oil and natural gas properties and
related assets in the Monroe field in Northern Louisiana, and
    
    EnerVest WV, L.P. (EnerVest WV), which owned oil and natural gas properties and related assets in West
Virginia.
   
    
    the combined operations of EnerVest Production Partners, EnerVest WV and CGAS Exploration
for periods before April 12, 2006, and
    
    the combined operations of EV Properties and CGAS Exploration from April 12, 2006 through
September 30, 2006.
 Basis of Presentation
  Interim Financial Statements
  6




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The Combined Predecessor Entities
Notes to Unaudited Condensed Combined Financial Statements (continued)
    NOTE 2. RISK MANAGEMENT
  Commodity Swaps and Costless Collars
  7




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The Combined Predecessor Entities
Notes to Unaudited Condensed Combined Financial Statements (continued)
  HedgedVolume
    
    Weighted
    
    Weighted
    
    Weightedper day
    
    Average
    
    Average
    
    Average(Bbl or
    
    Fixed
    
    Floor
    
    CeilingPeriod Covered
    
    Index
    
    MMBtu)
    
    Price
    
    Price
    
    PriceOil:Costless Collar 
10/06  12/06*
    
    WTI
    
    
    500
    
    
    $
    
    
    
    $
    45.000
    
    
    $
    61.000Swap 
10/06  12/06*
    
    WTI
    
    
    175
    
    
    
    63.350Swap  10/06  12/06
    
    WTI
    
    
    125
    
    
    
    76.400Swap  2007
    
    WTI
    
    
    125
    
    
    
    76.400Natural Gas:Swap 
10/2006*
    
    Dominion Appalachia
    
    
    1,000
    
    
    
    6.970Swap 
10/06  12/06*
    
    Dominion Appalachia
    
    
    3,000
    
    
    
    8.515Swap 
10/06  12/06*
    
    Dominion Appalachia
    
    
    500
    
    
    
    10.240Swap  10/06  12/06
    
    Dominion Appalachia
    
    
    1,500
    
    
    
    10.240Swap  10/06  12/06
    
    Dominion Appalachia
    
    
    2,000
    
    
    
    10.380Swap 
2007*
    
    Dominion Appalachia
    
    
    2,400
    
    
    
    10.265Swap  2007
    
    Dominion Appalachia
    
    
    3,100
    
    
    
    10.265Swap 
2007*
    
    Dominion Appalachia
    
    
    1,000
    
    
    
    10.625Swap 
2008*
    
    Dominion Appalachia
    
    
    2,800
    
    
    
    9.750Swap  2008
    
    Dominion Appalachia
    
    
    2,700
    
    
    
    9.750Costless Collar 
10/06
    
    NYMEX
    
    
    1,000
    
    
    
    
    
    
    
    5.940
    
    
    
    7.050Swap  10/06
    
    NYMEX
    
    
    750
    
    
    
    9.250Swap 
11/06  12/06
    
    NYMEX
    
    
    1,750
    
    
    
    10.430Swap  2007
    
    NYMEX
    
    
    1,500
    
    
    
    9.820Swap  2007
    
    NYMEX
    
    
    500
    
    
    
    10.000Swap  2008
    
    NYMEX
    
    
    1,500
    
    
    
    9.360Swap  2008
    
    NYMEX
    
    
    500
    
    
    
    9.500
 
   Accounting for Derivative
Instruments and Hedging Activities
 Interest Rate Swap
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The Combined Predecessor Entities
Notes to Unaudited Condensed Combined Financial Statements (continued)
 NOTE 3. ASSET RETIREMENT OBLIGATIONS
 Accounting for Asset Retirement
Obligations.
 Balance as of December 31, 2005
    
    $
    2,752Liabilities incurred
    
    
    11Accretion expense
    
    
    129Sale of assets
    
    
    (60
    )Balance as of September 30, 2006
    
    $
    2,832
 NOTE
4. LONGTERM DEBT
    NOTE 5. COMPREHENSIVE INCOME (LOSS)
  Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2006
    
    
    2005
    
    
    2006
    
    
    2005Net income
    
    $
    5,501
    
    
    $
    4,191
    
    
    $
    16,574
    
    
    $
    11,050Other comprehensive income
(loss):Unrealized gains
(losses) on derivatives
    
    
    5,962
    
    
    
    (12,277
    )
    
    
    14,346
    
    
    
    (12,476
    )Reclassification
adjustment into earnings
    
    
    (640
    )
    
    
    1,247
    
    
    
    (408
    )
    
    
    1,242Comprehensive income (loss)
    
    $
    10,823
    
    
    $
    (6,839
    )
    
    $
    30,512
    
    
    $
    (184
    )
 NOTE 6. COMMITMENTS AND CONTINGENCIES
   9




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The Combined Predecessor Entities
Notes to Unaudited Condensed Combined Financial Statements (continued)
  NOTE 7. RELATED PARTY TRANSACTIONS
   
    
    Our predecessors sold oil and natural gas properties totaling $0.4 million to a wholly
owned subsidiary of EnerVest. No loss was recognized on the sale as the transaction was
deemed to be a transfer of assets between entities under common control;
    
    Our predecessors sold other property totaling $0.2 million to a wholly owned subsidiary
of EnerVest. No loss was recognized on the sale as the transaction was deemed to be a
distribution to the general partner; and
    
    Our predecessors sold investments in affiliated companies totaling $1.3 million to a
wholly owned subsidiary of EnerVest. No loss was recognized on the sale as the transaction
was deemed to be a transfer of assets between entities under common control. Prior to the
sale, our predecessors recorded the proportionate share of net income from the investments
in affiliated companies under the equity method of accounting.
   10




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NOTE 8. OTHER SUPPLEMENTAL INFORMATION
  Nine Months EndedSeptember 30,2006
    
    2005Supplemental cash flows information:Cash paid for interest
    
    $
    686
    
    
    $
    378Cash paid for income taxes
    
    
    3,357
    
    
    
    3,006Noncash transactions:Costs for development of oil and natural gas properties in accounts
payable and accrued liabilities
    
    
    241
    
    
    
    Increase in oil and natural gas properties from purchase of limited
partnership interest in EnerVest WV
    
    
    7,681
    
    
    
    Distribution/sale of property and investments in affiliates to EnerVest
    
    
    1,849
    
    
    
    Reduction in debt through partner contribution
    
    
    150
    
    
    
    400Increase in due to affiliates for the incurrence of offering costs on
our behalf
    
    
    4,000
    
    
    
    Conversion of accounts payable to EnerVest to partners capital
    
    
    3,165
    
    
    
    
 NOTE 9. NEW ACCOUNTING STANDARDS
 Accounting for
Certain Hybrid Instruments, Accounting for Transfers and Servicing of Financial Assets and Extinguishments
of Liabilities,
 Fair Value
Measurements,
 Considering the Effects of Prior Year Misstatements when
Quantifying Misstatements in Current Year Financial Statements
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The Combined Predecessor Entities
Notes to Unaudited Condensed Combined Financial Statements (continued)
 NOTE 10. INITIAL PUBLIC OFFERING
       
    
    Our obligation to reimburse EnerVest for payment of operating expenses it incurs on our
behalf;
    
    Our obligation to pay EnerVest a monthly administrative fee for providing us general and
administrative services with respect to our business and operations;
    
    Our obligation to reimburse EnerVest for insurance coverage expenses it incurs with
respect to our operations;
    
    EnerVests obligation to provide us with general and administrative services equivalent
to what it provided our predecessors; and
    
    EnerVests obligation to indemnify us for certain liabilities and our obligation to
indemnify EnerVest for certain liabilities.We also entered into the following transactions and executed the following agreements:
    
    We entered into a new fiveyear $150.0 million senior secured revolving credit
agreement;
    
    We used a portion of the proceeds from the sale of common units to repay $10.4 million of
outstanding indebtedness we assumed in connection with the acquisition of our predecessors;
    
    Our longterm incentive plan became effective for employees, consultants and directors
of EV Management and employees and consultants of its affiliates who perform services for us
and our affiliates;
 12




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
    
    Our subsidiaries entered into an operating agreement with a subsidiary of EnerVest under
which the subsidiary acts as operator of the oil and natural gas wells and related gathering
systems and production facilities; and
    
    EV Management entered into employment agreements with Michael Mercer to act as our senior
vice president and chief financial officer and with Kathryn MacAskie to act as our senior
vice president of acquisitions and divestitures.
 NOTE 11. SUBSEQUENT EVENT
  13




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ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 The following discussion and analysis of the combined financial condition and results of
operations of our predecessors should be read in conjunction with our prospectus dated September
26, 2006 (No. 333134139), as filed with the Securities and Exchange Commission, and the condensed
combined financial statements of our predecessors and the related notes thereto included elsewhere
in this quarterly report of Form 10Q.
 OVERVIEW
    
    
    EV Properties, L.P. is a limited partnership that owns oil and natural gas properties and
related assets in the Monroe field in Northern Louisiana and in the Appalachian Basin in
West Virginia, and
    
    CGAS Exploration, Inc. is a corporation that owns oil and natural gas properties and
related assets in the Appalachian Basin in Ohio.
  
    
    EnerVest Production Partners, Ltd. which owned oil and natural gas properties and related
assets in the Monroe field in Northern Louisiana, and
    
    EnerVest WV, L.P. which owned oil and natural gas properties and related assets in West
Virginia.
   
    
    the combined operations of EnerVest Production Partners, EnerVest WV and CGAS Exploration
for periods before April 12, 2006, and
    
    the combined operations of EV Properties and CGAS Exploration from April 12, 2006 through
September 30, 2006.
  
    
    CGAS Exploration incurred substantial expenses related to exploration activities,
which we do not plan to do;
    
    the contracts under which our predecessors reimbursed EnerVest for general and
administrative costs were different than the contracts under which we will reimburse
EnerVest in the future; and
    
    our predecessors did not incur the additional costs of being a public company.
  Our Initial Public Offering
   Our Assets
  14




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BUSINESS ENVIRONMENT
  
    
    the prices at which we will sell our oil and gas production;
 
    
    our ability to hedge commodity prices;
 
    
    the amount of oil and natural gas we produce; and
 
    
    the level of our operating and administrative costs.
   Accounting for Derivative
Instruments and Hedging Activities
   15




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RESULTS OF OPERATIONS
  Three Months Ended
    
    Nine Months EndedSeptember 30,
    
    September 30,2006
    
    2005
    
    2006
    
    2005Production data (1):Oil (MBbls)
    
    
    47
    
    
    
    44
    
    
    
    147
    
    
    
    134Natural gas (MMcf)
    
    
    1,190
    
    
    
    968
    
    
    
    3,275
    
    
    
    2,882Net production:Total production (MMcfe)
    
    
    1,471
    
    
    
    1,231
    
    
    
    4,159
    
    
    
    3,687Average daily production (Mcfe/day)
    
    
    15,988
    
    
    
    13,380
    
    
    
    15,233
    
    
    
    13,507Average sales price per unit:Oil (Bbl) including hedges
    
    $
    54.79
    
    
    $
    59.73
    
    
    $
    55.23
    
    
    $
    52.65Oil (Bbl) excluding hedges
    
    
    68.43
    
    
    
    59.73
    
    
    
    64.38
    
    
    
    52.65Natural gas (Mcf) including hedges
    
    
    8.31
    
    
    
    7.08
    
    
    
    8.40
    
    
    
    7.07Natural gas (Mcf) excluding hedges
    
    
    6.72
    
    
    
    8.84
    
    
    
    7.60
    
    
    
    7.64Average unit cost per Mcfe (1):Lease operating expenses
    
    $
    1.50
    
    
    $
    1.55
    
    
    $
    1.46
    
    
    $
    1.40Depreciation, depletion and amortization
    
    
    1.38
    
    
    
    0.89
    
    
    
    1.06
    
    
    
    0.88General and administrative expenses
    
    
    0.41
    
    
    
    0.19
    
    
    
    0.36
    
    
    
    0.22
 
 (1)
    
    Represents production data or costs attributable to the operations of our combined
predecessors. Since we did not acquire all of the properties owned by our combined
predecessors, the information in this table may not be indicative of our future results. Revenues
    16




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##### Table of Contents



Operating Costs and Expenses
      Historical Revenues and Direct Operating Expenses of Our Partnership Properties
   17




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##### Table of Contents



Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2006
    
    
    2005
    
    
    2006
    
    
    2005Revenues:Oil and natural gas revenues
    
    $
    5,070
    
    
    $
    5,990
    
    
    $
    16,011
    
    
    $
    14,945Realized gain (loss) on oil and natural gas
derivatives
    
    
    1,318
    
    
    
    (933
    )
    
    
    2,222
    
    
    
    (956
    )Transportation and marketingrelated revenues
    
    
    1,291
    
    
    
    1,595
    
    
    
    4,207
    
    
    
    3,838Total revenues
    
    
    7,679
    
    
    
    6,652
    
    
    
    22,440
    
    
    
    17,827Direct operating expenses:Lease operating expenses
    
    
    1,432
    
    
    
    1,433
    
    
    
    4,249
    
    
    
    3,824Cost of purchased gas
    
    
    1,170
    
    
    
    1,489
    
    
    
    3,860
    
    
    
    3,516Production taxes
    
    
    53
    
    
    
    57
    
    
    
    145
    
    
    
    143Total direct operating expenses
    
    
    2,655
    
    
    
    2,979
    
    
    
    8,254
    
    
    
    7,483Revenues in excess of direct operating expenses
    
    $
    5,024
    
    
    $
    3,673
    
    
    $
    14,186
    
    
    $
    10,344Production data:Oil (MBbls)
    
    
    13
    
    
    
    15
    
    
    
    43
    
    
    
    46Natural gas (MMcf)
    
    
    628
    
    
    
    628
    
    
    
    1,772
    
    
    
    1,706Net production:Total production (MMcfe)
    
    
    706
    
    
    
    720
    
    
    
    2,032
    
    
    
    1,986Average daily production (Mcfe/day)
    
    
    7,670
    
    
    
    7,820
    
    
    
    7,441
    
    
    
    7,273Average sales price per unit:Oil (Bbl) including hedges
    
    $
    69.60
    
    
    $
    59.67
    
    
    $
    65.14
    
    
    $
    52.09Oil (Bbl) excluding hedges
    
    
    68.03
    
    
    
    59.67
    
    
    
    64.67
    
    
    
    52.09Natural gas (Mcf) including hedges
    
    
    8.73
    
    
    
    6.61
    
    
    
    8.70
    
    
    
    6.78Natural gas (Mcf) excluding hedges
    
    
    6.67
    
    
    
    8.09
    
    
    
    7.46
    
    
    
    7.34Average unit cost per Mcfe:Lease operating expenses
    
    $
    2.03
    
    
    $
    1.99
    
    
    $
    2.09
    
    
    $
    1.93Production taxes
    
    
    0.08
    
    
    
    0.08
    
    
    
    0.07
    
    
    
    0.07
 Revenues
   18




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##### Table of Contents



Direct operating expenses
    LIQUIDITY AND CAPITAL RESOURCES
   19




---



##### Table of Contents



Cash Flows
  2006
    
    2005Operating activities
    
    $
    20,114
    
    
    $
    15,327Investing activities
    
    
    (7,041
    )
    
    
    (15,278
    )Financing activities
    
    
    (17,330
    )
    
    
    575
 Operating Activities
  Investing Activities
  Financing Activities
   Available Credit Facilities
    20




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##### Table of Contents



NEW ACCOUNTING STANDARDS
 Accounting for
Certain Hybrid Instruments, Accounting for Derivative Instruments and
Hedging Activities, Accounting for
Transfers and Servicing of Financial Assets and Extinguishments of Liabilities,
 Fair Value
Measurements,
 Considering the Effects of Prior Year Misstatements when
Quantifying Misstatements in Current Year Financial Statements
 FORWARDLOOKING STATEMENTS
  http://www.sec.gov
 
 ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
 Commodity Price Risk
  21




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##### Table of Contents



HedgedVolume
    
    Weighted
    
    Weighted
    
    Weightedper day
    
    Average
    
    Average
    
    Average(Bbl or
    
    Fixed
    
    Floor
    
    CeilingPeriod Covered
    
    Index
    
    MMBtu)
    
    Price
    
    Price
    
    PriceOil:Costless Collar 
10/06  12/06*
    
    WTI
    
    
    500
    
    
    $
    
    
    
    $
    45.000
    
    
    $
    61.000Swap 
10/06  12/06*
    
    WTI
    
    
    175
    
    
    
    63.350Swap  10/06  12/06
    
    WTI
    
    
    125
    
    
    
    76.400Swap  2007
    
    WTI
    
    
    125
    
    
    
    76.400Natural Gas:Swap 
10/06*
    
    Dominion Appalachia
    
    
    1,000
    
    
    
    6.970Swap 
10/06  12/06*
    
    Dominion Appalachia
    
    
    3,000
    
    
    
    8.515Swap 
10/06  12/06*
    
    Dominion Appalachia
    
    
    500
    
    
    
    10.240Swap  10/06  12/06
    
    Dominion Appalachia
    
    
    1,500
    
    
    
    10.240Swap  10/06  12/06
    
    Dominion Appalachia
    
    
    2,000
    
    
    
    10.380Swap 
2007*
    
    Dominion Appalachia
    
    
    2,400
    
    
    
    10.265Swap 
2007
    
    Dominion Appalachia
    
    
    3,100
    
    
    
    10.265Swap 
2007*
    
    Dominion Appalachia
    
    
    1,000
    
    
    
    10.625Swap 
2008*
    
    Dominion Appalachia
    
    
    2,800
    
    
    
    9.750Swap  2008
    
    Dominion Appalachia
    
    
    2,700
    
    
    
    9.750Costless Collar 
10/06
    
    NYMEX
    
    
    1,000
    
    
    
    
    
    
    
    5.940
    
    
    
    7.050Swap  10/06
    
    NYMEX
    
    
    750
    
    
    
    9.250Swap 
11/06  12/06
    
    NYMEX
    
    
    1,750
    
    
    
    10.430Swap  2007
    
    NYMEX
    
    
    1,500
    
    
    
    9.820Swap  2007
    
    NYMEX
    
    
    500
    
    
    
    10.000Swap  2008
    
    NYMEX
    
    
    1,500
    
    
    
    9.360Swap  2008
    
    NYMEX
    
    
    500
    
    
    
    9.500
 
  .
 22




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##### Table of Contents



HedgedVolume
    
    Weighted
    
    Weighted
    
    Weightedper day
    
    Average
    
    Average
    
    Average(Bbl or
    
    Fixed
    
    Floor
    
    CeilingPeriod Covered
    
    Index
    
    MMBtu)
    
    Price
    
    Price
    
    PriceOil:Swap  10/06  12/06
    
    WTI
    
    
    125
    
    
    $
    76.400
    
    
    $
    
    
    
    $Swap  2007
    
    WTI
    
    
    125
    
    
    
    76.400Natural Gas:Swap  10/06  12/06
    
    Dominion Appalachia
    
    
    1,500
    
    
    
    10.240Swap  10/06  12/06
    
    Dominion Appalachia
    
    
    2,000
    
    
    
    10.380Swap  2007
    
    Dominion Appalachia
    
    
    3,100
    
    
    
    10.265Swap  2008
    
    Dominion Appalachia
    
    
    2,700
    
    
    
    9.750Costless Collar 
10/06
    
    NYMEX
    
    
    1,000
    
    
    
    
    
    
    
    5.940
    
    
    
    7.050Swap  10/06
    
    NYMEX
    
    
    750
    
    
    
    9.250Swap 
11/06  12/06
    
    NYMEX
    
    
    1,750
    
    
    
    10.430Swap  2007
    
    NYMEX
    
    
    1,500
    
    
    
    9.820Swap  2007
    
    NYMEX
    
    
    500
    
    
    
    10.000Swap  2008
    
    NYMEX
    
    
    1,500
    
    
    
    9.360Swap  2008
    
    NYMEX
    
    
    500
    
    
    
    9.500
 Accounting for Derivative Instruments and Hedging
Activities
 Interest Rate Risk
  
 ITEM 4. CONTROLS AND PROCEDURES
 Evaluation of Disclosure Controls and Procedures
  Change in Internal Controls Over Financial Reporting
  23




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##### Table of Contents



PART II. OTHER INFORMATION
 
 ITEM 1. LEGAL PROCEEDINGS
  
 ITEM 1A. RISK FACTORS
 Summary of Risk Factors
 Limited partner interests are inherently different from capital stock of a corporation,
although many of the business risks to which we are subject are similar to those that would be
faced by a corporation engaged in similar businesses. If any of the following risks were actually
to occur, our business, financial condition or results of operations could be materially adversely
affected. In that case, we might not be able to pay the minimum quarterly distribution on our
common units, the trading price of our common units could decline and you could lose all or part of
your investment.
 The following list of risk factors is not exhaustive. For a complete description of risk
factors, please see the risks under Risk Factors beginning on page 24 of our prospectus dated
September 26, 2006.
 Risks Related to Our Business
 
    
    Our ability to pursue our business plan and make distributions to unitholders will depend
upon our maintaining or increasing our revenues and cash flows, which will be subject to the
following risks:
 o
    
    a reduction in the prices we receive for our production, which prices have been and
are expected to continue to be volatile and affected by factors beyond our control such
as weather, economic conditions, availability of alternative fuels and government
regulations;o
    
    the costs we must reimburse EnerVest to operate our wells; ando
    
    whether we incur substantial costs to comply with environmental laws or to
remediate or clean up environmental contamination.
 
    
    Unless we replace the oil and gas reserves we produce, our production and revenues will
decline, which will adversely affect our ability to pursue our business plans and make
distributions to unitholders. Risks associated with our ability to replace our reserves
include:
 o
    
    our ability to acquire oil and gas properties, including our ability to evaluate
the value of an acquisition and compete with other purchasers of properties;o
    
    our ability to maintain production and replace reserves by development drilling,
including risks related to failure to discover reserves in commercial quantities, weather
conditions and catastrophic events such as fires or explosions;o
    
    our ability to attract financing for our acquisitions and drilling activities; ando
    
    the availability of equipment and services necessary to drill our wells, and the
costs we must incur to drill wells and otherwise develop our non-producing reserves.
 
    
    We may not have sufficient cash from operations following the establishment of cash
reserves and payment of fees and expenses, including cost reimbursements to our general
partner, to enable us to make cash distributions to holders of our common units and
subordinated units at the minimum quarterly distribution rate under our cash distribution
policy.
 24




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##### Table of Contents




    
    Any material inaccuracies in reserve estimates or the underlying assumptions will
materially affect the quantities and present value of our reserves.
    
    As a result of our hedging activities we may not fully participate in increases in
commodity prices, which would reduce our revenues and cash available for distribution to
unitholders from amounts we would receive if we had not hedged.
 Risks Inherent in an Investment in Us
 
    
    EnerVest controls our general partner, which has sole responsibility for conducting our
business and managing our operations. EnerVest, EV Investors and the EnCap partnerships,
which will be limited partners of our general partner, will have conflicts of interest with
us, which may permit them to favor their own interests to your detriment.
    
    Neither EnerVest nor EnCap is limited in its ability to compete with us for acquisition
or drilling opportunities. This could cause conflicts of interest and limit our ability to
acquire additional oil and natural gas properties which in turn could adversely affect our
ability to maintain production over the long term, and our results of operations and cash
available for distribution to our unitholders.
    
    Cost reimbursements due to our general partner and its affiliates for services provided
may be substantial and could reduce our cash available for distribution to you.
    
    Our partnership agreement limits our general partners fiduciary duties to holders of our
common units and subordinated units.
 
    
    Our partnership agreement restricts the remedies available to holders of our common units
and subordinated units for actions taken by our general partner that might otherwise
constitute breaches of fiduciary duty.
    
    Our general partner may elect to cause us to issue Class B units to it in connection with
a resetting of the target distribution levels related to our general partners incentive
distribution rights without the approval of the conflicts committee of our general partner
or holders of our common units and subordinated units. This may result in lower
distributions to holders of our common units in certain situations.
    
    Holders of our common units have limited voting rights and are not entitled to elect our
general partner or the members of the board of directors of its general partner.
    
    Even if holders of our common units are dissatisfied, they cannot initially remove our
general partner without its consent.
    
    Our partnership restricts the voting rights of unitholders owning 20% or more of our common units.
    
    Control of our general partner may be transferred to a third party without unitholder consent.
    
    We may issue additional units without your approval, which would dilute your existing ownership interests.
    
    Unitholders may have limited liquidity for their units, a trading market may not develop
for the units and you may not be able to resell your units at the initial public offering
price.
 Tax Risks to Common Unitholders
 
    
    Our tax treatment depends on our status as a partnership for federal income tax purposes
and not being subject to a material amount of entity-level taxation by individual states. If
the Internal Revenue Service treats us as a corporation or we become subject to a material
amount of entity-level taxation for state tax purposes, it would reduce the amount of cash
available for distribution to our unitholders.
    
    The Internal Revenue Service could contest our federal income tax positions, which may
adversely affect the market for our common units, and the cost of any Internal Revenue
Service contest will reduce our cash available for distribution to our unitholders.
 25




---



##### Table of Contents




    
    You may be required to pay taxes on income from us even if you do not receive any cash distributions from us.
    
    Tax gain or loss on disposition of common units could be more or less than expected.
    
    Tax-exempt entities and foreign persons face unique tax issues from owning our common
units that may result in adverse tax consequences to them.
    
    We will treat each purchaser of common units as having the same tax benefits without
regard to the actual common units purchased. The IRS may challenge this treatment, which
could adversely affect the value of the common units.
    
    The sale or exchange of 50% or more of our capital and profits interests during any
12-month period will result in the termination of our partnership for federal income tax
purposes.
    
    Unitholders may be subject to state and local taxes and tax return filing requirements in
states where they do not live as a result of investing in our common units.
 
 ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
 Unregistered Sales of Equity Securities
  Use of Proceeds
   
 ITEM 3. DEFAULTS UPON SENIOR SECURITIES
  
 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
  
 ITEM 5. OTHER INFORMATION
  26




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##### Table of Contents



ITEM 6. EXHIBITS
  1.1
    
    Underwriting Agreement, dated September 26, 2006 by and among EnerVest Management Partners,
Ltd., EV Management, LLC, EV Energy GP, L.P., EV Energy Partners, L.P., EV Properties GP, LLC,
EV Properties, LP, CGAS Holdings, LLC, EVEC Holdings, LLC, EnCap Energy Capital Fund V, L.P.,
EnCap V-B Acquisitions, L.P. and A.G. Edwards & Sons, Inc., Raymond James & Associates, Inc.,
Wachovia Capital markets, LLC and Oppenheimer & Co. Inc. (Incorporated by reference from
Exhibit 1.1 to EV Energy Partners, L.P.s current report on Form 8-K filed with the SEC on
October 5, 2006).3.1
    
    First Amended and Restated Partnership Agreement EV Energy Partners, L.P. (Incorporated by
reference from Exhibit 3.1 to EV Energy Partners, L.P.s current report on Form 8-K filed with
the SEC on October 5, 2006).3.2
    
    First Amended and Restated Partnership Agreement of EV Energy GP, L.P. (Incorporated by
reference from Exhibit 3.2 to EV Energy Partners, L.P.s current report on Form 8-K filed with
the SEC on October 5, 2006).3.3
    
    Amended and Restated Limited Liability Company Agreement of EV Management, LLC. (Incorporated
by reference from Exhibit 3.3 to EV Energy Partners, L.P.s current report on Form 8-K filed
with the SEC on October 5, 2006).10.1
    
    Omnibus Agreement, dated September 29, 2006, by and among EnerVest Management Partners, Ltd.,
EV Management, LLC, EV Energy GP, L.P., EV Energy Partners, L.P., and EV Properties, L.P.
(Incorporated by reference from Exhibit 10.1 to EV Energy Partners, L.P.s current report on Form 8-K filed
with the SEC on October 5, 2006).10.2
    
    Contract Operating Agreement, dated September 29, 2006, by and among EnerVest Operating,
L.L.C. and EnerVest Production Partners, L.P. (Incorporated by reference from Exhibit 10.2 to
EV Energy Partners, L.P.s current report on Form 8-K filed with the SEC on October 5, 2006).10.3
    
    Contract Operating Agreement, dated September 29, 2006, by and among EnerVest Operating,
L.L.C. and CGAS Properties, L.P. (Incorporated by reference from Exhibit 10.3 to EV Energy
Partners, L.P.s current report on Form 8-K filed with the SEC on October 5, 2006).10.4
    
    EV Energy Partners, L.P. Long-Term Incentive Plan (Incorporated by reference from Exhibit
10.4 to EV Energy Partners, L.P.s current report on Form 8-K filed with the SEC on October 5,
2006).10.5
    
    Contribution Agreement, dated September 29, 2006, by and among EnerVest Management Partners,
Ltd., EVEC Holdings, LLC, EnerVest Operating, L.L.C., CGAS Exploration, Inc., EV Investors,
L.P., , EVCG GP LLC, CGAS Properties, L.P., CGAS Holdings, LLC, EnCap Energy Capital Fund V,
L.P., EnCap V-B Acquisitions, L.P., EnCap Fund V, EV Management, LLC, EV Energy GP, L.P., and
EV Energy Partners, L.P. (Incorporated by reference from Exhibit 10.5 to EV Energy Partners,
L.P.s current report on Form 8-K filed with the SEC on October 5, 2006).10.6
    
    Credit Agreement, dated September 29, 2006, by and among EV Properties, L.P. and JPMorgan
Chase Bank, N.A., as administrative agent for the lenders named therein. (Incorporated by
reference from Exhibit 10.6 to EV Energy Partners, L.P.s current report on Form 8-K filed
with the SEC on October 5, 2006).10.7
    
    Employment Agreements, dated October 1, 2006, by and between EV Management, LLC and Michael
E. Mercer. (Incorporated by reference from Exhibit 10.7 to EV Energy Partners, L.P.s current
report on Form 8-K filed with the SEC on October 5, 2006).10.8
    
    Employment Agreements, dated October 1, 2006, by and between EV Management, LLC and Kathryn
S. MacAskie. (Incorporated by reference from Exhibit 10.8 to EV Energy Partners, L.P.s
current report on Form 8-K filed with the SEC on October 5, 2006).+31.1
    
    Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer.+31.2
    
    Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer.+32 .1
    
    Section 1350 Certification of Chief Executive Officer+32.2
    
    Section 1350 Certification of Chief Financial Officer
 
 +
    
    Filed herewith 27




---



##### Table of Contents



SIGNATURES
  EV Energy Partners, L.P.(Registrant)Date:
November 14, 2006
    
    By:
    
    /s/ MICHAEL E. MERCERMichael E. Mercer
Senior Vice President and Chief Financial Officer
 28




---



##### Table of Contents



EXHIBIT INDEX
 1.1
    
    Underwriting Agreement, dated September 26, 2006 by and among EnerVest Management Partners,
Ltd., EV Management, LLC, EV Energy GP, L.P., EV Energy Partners, L.P., EV Properties GP, LLC,
EV Properties, LP, CGAS Holdings, LLC, EVEC Holdings, LLC, EnCap Energy Capital Fund V, L.P.,
EnCap V-B Acquisitions, L.P. and A.G. Edwards & Sons, Inc., Raymond James & Associates, Inc.,
Wachovia Capital markets, LLC and Oppenheimer & Co. Inc. (Incorporated by reference from
Exhibit 1.1 to EV Energy Partners, L.P.s current report on Form 8-K filed with the SEC on
October 5, 2006).3.1
    
    First Amended and Restated Partnership Agreement EV Energy Partners, L.P. (Incorporated by
reference from Exhibit 3.1 to EV Energy Partners, L.P.s current report on Form 8-K filed with
the SEC on October 5, 2006).3.2
    
    First Amended and Restated Partnership Agreement of EV Energy GP, L.P. (Incorporated by
reference from Exhibit 3.2 to EV Energy Partners, L.P.s current report on Form 8-K filed with
the SEC on October 5, 2006).3.3
    
    Amended and Restated Limited Liability Company Agreement of EV Management, LLC. (Incorporated
by reference from Exhibit 3.3 to EV Energy Partners, L.P.s current report on Form 8-K filed
with the SEC on October 5, 2006).10.1
    
    Omnibus Agreement, dated September 29, 2006, by and among EnerVest Management Partners, Ltd.,
EV Management, LLC, EV Energy GP, L.P., EV Energy Partners, L.P., and EV Properties, L.P.
(Incorporated by reference from Exhibit 10.1 to EV Energy Partners, L.P.s current report on
Form 8-K filed with the SEC on October 5, 2006).10.2
    
    Contract Operating Agreement, dated September 29, 2006, by and among EnerVest Operating,
L.L.C. and EnerVest Production Partners, L.P. (Incorporated by reference from Exhibit 10.2 to
EV Energy Partners, L.P.s current report on Form 8-K filed with the SEC on October 5, 2006).10.3
    
    Contract Operating Agreement, dated September 29, 2006, by and among EnerVest Operating,
L.L.C. and CGAS Properties, L.P. (Incorporated by reference from Exhibit 10.3 to EV Energy
Partners, L.P.s current report on Form 8-K filed with the SEC on October 5, 2006).10.4
    
    EV Energy Partners, L.P. Long-Term Incentive Plan (Incorporated by reference from Exhibit
10.4 to EV Energy Partners, L.P.s current report on Form 8-K filed with the SEC on October 5,
2006).10.5
    
    Contribution Agreement, dated September 29, 2006, by and among EnerVest Management Partners,
Ltd., EVEC Holdings, LLC, EnerVest Operating, L.L.C., CGAS Exploration, Inc., EV Investors,
L.P., , EVCG GP LLC, CGAS Properties, L.P., CGAS Holdings, LLC, EnCap Energy Capital Fund V,
L.P., EnCap V-B Acquisitions, L.P., EnCap Fund V, EV Management, LLC, EV Energy GP, L.P., and
EV Energy Partners, L.P. (Incorporated by reference from Exhibit 10.5 to EV Energy Partners,
L.P.s current report on Form 8-K filed with the SEC on October 5, 2006).10.6
    
    Credit Agreement, dated September 29, 2006, by and among EV Properties, L.P. and JPMorgan
Chase Bank, N.A., as administrative agent for the lenders named therein. (Incorporated by
reference from Exhibit 10.6 to EV Energy Partners, L.P.s current report on Form 8-K filed
with the SEC on October 5, 2006).10.7
    
    Employment Agreements, dated October 1, 2006, by and between EV Management, LLC and Michael
E. Mercer. (Incorporated by reference from Exhibit 10.7 to EV Energy Partners, L.P.s current
report on Form 8-K filed with the SEC on October 5, 2006).10.8
    
    Employment Agreements, dated October 1, 2006, by and between EV Management, LLC and Kathryn
S. MacAskie. (Incorporated by reference from Exhibit 10.8 to EV Energy Partners, L.P.s
current report on Form 8-K filed with the SEC on October 5, 2006).+31.1
    
    Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer.+31.2
    
    Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer.+32 .1
    
    Section 1350 Certification of Chief Executive Officer+32.2
    
    Section 1350 Certification of Chief Financial Officer
 
 +
    
    Filed herewith