Stephen Brunner - President and CEO Chuck Ward - CFO and Treasurer

Dan Schenk - MLV Jay Abella - Investment Partners Gregg Abella - Investment Partners Asset Management Frank Abella - Investment Partners Asset Management

Good morning. And welcome to Constellation Energy Partners First Quarter 2014 Conference Call. My name is [Evan] and I will be moderating today’s call. At this time, all participants are in a listen-only mode. (Operator Instructions). As a reminder today’s call is being recorded; and if you have object to such recording, you may disconnect at this time. I would now like to turn the call over to Stephen R. Brunner, President and Chief Executive Officer of Constellation Energy Partners, Mr. Brunner, you may begin.

Good morning. I would like to thank everyone to take time to join us, for our look at first quarter 2014 results which we released Thursday last week and for updates and some key initiatives we have been working on since our call in March. Chuck is with me this morning, we will quite a bit ground the color for you. But before we get started on slide two, I’d like to remind everyone that this morning’s presentation is being webcast and our slide deck is available on our website, constellationenergypartners.com. I’d also like to remind everyone that our slides and discussion this morning include forward-looking statements, which are subject to certain risks and uncertainties, these risks and uncertainties are described more fully in our documents on file with the SEC, which can also be accessed from our website. And finally, we will again use non-GAAP financial measures in this morning's presentation to help our unitholders and the investment community to better understand our operating performance. The presentation available on our website includes an appendix that reconciles these non-GAAP financial measures to GAAP measures. Now if you turn with me to slide three. Starting with some operational highlights, our average net production during the first quarter was 4,131 BOE per day, which was down about 2% compared to a prior quarter with up 11% when compared to the same quarter last year. Included in our total production was oil and liquids production of about 907 barrels per day, which was up about 24% over the prior quarter and up 71% over the same quarter last year. Significantly, our oil and liquids production accounted for about 22% of our total production during the quarter as compared to 17% in prior quarter. Oil production also accounted for about 44% of our total sales revenue in the first quarter. During the first quarter, our operating costs, which include lease operating expenses, production taxes and general and administrative expenses, net of certain non-cash items, averaged $25.18 per BOE, this compares to $24.69 per BOE for the full year 2013 after adjustments for non-recurring items. Our adjusted EBITDA was $7 million for the first quarter, which was down relative to the prior quarter, is up about 17% over the same quarter last year. During which we reported $6 million in adjusted EBITDA after adjusting for non-recurring items. Our drilling focus remains on all opportunities in our existing asset base, with the uncertainties stemming from PostRock Litigation which was settled in March 31st. In a cooler to normal winter during the quarter, things are relatively quiet for us on the drilling front. In the first quarter, we completed seven net wells and recompletion with $2.7 million in capital spending and we finished the quarter with one net well in progress As noted in our press release this morning, after the quarter, we used $1.4 million in capital to require non-operated working interest in nine producing wells located in LaSalle Parish, Louisiana. In late April, the assets were producing approximately 17 barrels oil per day net to our interest. Beyond the current production, the assets provide about 15 drilling prospects with work on these prospects expected to begin in 2015. The wells which were acquired at auction are operated about Sanchez Oil & Gas Corporation, which also operates the majority of our Texas assets. Also after the end of the quarter, we executed hedges on approximately 84,000 barrels of our 2014 to 2016 oil production. As we announced on May 2nd, our borrowing base was increased from 55 million to 70 million, the borrowing base increase was primarily a function of reserve additions flowing through our year-end engineering reports together with removal of uncertainty associated with the PostRock Litigation. After several years of borrowing base pressure, I have to say it's really great to be working with the bank group that understands our story and brings liquidity support, to support our vision going forward. Finally, I'd like to take a minute to talk about the share of services and other agreements we executed with Sanchez Oil & Gas Corporation, which was the subject of a press release we issued on May 8th. Those agreements are summarized in the Form 8-K we filed on May 8th with some highlights provided on slide four. The shared services agreement or SSA is really the corner stone of our operational and business development relationship with SOG. Under this agreement, an affiliate of SOG will provide all services that CEP requires to operate its business including overhead, technical, administrative, marketing, accounting, operational, information systems, financial, compliance, insurance, professional and acquisition, disposition and financing services. In connection with providing these services, the Manager will receive compensation under a four part fee structure. First, the Manager will receive a $1 million administrative fee. This is upfront set up cost to CEP, the first half which was paid on May 8th and the second half of which will be paid out on the in service date of agreement. Second, the Manager will receive a quarterly fee equal to 0.375% of the value of CEP’s properties other than its Mid-Con assets. Third, the Manger will receive reimbursement for allocated overhead costs as well as any direct third party cost incurred. And finally, for each asset acquisition, asset disposition and financing, the Manager will receive a fee not to exceed 2% of the value of such transaction. The SSA has a primary term of 10 years and may be terminated after two years by either party with six months notice subject under certain conditions to payment of the termination fee. In conjunction with the SSA, we entered into three other agreements with SOG and its affiliates. These include the contract operating agreement, transition and assistant agreement, and seismic license agreement. These are intended to facilitate services contemplated under the SSA and address the provision of operational resources, use of CEP’s employees and provision of services and the joined use of technical resources that are vital to the business. In terms of these agreements, track the term of the SSA. In terms of financial impact of the SOG services agreement with the balance of this year targeted for transition, we anticipate that the agreement will result in no cost savings in 2014. After 2014, we anticipate cost savings will result from more efficient use of shared resources and economies of scale as a result of integrating our business for the larger management service organization. More importantly the services agreement provides a gateway to achieving some of the business development initiatives that are important steps toward growing CEP’s business. We hope to share more information on these business development initiatives in the coming months, but suffice to say that we are really excited about the prospect of working with SOG and its affiliates to return value to CEP’s unit holders. With those updates I would like now to turn the presentation over to Chuck Ward for a closer look at our first quarter financials.

Thanks, Steve. Slide five provides a comparison of our first quarter 2014 results to the fourth quarter 2013 and the first quarter 2013. Note that these results are for continuing operations so we have adjusted Robinson’s Bend out of our first quarter 2013 results. Total production during the first quarter 2014 was 372 MBOE, which is down slightly versus the prior quarter, but up about 11% when we compared to the same quarter of last year. Our oil and gas sales revenue of $16.7 million compares $17.5 million in the prior quarter with $14.4 million in the same quarter of last year. The balance of our revenue was impacted by a mark-to-market loss on the value of our hedge portfolio, which is again a function of higher commodity price levels quarter-on-quarter, as compared to the fixed prices under our hedge contracts. As noted during our previous calls this is a non-cash item and it’s removed from net income and arriving at our adjusted EBITDA. Our operating expenses in the first quarter were down considerably when compared to the prior quarter which I will recall included about $8 million in charges recorded in connection with the PostRock Litigation. Adjusting for these non-recurring charges our operating expenses during the first quarter of this year of $9.5 million were essentially flat for the fourth quarter of 2013. Our adjusted EBITDA was $7 million during the first quarter of this year as compared to $8.1 million in the prior quarter and $6 million in the same quarter of last year. With each of the 2013 quarterly metrics shown on slide five adjusted for non-recurring items, I would like to point out at our first quarter 2014 results were also been impacted by some non-recurring items related to winding up of the PostRock Litigation but these were almost fully absorbed by a credit we received in the first quarter for $1.25 million in insurance proceeds, we received in early April [with lawsuit]. So net-net non-recurring items didn’t have a significant impact on our financials during the first quarter of 2014. On our credit facility we currently have approximately $52 million in debt outstanding which leaves us with around $18 million in borrowing capacity. The amount of our debt balances up slightly since the end of the first quarter as a result of funding in Louisiana acquisition on the fields of the PostRock Litigation settlement. We continue to fund drilling activity with cash from operations. Regarding our forecast for the remainder of the year, the company has hedged approximately 4.8 Bcfe of its Mid-Con natural gas production at an effective NYMEX fixed price of $5.75 per Mcfe with basis hedges on 3.3 Bcfe of this amount at an average differential of $0.39 per Mcfe. Including the oil hedges that Steve mentioned earlier which were executed in April, the company also has hedges in place on approximately 214,000 barrels of its 2014 oil production at a fixed price of $95.53 per barrel. Additional information on our hedges can be found in the appendix to today’s slide deck. Back to Steve for some closing remarks.

Thanks, Chuck. The first quarter of this year was about building on positive momentum. After a pivotal year in 2013, we successfully resolved the PostRock Litigation at the end of the first quarter 2014. This was key to setting up a number of initiatives that we have planned for the remainder of the year and have resulted in further progress on our business plans since the end of the quarter. We look forward to continuing to build on this momentum, also with an eye toward returning value to our unitiholders. With those updates, I'd like to turn the call back to our moderator and open the lines for some questions.

(Operator Instructions). And our first question today is from Dan Schenk from MLV.

Hello Dan.

Dan, your line is open. Please check your mute feature. Dan Schenk - MLV: Hey guys. Can you hear me?

Yes, we hear you now Dan. How is it going? Dan Schenk - MLV: Sorry about that. It's good. Thanks for taking my questions. So, I was kind of curious on how you guys are seeing the [A&D] markets in 2014? Should we expect to see guys continue to build out your Louisiana assets and additionally, should we see more liquids exposure as well?

Yes, I think you are going to see us focused on the Louisiana, Texas markets. There is some stuff in Oklahoma and Kansas we're certainly going to take a look at, a couple of processes underway. But I think the medium term, near term is focusing on a couple of assets that rely -- that lie inside the Sanchez Group that we're going to focus on while looking at these other processes that are underway. Dan Schenk - MLV: Okay. Sticking to Sanchez, so going forward if you guys could fast forward say a year, how do you guys envision the relationship with Sanchez? Do you envision it being the traditional LP, GP relationship or it’s something different?

Well, clearly not a GP, LP today because of some residual structural features that we have including a logo and a name. We expect to also evolve over the course of the year, potentially up to including the structure.

Yeah, we intend to fully integrate. Dan Schenk - MLV: Okay, that's helpful. So finally just kind of curious about your liquidly position. So with your remaining CapEx plan for the year, it looks like liquidity might be a little bit light going forward or are there things that you can do to kind of help visibility in regards to liquidity?

Actually I guess we don't see liquidity. I think our adjusted EBITDA forecast for the balance of the year provides enough to fund all of my drilling that we have sitting in front of us. I view that this fair liquidly we have under the credit facility as being a good source for acquisition capital given whatever might be embedded inside of any assets we look to acquire. Dan Schenk - MLV: Okay, great. That's all I had. Thank you.

The balance of the adjusted EBITDA will [self fund]. Dan Schenk - MLV: Okay, great. Thank you.

Sure.

Thank you. Our next question is from Jay Abella from Investment Partners.

Hi Jay. Jay Abella - Investment Partners: A few things. Good morning. A few things; did you announce or put out a PB-10 number for right now updated?

No, we do not have the quarterly PB-10. No. Jay Abella - Investment Partners: Okay. Also did I notice that your adjusted reserves mostly on the gas side increased a little bit here as well?

Yes. That’s what happened is the gas curve came up which pushed down the hedges on one side, it increases the proved reserves on the gas on the other side. Jay Abella - Investment Partners: Like a 1 million BOE something like that?

I forgot the exact number but that’s something in the right. Jay Abella - Investment Partners: Okay. Then also…

(Inaudible) have been pretty flat right but gas has definitely moved up. Jay Abella - Investment Partners: Okay. That’s good. Now with the services agreement with Sanchez in place I guess what we’ve been waiting for on this and is a plan to basically see the path toward restoring this to its original function which was a traditional MLP and also one that is distributing obviously and you have some free cash you could maybe even do that this year. But we’re kind of looking for a plan that to restoring this to its vehicle/MLP status. And I noticed that Steve said that that was going to happen in the next month or two. What is the timetable for that if you can narrow that down a little bit and then what’s it going to look like? What should we expect on this end? Thanks.

Well the services agreement really establishes some timelines by which the folks here integrate into SOG. that is I’d say step one for one half of us, the other half of us then at the same time are looking to use our acquisition capital to increase the asset base and particularly trying to focus on a way in which increasing the asset base doesn’t meaningfully have an effect on our kind of the right way to dragging around the G&A. So though, while I think long-term we expect G&A to decrease, we don’t forecast anything on the current year. We would be surprised if some emerged in a current year but -- so it’s the ability to add assets without having any much of the effect on G&A and then also moving it to leverage the personnel that Sanchez has in place with the personnel that we have here in integrating those two shops.

Yes, Jane. I guess to add to that with the relationship now secure with the Sanchez organization we’re not just out in the [A&D] market like everybody else fighting for the latest thing that’s come up to market, we will look at opportunities for sure that come on the market, but we are involved with the Sanchez organization right now looking at properties that are in their current portfolio and looking to do some acquisitions this year everything we do there is going to be with an eye towards strengthening the company, the balance sheet and our ability to return to distribution and return value to our unit holders. In terms of when consideration for distribution comes up again we would look at it every quarter. We will see what we get done between now and then in terms of acquisitions where the company is and the Board will have to make a decision about distribution at that time. I can tell you that Chuck and I are really pleased that we have taken significant steps to that end liquidity and the credit facilities there with the overhang of PostRock Litigation gone, we’ve already acquired one property from Sanchez and I can tell you that teams you are looking at the next series of steps. So I think what you can look for as soon as practical we are going to continue to acquire, build the company and returning it to a position where it can redistribute again. Jay Abella - Investment Partners: Okay. And so that would mean to me that you will like to over the, I guess if you still have a 90% of your borrowing base covenant that you won’t exceed that with respect to the acquisitions, that will be first. And then the second part of that would be that you would be able to accrete on a reserve basis faster than you would be able to deplete on a production basis is in fact that opportunity were out there for acquisition, along the lines I am assuming that you just did with respect to this small one is producing 17 barrels a day? [Multiple speakers]

Yes. That’s exactly, get it, you always you get the math, and that’s exactly though -- I will say though we talk about the reserves and I appreciate the time and effort you spent on them, we will always be focused on that adjusted EBITDA to free cash flow which then gets to distributable cash flow right. Jay Abella - Investment Partners: I am focused on -- I am sorry, go ahead.

So as we continue to focus on adding liquids for the portfolio [Technical Difficulty] that will continue to shift some. Jay Abella - Investment Partners: Well, the reason of asking about accreting reserves faster is because the next time your borrowing base comes up, if you need additional funding then you possibly could get it, they are on a reserve basis. And so accreting the reserves and flowing up additional cash would therefore increase the free cash of the company to generate and therefore distribute. And so that’s kind of what we are looking for. And I am wondering whether that will be communicated in total at one point before that will just be subject basically to -- as deals come up and deals are affected that you would be transferring them one by one rather than a grand strategy, if you will that would increase liquidity for the stock which quite frankly unique. So that’s kind of my angle as we are (inaudible) belong with of all this.

I would say generally yes. We're going to continue communicating, we will continue communicating as we do deals certainly as they are strategic, might actually do a breakout outside of the quarterly communication. And we're just continuing to relate information as we have it. Jay Abella - Investment Partners: Thanks guys.

Sure.

Thank you. Our next question is from Gregg Abella from Investment Partners Asset Management.

Good morning. Gregg Abella - Investment Partners Asset Management: Good morning guys. How are you? Just really more of a comment. So I personally and I think many unitholders don't see any benefit of having any sort of legacy that refers to Constellation Energy anymore. So, you alluded to it a little bit in your previous comments. But changing the branding of the company sooner rather than later is something with Sanchez and the name I think sort of…

Greg, I think we have to reset in service date and the service from where we get to that next thing. But as you can tell, the timing of the service date, on the service agreement is being done after the PostRock Litigation clearly evidences that we were working on these agreements during the time period of PostRock Litigation. And so, same as rebranding and some of those other things, we have been working on those, and we were comfortable alluding to them. But until the in service has occurred, it’s kind of unlike to announce and to fall through on that. Gregg Abella - Investment Partners Asset Management: Okay, fair enough. I just think we're dealing with…

They are just waiting for us to get a little bit of (inaudible) Greg. Gregg Abella - Investment Partners Asset Management: Yes, basically. Of seriousness, it's a new MLP, so let’s sort of put our new best foot forward.

Absolutely, we couldn’t have remarked.

And we will do that as soon as we can. Gregg Abella - Investment Partners Asset Management: Okay. Thanks guys.

Thank you. Our next question is from Frank Abella from Investment Partners Asset Management. Frank Abella - Investment Partners Asset Management: Good morning, gentlemen.

Good morning, Frank. Frank Abella - Investment Partners Asset Management: How are you? Couple of questions. First of all echoing what Gregg has just asked, it's not good to have Constellation Energy who is suing us under the brand of Exelon of course having anything to do with this company, so sooner the better for that purpose. And actually this peaks into my question. Did the Exelon Ligation have any effect on the redetermination that the bank gave you and the total amount of 70 million at all?

No, we can't comment on that because it is an ongoing litigation but we can confirm for you that we think it’s without merit and we will treat it as such. Frank Abella - Investment Partners Asset Management: Okay. This maybe is going to be similar answer on your part, but let me kind of phrase it in a way which you know my sentiments and feelings on independent of this call. Is the Exelon Litigation having any effect on the timing of the distribution?

No. Frank Abella - Investment Partners Asset Management: In other words, if the Board considers its posture for hopefully sometime reasonably soon to start the process of a distribution even if modest as part of the plan, does the Exelon Litigation have any impact on the Board's determination?

Again, we believe it's without merit; it's not material to that consideration, Frank. Frank Abella - Investment Partners Asset Management: Got it. Is it possible that Board can take up the issue of bringing a countersuit against Constellation Energy Partners, Exelon whomever as a consequence?

Again, I can't comment on ongoing litigation, but we're going to defend vigorously against this lawsuit. Frank Abella - Investment Partners Asset Management: Well, one of the ways to best defend sometimes is an offense often. Having said that I think you know my sentiments; they have been the ones who in a sense gave birth to this. And now after all these years, after putting us an orphan on a doorstep, they’ve determined that they ought to come in at the last hour if you settle the PostRock Litigation, having sold of gas asset to a competitor and PostRock and caused us all the angst that we all suffered through for the last two or three years. It would seem to me that the Board has every reason to take up an offensive strategy against Exelon as part of your defending vigorously the lawsuit they brought. And with that I have no other comment.

Thanks Frank.

Thanks Frank.

I am showing no further questions at this time.

Okay. Well, thanks again for joining us this morning. We look forward to speaking with you again in August as we review our second quarter 2014 results.

Thank you. And this does conclude today’s conference. You may disconnect at this time.