- Highlights higher production and Adjusted EBITDA

         - Delivers positive results from horizontal drilling pilot



    HOUSTON, Aug. 7 /EMWNews/ -- Constellation Energy Partners

LLC (NYSE: CEP) today reported second quarter results highlighting higher

production, increased Adjusted EBITDA, and positive results from its

horizontal drilling pilot program during the second quarter.



    The company produced 4,422 MMcfe for the second quarter, up 146 percent

from the second quarter of 2007 and 9 percent from the first quarter of

2008. Adjusted EBITDA was $20.5 million, an increase of 108 percent from

the second quarter of 2007 and 17 percent from the first quarter of 2008.

Net income on a Generally Accepted Accounting Principles (GAAP) basis for

the second quarter of 2008 was a loss of $8.8 million, down $10.9 million

from the second quarter of 2007 and down $11.3 million from the first

quarter of 2008.



    Second quarter results included an unrealized noncash mark-to-market

(MTM) loss of $15 million from future period natural gas hedges primarily

as a result of higher natural gas prices as of June 30, 2008. Recent

volatility in future expected natural gas prices has resulted in

significant changes to the mark-to-market value of the company's hedges.

Since the hedging arrangements are under the company's reserve-based credit

facilities, cash margining on these hedges is not required.



    "We continued to execute on our operational and financial objectives

during the second quarter. Our production levels and Adjusted EBITDA rose

from our first quarter performance. Our distribution coverage ratio

improved to just over one times for the second quarter," said Stephen R.

Brunner, president and chief executive officer of Constellation Energy

Partners. "We also saw a reduction in our lease operating expense per unit

of production as a result of our increased focus on cost controls."



    During the second quarter, the company worked on 78 wells and

recompletions out of the 200 to 230 planned for its 2008 program. The

company completed 21 wells and seven recompletions during the second

quarter, bringing program results to 50 wells and 18 recompletions for the

six months of 2008. An additional 50 wells and recompletions were in

progress, the majority of which are expected to flow to sales by the end of

the third quarter and the remaining by the end of the year.



    The company continued to deliver positive results on its horizontal

drilling pilot program, completing six wells year to date, producing at an

average rate of 128 Mcfe per day per well at the end of the second quarter.

The production levels of the four horizontal wells completed during 2007

continued to improve, increasing from an average rate of 166 Mcfe per day

per well at the end of the first quarter to 180 Mcfe per day per well at

the end of the second quarter.



    "We saw continued success in our horizontal pilot program and are

optimistic about the potential of the program. Initial production results

and well costs are in line with our expectations," said Brunner.

"Production levels are continuing to improve and, compared to our

traditional vertical wells, are producing at a significantly higher rate.

Based on the results we are observing to date, we will continue to focus on

executing the pilot program.



    "While our drilling program activity and production levels improved in

the second quarter, we continue to feel the impact of the delays in our

drilling program resulting from inclement weather and ongoing integration

challenges," said Brunner. "Although we expect to see further improvement

in the third and fourth quarters, it seems prudent that we temper our

expectation for the full year. We now expect to be at the low end or

slightly below the low end of our 2008 Adjusted EBITDA forecast range of

$94 million to $105 million and our net production forecast range of 17

Bcfe to 20 Bcfe.



    "We have maintained our current production levels in the Black Warrior

and Cherokee Basins despite the delays in our drilling program, giving us

confidence in the value of our assets. Our focus continues to be on

building our organization and improving performance to better position us

for the future."



    The company reaffirmed the 2008 operating expense range of $54.5

million to $57.5 million and capital spending forecast of $44.5 million.

Management expects to recommend to the board of managers maintaining a cash

distribution of $0.5625 per outstanding common unit and Class A unit for

the quarter ended Sept. 31, 2008, or $2.25 per unit on an annualized basis.

Management will continue to evaluate distribution levels on a quarterly

basis taking into consideration the company's overall portfolio performance

and coverage ratio as well as the market outlook. All distributions are

subject to approval by the company's board of managers.



    Non-GAAP Measures



    We present Adjusted EBITDA and Distributable Cash Flow in addition to

our reported net income in accordance with GAAP. Adjusted EBITDA is a

non-GAAP financial measure that is defined as net income (loss) plus

interest (income) expense; depreciation, depletion and amortization;

write-off of deferred financing fees; impairment of long-lived assets;

(gain) loss on sale of assets; (gain) loss from equity investment;

long-term incentive plan expense; accretion of asset retirement obligation;

unrealized (gain) loss on natural gas derivatives; and realized (gain) loss

on cancelled natural gas derivatives. Distributable Cash Flow is defined as

Adjusted EBITDA less maintenance capital expenditures and cash interest

expense. Maintenance capital expenditures are capital expenditures that we

expect to make on an ongoing basis to maintain our asset base (including

our undeveloped leasehold acreage) at a steady level over the long term.

These expenditures include the drilling and completion of additional

development wells to offset the expected production decline during such

period from our producing properties, as well as additions to our inventory

of unproved properties or proved reserves required to maintain our asset

base.



    Adjusted EBITDA and Distributable Cash Flow are used by management to

indicate (prior to the establishment of any cash reserves by our board of

managers) the cash distributions we expect to pay our unitholders.

Specifically, these financial measures indicate to investors whether or not

we are generating cash flow at a level that can sustain or support an

increase in our quarterly distribution rates. Adjusted EBITDA and

Distributable Cash Flow are also used as quantitative standards by our

management and by external users of our financial statements such as

investors, research analysts and others to assess the financial performance

of our assets without regard to financing methods, capital structure or

historical cost basis; the ability of our assets to generate cash

sufficient to pay interest costs and support our indebtedness; and our

operating performance and return on capital as compared to those of other

companies in our industry, without regard to financing or capital

structure. Adjusted EBITDA and Distributable Cash Flow are not intended to

represent cash flows for the period, nor are they presented as a substitute

for net income, operating income, cash flows from operating activities or

any other measure of financial performance or liquidity presented in

accordance with GAAP. We also provide our earnings forecast in terms of

Adjusted EBITDA. We are unable to reconcile our forecast to GAAP net income

or operating income because we do not predict the future impact of

adjustments to net income (loss), such as (gains) losses on gas derivatives

and equity investments or asset impairments, due to the difficulty of doing

so.



    SEC Filings



    CEP intends to file its Form 10-Q for the quarter ended June 30, 2008,

on or about August 8, 2008.



    Forward-Looking Statements



    We make statements in this news release that are considered forward-

looking statements within the meaning of the Securities Exchange Act of

1934. These forward-looking statements are largely based on our

expectations, which reflect estimates and assumptions made by our

management. These estimates and assumptions reflect our best judgment based

on currently known market conditions and other factors. Although we believe

such estimates and assumptions to be reasonable, they are inherently

uncertain and involve a number of risks and uncertainties that are beyond

our control. In addition, management's assumptions about future events may

prove to be inaccurate. Management cautions all readers that the

forward-looking statements contained in this news release are not

guarantees of future performance, and we cannot assure you that such

statements will be realized or the forward-looking events and circumstances

will occur. Actual results may differ materially from those anticipated or

implied in the forward-looking statements due to factors listed in the

"Risk Factors" section in our SEC filings and elsewhere in those filings.

All forward-looking statements speak only as of the date of this news

release. We do not intend to publicly update or revise any forward-looking

statements as a result of new information, future events or otherwise.



    Conference Call Information



    The company will host a conference call today at 8:30 a.m. (CDT) to

review its financial results and discuss its business outlook for 2008.



    To participate, analysts, investors, media and the public in the U.S.

may dial (888) 322-9245 shortly before 8:30 a.m. (CDT). The international

phone number is (773) 756-0253. The conference password is PARTNERS.



    A replay will be available approximately one hour after the end of the

call by dialing (866) 388-5359 or (203) 369-0414 (international). A live

audio webcast of the conference call, presentation slides and the earnings

press release will be available on the Investor Relations page of

Constellation Energy Partners' Web site

(http://www.constellationenergypartners.com). A webcast replay, as well as

a replay in downloadable MP3 format will also be available on the site

approximately one hour after the completion of the call.



    Constellation Energy Partners LLC,

(http://www.constellationenergypartners.com), is a limited liability

company focused on the acquisition, development and exploitation of oil and

natural gas properties, as well as related midstream assets.










    PRESS RELEASE

    Constellation Energy Partners LLC

    Operating Statistics



                                      Three Months Ended    Six Months Ended

                                           June 30,              June 30,

                                       2008       2007       2008       2007

    Net Production:

    Total production (MMcfe)           4,422      1,796      8,465      3,023

    Average daily production

     (Mcfe/day)                       48,593     19,736     46,511     16,702



    Average Net Sales Price per Mcfe:

    Net realized price, including

     hedges                            $8.31(a)   $8.46(a)   $8.03(a)   $8.77

    Net realized price, excluding

     hedges                            $9.91      $7.44      $8.82      $7.25

    (a) Excludes impact of mark-to-

        market losses and net of cost

        of sales.





    Net Wells Drilled and Completed       21       20.5         50       28.5

    Net Recompletions                      7        3.0         18        3.0







    Constellation Energy Partners LLC

    Condensed Consolidated Statements of Operations



                                  Three Months Ended       Six Months Ended

                                       June 30,                June 30,

                                   2008        2007        2008        2007

                                   ($ in thousands)        ($ in thousands)



    Oil and gas sales             $38,994     $15,190     $71,382     $26,497

    Gain/(Loss) from mark-to-

     market activities            (15,033)     (2,619)    (17,989)     (5,401)

        Total Revenues            $23,961     $12,571     $53,393     $21,096



    Operating expenses:

      Lease operating

       expenses                     9,209       3,150      18,273       4,745

      Cost of sales                 2,239         -         3,387         -

      Production taxes              2,885         685       4,550       1,144

      General and

       administrative               3,787       1,771       7,122       3,390

      (Gain)/Loss on sale of

       equipment                      -            (1)       (211)         94

      Depreciation, depletion

       and amortization            11,489       3,584      21,022       5,543

      Accretion expense               101          77         202         113

        Total operating expenses   29,710       9,266      54,345      15,029



    Other expenses:

      Interest (income)

       expense, net                 3,059       1,182       5,378       1,690

      Other (income) expense          (18)        (70)         (4)        (70)



        Total expenses             32,751      10,378      59,719      16,649



    Net income (loss)             $(8,790)     $2,193     $(6,326)     $4,447



    Adjusted EBITDA               $20,539      $9,877     $38,050     $17,114



    EPS - Basic                    $(0.39)      $0.17      $(0.28)      $0.36

    EPS - Basic Units

     Outstanding               22,351,353  13,072,577  22,349,517  12,201,279



    EPS - Diluted                  $(0.39)      $0.17      $(0.28)      $0.36

    EPS - Diluted Units

     Outstanding               22,351,353  13,072,577  22,349,517  12,201,279







    Constellation Energy Partners LLC

    Condensed Consolidated Balance Sheets



                                                  June 30,        December 31,

                                                    2008              2007

                                                       ($ in thousands)



    Current assets                                 $43,843           $45,873

    Natural gas properties, net of accumulated

     depreciation, depletion and amortization      693,143           643,653

    Other assets                                    15,071            17,129

        Total assets                              $752,057          $706,655



    Current liabilities                            $87,776           $20,551

    Debt                                           216,000           153,000

    Other long-term liabilities                    106,598            16,702

        Total liabilities                          410,374           190,253



    Class D Interests                                6,667             7,000



    Common members' equity                         473,854           505,178

    Accumulated other comprehensive income        (138,838)            4,224

        Total members' equity                      335,016           509,402

          Total liabilities and members'

           equity                                 $752,057          $706,655







    Constellation Energy Partners LLC

    Reconciliation of Net Income to Adjusted EBITDA to Distributable Cash



                                              Three Months    Six Months Ended

                                             Ended June 30,      June 30,

                                             2008      2007    2008     2007

                                            ($ in thousands)  ($ in thousands)



    Reconciliation of Net Income to

     Adjusted EBITDA to Distributable Cash:

    Net income                              $(8,790) $2,193  $(6,326)  $4,447

    Add:

      Interest expense/(income), net          3,059   1,182    5,378    1,690

      Depreciation, depletion and

       amortization                          11,489   3,584   21,022    5,543

      Accretion of asset retirement

       obligation                               101      77      202      113

      (Gain)/Loss on sale of asset              -        (1)    (211)      94

      Loss from mark-to-market activities    15,033   2,619   17,989    5,401

      Long-term incentive plan                   57     -        155      -

      Unrealized (gain)/loss on natural

       gas derivatives/hedge ineffectiveness   (410)    223     (159)    (174)

    Adjusted EBITDA (1)                     $20,539  $9,877  $38,050  $17,114



      Maintenance capital (2)                 7,417   1,519   14,167    2,757

      Drilling fund                          (1,500)    -     (3,000)     -

      Interest expense (cash)                 1,549     488    5,049      912



    Distributable Cash                      $13,073  $7,870  $21,834  $13,445





                                                  Three Months Ended March 31,

                                                      2008             2007

                                                        ($ in thousands)



    Reconciliation of Net Income to

      Adjusted EBITDA to Distributable Cash:

    Net income                                       $2,464            $2,254

    Add:

      Interest expense/(income), net                  2,319               508

      Depreciation, depletion and amortization        9,533             1,959

      Accretion of asset retirement obligation          101                36

      (Gain)/Loss on sale of asset                     (211)               95

      Loss from mark-to-market activities             2,956             2,782

      Long-term incentive plan                           98              -

      Unrealized (gain)/loss on natural gas

       derivatives/hedge ineffectiveness                251              (397)

    Adjusted EBITDA (1)                             $17,511            $7,237



      Maintenance capital (2)                         6,750             1,238

      Drilling fund                                  (1,500)             -

      Interest expense (cash)                         3,500               424



    Distributable Cash                               $8,761            $5,575





    (1) Our Adjusted EBITDA should not be considered as an alternative to net

        income, operating income, cash flows from operating activities or any

        other measure of financial performance or liquidity presented in

        accordance with GAAP. Our Adjusted EBITDA excludes some, but not all,

        items that affect net income and operating income and these measures

        may vary among other companies. Therefore, our Adjusted EBITDA may

        not be comparable to similarly titled measures of other companies.

        We define Adjusted EBITDA as net income (loss) plus:

        -- interest (income) expense;

        -- depreciation, depletion and amortization;

        -- write-off of deferred financing fees;

        -- impairment of long-lived assets;

        -- (gain) loss on sale of assets;

        -- (gain) loss from equity investment;

        -- Long-term incentive plan expense;

        -- accretion of asset retirement obligation;

        -- unrealized (gain) loss on natural gas derivatives; and

        -- realized loss (gain) on cancelled natural gas derivatives



    (2) Maintenance capital expenditures are capital expenditures that we

        expect to make on an ongoing basis to maintain our asset base

        (including our undeveloped leasehold acreage) at a steady level over

        the long term. These expenditures include the drilling and

        completion of additional development wells to offset the expected

        production decline during such period from our producing properties,

        as well as additions to our inventory of unproved properties or proved

        reserves required to maintain our asset base.