Management's Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with our condensed consolidated financial statements and the related notes thereto, as well as our Annual Report on Form 10-K for the year ended December 31, 2008.

OVERVIEW

We are a Delaware limited partnership formed in April 2006 by EnerVest to acquire, produce and develop oil and natural gas properties. Our general partner is EV Energy GP, a Delaware limited partnership, and the general partner of our general partner is EV Management, a Delaware limited liability company.

Our properties are located in the Appalachian Basin (primarily in Ohio and West Virginia), Michigan, the Monroe Field in Northern Louisiana, Central and East Texas (which includes the Austin Chalk area), the Permian Basin, the San Juan Basin and the Mid-Continent areas in Oklahoma, Texas, Kansas and Louisiana.

CURRENT DEVELOPMENTS

In June 2009, we closed a public offering of 4.0 million of our common units at an offering price of $20.40 per common unit. We received net proceeds of $79.9 million, including a contribution of $1.6 million by our general partner to maintain its 2% interest in us. We used the proceeds to repay indebtedness outstanding under our credit facility.

In July 2009, we, along with certain institutional partnerships managed by EnerVest, acquired additional oil and natural gas properties in the Austin Chalk area in Central and East Texas. We acquired a 15.15% interest in these properties for approximately $11.8 million. This acquisition was funded with cash on hand.

In September 2009, we, along with certain institutional partnerships managed by EnerVest, acquired additional oil and natural gas properties in the Austin Chalk area in Central and East Texas. We acquired a 15.15% interest in these properties for approximately $5.0 million. This acquisition was funded with cash on hand.

In September 2009, we closed an additional public offering of 3.2 million of our common units at an offering price of $22.83 per common unit. We received net proceeds of $71.8 million, including a contribution of $1.4 million by our general partner to maintain its 2% interest in us. This contribution is included in "Accounts receivable - related party" in our condensed consolidated balance sheet. We received this contribution on October 9, 2009. We used the proceeds to repay indebtedness outstanding under our credit facility.

In September 2009, we, along with certain institutional partnerships managed by EnerVest, signed an agreement to acquire oil and natural gas properties in the Appalachian Basin. We will acquire a 17.2% interest in these properties for $25.0 million. In conjunction with the signing of the agreement, we made a $2.5 million earnest money deposit which is included in "Other assets" on the condensed consolidated balance sheet. The acquisition is expected to close by late November 2009 and is subject to customary post-closing adjustments.

On October 27, 2009, the board of directors of EV Management declared a $0.754 per unit distribution for the third quarter of 2009 on all common and subordinated units. The distribution of $20.1 million is to be paid on November 13, 2009 to unitholders of record at the close of business on November 6, 2009. In accordance with our partnership agreement, two business days after the payment of this quarterly distribution, all of the subordinated units will convert to common units.

In the nine months ended September 30, 2009, we have repaid indebtedness outstanding under our credit facility by $175.0 million, reducing the amount outstanding to $292.0 million. In October 2009, we repaid an additional $10.0 million of the amount outstanding under the facility.

BUSINESS ENVIRONMENT

Our primary business objective is to provide stability and growth in cash distributions per unit over time. The amount of cash we can distribute on our units principally depends upon the amount of cash generated from our operations, which will fluctuate from quarter to quarter based on, among other things:

· the prices at which we will sell our oil, natural gas liquids and natural gas production;

· our ability to hedge commodity prices;

· the amount of oil, natural gas liquids and natural gas we produce; and

· the level of our operating and administrative costs.

The U.S. and other world economies have been in a recession which has lasted well into 2009 and economic conditions remain uncertain. The primary effect of these uncertain economic conditions on our business has been reduced demand for oil and natural gas, which has contributed to the decline in oil and natural gas prices we receive for our production compared with prices received in the first nine months of 2008. In response to the lower oil and natural gas prices, we, along with many other oil and natural gas companies, have considerably scaled back our drilling programs.

While oil and natural gas prices have strengthened in recent months, they remain unstable and are expected to be, volatile in the future. Factors affecting the price of oil include the worldwide recession, geopolitical activities, worldwide supply disruptions, weather conditions, actions taken by the Organization of Petroleum Exporting Countries and the value of the U.S. dollar in international currency markets. Factors affecting the price of natural gas include the discovery of substantial accumulations of natural gas in unconventional reservoirs due to technological advancements necessary to commercially produce these unconventional reserves, North American weather conditions, industrial and consumer demand for natural gas, storage levels of natural gas and the availability and accessibility of natural gas deposits in North America.

In order to mitigate the impact of changes in oil and natural gas prices on our cash flows, we are a party to derivative agreements, and we intend to enter into derivative agreements in the future to reduce the impact of oil and natural gas price volatility on our cash flows. By removing a significant portion of this price volatility on our future oil and natural gas production through August 2014, we have mitigated, but not eliminated, the potential effects of changing oil and natural gas prices on our cash flows from operations for those periods. If the global recession continues, commodity prices may be depressed for an extended period of time, which could alter our acquisition and development plans, and adversely affect our growth strategy and ability to access additional capital in the capital markets.

The primary factors affecting our production levels are capital availability, our ability to make accretive acquisitions, the success of our drilling program and our inventory of drilling prospects. In addition, we face the challenge of natural production declines. As initial reservoir pressures are depleted, production from a given well decreases. We attempt to overcome this natural decline through a combination of drilling and acquisitions. Our future growth will depend on our ability to continue to add reserves in excess of production. We will maintain our focus on the costs to add reserves through drilling and acquisitions as well as the costs necessary to produce such reserves. Our ability to add reserves through drilling is dependent on our capital resources and can be limited by many factors, including our ability to timely obtain drilling permits and regulatory approvals. Any delays in drilling, completion or connection to gathering lines of our new wells will negatively impact our production, which may have an adverse effect on our revenues and, as a result, cash available for distribution.

We focus our efforts on increasing oil and natural gas reserves and production while controlling costs at a level that is appropriate for long-term operations. Our future cash flows from operations are dependent upon our ability to manage our overall cost structure.

In the third quarter of 2008, third party natural gas liquids fractionation facilities in Mt. Belvieu, TX sustained damage from Hurricane Ike, which caused a reduction in the volume of natural gas liquids that were fractionated and sold during the third and fourth quarters of 2008. In addition, these facilities underwent a mandatory five year turnaround during the fourth quarter of 2008. We fractionated and sold all of these natural gas liquids during the first six months of 2009.

ACQUISITIONS IN 2008

In 2008, we completed the following acquisitions:

· in May, we acquired oil properties in South Central Texas for $17.4 million;

· in August, we acquired oil and natural gas properties in Michigan, Central and East Texas, the Mid-Continent area (Oklahoma, Texas Panhandle and Kansas) and Eastland County, Texas for $58.8 million;

· in September, we issued 236,169 common units to EnerVest to acquire natural gas properties in West Virginia; and

· in September, we acquired oil and natural gas properties in the San Juan Basin from institutional partnerships managed by EnerVest for $114.7 million in cash and 908,954 of our common units.

RESULTS OF OPERATIONS

                                             Three Months Ended          Nine Months Ended
                                                September 30,              September 30,
                                             2009           2008         2009          2008

Production data:
Oil (MBbls)                                      132           111           386          301
Natural gas liquids (MBbls)                      180           127           580          386
Natural gas (MMcf)                             4,251         3,285        12,230       10,305
Net production (MMcfe)                         6,123         4,710        18,026       14,423
Average sales price per unit:
Oil (Bbl)                                  $   64.04      $ 115.55     $   50.95     $ 111.40
Natural gas liquids (Bbl)                      32.35         68.41         27.84        65.63
Natural gas (Mcf)                               3.28          9.80          3.56         9.37
Mcfe                                            4.61         11.39          4.40        10.77
Average unit cost per Mcfe:
Production costs:
Lease operating expenses                   $    1.70      $   2.51     $    1.72     $   2.12
Production taxes                                0.25          0.55          0.23         0.50
Total                                           1.95          3.06          1.95         2.62
Depreciation, depletion and amortization        2.11          1.66          2.18         1.68
General and administrative expenses             0.74          0.60          0.71         0.68

Three Months Ended September 30, 2009 Compared with the Three Months Ended September 30, 2008

Oil, natural gas and natural gas liquids revenues for the three months ended September 30, 2009 totaled $28.2 million, a decrease of $25.5 million compared with the three months ended September 30, 2008. This decrease was primarily the result of a decrease of $29.9 million related to lower prices for oil, natural gas liquids and natural gas partially offset by an increase of $3.3 million related to the oil and natural gas properties that we acquired in 2009 and in the three months ended September 30, 2008 and an increase of $1.1 million related to increased production from the oil and natural gas properties that we acquired prior to 2008.

Transportation and marketing-related revenues for the three months ended September 30, 2009 decreased $1.8 million compared with the three months ended September 30, 2008 primarily due to lower prices in the three months ended September 30, 2009 compared with the three months ended September 30, 2008 for the natural gas that we transport through our gathering systems in the Monroe Field and the recognition of $0.3 million of deferred revenues from the production curtailments in the Monroe Field in the three months ended September 30, 2008.

Lease operating expenses for the three months ended September 30, 2009 decreased $1.4 million compared with the three months ended September 30, 2008 primarily as the result of $1.4 million of lease operating expenses associated with the oil and natural gas properties that we acquired in 2009 and in the three months ended September 30, 2008 offset by a decrease of $2.8 million related to the oil and natural gas properties that we acquired prior to July 1, 2008. Lease operating expenses per Mcfe were $1.70 in the three months ended September 30, 2009 compared with $2.51 in the three months ended September 30, 2008. This decrease reflects the downward trend in operating costs throughout the oil and natural gas industry.

The cost of purchased natural gas for the three months ended September 30, 2009 decreased $1.5 million compared with the three months ended September 30, 2008 primarily due to lower prices for natural gas that we purchased and transported through our gathering systems in the Monroe Field.

Production taxes for the three months ended September 30, 2009 decreased $1.1 million compared with the three months ended September 30, 2008 primarily as the result of a decrease of $1.4 million in production taxes associated with our decreased oil, natural gas and natural gas liquids revenues offset by an increase of $0.3 million ($0.25 per Mcfe) in production taxes associated with the oil and natural gas properties that we acquired in 2009 and in the three months ended September 30, 2008. Production taxes for the three months ended September 30, 2009 were $0.25 per Mcfe compared with $0.55 per Mcfe for the three months ended September 30, 2008.

Depreciation, depletion and amortization for the three months ended September 30, 2009 increased $5.1 million compared with the three months ended September 30, 2008 primarily due to $2.4 million related to the oil and natural gas properties that we acquired in 2009 and in the three months ended September 30, 2008 and $2.7 million related to the oil and natural gas properties that we acquired prior to July 1, 2008. The increase in depreciation, depletion and amortization for the oil and natural gas properties that we acquired prior to July 1, 2008 is related to lower reserves primarily due to decreased prices in the current year compared with the prior year. Depreciation, depletion and amortization for the three months ended September 30, 2009 was $2.11 per Mcfe compared with $1.66 per Mcfe for the three months ended September 30, 2008.

General and administrative expenses for the three months ended September 30, 2009 totaled $4.5 million, an increase of $1.7 million compared with the three months ended September 30, 2008. This increase is primarily the result of (i) an increase of $0.5 million in fees paid to EnerVest under the omnibus agreement due to our acquisitions of oil and natural gas properties in 2008, (ii) an increase of $1.0 million in compensation costs related to our phantom units and incentive units and (iii) $0.1 million of due diligence costs related to our acquisitions of oil and natural gas properties in 2008. General and administrative expenses were $0.74 per Mcfe in the three months ended September 30, 2009 compared with $0.60 per Mcfe in the three months ended September 30, 2008.

Realized gains (losses) on mark-to-market derivatives, net represent the monthly cash settlements with our counterparties related to derivatives that matured during the period. During the three months ended September 30, 2009, we received cash payments of $18.4 million from our counterparties as the contract prices for our derivatives exceeded the underlying market prices for that period. During the three months ended September 30, 2008, we made cash payments of $10.4 million to our counterparties as the contract prices for our derivatives were lower than the underlying market prices for that period.

Unrealized (losses) gains on mark-to-market derivatives, net represent the change in the fair value of our open derivatives during the period. In the three months ended September 30, 2009, the fair value of our open derivatives decreased from a net asset of $126.9 million at June 30, 2009 to a net asset of $110.3 million at September 30, 2009. In the three months ended September 30, 2008, the fair value of our open derivatives increased from a net liability of $177.6 million at June 30, 2008 to a net asset of $11.2 million at September, 2008.

Interest expense for the three months ended September 30, 2009 decreased $0.7 million compared with the three months ended September 30, 2008 primarily due to $0.1 million of additional interest expense from the increase in weighted average borrowings outstanding under our credit facility offset by $0.8 million due to a lower weighted average effective interest rate in the three months ended September 30, 2009 compared with the three months ended September 30, 2008.

Nine Months Ended September 30, 2009 Compared with the Nine Months Ended September 30, 2008

Oil, natural gas and natural gas liquids revenues for the nine months ended September 30, 2009 totaled $79.4 million, a decrease of $76.0 million compared with the nine months ended September 30, 2008. This decrease was primarily the result of a decrease of $88.5 million related to lower prices for oil, natural gas liquids and natural gas partially offset by an increase of $11.3 million related to the oil and natural gas properties that we acquired in 2009 and 2008 and an increase of $1.2 million related to increased production at oil and natural gas properties that we acquired prior to 2008.

Transportation and marketing-related revenues for the nine months ended September 30, 2009 decreased $3.2 million compared with the nine months ended September 30, 2008 primarily due to a decrease of $4.7 million related to lower prices in the three months ended September 30, 2009 compared with the three months ended September 30, 2008 for the natural gas that we transport through our gathering systems in the Monroe Field offset by an increase of $1.5 million related to the recognition of deferred revenues from the production curtailments in the Monroe Field in 2008.

Lease operating expenses for the nine months ended September 30, 2009 increased $0.5 million compared with the nine months ended September 30, 2008 primarily as the result of $5.9 million of lease operating expenses associated with the oil and natural gas properties that we acquired in 2009 and 2008 offset by a decrease of $5.4 million related to the oil and natural gas properties that we acquired prior to 2008. Lease operating expenses per Mcfe were $1.72 in the nine months ended September 30, 2009 compared with $2.12 in the nine months ended September 30, 2008. This decrease reflects the downward trend in operating costs throughout the oil and natural gas industry.

The cost of purchased natural gas for the nine months ended September 30, 2009 decreased $4.4 million compared with the nine months ended September 30, 2008 primarily due to lower prices for natural gas that we purchased and transported through our gathering systems in the Monroe Field.

Production taxes for the nine months ended September 30, 2009 decreased $3.1 million compared with the nine months ended September 30, 2008 primarily as the result of a decrease of $4.2 million in production taxes associated with our decreased oil, natural gas and natural gas liquids revenues offset by an increase of $1.1 million ($0.33 per Mcfe) in production taxes associated with the oil and natural gas properties that we acquired in 2009 and 2008. Production taxes for the nine months ended September 30, 2009 were $0.23 per Mcfe compared with $0.50 per Mcfe for the nine months ended September 30, 2008.

Depreciation, depletion and amortization for the nine months ended September 30, 2009 increased $15.1 million compared with the nine months ended September 30, 2008 primarily due to $7.3 million related to the oil and natural gas properties that we acquired in 2009 and 2008 and $7.8 million related to the oil and natural gas properties that we acquired prior to 2008. The increase in depreciation, depletion and amortization for the oil and natural gas properties that we acquired prior to 2008 is related to lower reserves due to decreased prices in the current year compared with the prior year. Depreciation, depletion and amortization for the nine months ended September 30, 2009 was $2.18 per Mcfe compared with $1.68 per Mcfe for the nine months ended September 30, 2008.

General and administrative expenses for the nine months ended September 30, 2009 totaled $12.9 million, an increase of $3.0 million compared with the nine months ended September 30, 2008. This increase is primarily the result of an increase of $1.8 million of fees paid to EnerVest under the omnibus agreement due to our acquisitions of oil and natural gas properties in 2008 and an increase of $1.3 million in compensation costs related to our phantom units and incentive units. General and administrative expenses were $0.71 per Mcfe in the nine months ended September 30, 2009 compared with $0.68 per Mcfe in the nine months ended September 30, 2008.

Realized gains (losses) on mark-to-market derivatives, net represent the monthly cash settlements with our counterparties related to derivatives that matured during the period. During the nine months ended September 30, 2009, we received cash payments of $55.2 million from our counterparties as the contract prices for our derivatives exceeded the underlying market prices for that period. During the nine months ended September 30, 2008, we made cash payments of $24.8 million to our counterparties as the contract prices for our derivatives were lower than the underlying market prices for that period.

Unrealized (losses) gains on mark-to-market derivatives, net represent the change in the fair value of our open derivatives during the period. In the nine months ended September 30, 2009, the fair value of our open derivatives decreased from a net asset of $144.7 million at December 31, 2008 to a net asset of $110.3 million at September 30, 2009. In the nine months ended September 30, 2008, the fair value of our open derivatives increased from a net liability of $18.5 million at December 31, 2007 to a net asset of $11.2 million at September 30, 2008.

Interest expense for the nine months ended September 30, 2009 decreased $0.7 million compared with the nine months ended September 30, 2008 primarily due to $2.7 million of additional interest expense from the increase in weighted average borrowings outstanding under our credit facility offset by $3.4 million due to a lower weighted average effective interest rate in the nine months ended September 30, 2009 compared with the nine months ended September 30, 2008.

LIQUIDITY AND CAPITAL RESOURCES

The U.S. debt and equity markets are experiencing significant volatility, and many financial institutions have liquidity concerns, prompting government intervention to mitigate pressure on the capital markets.

Our primary exposure to the current economic conditions in the debt and equity markets includes the following,

· our revolving credit facility;

· our cash investments;

· counterparty nonperformance risks; and

· our ability to finance the replacement of our reserves and our growth by accessing the capital markets.

Historically, our primary sources of liquidity and capital have been issuances of equity securities, borrowings under our credit facility and cash flows from operations, and our primary uses of cash have been acquisitions of oil and natural gas properties and related assets, development of our oil and natural gas properties, distributions to our partners and working capital needs. For 2009, we believe that cash on hand, net cash flows generated from operations and proceeds from our public offerings will be adequate to fund our capital budget and satisfy our short-term liquidity needs. We may also utilize various financing sources available to us, including the issuance of equity or debt securities through public offerings or private placements, to fund our acquisitions and long-term liquidity needs. Our ability to complete future offerings of equity or debt securities and the timing of these offerings will depend upon various factors including prevailing market conditions and our financial condition.

In the past we accessed the equity markets to finance our significant acquisitions. While we have been successful in accessing the public equity markets twice in 2009, any disruptions in the financial markets may limit our ability to access the public equity or debt markets in the future.

Available Credit Facility

We have a $700.0 million facility that expires in October 2012. Borrowings under the facility are secured by a first priority lien on substantially all of our assets and the assets of our subsidiaries. We may use borrowings under the facility for acquiring and developing oil and natural gas properties, for working capital purposes, for general corporate purposes and for funding distributions to partners. We also may use up to $50.0 million of available borrowing capacity for letters of credit. The facility contains certain covenants which, among other things, require the maintenance of a current ratio (as defined in the facility) of greater than 1.0 and a ratio of total debt to earnings plus interest expense, taxes, depreciation, depletion and amortization expense and exploration expense of no greater than 4.0 to 1.0. As of September 30, 2009, we were in compliance with all of the facility's financial covenants.

Borrowings under the facility may not exceed a "borrowing base" determined by the lenders based on our oil and natural gas reserves. The borrowing base is subject to scheduled redeterminations as of April 1 and October 1 of each year with an additional redetermination once per calendar year at our request or at the request of the lenders and with one calculation that may be made at our request during each calendar year in connection with material acquisitions or divestitures of properties. The borrowing base is determined by each lender based on the value of our proved oil and natural gas reserves using assumptions regarding future prices, costs and other matters that may vary by lender. In April 2009, our borrowing base was redetermined from $525.0 million to $465.0 million. In connection with this redetermination, we wrote off $0.2 million of deferred loan costs. In October 2009, our borrowing base was reaffirmed at $465.0 million.

Borrowings under the facility will bear interest at a floating rate based on, at our election, a base rate or the London Inter-Bank Offered Rate plus applicable premiums based on the percent of the borrowing base that we have outstanding.

At September 30, 2009, we had $292.0 million outstanding under the facility. In October 2009, we repaid $10.0 million of the amount outstanding under the facility.

If the financial markets remain unstable for an extended period of time, replacement of our facility, which expires in October 2012, may be more expensive. In addition, since our borrowing base is subject to periodic review by our lenders, difficulties in the credit markets or declining oil and natural gas prices may cause the banks to be more restrictive when redetermining our borrowing base.

Cash and Short-term Investments

Current conditions in the financial markets also elevate the concern over our cash and short-term investments. At September 30, 2009, we had $25.4 million of cash and short-term investments. With regard to our short-term investments, we had $22.6 million invested in money market accounts with a major financial institution.

Counterparty Exposure

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