EXHIBIT 99.2
[NETHERLAND, SEWELL & ASSOCIATES, INC. LETTERHEAD]
February 9, 2004
Energy Partners, Ltd.
Suite 3400
201 St. Charles Avenue
New Orleans, Louisiana 70170
Ladies and Gentlemen:
In accordance with your request, we have estimated the proved reserves and
future revenue, as of January 1, 2004 to the Energy Partners, Ltd. (EPL)
interest in certain oil and gas properties located in Bay Marchand, Brazos
495-S, East Cameron 9, East Cameron 263, Eugene Island 142, High Island 55-L,
Main Pass 122/133, Ship Shoal 133, South Marsh Island 24, South Marsh Island
109, South Pass 24/27/37/39/42, South Timbalier 26, South Timbalier 27, and
South Timbalier 41 Fields, offshore Louisiana and Texas and in the Gulf of
Mexico as listed in the accompanying tabulations. This report has been prepared
using constant prices and costs and conforms to the guidelines of the Securities
and Exchange Commission (SEC).
As presented in the accompanying summary projections, Tables I through IV, we
estimate the net reserves and future net revenue to the EPL interest, as of
January 1, 2004, to be:
<Table>
<Caption>
Net Reserves Future Net Revenue ($)
Net Gas -------------------------- -----------------------------
Produced Oil Gas Sales(1) Present Worth
Category (MCF) (Barrels) (MCF) Total at 10%
- ------------------ ----------- ----------- ----------- ----------- -------------
Proved Developed
Producing 34,834,841 12,596,844 11,827,732 121,037,000 131,446,400
Non-Producing 31,802,228 9,262,605 21,857,825 260,998,500 152,693,300
Proved Undeveloped 43,151,434 5,027,080 41,919,792 283,683,400 158,867,000
----------- ---------- ---------- ----------- -----------
Total Proved 109,788,503 26,886,529 75,605,349 665,718,900 443,006,700
</Table>
(1) Net gas sales reserves include the effect of gas consumed in operations.
The oil reserves shown include crude oil, condensate, and natural gas liquids
(NGL). Oil and NGL volumes are expressed in barrels that are equivalent to 42
United States gallons. Gas volumes are expressed in thousands of standard cubic
feet (MCF) at the contract temperature and pressure bases. The gas prices for
Bay Marchand and East Cameron 9 properties are adjusted to include the effect of
NGL revenue. Gas sales volumes at Main Pass 122/133, South Pass 24/27/37/39/42,
and South Timbalier 26 Fields are adjusted for our estimates of shrinkage to
account for fuel and flare losses.
The estimated reserves and future revenue shown in this report are for proved
developed producing, proved developed non-producing, and proved undeveloped
reserves. In accordance with SEC guidelines, our estimates do not include any
probable or possible reserves which may exist for these properties. This report
does not include any value which could be attributed to interests in undeveloped
acreage beyond those tracts for which undeveloped reserves have been estimated.
As shown in the Table of Contents, this report includes a summary projection of
reserves and revenue by reserve category for each field along with one-line
summaries of reserves, economics, and basic data by lease and supplemental data
summaries. For the purposes of this report, the term "lease" refers to a single
economic projection.
[NETHERLAND, SEWELL
& ASSOCIATES, INC. LOGO]
Future gross revenue to the EPL interest is prior to deducting state production
taxes and ad valorem taxes. Future net revenue is after deducting these taxes,
future capital costs, and operating expenses but before consideration of federal
income taxes; future net revenue for all fields except Main Pass 122/133 is also
after deducting abandonment costs. In accordance with SEC guidelines, the future
net revenue has been discounted at an annual rate of 10 percent to determine its
"present worth." The present worth is shown to indicate the effect of time on
the value of money and should not be construed as being the fair market value of
the properties.
For the purposes of this report, a field inspection of the properties has not
been performed nor has the mechanical operation or condition of the wells and
their related facilities been examined. We have not investigated possible
environmental liability related to the properties; therefore, our estimates do
not include any costs which may be incurred due to such possible liability. In
accordance with EPL's farmout agreement, our estimates of future revenue do not
include any salvage value for the lease and well equipment or the costs to
abandon the Main Pass 122/133 properties. Future revenue estimates for all other
properties excluding Main Pass 122/133 also do not include any salvage value for
the lease and well equipment but do include EPL's estimates of the costs to
abandon the wells, platforms, and production facilities. Abandonment costs are
included with other capital expenditures.
Oil and NGL prices used in this report are based on a December 31, 2003 West
Texas Intermediate posted price of $29.25 per barrel, adjusted by lease for
quality, transportation fees, and regional price differentials. Gas prices used
in this report are based on a December 31, 2003 Gulf Coast spot market price of
$5.97 per MMBTU, adjusted by lease for energy content, transportation fees, and
regional price differentials. Oil, NGL, and gas prices are held constant in
accordance with SEC guidelines.
Lease and well operating costs are based on operating expense records of EPL.
These costs include the per-well overhead expenses allowed under joint operating
agreements along with costs estimated to be incurred at and below the field
levels. Headquarters general and administrative overhead expenses of EPL are not
included. Lease and well operating costs are held constant in accordance with
SEC guidelines. Capital costs are included as required for workovers, new
development wells, and production equipment.
We have made no investigation of potential gas volume and value imbalances
resulting from overdelivery or underdelivery to the EPL interest. Therefore, our
estimates of reserves and future revenue do not include adjustments for the
settlement of any such imbalances; our projections are based on EPL receiving
its net revenue interest share of estimated future gross gas production.
The reserves included in this report are estimates only and should not be
construed as exact quantities. They may or may not be recovered; if recovered,
the revenues therefrom and the costs related thereto could be more or less than
the estimated amounts. A substantial portion of these reserves are for behind
pipe zones, undeveloped locations, and producing wells that lack sufficient
production history upon which performance-related estimates of reserves can be
based. Therefore, these reserves are based on estimates of reservoir volumes and
recovery efficiencies along with analogies to similar production. As such
reserve estimates are usually subject to greater revision than those based on
substantial production and pressure data, it may be necessary to revise these
estimates in the future as additional performance data become available. The
sales rates, prices received for the reserves, and costs incurred in recovering
such reserves may vary from assumptions included in this report due to
governmental policies and uncertainties of supply and demand. Also, estimates
of reserves may increase or decrease as a result of future operations.
In evaluating the information at our disposal concerning this report, we have
excluded from our consideration all matters as to which legal or accounting,
rather than engineering and geological, interpretation may be controlling. As in
all aspects of oil and gas evaluation, there are uncertainties inherent in the
interpretation of engineering and geological data; therefore, our conclusions
necessarily represent only informed professional judgments.
The titles to the properties have not been examined by Netherland, Sewell &
Associates, Inc., nor has the actual degree or type of interest owned been
independently confirmed. The data used in our estimates were obtained
(NETHERLAND, SEWELL &
ASSOCIATES, INC. LOGO)
from Energy Partners, Ltd., other interest owners, various operators of the
properties, and the nonconfidential files of Netherland, Sewell & Associates,
Inc. and were accepted as accurate. Supporting geologic, field performance, and
work data are on file in our office. We are independent petroleum engineers,
geologists, geophysicists, and petrophysicists; we do not own an interest in
these properties and are not employed on a contingent basis.
Very truly yours,
/s/ Frederic D. Sewell
JJS:CLM
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