Exhibit 99.1
EPL Announces Record High First Quarter 2003 Net Income Led By
Record High Production Volumes and Strong Energy Prices
NEW ORLEANS--(BUSINESS WIRE)--May 5, 2003--Energy Partners, Ltd.
("EPL") (NYSE: EPL) announced today net income available to common
stockholders for the first quarter of 2003 of $13.3 million, or $0.44
per diluted share. First quarter net income includes an after-tax
benefit of $2.3 million, or $0.07 per diluted share, related to the
cumulative effect of a change in accounting principle as a result of
the adoption of Financial Accounting Standards Board Statement 143
("Accounting for Asset Retirement Obligations") which is effective
January 1, 2003. In the same period a year ago, EPL reported a net
loss available to common stockholders of $6.5 million, or $0.24 per
diluted share. First quarter 2002 results included a charge of $1.2
million for severance expense relating to the rationalization of EPL's
organization following the acquisition of Hall-Houston Oil Company.
EPL's first quarter 2003 discretionary cash flow, which is cash
flows from operating activities before changes in working capital and
before total exploration expenditures, totaled $37.5 million as
compared to $9.4 million in the same quarter of 2002 (see
reconciliation of discretionary cash flow schedule in the tables).
First quarter 2003 cash flows from operating activities totaled $24.8
million as compared to negative cash flows of $7.2 million in the same
quarter of 2002.
EPL said first quarter 2003 results benefited from record high
production volumes and sharply higher natural gas and oil prices. A
decline in lease operating expenses and exploration expenses compared
with the same quarter a year ago was offset by increased depreciation,
depletion and amortization expenses related to higher production
volumes, and higher taxes, other than on earnings related to higher
commodity prices.
In the first quarter of 2003, natural gas sales volumes rose 31%
to a record 70.0 million cubic feet of natural gas ("Mmcf") per day
from 53.3 Mmcf per day in the same period a year ago. Crude oil
production averaged 8,012 barrels per day in the first quarter of 2003
compared with 8,876 barrels per day in 2002's first quarter. Total
production on a barrel of oil equivalent ("Boe") basis rose to a
record 19,680 Boe per day in the first quarter of 2003, up 11% from
the first quarter of 2002. Natural gas production rose as a result of
new production brought on line from successful drilling activities.
Realized natural gas prices in the first quarter of 2003 more than
doubled from the same period a year ago, averaging $5.58 per thousand
cubic feet ("Mcf") compared with $2.77 per Mcf in the same quarter of
2002. Realized oil prices also increased sharply, averaging $30.24 per
barrel in the first quarter of 2003, up 49% from $20.33 per barrel in
the same period a year ago. All of the above prices are stated net of
the impact of EPL's hedging program.
Richard A. Bachmann, EPL's Founder, Chairman, President and Chief
Executive Officer commented, "Our first quarter results were
excellent. We achieved record production volumes in the same quarter
in which we experienced the highest commodity prices on a Boe basis
since our Company's inception. Our operations team did an excellent
job of quickly tying into production all but three of our drilling
successes from late 2002, allowing us to take advantage of very
attractive commodity prices during the quarter. At the same time, we
made significant progress toward our goal of lowering lease operating
expenses, averaging $4.53 per Boe of production, down 18% from $5.50
per Boe in the same quarter a year ago."
During the first quarter of 2003, the Company's capital
expenditures totaled $24.3 million. At quarter-end EPL's long-term
debt totaled $118.7 million while cash and cash equivalents stood at
$2.9 million.
On April 16, 2003, the Company completed the public offering of
6,796,116 shares of its common stock which was priced at $9.50 per
share. The offering included 4,210,526 shares offered by the Company,
1,723,727 shares offered by Evercore Capital Partners L.P. and certain
of its affiliates, and 861,863 shares offered by Energy Income Fund,
L.P. The Company is using the proceeds net of expenses and
underwriting discounts and commissions from the offering of
approximately $37.6 million to repay a portion of the outstanding
borrowings under its revolving credit facility. The Company did not
receive any proceeds from the shares offered by the selling
shareholders. The underwriters have exercised their option to purchase
1,019,417 additional shares to cover over-allotments, the proceeds
from which also go to the selling shareholders and not to the Company.
Hedging Positions
The Company further increased its hedging positions on its oil and
natural gas production for 2003 during the first quarter. A summary of
its current hedging positions is available under the Investor
Relations section at the Company's web site, www.eplweb.com.
Operational Highlights
During the first quarter of 2003, EPL successfully completed eight
of nine workovers/recompletions, of which five were natural gas and
three were oil. The Company also initiated its 2003 drilling program,
which currently includes 19 exploration wells and 8 development wells.
During the first quarter of 2003, the Company successfully drilled its
first new exploratory well of the year, the Eyeball prospect at
Greater Bay Marchand, under its drill-to-earn arrangement with
ChevronTexaco. The SL 1486 #1 well located in 44 feet of water about
three miles off the Louisiana coast was drilled to a total depth of
10,372 feet and encountered a total of 80 feet of net oil and natural
gas pay in four sand objectives. The well was brought on line at the
end of April with an initial test of 1.5 Mmcf per day. Plans are to
optimize the well to 4 Mmcf per day. EPL is the operator of the well
and owns a 43.6% working interest.
EPL currently has rigs on location for two exploratory wells. At
East Cameron Block 378, the well has logged 86 feet of apparent net
natural gas pay in a total of two sands. A liner was set to protect
the shallowest logged pay. The well was then sidetracked and the
deepest productive interval has since been cased. Completion plans are
currently being evaluated. EPL is the operator of the well and owns a
33% working interest.
One additional exploratory well is currently drilling at East
Cameron Block 44, where EPL is the operator and owns a 33% working
interest. The well is currently drilling below 12,200 feet going to a
total measured depth of 14,846 feet.
The Company announced during the first quarter that it was the
apparent high bidder on six blocks encompassing 30,000 gross acres at
the Central Gulf of Mexico Lease Sale 185. Prospects on as many as
three of the six blocks could be drilled in 2003 assuming the blocks
are awarded. The total amount of EPL's bids on these blocks was
approximately $4 million. The Company was recently informed that it
was awarded South Timbalier Block 46 in which it has a 100% working
interest and will be the operator. It has also been awarded South
Timbalier Block 41 in which it has a 60% working interest and is the
operator, and South Marsh Island Block 109 in which it has a 25%
working interest. Bids on the remaining three blocks are currently
under evaluation by the Minerals Management Service.
Bachmann continued, "We are very pleased with the success of our
recent equity offering and welcome all of our new shareholders. We
believe we have an exciting year ahead for all of us. Our capital
spending program for 2003 is well underway, with significant
development activity already completed at the sites of our 2002
drilling successes, as well as having rigs on location for two
exploratory wells. In total, we plan to drill 27 new wells this year
compared with 17 in 2002. We expect to drill them fairly evenly
through the year, keeping three to five rigs busy at all times. Our
exploratory program is particularly exciting as it provides us with an
excellent mix of low to moderate risk drilling opportunities as well
as a number of higher risk, higher potential prospects. We are also
very well positioned to take advantage of any opportunities to acquire
strategic properties in our Gulf of Mexico Shelf focus area. We
believe our multi-faceted strategy of exploration, exploitation,
acquisitions and drill-to-earns will enable us to continue to create
value for all of our shareholders."
Conference Call
EPL has scheduled its quarterly earnings conference call for
today, May 5, 2003 at 10:00 a.m. (Central Daylight Time) during which
the Company will discuss first quarter results and provide guidance
for the second quarter and balance of 2003. EPL's guidance will be
available in the Investor Relations section of its web site. To
participate in the conference call, callers in the United States and
Canada can dial (877) 612-5303 and international callers can dial
(706) 634-0487. The Conference I.D. for all callers is 9699052. The
conference call will also be webcast live as well as for on-demand
listening at the Company's web site by accessing "Conference Call"
under the Investor Relations section of its site.
Founded in 1998, EPL is an independent oil and natural gas
exploration and production company based in New Orleans, Louisiana.
The Company's operations are focused in the shallow to moderate depth
waters of the Gulf of Mexico Shelf.
Any statements made in this news release, other than those of
historical fact, about an action, event or development, which the
Company hopes, believes or anticipates may or will occur in future,
are "forward-looking statements" under U. S. securities laws. Such
statements are subject to various assumptions, risks and
uncertainties, which are specifically described in the Company's
Annual Report on Form 10-K for the fiscal year ended December 31, 2002
filed with the Securities and Exchange Commission. Forward-looking
statements are not guarantees of future performance or an assurance
that the Company's current assumptions and projections are valid.
Actual results may differ materially from those projected.
ENERGY PARTNERS, LTD.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In Thousands, Except per share data)
Three Months Ended
March 31,
----------- ------------
2003 2002
----------- -----------
(unaudited)
Revenues:
Oil and natural gas $ 56,954 $ 29,541
Other 283 (416)
----------- -----------
57,237 29,125
----------- -----------
Costs and expenses:
Lease operating 8,017 8,800
Taxes, other than on earnings 2,371 1,550
Exploration expenditures 1,307 2,322
Depreciation, depletion and amortization 17,572 16,383
General and administrative:
Stock-based compensation 126 127
Other general and administrative 7,439 6,253
Severance costs - 1,211
----------- -----------
Total costs and expenses 36,832 36,646
----------- -----------
Income (loss) from operations 20,405 (7,521)
----------- -----------
Other income (expense):
Interest income 21 22
Interest expense (1,821) (1,601)
----------- -----------
(1,800) (1,579)
----------- -----------
Income (loss) before income taxes and
cumulative effect of change in accounting
principle 18,605 (9,100)
Income taxes (6,691) 3,286
----------- -----------
Income (loss) before cumulative effect of
change in accounting principle 11,914 (5,814)
Cumulative effect of change of accounting
principle, net of income tax expense of
$1,276 2,268 -
----------- -----------
Net income (loss) 14,182 (5,814)
Less dividends earned on preferred stock
and accretion of discount (855) (724)
----------- -----------
Net income (loss) available to common
stockholders $ 13,327 $ (6,538)
=========== ===========
Earnings per share:
Basic:
Before cumulative effect of change in
accounting principle $ 0.40 $ (0.24)
Cumulative effect of change in accounting
principle $ 0.08 $ -
----------- -----------
Basic earnings (loss) per share $ 0.48 $ (0.24)
=========== ===========
Diluted:
Before cumulative effect of change in
accounting principle $ 0.37 $ (0.24)
Cumulative effect of change in accounting
principle $ 0.07 $ -
----------- -----------
Diluted earnings (loss) per share $ 0.44 $ (0.24)
=========== ===========
Weighted average common shares used in
computing income (loss) per share:
Basic 27,651 27,371
Incremental common shares 4,850 -
----------- -----------
Diluted 32,501 27,371
=========== ===========
ENERGY PARTNERS, LTD.
CONSOLIDATED STATEMENTS OF NET CASH PROVIDED BY
OPERATING ACTIVITIES
(In Thousands)
Three Months Ended
March 31,
--------- --------
2003 2002
--------- --------
(unaudited)
Cash flows from operating activities:
Net income (loss) $ 14,182 $ (5,814)
Adjustments to reconcile net income (loss) to
net cash provided by operating activities:
Cumulative effect of change in accounting
principle, net of tax (2,268) -
Depreciation, depletion and amortization 17,572 16,383
Gain on sale of oil and natural gas assets (207) -
Amortization of deferred revenue - (868)
Stock-based compensation 126 127
Deferred income taxes 6,691 (3,286)
Exploration expenditures 311 1,828
Amortization of deferred financing costs 86 59
Non-cash effect of derivative instruments - 514
Other 50 -
--------- --------
36,543 8,943
Changes in operating assets and liabilities,
net of acquisition:
Increase in trade accounts receivable (20,708) (2,419)
Decrease in prepaid expenses 703 662
Increase in other assets (598) (511)
Increase (decrease) in accounts payable
and accrued expenses 8,996 (13,943)
(Decrease) increase in other liabilities (144) 31
--------- --------
Net cash provided by (used in) operating
activities $ 24,792 $ (7,237)
========= ========
Reconciliation of discretionary cash flow:
Net cash provided by (used in) operating
activities 24,792 (7,237)
Changes in working capital 11,751 16,180
Non-cash exploration expenditures (311) (1,828)
Total exploration expenditures 1,307 2,322
--------- --------
Discretionary cash flow $ 37,539 $ 9,437
========= ========
The table above reconciles discretionary cash flow to net cash
provided by (used in) operating activities. Discretionary cash flow is
defined as cash flow from operations before changes in working capital
and exploration expenditures. Discretionary cash flow is widely
accepted as a financial indicator of an oil and natural gas company's
ability to generate cash which is used to internally fund exploration
and development activities, pay dividends and service debt.
Discretionary cash flow is presented based on management's belief that
this non-GAAP measure is useful information to investors because it is
widely used by professional research analysts in the valuation,
comparison, rating and investment recommendations of companies within
the oil and natural gas exploration and production industry. Many
investors use the published research of these analysts in making their
investment decisions. Discretionary cash flow is not a measure of
financial performance under GAAP and should not be considered as an
alternative to cash flows from operating activities, as defined by
GAAP, or as a measure of liquidity, or an alternative to net income.
ENERGY PARTNERS, LTD.
SELECTED PRODUCTION, PRICING AND OPERATIONAL STATISTICS
(Unaudited)
Three Months Ended
March 31,
----------- ------------
2003 2002
----------- -----------
PRODUCTION AND PRICING
- ----------------------
Net production (per day):
Oil (Bbls) 8,012 8,876
Natural gas (Mcf) 70,007 53,345
Total (Boe) 19,680 17,767
Oil and natural gas revenues (in thousands):
Oil $ 21,803 $ 16,238
Natural gas 35,151 13,303
Total 56,954 29,541
Average sales prices (1) :
Oil (per Bbl) $ 30.24 $ 20.33
Natural gas (per Mcf) 5.58 2.77
Average (per Boe) 32.16 18.47
OPERATIONAL STATISTICS
- ----------------------
Average costs (per Boe):
Lease operating $ 4.53 $ 5.50
Taxes, other than on earnings 1.34 0.97
Depreciation, depletion and amortization 9.92 10.25
(1) Prices are net of hedging transactions which had the following
impact:
-- Reduced oil and natural gas price realizations by $2.45 per
barrel and $0.90 per Mcf, respectively, for the first quarter
of 2003; and
-- Increased natural gas price realizations by $0.28 per Mcf in
the first quarter of 2002
ENERGY PARTNERS, LTD.
CONSOLIDATED BALANCE SHEETS
(In Thousands)
March 31, December 31,
2003 2002
----------- ------------
(Unaudited)
ASSETS
- ------
Current assets:
Cash and cash equivalents $ 2,883 $ 116
Trade accounts receivable 46,532 25,824
Deferred tax asset 1,015 1,221
Prepaid expenses 1,165 1,868
----------- ------------
Total current assets 51,595 29,029
Property and equipment, at cost under the
successful efforts method of accounting
for oil and natural gas properties 522,778 471,840
Less accumulated depreciation, depletion and
amortization (146,061) (121,034)
----------- ------------
Net property and equipment 376,717 350,806
Other assets 4,061 3,463
Deferred financing costs 836 922
----------- ------------
Total assets $ 433,209 $ 384,220
=========== ============
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
Current liabilities:
Accounts payable $ 20,906 $ 8,869
Accrued expenses 28,445 43,533
Fair value of commodity derivative
instruments 2,820 3,392
Current maturities of long-term debt 94 92
----------- ------------
Total current liabilities 52,265 55,886
Long-term debt 118,663 103,687
Deferred income taxes 17,001 9,033
Other 38,553 23,692
----------- ------------
226,482 192,298
Stockholders' equity:
Preferred stock 34,703 35,359
Common stock 277 276
Additional paid-in capital 189,088 187,965
Accumulated other comprehensive loss (1,805) (2,171)
Accumulated deficit (15,536) (29,507)
----------- ------------
Total stockholders' equity 206,727 191,922
----------- ------------
Total liabilities and stockholders'
equity $ 433,209 $ 384,220
=========== ============
CONTACT: Energy Partners Ltd., New Orleans
Al Petrie, 504/799-1953
alpetrie@eplweb.com
www.eplweb.com