Exhibit 99.1
EPL Announces Fourth Quarter 2003 and Full Year 2003 Results
NEW ORLEANS--(BUSINESS WIRE)--Feb. 12, 2004--Energy Partners, Ltd.
(NYSE:EPL):
-- Highest Profits in Company History
-- Record Quarterly and Annual Production, Revenue, and Cash Flow
-- 130% Reserve Replacement in 2003
Energy Partners, Ltd. ("EPL") (NYSE:EPL) today announced financial
and operational results for the fourth quarter of 2003 as well as full
year 2003 results. Net income available to common stockholders for the
fourth quarter 2003 was $3.9 million, or $0.12 per diluted share,
compared to a net loss of $1.7 million, or $0.06 per diluted share, in
the same quarter a year ago.
Cash flow from operating activities for 2003's fourth quarter was
$35.1 million, more than double the fourth quarter 2002 figure of
$13.3 million. Discretionary cash flow, which is cash flow from
operating activities before changes in working capital and exploration
expenditures, also more than doubled, rising to $38.6 million for the
fourth quarter 2003 from $15.6 million in the fourth quarter 2002 (see
reconciliation of discretionary cash flow schedule in the tables). The
Company said its strong quarterly earnings and cash flow were
primarily attributable to record high production volumes and continued
high commodity prices. Partially offsetting these benefits were higher
costs and expenses that were directly related to higher production
volumes and an active exploratory drilling program.
For the full year 2003, net income available to common
stockholders reached a record $29.7 million, or $0.93 per diluted
share, a reversal from the loss of $12.1 million, or $0.44 per diluted
share, in 2002. Earnings for 2003 included a one-time after-tax
benefit of $2.3 million, or $0.06 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 No.
143, "Accounting for Asset Retirement Obligations", which became
effective January 1, 2003. The 2002 period included a charge of $1.2
million for expenses relating to the rationalization of EPL's
organization following the acquisition of Hall-Houston Oil Company.
For the full year 2003, cash flow from operating activities
totaled $136.7 million, more than five times the 2002 figure of $25.4
million. Discretionary cash flow increased two and one-half times in
2003, to $150.2 million from $60.0 million in 2002 (see reconciliation
of discretionary cash flow schedule in the tables). Significantly
higher production volumes and commodity prices were the primary
factors leading to sharply improved earnings and cash flow in 2003.
Reserve Replacement and Finding and Development Costs
EPL also announced that it had replaced 130% of 2003 production
with new reserves. Extensions and discoveries totaled 9.0 million
barrels of oil equivalent (Mmboe) while revisions to previous
estimates totaled 1.0 Mmboe. EPL had no acquisitions or divestitures
of reserves in 2003. At year-end 2003, proved reserves were 49.8
Mmboe, up 5% from 47.5 Mmboe at year-end 2002. 69% of EPL's reserves
at year-end 2003 were classified as proved developed. EPL's proved
reserve estimates as of 12/31/03 and 12/31/02 are based upon third
party engineering reports prepared by Netherland, Sewell & Associates,
Inc. and Ryder Scott Company, L.P.
EPL's finding and development costs in 2003 were $11.19 per barrel
of oil equivalent (Boe). Since inception, EPL has averaged 327% annual
reserve replacement at a cost of $7.97 per Boe. Drill bit replacement
since inception has averaged 134% at $11.57 per Boe, and acquisitions
have averaged 173% at $6.10 per Boe.
Richard A. Bachmann, EPL's Founder, Chairman, President and CEO,
remarked, "The fourth quarter of 2003 was highlighted with new Company
records for production, revenues and discretionary cash flow. The
combination of favorable commodity prices, record production and
vigilant control of expenses gave us a strong finish to a very strong
year. For the full year, we achieved a 23% growth in production purely
from our drilling program without any benefit from acquisitions. We
also made significant progress in lowering our per-unit operating
costs."
Bachmann continued, "Our exploratory program was in high gear in
the fourth quarter, and our success in that program throughout the
year enabled us to achieve an admirable reserve replacement of 130% at
a cost of $11.19 per Boe, which we believe is attractive for a Gulf of
Mexico focused producer."
Fourth Quarter 2003 Results
EPL's production for the fourth quarter 2003 averaged 22,609 Boe
per day, another new record high for the Company. Production on a Boe
basis was up 46% from fourth quarter 2002's production of 15,529 Boe
per day which was negatively impacted by tropical storm related
downtime. Natural gas production grew 63% to 84.2 million cubic feet
per day (Mmcfd) while oil production increased 24% to 8,571 barrels
per day (Bopd).
In the fourth quarter of 2003, EPL realized average prices of
$4.86 per thousand cubic feet (Mcf) of natural gas and $28.10 per
barrel of oil, net of hedging. These prices represent a 29% increase
in the average natural gas price and 9% increase in the average oil
price from the fourth quarter 2002. EPL maintains detailed information
on its hedging program on its web site, www.eplweb.com.
Full Year 2003 Results
Production for 2003 averaged 21,077 Boe per day, a new record high
for the Company, and an increase of 23% over 2002 average volumes of
17,173 Boe per day. Natural gas production rose 45% from 2002 levels
to average 78.6 Mmcfd in 2003. Oil production declined slightly,
averaging 7,978 Bopd in 2003 compared to 8,148 Bopd in 2002.
Net of the impact of hedging, the average realized natural gas
price for 2003 was $5.16 per Mcf, a 60% increase from the 2002 average
realized natural gas price of $3.23. Oil price realizations rose to
$28.02 per barrel for 2003, net of hedging, a 19% increase compared to
the 2002 average realized oil price of $23.64.
Capital Expenditures
EPL's expenditures for exploration and development totaled $111.9
million for the full year 2003. The Company recently announced a
capital and exploration budget for 2004 of $125 million. EPL expects
the risk allocation of the 2004 budget to match its historic
allocation, with approximately 60% of the budget earmarked for
development and low risk exploitation, 25% for moderate risk
exploration, and 15% for higher risk, higher potential exploration.
The Company does not budget for acquisitions.
As of year-end 2003, EPL's long-term debt totaled $150.4 million
while cash and cash equivalents totaled $104.4 million. Its debt to
total capitalization ratio was 36%, excluding the impact of the cash
on the balance sheet as of the end of the year. The Company has $59.9
million in unused capacity under its bank credit facility.
2003 Operational Highlights
In 2003 EPL successfully drilled 18 of 23 new wells for a 78%
overall success rate. Of the 21 exploratory wells in the program, 17
were successful, an 81% success rate. The Company also successfully
completed 28 well workovers and recompletions. A table summarizing the
2003 drilling program follows.
Water Well EPL
Well Depth Depth Working
Prospect Number (ft.) (ft.) Result Interest
- ---------------------- ------- ------ ------- ------------- ---------
Grand Isle 25 (GBM -
Eyeball) #25 44 8,417 Oil and Gas 44%
East Cameron 378 #3 437 12,224 Gas 33%
East Cameron 44 #1 44 11,984 Dry Hole 33%
Brazos 495-S #1 44 7,500 Gas 50%
South Timbalier 185 #C-2 184 4,509 Gas 80%
East Cameron 280 #B-3 167 6,130 Gas 50%
South Pass 24 (East
Bay - Glacier) #B-59 10 11,259 Oil and Gas 50%
East Cameron 161 #A-1ST 86 8,235 Gas 100%
South Pass 37 (East
Bay - Grizzly) #9 105 9,917 Dry Hole 63%
South Marsh Island 109 #1 189 10,400 Gas 27%
South Timbalier 26
(GBM - Mossy Creek) #16 55 10,800 Oil and Gas 100%
South Marsh Island 109 #2 189 10,500 Gas 27%
East Cameron 44 #2 44 7,500 Gas 100%
High Island 55L #4 45 8,200 Gas 35%
South Pass 24 (East
Bay - Mesa Verde E.) #193 10 13,900 Gas 67%
Grand Isle 20 #B-4 65 11,000 Dry Hole 94%
South Marsh Island 109 #3 189 10,500 Gas 27%
High Island 55L #6 45 8,200 Gas 35%
South Timbalier 41
(GBM - Rock Creek) #1 60 15,600 Oil and Gas 60%
Eugene Island 145 #1 36 16,000 Dry Hole 33%
Eugene Island 142 #5 40 19,000 Gas 17%
South Pass 27 (East
Bay) (1) #B-53 10 10,573 Dry Hole 100%
High Island A-538 (1) #A-2 220 2,220 Gas 33%
(1) Development Well
Of EPL's 18 successes, eight were onstream before year-end 2003,
five are expected to be online in the first half of 2004, and the
remaining five are expected in the second half of 2004.
Bachmann added, "In many important respects, 2003 was a landmark
year for EPL. We executed the most extensive drilling program in the
history of the Company while maintaining our high success rate,
continuing the momentum established with our 2002 drilling program. We
also reached record highs on nearly every operational and financial
metric and have ended the year with over $100 million in cash on our
balance sheet. For 2004, we have set equally challenging goals for
ourselves. We plan to have an active drilling program that will be
better balanced throughout the year while we continue to pursue
acquisitions of properties that fit our strategic focus, utilizing our
well-positioned balance sheet."
EPL has scheduled a conference call to discuss quarterly and
year-end results for today, February 12, at 9:00 AM CST. Management
will also discuss guidance for 2004. To participate in the EPL
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 callers is 5183650.
The call will be available for replay beginning two hours after
the call is completed through midnight of February 17, 2004. For
callers in the United States and Canada, the toll-free number for the
replay is (800) 642-1687. For international callers the number is
(706) 645-9291. The Conference I.D. for all callers to access the
replay is 5183650.
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. Additional information on the
Company is available on its web site, www.eplweb.com.
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 the
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 our 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 Years Ended
December 31, December 31,
-------------------- --------------------
2003 2002 2003 2002
--------- --------- --------- ---------
(Unaudited) (Unaudited)
Revenues:
Oil and natural gas $ 59,792 $ 34,284 $ 229,703 $ 134,146
Other 60 (162) 484 (358)
--------- --------- --------- ---------
59,852 34,122 230,187 133,788
--------- --------- --------- ---------
Costs and expenses:
Lease operating 8,578 8,333 36,693 34,400
Taxes, other than on
earnings 1,731 1,731 7,650 6,572
Exploration
expenditures and dry
hole costs 8,118 2,786 17,353 10,735
Depreciation, depletion
and amortization 22,482 14,196 81,927 64,513
General and
administrative:
Stock-based
compensation 466 126 1,285 453
Severance costs - - - 1,211
Other general and
administrative 7,555 6,504 26,719 22,504
--------- --------- --------- ---------
Total costs and
expenses 48,930 33,676 171,627 140,388
--------- --------- --------- ---------
Income (loss) from
operations 10,922 446 58,560 (6,600)
--------- --------- --------- ---------
Other income (expense):
Interest income 201 18 380 107
Interest expense (3,625) (1,751) (10,174) (6,988)
--------- --------- --------- ---------
(3,424) (1,733) (9,794) (6,881)
--------- --------- --------- ---------
Income (loss) before
income taxes and
cumulative effect of
change in accounting
principle 7,498 (1,287) 48,766 (13,481)
Income taxes (2,718) 412 (17,784) 4,682
--------- --------- --------- ---------
Income (loss) before
cumulative effect of
change in accounting
principle 4,780 (875) 30,982 (8,799)
Cumulative effect of
change in accounting
principle, net of income
taxes of $1,276 - - 2,268 -
--------- --------- --------- ---------
Net income (loss) 4,780 (875) 33,250 (8,799)
Less dividends earned
on preferred stock and
accretion of discount (854) (863) (3,545) (3,330)
--------- --------- --------- ---------
Net income (loss)
available to common
stockholders $ 3,926 $ (1,738) $ 29,705 $ (12,129)
========= ========= ========= =========
Earnings per share:
Basic:
Before cumulative effect
of change in accounting
principle $ 0.12 $ (0.06) $ 0.89 $ (0.44)
Cumulative effect of
change in accounting
principle $ - $ - $ 0.07 $ -
--------- --------- --------- ---------
Basic earnings (loss)
per share $ 0.12 $ (0.06) $ 0.96 $ (0.44)
========= ========= ========= =========
Diluted:
Before cumulative effect
of change in accounting
principle $ 0.12 $ (0.06) $ 0.87 $ (0.44)
Cumulative effect of
change in accounting
principle $ - $ - $ 0.06 $ -
--------- --------- --------- ---------
Diluted earnings (loss)
per share $ 0.12 $ (0.06) $ 0.93 $ (0.44)
========= ========= ========= =========
Weighted average common
shares used in computing
income (loss) per share:
Basic 32,185 27,524 30,822 27,467
Incremental common
shares 5,182 - 4,753 -
--------- --------- --------- ---------
Diluted 37,367 27,524 35,575 27,467
========= ========= ========= =========
ENERGY PARTNERS, LTD.
CONSOLIDATED STATEMENTS OF NET CASH PROVIDED BY
OPERATING ACTIVITIES
(In Thousands)
Three Months Ended Years Ended
December 31, December 31,
------------------ ------------------
2003 2002 2003 2002
-------- -------- -------- --------
(Unaudited) (Unaudited)
Cash flows from operating
activities:
Net income (loss) $ 4,780 $ (875) $ 33,250 $ (8,799)
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 22,482 14,196 81,927 64,513
Gain on sale of oil and
natural gas assets - 243 (207) 243
Amortization of deferred
revenue - (628) - (3,420)
Stock-based compensation 466 126 1,285 453
Deferred income taxes 2,442 (383) 17,708 (4,653)
Exploration expenditures 6,690 1,927 12,810 5,909
Non-cash effect of
derivative instruments - - - 514
Amortization of deferred
financing costs 232 112 902 370
Other 38 52 271 52
Changes in operating assets
and liabilities, net of
acquisition in 2002:
Trade accounts receivable (5,164) (4,292) (9,490) (4,234)
Prepaid expenses (225) (545) (239) 154
Other assets (424) (63) (3,112) (2,160)
Accounts payable and
accrued expenses 4,047 3,731 4,814 (21,595)
Other liabilities (286) (351) (949) (1,930)
-------- -------- -------- --------
Net cash provided by operating
activities $ 35,078 $ 13,250 $136,702 $ 25,417
======== ======== ======== ========
Reconciliation of
discretionary cash flow:
Net cash provided by
operating activities 35,078 13,250 136,702 25,417
Changes in working capital 2,052 1,520 8,976 29,765
Non-cash exploration
expenditures (6,690) (1,927) (12,810) (5,909)
Total exploration
expenditures 8,118 2,786 17,353 10,735
-------- -------- -------- --------
Discretionary cash flow $ 38,558 $ 15,629 $150,221 $ 60,008
======== ======== ======== ========
The table above reconciles discretionary cash flow to net cash
provided by operating activities. Discretionary cash flow is defined
as cash flow from operations before changes in working capital and
total 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 financial measure is useful information to investors
because it is widely used by professional research anaylsts 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. Investors should be cautioned that discretionary cash flow
as reported by us may not be comparable in all instances to
discretionary cash flow as reported by other companies.
ENERGY PARTNERS, LTD.
SELECTED PRODUCTION, PRICING AND OPERATIONAL STATISTICS
(Unaudited)
Three Months Ended Years Ended
December 31, December 31,
-------------------- ------------------
2003 2002 2003 2002
--------- --------- -------- --------
PRODUCTION AND PRICING
- ----------------------
Net Production (per day):
Oil (Bbls) 8,571 6,938 7,978 8,148
Natural gas (Mcf) 84,228 51,548 78,596 54,150
Total (Boe) 22,609 15,529 21,077 17,173
Oil and Natural Gas
Revenues (in thousands):
Oil $ 22,158 $ 16,428 $ 81,599 $ 70,311
Natural gas 37,634 17,856 148,104 63,835
Total 59,792 34,284 229,703 134,146
Average Sales Prices (1):
Oil (per Bbl) $ 28.10 $ 25.74 $ 28.02 $ 23.64
Natural gas (per Mcf) 4.86 3.77 5.16 3.23
Average (per Boe) 28.75 24.00 29.86 21.40
OPERATIONAL STATISTICS
- ----------------------
Average Costs (per Boe):
Lease operating expense $ 4.12 $ 5.83 $ 4.77 $ 5.49
Taxes, other than on
earnings 0.83 1.21 0.99 1.05
Depreciation, depletion
and amortization 10.81 9.93 10.65 10.29
(1) Prices are net of hedging transactions which had the following
impact:
-- Did not impact natural gas price realizations in the fourth
quarter of 2003 and reduced realizations by $0.60 per Mcf in
the fourth quarter 2002;
-- Reduced oil price realizations by $1.87 and $0.76 per barrel
for the fourth quarter of 2003 and 2002, respectively;
-- Reduced natural gas price realizations by $0.23 and $0.18 per
Mcf for the year ended December 31, 2003 and 2002,
respectively; and
-- Reduced oil price realizations by $1.67 and $0.51 per barrel
for the year ended December 31, 2003 and 2002, respectively.
ENERGY PARTNERS, LTD.
CONSOLIDATED BALANCE SHEETS
(In Thousands, except share data)
December 31, December 31,
2003 2002
------------ ------------
(Unaudited)
ASSETS
- ------
Current assets:
Cash and cash equivalents $ 104,392 $ 116
Trade accounts receivable -- net of
allowance for doubtful accounts 35,315 25,824
Deferred tax asset 2,939 1,221
Prepaid expenses 2,106 1,868
------------ ------------
Total current assets 144,752 29,029
Property and equipment, at cost under the
successful efforts method of accounting
for oil and natural gas properties 598,101 471,840
Less accumulated depreciation, depletion
and amortization (210,013) (121,034)
------------ ------------
Net property and equipment 388,088 350,806
Other assets 6,575 3,463
Deferred financing costs -- net of
accumulated amortization 4,766 922
------------ ------------
$ 544,181 $ 384,220
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
Current liabilities:
Accounts payable $ 14,650 $ 8,869
Accrued expenses 42,487 43,533
Fair value of commodity derivative
instruments 3,814 3,392
Current maturities of long-term debt 99 92
------------ ------------
Total current liabilities 61,050 55,886
Long-term debt 150,317 103,687
Deferred income taxes 29,584 9,033
Asset retirement obligation 40,577 22,669
Other 1,168 1,023
------------ ------------
282,696 192,298
Stockholders' equity:
Preferred stock, $1 par value
per share. Authorized 1,700,000
shares; issued and outstanding:
2003 - 368,076 shares; 2002 - 382,261
shares. Aggregate liquidation
value: 2003 - $36,808; 2002 - $38,226 34,894 35,359
Common stock, par value $0.01 per share.
Authorized 50,000,000 shares; issued and
outstanding: 2003 - 32,241,981 shares;
2002 - 27,550,466 shares 323 276
Additional paid-in capital 228,511 187,965
Accumulated other comprehensive loss (2,441) (2,171)
Retained earnings (deficit) 198 (29,507)
------------ ------------
Total stockholders' equity 261,485 191,922
Commitments and contingencies
------------ ------------
$ 544,181 $ 384,220
============ ============
ENERGY PARTNERS, LTD.
SUPPLEMENTAL OIL & NATURAL GAS DISCLOSURE
(Unaudited)
Crude Oil Natural Gas Equivalents
(Mbbl) (Mmcf) (Mboe)
---------- ----------- -----------
Proved developed and undeveloped
reserves:
December 31, 2000 27,521 49,150 35,712
Purchases of reserves in place 117 301 167
Extensions, discoveries and
other additions 2,797 28,383 7,528
Revisions (1,192) (3,422) (1,762)
Production (3,781) (12,615) (5,883)
---------- ----------- -----------
December 31, 2001 25,462 61,797 35,762
Purchases of reserves in place 223 57,728 9,844
Extensions, discoveries and
other additions 2,117 32,492 7,532
Revisions 1,525 (5,295) 643
Production (2,974) (19,765) (6,268)
---------- ----------- -----------
December 31, 2002 26,353 126,957 47,513
Extensions, discoveries and
other additions 2,275 40,270 8,987
Revisions 1,698 (4,135) 1,008
Production (2,912) (28,688) (7,693)
---------- ----------- -----------
December 31, 2003 27,414 134,404 49,815
Proved developed reserves:
December 31, 2001 22,176 38,099 28,526
December 31, 2002 21,070 70,014 32,739
December 31, 2003 22,306 71,531 34,228
Costs incurred for oil and natural gas property acquisition,
exploration and development activities for the three years ended
December 31 are as follows (in Thousands):
2003 2002 2001
-------- -------- --------
Business combinations
Proved properties (1) $ 850 $116,415 $ 523
Unproved properties - 7,616 -
-------- -------- --------
Total business combinations 850 124,031 523
Lease acquisitions 6,030 1,922 1,993
Exploration 60,170 27,083 45,592
Development 45,682 39,061 55,882
-------- -------- --------
Total finding and development costs 111,882 68,066 103,467
-------- -------- --------
Total finding, development and
acquisition costs 112,732 192,097 103,990
-------- -------- --------
Asset retirement liabilities incurred 812 - -
Asset retirement revisions 2,519 - -
-------- -------- --------
Total cost incurred $116,063 $192,097 $103,990
(1) Proved acquisition costs in 2003 relate to the first contingent
consideration payment made to former Hall-Houston Oil Company
shareholders.
CONTACT: Energy Partners Ltd., New Orleans
Al Petrie, 504-799-1953
alpetrie@eplweb.com