Exhibit 99.1
EPL Announces Record Revenues, Discretionary Cash Flow and
Production for the Second Quarter 2004
NEW ORLEANS--(BUSINESS WIRE)--Aug. 5, 2004--Energy Partners, Ltd.
("EPL") (NYSE:EPL) today reported that in the second quarter of 2004,
revenues reached a record high of $75.1 million and net income
available to common stockholders was $13.8 million, or $0.38 per
diluted share. In the second quarter of 2003, revenues totaled $54.2
million and net income available to common stockholders was $6.6
million, or $0.21 per diluted share.
Discretionary cash flow, which is cash flow from operating
activities before changes in working capital and exploration expense,
also was the highest in the Company's history totaling $53.7 million,
up 49% over second quarter 2003 discretionary cash flow of $36.1
million (see reconciliation of discretionary cash flow in table.) Cash
flow from operating activities in the most recent quarter was $48.0
million, compared to $36.1 million in the second quarter of 2003.
The Company said that growing production volumes and strong
commodity prices were the primary drivers in the results reported
today. Cash operating costs, which includes lease operating expenses,
taxes other than on earnings, and general and administrative expenses,
declined to $8.78 per barrel of oil equivalent (Boe), down 6% from
$9.32 per Boe in the second quarter of 2003.
In the second quarter of 2004, production volumes averaged 22,920
Boe per day, another record high for EPL. Natural gas production
averaged 87.1 million cubic feet (Mmcf) per day, an increase of 18%
over second quarter 2003 volumes of 73.6 Mmcf per day. Oil production
in the second quarter of 2004 averaged 8,411 barrels per day, a 12%
increase over volumes of 7,483 barrels per day in the same period a
year ago. On a Boe basis, production grew 16% over second quarter 2003
levels of 19,751 Boe per day. The Company also said that production is
currently averaging over 24,000 Boe per day.
Natural gas price realizations in the second quarter 2004, net of
hedging, averaged $6.26 per thousand cubic feet (Mcf), a 17% increase
over second quarter 2003 realizations of $5.36. Oil realizations net
of hedging averaged $33.20 per barrel, a 24% increase over
realizations of $26.84 in the same period of 2003.
Richard A. Bachmann, EPL's Founder, Chairman, President, and CEO
commented, "We have been fortunate to achieve all time high production
volumes at a time when commodity prices are at or near record levels.
That combination has allowed the Company to set new highs on a number
of fronts, continuing a streak of record results over the last several
quarters for EPL. We have also been quite successful in controlling
our unit operating costs. We take great satisfaction in demonstrating
the ability to grow while creating value in the Gulf of Mexico."
For the six months ended June 30, 2004, net income available to
common stockholders was $20.4 million, or $0.58 per diluted share. Net
income available to common stockholders in the same period of 2003 was
$19.9 million, or $0.63 per diluted share, inclusive of an 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
adoption of Financial Accounting Standards Board Statement No. 143,
("Accounting for Asset Retirement Obligations"), which was effective
January 1, 2003.
Discretionary cash for the first two quarters of 2004 totaled
$94.8 million, rising 29% over $73.7 million in the same period a year
ago. (See reconciliation of discretionary cash flow in table.) Cash
flow from operating activities in the first six months of 2004 was
$68.7 million, up 13% compared to $60.9 million in the same period of
2003. First half 2004 results benefited from higher production volumes
compared to the same period in 2003 as well as higher commodity
prices.
For the first half of 2004, natural gas volumes averaged 82.1 Mmcf
per day, a 14% increase over first half 2003 natural gas volumes of
71.8 Mmcf per day. Oil production averaged 8,200 barrels per day in
the first half of 2004, a 6% increase over production of 7,746 barrels
per day in the first half of 2003. On a Boe basis, production averaged
21,882 Boe per day for the first six months of 2004, representing an
11% increase over the average of 19,716 Boe per day in the same period
a year ago.
For the first six months of 2004 natural gas price realizations
net of hedging averaged $6.01 per Mcf, a 10% increase over
realizations of $5.46 in the same period a year ago. Oil price
realizations net of hedging for the first two quarters of 2004 were
$32.55 per barrel, a 14% increase from $28.59 in the same period of
2003.
For the first six months of 2004, exploration and development
expenditures totaled $95.8 million, a 72% increase over exploration
and development expenditures of $55.8 million in the first six months
of 2003. EPL has increased its 2004 exploration and development budget
on two occasions since the end of the first quarter. The budget for
2004 currently stands at $175 million, up 40% from EPL's initial
exploration and development budget of $125 million and up 56% from
actual expenditures of $112 million in 2003.
On June 30, 2004, cash and cash equivalents totaled $94.6 million
while long-term debt stood at $150.3 million. The Company's debt to
total capitalization ratio was 34% excluding the impact of cash on the
balance sheet at quarter-end.
On July 16, 2004, after the close of the second quarter, the
Company filed a universal shelf registration which, when declared
effective, will allow EPL to issue an aggregate of $300 million in
common stock, preferred stock, senior debt, and subordinated debt. The
Company does not currently have plans to raise additional capital
under this shelf.
The Company also recently amended its bank credit facility. On
August 3, 2004, EPL entered into a four year $200 million credit
facility with a group of six banks that has a $60 million initial
borrowing base. The Company currently has no amount outstanding under
this facility.
Hedging
EPL has recently established hedging positions in 2005 for both
oil and natural gas. To view a complete and regularly updated schedule
of all hedging positions, please visit the Investor Relations section
of the Company's website, www.eplweb.com, under "Hedging".
Operational Update
In the second quarter of 2004, EPL had five exploratory
discoveries and one dry hole. The five successful wells were East
Cameron 161 #A-3, South Timbalier 41 #2, High Island 56L #1, Eugene
Island 277 #A-3ST and Eugene Island 242 #1; the one dry hole was at
West White Lake in Vermilion Parish, Louisiana. After the end of the
quarter, the operator of the High Island A-6 #5 well, where EPL holds
a 17% working interest, announced that the well was an exploratory
success.
For the year to date, EPL drilled nine exploratory discoveries in
ten attempts, and five exploratory tests are currently underway with
results pending. Those wells are East Buck Point in Vermilion Parish,
Louisiana, East Cameron 43 #1, South Pass 27 #92, South Marsh Island
192 #A-2, and South Timbalier 41 #3.
EPL initiated production from two exploratory successes in the
quarter, East Cameron 161 #A-3 and South Timbalier 41 #1. Since June
30, production has begun from four more exploratory successes, the
East Cameron 44 #2 well, Eugene Island 242 #1 and two wells at High
Island 55L. The Company also finished ten well workovers and
recompletions in the quarter.
At the March 2004 Central Gulf Lease Sale, EPL submitted bids on
twelve blocks and was the high bidder on eight of the twelve blocks.
All of the blocks on which EPL submitted the high bid were
subsequently awarded. The blocks include Eugene Island 52, Eugene
Island 248, Ship Shoal 115, South Marsh Island 79, South Timbalier 42,
Vermilion 237, West Cameron 145 and West Cameron 242. EPL plans to
drill prospects on five of these blocks in 2004.
In May 2004, EPL participated in the Louisiana State Lease Sale
and submitted high bids on three tracts covering state water portions
of South Pass blocks 26, 27, 38, and 39. The three tracts together
cover a total of 5,200 acres, which are contiguous to and extend the
Company's East Bay field. All of the tracts have been awarded.
Bachmann continued, "At this point, we are nearly halfway through
the largest and most exciting exploratory program in the Company's
history. As pleased as we are with our success in the first half of
the year in drilling wells, installing facilities, initiating new
production, and adding prospective acreage, we are even more excited
at the potential that the second half of 2004 holds for us. All the
ingredients are in place for an excellent second half and full year
2004, and we will continue to work diligently to deliver value to our
shareholders."
Conference Call Information
EPL has scheduled a conference call to discuss quarterly and
mid-year results for today, August 5, at 9:00 AM Central Time.
Management will also discuss guidance for the remainder of the year
and will provide preliminary guidance for 2005. 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 8724309.
The call will be available for replay beginning two hours after
the call is completed through midnight of August 10, 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
8724309.
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 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 fiscal year ended December 31, 2003 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)
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
2004 2003 2004 2003
-------- -------- -------- --------
Revenues:
Oil and natural gas $ 74,977 $ 54,146 $138,396 $111,100
Other 90 73 143 356
-------- -------- -------- --------
75,067 54,219 138,539 111,456
-------- -------- -------- --------
Costs and expenses:
Lease operating 9,802 9,427 19,576 17,444
Taxes, other than on earnings 2,078 1,780 4,320 4,151
Exploration expenditures and
dry hole costs 7,467 3,929 16,932 5,236
Depreciation, depletion and
amortization 22,215 19,532 40,952 37,104
General and administrative:
Stock-based compensation 662 353 1,519 479
Other general and
administrative 6,434 5,551 13,750 12,990
-------- -------- -------- --------
Total costs and expenses 48,658 40,572 97,049 77,404
-------- -------- -------- --------
Income from operations 26,409 13,647 41,490 34,052
-------- -------- -------- --------
Other income (expense):
Interest income 221 25 463 46
Interest expense (3,586) (1,608) (7,160) (3,429)
-------- -------- -------- --------
(3,365) (1,583) (6,697) (3,383)
-------- -------- -------- --------
Income before income taxes and
cumulative effect of change in
accounting principle 23,044 12,064 34,793 30,669
Income taxes (8,388) (4,500) (12,691) (11,191)
-------- -------- -------- --------
Income before cumulative effect
of change in accounting
principle 14,656 7,564 22,102 19,478
Cumulative effect of change in
accounting principle, net of
income taxes of $1,276 - - - 2,268
-------- -------- -------- --------
Net income 14,656 7,564 22,102 21,746
Less dividends earned on
preferred stock and accretion
of discount (821) (953) (1,750) (1,808)
-------- -------- -------- --------
Net income available to common
stockholders $ 13,835 $ 6,611 $ 20,352 $ 19,938
======== ======== ======== ========
Earnings per share:
Basic:
Before cumulative effect of
change in accounting
principle $ 0.42 $ 0.21 $ 0.62 $ 0.60
Cumulative effect of change in
accounting principle $ - $ - $ - $ 0.08
-------- -------- -------- --------
Basic earnings per share $ 0.42 $ 0.21 $ 0.62 $ 0.68
======== ======== ======== ========
Diluted:
Before cumulative effect of
change in accounting
principle $ 0.38 $ 0.21 $ 0.58 $ 0.57
Cumulative effect of change in
accounting principle $ - $ - $ - $ 0.06
-------- -------- -------- --------
Diluted earnings per share $ 0.38 $ 0.21 $ 0.58 $ 0.63
======== ======== ======== ========
Weighted average common shares
used in computing earnings
per share:
Basic 32,913 31,291 32,671 29,481
Incremental common shares 5,437 4,838 5,460 4,837
-------- -------- -------- --------
Diluted 38,350 36,129 38,131 34,318
======== ======== ======== ========
ENERGY PARTNERS, LTD.
CONSOLIDATED STATEMENTS OF NET CASH PROVIDED BY
OPERATING ACTIVITIES
(In Thousands)
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
---------------- -----------------
2004 2003 2004 2003
------- ------- -------- -------
Cash flows from operating
activities:
Net income $14,656 $ 7,564 $ 22,102 $21,746
Adjustments to reconcile net
income to net cash provided by
operating activities:
Cumulative effect of change in
accounting principle, net of
tax - - - (2,268)
Depreciation, depletion and
amortization 22,215 19,532 40,952 37,104
Gain on sale of oil and
natural gas assets - - - (207)
Non-cash compensation 662 353 1,568 479
Deferred income taxes 8,385 4,501 12,688 11,192
Exploration expenditures 5,462 2,697 13,272 3,008
Amortization of deferred
financing costs 228 119 457 205
Other 51 139 104 189
Changes in operating assets and
liabilities:
Trade accounts receivable (6,212) 11,858 (20,510) (8,850)
Prepaid expenses (3,016) (1,341) (3,423) (638)
Other assets (576) (756) (489) (1,354)
Accounts payable and accrued
expenses 6,509 (8,558) 2,524 438
Other liabilities (340) 26 (587) (118)
------- ------- -------- -------
Net cash provided by operating
activities $48,024 $36,134 $ 68,658 $60,926
======= ======= ======== =======
Reconciliation of discretionary
cash flow:
Net cash provided by operating
activities 48,024 36,134 68,658 60,926
Changes in working capital 3,635 (1,229) 22,485 10,522
Non-cash exploration
expenditures (5,462) (2,697) (13,272) (3,008)
Total exploration expenditures 7,467 3,929 16,932 5,236
------- ------- -------- -------
Discretionary cash flow $53,664 $36,137 $ 94,803 $73,676
======= ======= ======== =======
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
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 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.
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 Six Months Ended
June 30, June 30,
------------------ ------------------
2004 2003 2004 2003
-------- -------- -------- --------
PRODUCTION AND PRICING
- ------------------------------
Net Production (per day):
Oil (Bbls) 8,411 7,483 8,200 7,746
Natural gas (Mcf) 87,054 73,607 82,094 71,817
Total (Boe) 22,920 19,751 21,882 19,716
Oil and Natural Gas Revenues
(in thousands):
Oil $ 25,412 $ 18,274 $ 48,583 $ 40,077
Natural gas 49,565 35,872 89,813 71,023
Total 74,977 54,146 138,396 111,100
Average Sales Prices (1):
Oil (per Bbl) $ 33.20 $ 26.84 $ 32.55 $ 28.59
Natural gas (per Mcf) 6.26 5.36 6.01 5.46
Average (per Boe) 35.95 30.13 34.75 31.13
OPERATIONAL STATISTICS
- ------------------------------
Average Costs (per Boe):
Lease operating expense $ 4.70 $ 5.24 $ 4.92 $ 4.89
Taxes, other than on
earnings 1.00 0.99 1.08 1.16
Depreciation, depletion and
amortization 10.65 10.87 10.28 10.40
(1) Prices are net of hedging transactions which had the following
impact:
-- Reduced natural gas price realizations by $0.01 and $0.12 per
Mcf for the second quarter of 2004 and 2003, respectively; and
-- Reduced oil price realizations by $3.40 and $0.73 per barrel
for the second quarter of 2004 and 2003, respectively.
-- Reduced natural gas price realizations by $0.04 and $0.50 per
Mcf for the first half of 2004 and 2003, respectively; and
-- Reduced oil price realizations by $2.54 and $1.61 per barrel
for the first half of 2004 and 2003, respectively.
ENERGY PARTNERS, LTD.
CONSOLIDATED BALANCE SHEETS
(In Thousands, except share data)
June 30, Dec. 31,
2004 2003
----------- -----------
(Unaudited)
ASSETS
- -------------
Current assets:
Cash and cash equivalents $ 94,624 $ 104,392
Trade accounts receivable 54,921 35,315
Deferred tax asset 2,460 2,939
Prepaid expenses 5,529 2,106
----------- -----------
Total current assets 157,534 144,752
Property and equipment, at cost under the
successful efforts method of accounting
for oil and natural gas properties 687,072 598,101
Less accumulated depreciation, depletion and
amortization (256,100) (210,013)
----------- -----------
Net property and equipment 430,972 388,088
Other assets 7,064 6,575
Deferred financing costs -- net of
accumulated amortization 4,315 4,766
----------- -----------
$ 599,885 $ 544,181
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
- ---------------------------------------------
Current liabilities:
Accounts payable $ 17,929 $ 14,650
Accrued expenses 57,605 42,487
Fair value of commodity derivative
instruments 5,081 3,814
Current maturities of long-term debt 104 99
----------- -----------
Total current liabilities 80,719 61,050
Long-term debt 150,164 150,317
Deferred income taxes 39,812 29,584
Asset retirement obligation 40,610 40,577
Other 1,501 1,168
----------- -----------
312,806 282,696
Stockholders' equity:
Preferred stock, $1 par value, authorized
1,700,000 shares; issued and outstanding:
2004 - 346,443 shares; 2003 - 368,076
shares. Aggregate liquidation value:
2004 - $34,644; 2003 - $36,808 33,268 34,894
Common stock, par value $0.01 per share.
Authorized 50,000,000 shares; issued
and outstanding: 2004 - 32,958,921
shares; 2003 - 32,241,981 shares 330 323
Additional paid-in capital 236,183 228,511
Accumulated other comprehensive loss (3,252) (2,441)
Retained earnings 20,550 198
----------- -----------
Total stockholders' equity 287,079 261,485
Commitments and contingencies
----------- -----------
$ 599,885 $ 544,181
=========== ===========
CONTACT: Energy Partners, Ltd., New Orleans
Al Petrie, 504-799-1953
or
Charles Meade, 504-799-4814