Exhibit 99.1
EPL Announces First Quarter 2005 Results
with Record High Production, Net Income and Cash Flow
NEW ORLEANS--(BUSINESS WIRE)--May 5, 2005--Energy Partners, Ltd.
("EPL") (NYSE:EPL) today announced results for the first quarter of
2005, including record highs for production, revenue, net income and
cash flow. The Company also announced five new exploratory successes,
three offshore and two onshore in south Louisiana, bringing the total
exploratory discoveries in the year to fourteen out of eighteen
exploratory tests.
Revenue for the first quarter of 2005 rose to $97.5 million, a 54%
increase over first quarter 2004 revenues of $63.5 million. Net income
available to common stockholders was $19.5 million for the first
quarter of 2005, a threefold increase from $6.5 million in the first
quarter of 2004. Net income per diluted share for the first quarter
2005 rose two and a half times to reach $0.51 compared to $0.20 per
diluted share in the same quarter a year ago.
Cash flow from operating activities in the first quarter of 2005
was $69.4 million, rising more than threefold to a record high from
$20.6 million in the same quarter a year ago. Discretionary cash flow,
which is cash flow from operating activities before changes in working
capital and exploration expenses, rose to $70.2 million, another
record high for EPL, up from $41.1 million in the first quarter last
year. (See reconciliation of discretionary cash flow schedule in the
tables.)
The Company said that its record performance across a broad set of
metrics was primarily driven by record high production volumes
combined with continued strength in commodity prices. While costs
increased on an absolute basis compared to the first quarter of 2004,
the Company was successful in reducing cash operating costs on a unit
of production basis, with cash operating costs defined as lease
operating expense, taxes other than on income, and general and
administrative costs.
Richard A. Bachmann, EPL's Chairman, President, and CEO,
commented, "We are very pleased to get off to a strong start in 2005.
The first quarter continued a stretch of quarters going back nearly
two years that has produced a series of new records for the Company,
and we expect that trend to continue, as the first quarter did not
include a full quarter's production from our recent south Louisiana
acquisition. While there are surely many challenges ahead, we believe
that our first quarter results are just the start to what should be a
great year for us."
Natural gas production in the first quarter of 2005 averaged 96.2
million cubic feet ("Mmcf") per day, a 25% increase from 77.1 Mmcf per
day in the first quarter of 2004. Oil production in the most recent
quarter averaged 9,978 barrels per day, a 25% rise from the average of
7,989 in the same period a year ago. On a barrels of oil-equivalent
("Boe") basis, production for the first quarter of 2005 was a record
26,007 Boe per day, increasing 25% compared to 20,845 Boe per day in
the first quarter last year. The Company also said production is
currently averaging over 28,000 Boe per day.
Oil price realizations for the first quarter 2005 averaged $45.68
per barrel, a 43% increase from oil price realizations of $31.87 in
the same period a year ago. Natural gas price realizations in the
quarter averaged $6.52 per Mcf, increasing 14% from $5.73 in the first
quarter of 2004. All commodity prices are stated net of hedging
impact. The Company maintains a complete and regularly updated
schedule of hedging positions under "Hedging" in the Investor
Relations section of the Company's web site, www.eplweb.com.
Expenditures for exploration and development in the first quarter
totaled $63.9 million. During the quarter, EPL also invested $174.0
million in acquisitions, including $146.0 million for the acquisition
of south Louisiana properties and $21.0 million for the acquisition of
additional interest at South Timbalier 26. To fund these purchases,
the Company used $97.0 million in available cash at the time of
closing and borrowed the remainder on its bank credit facility, with
$60.0 million outstanding at quarter end. As of March 31, total debt
stood at $210.2 million, and the Company's debt to capitalization
ratio was 39%.
Also in the first quarter, the Company called its outstanding
convertible preferred stock for redemption, and by the end of the
quarter all outstanding shares of preferred had been converted into a
total of 4,032,772 common shares.
Operational Highlights
At the March 2005 Federal Outer Continental Shelf Lease Sale, EPL
was the high bidder on 22 of 27 blocks on which the Company submitted
bids. The successful bids represent approximately 85,000 gross acres,
including tracts around the East Bay and South Timbalier 41 fields as
well as other areas on the Gulf of Mexico Shelf. EPL's share of the
lease bonuses for the successful high bids totaled $15.1 million, and
to date four of the high bid blocks have been awarded. The Company
also recently acquired additional acreage in Louisiana state waters at
the April state lease sale, submitting the high bid of $400,000 for
acreage in West Cameron 25.
EPL also announced three new exploratory successes offshore, the
Eugene Island 27 #2, the Eugene Island 277 #A-2 ST, and the Galveston
341-S #1. The Eugene Island 27 #2 was drilled to a vertical depth of
10,963 feet and encountered apparent natural gas pay in a single
interval. EPL is the operator of the well and holds a 100% working
interest, and production is expected in the second quarter.
The Eugene Island 277 #A-2ST was drilled to a vertical depth of
11,615 feet and encountered apparent oil pay in two intervals. EPL is
the operator of the well with a 50% working interest, and initial
production is also expected in the second quarter.
The Galveston 341-S #1 was drilled to a vertical depth of 9,500
feet and encountered apparent natural gas pay in two intervals. EPL
holds a 50% working interest in the well, and initial production is
expected by the end of the year.
In the Company's onshore south Louisiana operations, EPL has
recently decisioned three additional exploratory wells, two successful
and one unsuccessful. For the year to date, the Company has five
exploratory discoveries out of seven wells onshore and nine
discoveries out of eleven wells offshore, for a total of fourteen
discoveries in eighteen attempts. EPL currently has five exploratory
drilling operations underway offshore, at West Delta 51, East Cameron
111, Eugene Island 141, Eugene Island 247, and West Cameron 31.
Onshore, the Company has two exploratory wells and one development
well currently drilling.
Richard A. Bachmann continued, "We have great confidence that we
have built an organization that can execute against the challenging
goals we have set for the year, as evidenced by the operational pace
we have established early in the year, not only offshore but also
onshore where we have been operating for only three months. We plan to
drill at least twice as many exploratory wells this year as last and
to increase our annual production by at least 25%. We believe our
results thus far put us on or even ahead of schedule to deliver on
those goals."
EPL has scheduled a conference call to review first quarter 2005
results for today, May 5, 2005 at 8:30 A.M. central time. On the call,
management will discuss operational and financial results and also
provide an update on 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 5847720.
The call will be available for replay beginning two hours after
the call is completed through midnight of May 10, 2005. 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
5847720.
The conference call will be webcast live as well as for on-demand
listening at the Company's web site, www.eplweb.com. Listeners may
access the call through the "Conference Calls" link in the Investor
Relations section of the site. The call will also be available through
the CCBN Investor Network.
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 along the U. S. Gulf Coast, both
onshore in south Louisiana and offshore 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, 2004 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
March 31,
--------------------
2005 2004
--------- ---------
Revenues:
Oil and natural gas $ 97,453 $ 63,419
Other 25 53
--------- ---------
97,478 63,472
--------- ---------
Costs and expenses:
Lease operating 12,443 9,640
Transportation expense 160 134
Taxes, other than on earnings 2,764 2,242
Exploration expenditures and dry hole costs 10,755 9,465
Depreciation, depletion and amortization 25,513 18,737
General and administrative:
Stock-based compensation 1,883 857
Other general and administrative 8,017 7,316
--------- ---------
Total costs and expenses 61,535 48,391
--------- ---------
Income from operations 35,943 15,081
--------- ---------
Other income (expense):
Interest income 185 242
Interest expense (4,048) (3,574)
--------- ---------
(3,863) (3,332)
--------- ---------
Income before income taxes 32,080 11,749
Income taxes (11,659) (4,303)
--------- ---------
Net income 20,421 7,446
Less dividends earned on preferred stock and
accretion of discount (944) (929)
--------- ---------
Net income available to common stockholders $ 19,477 $ 6,517
========= =========
Earnings per share:
Basic earnings per share $ 0.56 $ 0.20
========= =========
Diluted earnings per share $ 0.51 $ 0.20
========= =========
Weighted average common shares used in
computing earnings per share:
Basic 35,026 32,428
Incremental common shares 5,241 5,279
--------- ---------
Diluted 40,267 37,707
========= =========
ENERGY PARTNERS, LTD.
CONSOLIDATED STATEMENTS OF NET CASH PROVIDED BY
OPERATING ACTIVITIES
(In Thousands)
(Unaudited)
Three Months Ended
March 31,
--------------------
2005 2004
--------- ---------
Cash flows from operating activities:
Net income $ 20,421 $ 7,446
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation, depletion and amortization 25,513 18,737
Loss on disposition of oil and natural gas
assets 92 -
Stock-based compensation 1,883 906
Deferred income taxes 11,309 4,303
Exploration expenditures 4,728 7,810
Amortization of deferred financing costs 247 229
Other - 53
Changes in operating assets and liabilities:
Trade accounts receivable (2,683) (14,298)
Other receivables (81) -
Prepaid expenses 1,282 (407)
Other assets (1,292) 87
Accounts payable and accrued expenses 8,152 (3,985)
Other liabilities (128) (247)
--------- ---------
Net cash provided by operating activities $ 69,443 $ 20,634
========= =========
Reconciliation of discretionary cash flow:
Net cash provided by operating activities 69,443 20,634
Changes in working capital (5,250) 18,850
Non-cash exploration expenditures (4,728) (7,810)
Total exploration expenditures 10,755 9,465
--------- ---------
Discretionary cash flow $ 70,220 $ 41,139
========= =========
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 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
March 31,
-------------------
2005 2004
--------- ---------
PRODUCTION AND PRICING
- ----------------------
Net Production (per day):
Oil (Bbls) 9,978 7,989
Natural gas (Mcf) 96,172 77,134
Total (Boe) 26,007 20,845
Oil and Natural Gas Revenues (in thousands):
Oil $ 41,019 $ 23,171
Natural gas 56,434 40,248
Total 97,453 63,419
Average Sales Prices (1):
Oil (per Bbl) $ 45.68 $ 31.87
Natural gas (per Mcf) 6.52 5.73
Average (per Boe) 41.64 33.43
OPERATIONAL STATISTICS
- ----------------------
Average Costs (per Boe):
Lease operating expense $ 5.32 $ 5.08
Taxes, other than on earnings 1.18 1.18
Depreciation, depletion and amortization 10.90 9.88
(1) Prices are net of hedging transactions which had the following
impact:
-- Reduced natural gas price realizations by $0 and $0.08 per Mcf
for the first quarter of 2005 and 2004, respectively; and
-- Reduced oil price realizations by $1.17 and $1.63 per barrel
for the first quarter of 2005 and 2004, respectively.
ENERGY PARTNERS, LTD.
CONSOLIDATED BALANCE SHEETS
(In Thousands, except share data)
March 31, December 31,
2005 2004
------------ ------------
(Unaudited)
ASSETS
- ------
Current assets:
Cash and cash equivalents $ 3,189 $ 93,537
Trade accounts receivable 62,024 59,341
Other receivables 5,681 5,600
Deferred tax asset 3,662 1,906
Prepaid expenses 1,003 2,285
------------ ------------
Total current assets 75,559 162,669
Property and equipment, at cost under the
successful efforts method of accounting
for oil and natural gas properties 1,001,981 769,331
Less accumulated depreciation, depletion
and amortization (329,556) (304,997)
------------ ------------
Net property and equipment 672,425 464,334
Other assets 13,131 15,970
Deferred financing costs -- net of
accumulated amortization 4,818 4,705
------------ ------------
$ 765,933 $ 647,678
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
Current liabilities:
Accounts payable $ 31,411 $ 21,255
Accrued expenses 67,351 59,387
Fair value of commodity derivative
instruments 9,070 1,749
Current maturities of long-term debt 191 108
------------ ------------
Total current liabilities 108,023 82,499
Long-term debt 210,000 150,109
Deferred income taxes 63,081 53,686
Asset retirement obligation 47,987 45,064
Other 3,707 1,271
------------ ------------
432,798 332,629
Stockholders' equity:
Preferred stock, $1 par value, authorized
1,700,000 shares; issued and outstanding:
2005 - no shares; 2004 - 344,399 shares.
Aggregate liquidation value:
2004 - $34,440 - 33,504
Common stock, par value $0.01 per share.
Authorized 50,000,000 shares; issued and
outstanding: 2005 - 40,813,206 shares;
2004 - 36,618,084 shares 410 367
Additional paid-in capital 334,772 296,460
Accumulated other comprehensive loss (7,361) (1,119)
Retained earnings 62,692 43,215
Treasury stock, at cost. 2005 -- 3,471,896
shares 2004 -- 3,480,441 shares (57,378) (57,378)
------------ ------------
Total stockholders' equity 333,135 315,049
Commitments and contingencies
------------ ------------
$ 765,933 $ 647,678
============ ============
CONTACT: Energy Partners Ltd., New Orleans
Charles A. Meade, 504-799-4814
or
Al Petrie, 504-799-1953