Exhibit 99.1
EPL Announces Record Second Quarter Results and Increase in 2005 Capital Budget
NEW ORLEANS--(BUSINESS WIRE)--Aug. 8, 2005--Energy Partners, Ltd.
("EPL") (NYSE:EPL) today announced that for the second quarter of
2005, revenues reached $106.2 million, a new record high for the
company, while net income available to common stockholders was $18.1
million, or $0.45 per diluted share. The Company also said that its
Board had recently approved an increase in the 2005 capital budget to
approximately $305 million, a 15% increase over the previous capital
budget of $265 million.
Compared to the second quarter of 2004, revenues rose 41% from
$75.1 million and net income available to common stockholders rose 31%
from $13.8 million. Cash flow from operating activities in the most
recent quarter was $75.1 million, a 56% increase from $48.0 million in
the second quarter last year. Discretionary cash flow, which is cash
flow from operating activity before changes in working capital and
exploration expense, rose to $77.2 million, a 44% increase from $53.7
million in the same quarter last year (see reconciliation of
discretionary cash flow in table). Both cash flow from operations and
discretionary cash flow in the most recent quarter were record highs
for EPL.
The Company said that its record results on a number of metrics
reflect success in bringing new production on line in a strong
commodity price environment. Offsetting the record levels of revenue
and cash flow were higher exploration expense associated with the
Company's expanded exploratory program and increased industry
operating costs associated with drilling and production activities.
Production volumes in the second quarter averaged 27,126 barrels
of oil equivalent (Boe) per day, rising 18% from 22,920 Boe per day in
the second quarter last year. Natural gas production in the second
quarter of 2005 averaged 99.9 million cubic feet (Mmcf) per day and
oil averaged 10,469 barrels per day. Compared to the second quarter of
2004, natural gas production in the second quarter of 2005 was up 15%
and oil production was up 24%.
Price realizations for natural gas in the quarter were $6.88 per
thousand cubic feet (Mcf), a 10% increase from $6.26 per Mcf in the
same quarter last year. Oil price realizations in the quarter averaged
$45.80 per barrel, up 38% from $33.20 per barrel in the second quarter
of 2004. All commodity prices are stated net of hedging. EPL maintains
a complete schedule of its hedging positions on its website,
www.eplweb.com, in the Investor Relations section.
Richard A. Bachmann, EPL's Chairman and CEO, commented, "We are
pleased to report another strong quarter this morning, with record
levels for production, revenue, and cash flow. While exploration
expense was higher than in past quarters, more than anything else this
reflects the increased scale and pace of our exploratory operations in
2005. With the increased capital budget that our Board recently
approved, we expect that we will drill over 50 exploratory wells in
2005, and we are still on track to deliver on our guidance of 25% to
35% production growth over 2004."
For the six months ended June 30, 2005, net income available to
common stockholders was $37.5 million, or $0.95 per diluted share.
This figure represents an 84% increase from net income available to
common stockholders in the same period of 2004, which was $20.4
million, or $0.58 per diluted share.
Discretionary cash flow for the first two quarters of 2005 totaled
$147.4 million, up 55% from $94.8 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 2005 was
$144.5 million, more than double the total of $68.7 million in the
same period of 2004.
For the first six months of 2005, exploration and development
expenditures totaled $165.2 million including lease sale acquisition
costs. At the most recent Board meeting, the Company's directors
approved an increase in the 2005 capital budget to approximately $305
million, excluding acquisitions. This revised capital budget
represents a 60% increase over the 2004 capital budget of $190
million, with the most recent increase directed in part to completion
of early 2005 exploratory successes as well as increased industry
costs. The Company said it expects to fully fund its expanded capital
program from internally generated cash flow. EPL has also spent an
additional $172.1 million on acquisitions year to date.
On June 30, 2005, cash stood at $5.7 million, long term debt
totaled $222.2 million, and the Company's debt to capitalization was
38%. EPL also said that it had $78 million of remaining capacity
available under its current bank facility.
Operational Highlights
For the year to date, EPL has drilled a total of 34 exploratory
wells, with 20 offshore and 14 onshore in south Louisiana. The Company
has had a total of 14 discoveries offshore and 10 onshore, for an
overall exploratory success rate of 71%.
EPL currently has exploratory tests ongoing at five locations, two
onshore and three offshore. The three offshore exploratory wells
currently underway are at Eugene Island 4, West Cameron 98, and West
Delta 52.
Also in the second quarter, EPL was awarded leases on 21 of 22
blocks on which the Company submitted the high bid at the 2005 Central
Gulf Lease Sale.
Bachmann continued, "With 24 discoveries in 34 exploratory tests
year to date, we are ahead of the curve to complete our 2005
exploratory program. We have already drilled more wells in 2005 than
we did in all of 2004, and at the same time we are near our historical
success rate. Looking ahead to the third and fourth quarters, we are
particularly focused on ramping up production as we are scheduled to
bring on a number of new wells. While Tropical Storm Cindy and
Hurricane Dennis did force us to delay some production in July, our
production is near record levels now and we are poised for our results
in the second half of 2005 to be even better than the first."
Conference Call
EPL has scheduled a conference call to review second quarter 2005
results for August 8, 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 7879962.
The call will be available for replay beginning two hours after
the call is completed through midnight of August 13, 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
7879962.
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 Six Months Ended
June 30, June 30,
------------------ ------------------
2005 2004 2005 2004
-------- -------- -------- --------
Revenues:
Oil and natural gas $106,230 $ 74,977 $203,683 $138,396
Other (74) 90 (49) 143
-------- -------- -------- --------
106,156 75,067 203,634 138,539
-------- -------- -------- --------
Costs and expenses:
Lease operating 14,114 9,720 26,557 19,359
Transportation expense 345 82 505 217
Taxes, other than on earnings 2,658 2,078 5,422 4,320
Exploration expenditures and
dry hole costs 18,872 7,467 29,627 16,932
Depreciation, depletion and
amortization 27,639 22,215 53,152 40,952
General and administrative:
Stock-based compensation 1,874 662 3,757 1,519
Other general and
administrative 8,288 6,434 16,305 13,750
-------- -------- -------- --------
Total costs and expenses 73,790 48,658 135,325 97,049
-------- -------- -------- --------
Income from operations 32,366 26,409 68,309 41,490
-------- -------- -------- --------
Other income (expense):
Interest income 110 221 295 463
Interest expense (4,335) (3,586) (8,383) (7,160)
-------- -------- -------- --------
(4,225) (3,365) (8,088) (6,697)
-------- -------- -------- --------
Income before income taxes 28,141 23,044 60,221 34,793
Income taxes (10,091) (8,388) (21,750) (12,691)
-------- -------- -------- --------
Net income 18,050 14,656 38,471 22,102
Less dividends earned on
preferred stock and accretion
of discount - (821) (944) (1,750)
-------- -------- -------- --------
Net income available to common
stockholders $ 18,050 $ 13,835 $ 37,527 $ 20,352
======== ======== ======== ========
Basic earnings per share $ 0.48 $ 0.42 $ 1.03 $ 0.62
======== ======== ======== ========
Diluted earnings per share $ 0.45 $ 0.38 $ 0.95 $ 0.58
======== ======== ======== ========
Weighted average common shares
used in computing
earnings per share:
Basic 37,558 32,913 36,299 32,667
Incremental common shares 2,968 5,437 4,121 5,461
-------- -------- -------- --------
Diluted 40,526 38,350 40,420 38,128
======== ======== ======== ========
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,
-------- --------- -------- ---------
2005 2004 2005 2004
-------- -------- -------- --------
Cash flows from operating
activities:
Net income $ 18,050 $ 14,656 $ 38,471 $ 22,102
Adjustments to reconcile net
income to net cash
provided by operating
activities:
Depreciation, depletion and
amortization 27,639 22,215 53,152 40,952
Loss on disposition of oil
and natural gas assets - - 92 -
Non-cash compensation 1,924 662 3,807 1,568
Deferred income taxes 10,091 8,385 21,400 12,688
Exploration expenditures 16,604 5,462 21,332 13,272
Amortization of deferred
financing costs 250 228 497 457
Other 379 51 379 104
Changes in operating assets
and liabilities:
Trade accounts receivable (5,737) (6,212) (8,420) (15,653)
Other receivables (4,819) - (4,900) (4,857)
Prepaid expenses (5,224) (3,016) (3,942) (3,423)
Other assets (310) (576) (1,602) (489)
Accounts payable and accrued
expenses 16,246 6,509 24,398 2,524
Other liabilities (3) (340) (131) (587)
-------- -------- -------- --------
Net cash provided by operating
activities $ 75,090 $ 48,024 $144,533 $ 68,658
======== ======== ======== ========
Reconciliation of discretionary
cash flow:
Net cash provided by
operating activities 75,090 48,024 144,533 68,658
Changes in working capital (153) 3,635 (5,403) 22,485
Non-cash exploration
expenditures (16,604) (5,462) (21,332) (13,272)
Total exploration
expenditures 18,872 7,467 29,627 16,932
-------- -------- -------- --------
Discretionary cash flow $ 77,205 $ 53,664 $147,425 $ 94,803
======== ======== ======== ========
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,
-------- --------- -------- ---------
2005 2004 2005 2004
-------- -------- -------- --------
PRODUCTION AND PRICING
- ----------------------
Net Production (per day):
Oil (Bbls) 10,469 8,411 10,225 8,200
Natural gas (Mcf) 99,941 87,054 98,067 82,094
Total (Boe) 27,126 22,920 26,570 21,882
Oil and Natural Gas Revenues
(in thousands):
Oil $ 43,637 $ 25,412 $ 84,656 $ 48,583
Natural gas 62,593 49,565 119,027 89,813
Total 106,230 74,977 203,683 138,396
Average Sales Prices (1):
Oil (per Bbl) $ 45.80 $ 33.20 $ 45.74 $ 32.55
Natural gas (per Mcf) 6.88 6.26 6.71 6.01
Average (per Boe) 43.03 35.95 42.35 34.75
OPERATIONAL STATISTICS
- ----------------------
Average Costs (per Boe):
Lease operating expense $ 5.72 $ 4.66 $ 5.52 $ 4.86
Taxes, other than on earnings 1.08 1.00 1.13 1.08
Depreciation, depletion and
amortization 11.20 10.65 11.05 10.28
(1) Prices are net of hedging transactions which had the following
impact:
-- Reduced natural gas price realizations by none and $0.01 per
Mcf for the second quarter of 2005 and 2004, respectively; and
-- Reduced oil price realizations by $1.74 and $3.40 per barrel
for the second quarter of 2005 and 2004, respectively.
-- Reduced natural gas price realizations by none and $0.04 per
Mcf for the first half of 2005 and 2004, respectively; and
-- Reduced oil price realizations by $1.46 and $2.54 per barrel
for the first half of 2005 and 2004, respectively.
ENERGY PARTNERS, LTD.
CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
June 30, December 31,
2005 2004
------------ ------------
(Unaudited)
ASSETS
- ------
Current assets:
Cash and cash equivalents $ 5,694 $ 93,537
Trade accounts receivable 67,761 59,341
Other receivables 10,500 5,600
Deferred tax asset 3,203 1,906
Prepaid expenses 6,227 2,285
------------ ------------
Total current assets 93,385 162,669
Property and equipment, at cost under the
successful efforts method of accounting
for oil and natural gas properties 1,082,137 769,331
Less accumulated depreciation, depletion
and amortization (356,710) (304,997)
------------ ------------
Net property and equipment 725,427 464,334
Other assets 13,920 15,970
Deferred financing costs -- net of
accumulated amortization 4,584 4,705
------------ ------------
$ 837,316 $ 647,678
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
Current liabilities:
Accounts payable $ 38,122 $ 21,255
Accrued expenses 86,667 59,387
Fair value of commodity derivative
instruments 6,771 1,749
Current maturities of long-term debt 164 108
------------ ------------
Total current liabilities 131,724 82,499
Long-term debt 222,000 150,109
Deferred income taxes 72,132 53,686
Asset retirement obligation 49,631 45,064
Other 5,135 1,271
------------ ------------
480,622 332,629
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 - 41,095,780 shares;
2004 - 36,618,084 shares 412 367
Additional paid-in capital 339,736 296,460
Accumulated other comprehensive loss (6,764) (1,119)
Retained earnings 80,742 43,215
Treasury stock, at cost. 2005 -- 3,474,208
shares; 2004 -- 3,480,441 shares (57,432) (57,378)
------------ ------------
Total stockholders' equity 356,694 315,049
Commitments and contingencies
------------ ------------
$ 837,316 $ 647,678
============ ============
CONTACT: Energy Partners, Ltd., New Orleans
Charles A. Meade, 504-799-4814
or
Al Petrie, 504-799-1953