Exhibit 99.1
EPL Announces First Quarter 2007 Results
NEW ORLEANS--(BUSINESS WIRE)--May 3, 2007--Energy Partners, Ltd.
("EPL" or the "Company") (NYSE:EPL) today reported financial and
operational results for the first quarter of 2007. The Company also
announced a recent discovery on the Gulf of Mexico Shelf (Shelf) in
West Cameron 252.
Financial Results
Net income was $3.7 million for the first quarter of 2007 compared
to $14.8 million for the first quarter of 2006. Net income per diluted
share for the first quarter 2007 was $0.09 compared to $0.37 per
diluted share in the same quarter a year ago. Revenue for the first
quarter of 2007 was $108.5 million, essentially flat with first
quarter 2006 revenues of $109.2 million. Discretionary cash flow,
which is cash flow from operating activities before changes in working
capital and exploration expenses, was $71.2 million versus $92.9
million in the first quarter last year. (See reconciliation of
discretionary cash flow schedule in the tables.) Cash flow from
operating activities in the first quarter of 2007 was $113.8 million
compared with $63.9 million in the same quarter a year ago.
The first quarter of 2007 benefited from a 13% increase in
production volumes versus the first quarter of 2006. Benefits were
also realized in the quarter from the settlement of insurance claims
related to Hurricanes Katrina and Rita. Insurance collections in the
first quarter of 2007 were $92.9 million, compared to $58.3 million of
insurance receivables recorded at the end of year 2006. The benefits
of increased production and gains resulting from insurance collections
were reduced by decreased commodity prices and increased expenses,
primarily attributable to $8.8 million of legal and financial advisory
fees related to the exploration of strategic alternatives and the
recently concluded equity self-tender offer and related tender offer
for the Company's senior notes due 2010. Lease operating expenses were
also higher than the same period a year ago, mainly due to additional
expenses associated with production from new field discoveries,
non-routine workover expenses, costs associated with pipeline repairs
at its East Bay field, and hurricane related inspections not covered
by insurance.
Production for the first quarter of 2007 averaged 25,982 barrels
of oil equivalent (Boe) per day, up 13% from 22,991 Boe per day in the
first quarter of 2006. Natural gas production in the first quarter of
2007 averaged 100.4 million cubic feet (Mmcf) per day, a 6% rise from
94.8 Mmcf per day in the first quarter of 2006. Oil production in the
most recent quarter averaged 9,244 barrels per day, a 29% rise from
the average of 7,185 barrels per day in the first quarter of last
year. First quarter 2007 production volumes were up compared to the
first quarter of 2006 due to new wells that came on line and
essentially all production being restored following the disruptions
related to the 2005 storm season.
Oil price realizations for the first quarter of 2007 averaged
$53.31 per barrel, a 10% decrease from $59.16 per barrel in the same
period a year ago. First quarter natural gas price realizations
averaged $7.09 per thousand cubic feet (Mcf), decreasing 15% from
$8.30 per Mcf in the first quarter of 2006. 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.
During the quarter, capital expenditures for exploration and
development activities totaled $103.2 million. As of March 31, 2007,
the Company had cash on hand of $33.9 million, total debt of $315.0
million, and a debt to total capitalization ratio of 45%, and a net
debt to total capitalization ratio of 41%.
Completion of Concurrent Tenders and Financing
On March 12, 2007, the Company announced the conclusion of its
strategic alternatives process. The Company stated that the Board,
with advice from the Company's financial advisors and management,
determined to continue with the execution of the Company's strategic
plan, augmented by an equity self-tender offer and related financing
transactions and the divestment of selected properties. In late April,
EPL privately placed $450 million of Senior Unsecured Notes at par and
secured a new revolving credit facility. Proceeds were used to fund
the purchase of 8,700,000 shares at $23.00 per share in its equity
self-tender offer, the repurchase of approximately 96% of its senior
notes due 2010, and the repayment of its then existing revolving
credit facility. The Company stated it is actively marketing selected
non-strategic properties for divestiture to reduce its post tender
offer debt, with an expected close in the third quarter of 2007.
Additionally, based on its increased financial leverage, the Company
has initiated a comprehensive hedging program designed to mitigate
commodity price risk.
Richard A. Bachmann, EPL's Chairman and CEO, commented, "We are
very excited to have the corporate actions initiated in mid-March
behind us, with only the asset divesture remaining to be wrapped up
sometime in the third quarter of this year. I'm pleased to report that
through all of the turmoil of the last two years, we have maintained
the staff that brought us our previous successes. We can now turn our
full attention to our core business, with renewed focus and
determination to create value for our shareholders."
Recent Shelf Discovery
The Company today announced a recent discovery on the Shelf, the
West Cameron 252 #1 well. The moderate risk, moderate potential well,
drilled to a total depth of 8,299 feet, encountered high quality
natural gas pay in a single interval. The well is currently
anticipated to initiate production in 2008, with an option to
accelerate first production currently under evaluation. EPL, the
operator, holds a 75% working interest in the well and Mariner Energy,
Inc. (NYSE:ME) holds the remaining 25%.
Current Operations
Onshore
The Company has one moderate risk, high potential exploratory well
underway, called Longhorn, located onshore in Terrebonne Parish in
south Louisiana. One additional onshore exploratory well, the moderate
risk, moderate potential Goldfish prospect located in Jefferson Parish
in south Louisiana, is expected to spud in the second quarter.
Shelf
The Company is currently drilling a moderate risk, moderate
potential well located on the Shelf in West Cameron 312. For the
remainder of the second quarter, exploration activity on the Shelf
will focus within the South Timbalier (ST) area where the Company has
historically had a strong track record of successes. Operations will
include the planned spud of two wells, a moderate risk, high potential
prospect, called Cap Rock, located in 60% EPL owned ST 41 and a
moderate risk, moderate potential prospect, called Chimney Rock,
located in 100% EPL owned ST 26. Additionally, EPL expects first
production from the 100% EPL owned ST 46 discovery area in mid-second
quarter from the recently completed #4 acceleration well.
Conference Call Information
EPL has scheduled a conference call to review first quarter 2007
results and second quarter guidance this morning, May 3, 2007 at 8:00
a.m. central time. The Company will also post the second quarter
guidance as covered during the call along with full year guidance on
the Company's website in the Investor Relations section. 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 6665956.
The call will be available for replay beginning two hours after
the call is completed through midnight of May 8, 2007. 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
6665956.
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 Gulf of Mexico.
Forward-Looking Statements
This press release may contain forward-looking information and
statements regarding EPL. Any statements included in this press
release that address activities, events or developments that EPL
expects, believes or anticipates will or may occur in the future are
forward-looking statements. These include statements regarding:
-- reserve and production estimates;
-- oil and natural gas prices;
-- the impact of derivative positions;
-- production expense estimates;
-- cash flow estimates;
-- future financial performance;
-- planned capital expenditures; and
-- other matters that are discussed in EPL's filings with the
Securities and Exchange Commission.
These statements are based on current expectations and projections
about future events and involve known and unknown risks,
uncertainties, and other factors that may cause actual results and
performance to be materially different from any future results or
performance expressed or implied by these forward-looking statements.
Please refer to EPL's filings with the SEC, including Form 10-K for
the year ended December 31, 2006 and Form 10-Q as of March 31, 2007 to
be filed shortly, for a discussion of these risks.
This announcement does not constitute an offer or invitation to
purchase nor a solicitation of an offer to buy or sell any securities
of EPL.
Additional Information and Where to Find It. Security holders may
obtain information regarding the Company from EPL's website at
www.eplweb.com, from the Securities and Exchange Commission's website
at www.sec.gov, or by directing a request to: Energy Partners, Ltd.
201 St. Charles Avenue, Suite 3400, New Orleans, Louisiana 70170,
Attn: Secretary, (504) 569-1875.
ENERGY PARTNERS, LTD.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
Three Months
Ended
March 31,
-----------------
2007 2006
-------- --------
Revenues:
Oil and natural gas $108,402 $109,124
Other 61 69
-------- --------
108,463 109,193
-------- --------
Costs and expenses:
Lease operating 16,749 12,365
Transportation expense 459 248
Taxes, other than on earnings 2,870 2,995
Exploration expenditures, dry hole costs and
impairments 21,801 19,596
Depreciation, depletion and amortization 47,920 46,052
Accretion expense 1,100 1,093
General and administrative 22,395 12,456
Gain on insurance recoveries (8,084) -
Other - (925)
-------- --------
Total costs and expenses 105,210 93,880
-------- --------
Business interruption recovery 9,084 12,689
Income from operations 12,337 28,002
-------- --------
Other income (expense):
Interest income 180 279
Interest expense (6,757) (5,084)
-------- --------
(6,577) (4,805)
-------- --------
Income before income taxes 5,760 23,197
Income taxes (2,064) (8,394)
-------- --------
Net income 3,696 14,803
Basic earnings per share $ 0.09 $ 0.39
======== ========
Diluted earnings per share $ 0.09 $ 0.37
======== ========
Weighted average common shares used in computing
earnings per share:
Basic 40,157 38,028
Incremental common shares 326 2,340
-------- --------
Diluted 40,483 40,368
======== ========
ENERGY PARTNERS, LTD.
CONSOLIDATED STATEMENTS OF NET CASH PROVIDED BY
OPERATING ACTIVITIES
(In thousands)
(Unaudited)
Three Months
Ended
March 31,
-----------------
2007 2006
-------- --------
Cash flows from operating activities:
Net income $ 3,696 $ 14,803
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation, depletion, amortization and
accretion 49,021 47,145
Non-cash compensation 2,139 2,115
Deferred income taxes 2,063 8,677
Exploration expenditures 16,663 13,968
Amortization of deferred financing costs 234 249
Gain on insurance recoveries (8,084) -
Other 379 294
Changes in operating assets and liabilities:
Trade accounts receivable 3,818 11,381
Other receivables 56,006 (12,603)
Prepaid expenses (112) 2,124
Other assets (152) 850
Accounts payable and accrued expenses (11,843) (25,030)
Other liabilities (38) (103)
-------- --------
Net cash provided by operating activities $113,790 $ 63,870
======== ========
Reconciliation of discretionary cash flow:
Net cash provided by operating activities 113,790 63,870
Changes in working capital (47,679) 23,381
Non-cash exploration expenditures (16,663) (13,968)
Total exploration expenditures 21,801 19,596
-------- --------
Discretionary cash flow $ 71,249 $ 92,879
======== ========
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
March 31,
-----------------
2007 2006
-------- --------
PRODUCTION AND PRICING
- ----------------------------------------------------
Net Production (per day):
Oil (Bbls) 9,244 7,185
Natural gas (Mcf) 100,427 94,833
Total (Boe) 25,982 22,991
Oil and Natural Gas Revenues (in thousands):
Oil $ 44,348 $ 38,253
Natural gas 64,054 70,871
Total 108,402 109,124
Average Sales Prices (1):
Oil (per Bbl) $ 53.31 $ 59.16
Natural gas (per Mcf) 7.09 8.30
Average (per Boe) 46.36 52.74
Impact of hedging:
Oil (per Bbl) $ - $ -
Natural gas (per Mcf) - (0.11)
OPERATIONAL STATISTICS
- ----------------------------------------------------
Average Costs (per Boe):
Lease operating expense $ 7.16 $ 5.98
Taxes, other than on earnings 1.23 1.45
Depreciation, depletion and amortization 20.49 22.26
ENERGY PARTNERS, LTD.
CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
March 31, December 31,
2007 2006
----------- ------------
(Unaudited)
ASSETS
- ----------------------------------------------
Current assets:
Cash and cash equivalents $ 33,912 $ 3,214
Trade accounts receivable 70,314 74,132
Other receivables 2,263 58,269
Deferred tax asset 1,499 1,387
Prepaid expenses 3,682 3,570
----------- ------------
Total current assets 111,670 140,572
Property and equipment, at cost under the
successful efforts method of accounting for
oil and natural gas properties 1,608,002 1,527,304
Less accumulated depreciation, depletion and
amortization (739,267) (680,845)
----------- ------------
Net property and equipment 868,735 846,459
Other assets 13,181 13,029
Deferred financing costs -- net of
accumulated amortization 3,551 3,785
----------- ------------
$ 997,137 $ 1,003,845
=========== ============
LIABILITIES AND STOCKHOLDERS' EQUITY
- ---------------------------------------------
Current liabilities:
Accounts payable $ 34,981 $ 47,154
Accrued expenses 133,156 133,198
Fair value of commodity derivative
instruments 2,284 1,552
----------- ------------
Total current liabilities 170,421 181,904
Long-term debt 315,000 317,000
Deferred income taxes 64,363 62,451
Asset retirement obligation 68,226 68,767
Other 1,584 1,453
----------- ------------
619,594 631,575
Stockholders' equity:
Preferred stock, $1 par value. Authorized
1,700,000 shares; no shares issued and
outstanding - -
Common stock, par value $0.01 per share.
Authorized 50,000,000 shares; issued and
outstanding: 2007 - 43,840,166 shares; 2006
- 42,501,726 shares 439 425
Additional paid-in capital 367,345 365,313
Accumulated other comprehensive loss (1,464) (994)
Retained earnings 68,663 64,966
Treasury stock, at cost. 2007 -- 3,480,181
shares; 2006 -- 3,479,814 shares (57,440) (57,440)
----------- ------------
Total stockholders' equity 377,543 372,270
Commitments and contingencies
----------- ------------
$ 997,137 $ 1,003,845
=========== ============
CONTACT: Energy Partners, Ltd.
T.J. Thom, 504-799-4830
or
Al Petrie, 504-799-1953