Exhibit 99.1
EPL Announces Second Quarter 2007
Results
EPL Announces a Shelf Discovery at Eugene Island 311
NEW ORLEANS--(BUSINESS WIRE)--Aug. 8, 2007--Energy Partners, Ltd.
("EPL" or the "Company") (NYSE:EPL) today reported financial and
operational results for the second quarter of 2007. The Company also
announced another discovery on the Gulf of Mexico Shelf ("Shelf") in
the Eugene Island ("EI") 311/312 area, making it the second discovery
in this area this year, and the third discovery since drilling began
in late 2006. The Company has four exploratory wells drilling and
three wells planned to spud before the end of year. Four of seven
wells currently drilling or scheduled to drill are high potential.
Financial Results
The Company reported a net loss to common stockholders of $6.3
million, or $0.18 per diluted share, for the second quarter of 2007
compared to net income available to common stockholders of $12.6
million, or $0.31 per diluted share, for the second quarter of 2006.
Results for the second quarter included a pre-tax gain of $7.0 million
primarily related to the previously announced sale of substantially
all of EPL's onshore South Louisiana assets that closed in mid-June,
as well as an unrealized gain of $1.9 million on its derivative
instruments. The quarter also included pre-tax costs of $10.8 million
associated with the early extinguishment of the Company's 8 3/4%
Senior Notes due 2010 and the refinancing of its bank credit facility,
which included $3.4 million of non-cash charges.
Revenue for the second quarter of 2007 rose to $121.7 million,
representing a new record high for the Company. This was a slight
increase over the prior record revenue of $121.2 million set in the
second quarter of 2006. Discretionary cash flow, which is cash flow
from operating activities before changes in working capital and
exploration expenses, was $70.5 million, compared with $98.5 million
in the second quarter of last year. (See reconciliation of
discretionary cash flow schedule in the tables.) Cash flow from
operating activities in the second quarter of 2007 was $53.5 million
compared with $111.1 million in the same quarter a year ago.
EPL benefited from strong production volumes and commodity prices
during the second quarter of 2007, as well as cash proceeds from its
onshore asset divestiture totaling $67.5 million after closing
adjustments through June 30, 2007. These benefits were reduced in the
quarter by expenses related to the repurchase of its senior notes due
2010 and higher exploration costs. The higher exploration costs were
primarily the result of dry hole costs totaling $28.2 million mainly
related to three high working interest wells, as well as $7.0 million
for the impairment of two small properties that depleted. The Company
said depreciation, depletion and amortization ("DD&A") expenses per
barrel of oil equivalent ("Boe") trended down to $18.55 per Boe in the
second quarter of 2007, representing a significant decrease from the
reported first quarter of 2007 DD&A rate of $20.49 per Boe, and a
level lower than any reporting period in 2006.
Production for the second quarter of 2007 averaged 26,093 Boe per
day. Production volumes were within the guidance range provided for
the quarter despite the impact of an estimated decrease of 400 Boe per
day due to the earlier than expected closing of the sale of its
onshore south Louisiana divestiture package on June 12, 2007, which
was not anticipated to occur until the third quarter. Oil production
in the most recent quarter averaged 9,085 barrels per day, up 11% from
the average of 8,187 Boe per day in the second quarter of 2006.
Natural gas production in the second quarter of 2007 averaged 102.0
million cubic feet ("Mmcf") per day, down 15% from 119.6 Mmcf per day
in the second quarter of 2006.
Oil price realizations for the second quarter of 2007 averaged
$59.89 per barrel, compared to $61.72 per barrel in the same period a
year ago. Natural gas price realizations in the quarter averaged $7.76
per thousand cubic feet ("Mcf"), a 12% increase from $6.90 per Mcf in
the second quarter of 2006. The Company, which discontinued cash flow
hedge accounting as of April 2, 2007, recorded an unrealized gain on
its derivative instruments of $1.9 million during the second quarter.
The Company maintains a complete and periodically updated schedule of
derivative positions under "Hedging" in the Investor Relations section
of the Company's web site, www.eplweb.com.
For the six months ended June 30, 2007, the Company reported a net
loss to common stockholders of $2.6 million, or $0.07 per diluted
share. Net income available to common stockholders was $27.4 million,
or $0.68 per diluted share in the same period of 2006. Discretionary
cash flow for the first two quarters of 2007 totaled $141.7 million,
down 26% from $191.4 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 2007 was $167.3
million, down 4% from the total of $174.9 million in the same period
of 2006.
For the first six months of 2007, the Company said capital
expenditures for exploration and development activities totaled $183.4
million. The Company continues to anticipate that its 2007 capital
budget for exploration and development activities will total
approximately $300 million, which is intended to be funded from
internally generated cash flow.
As of June 30, 2007, the Company had cash on hand of $7.8 million,
total debt of $474.5 million, and a debt to total capitalization ratio
of 73%. The Company also had $180.0 million of remaining capacity
available under its current bank facility which was refinanced in late
April 2007 and has a borrowing base of $200 million.
Operational Highlights
The Company today announced a new discovery on the Shelf, the EI
311 #D-3 well. The moderate risk, moderate potential well drilled to a
total depth of 8,031 feet and encountered high quality natural gas
pay. The #D-3 well is expected to be on line in the third quarter of
2007, along with the previously announced EI 312 #D-2 discovery. Hunt
Petroleum Corporation is the operator with a 60% working interest, and
EPL holds the remaining 40% working interest.
For the year-to-date, the Company has announced discoveries at ST
26, ST 41 and West Cameron 252, and two discoveries in the EI 311/312
area. Additionally, at EPL's 100% owned ST 46 field, the Company is
continuing to test the #3 (A-1) well in one of the four sands
discovered in the deep hole section. To date, EPL has discovered 14
sands in ST 46, with ten pay sands and 250 net feet of natural gas pay
in the shallow section, and four additional sands with 100 feet of pay
in the deep section, in which one of the sands is currently being
tested. The Company is encouraged that the well testing efforts have
confirmed this sand's productive capability, with high quality gas and
associated condensate being sold directly into the field's gas sales
line. The Company is evaluating another well to drill deeper,
primarily to test a sizable amplitude below the sands discovered to
date.
Current Operations
The Company is currently drilling four exploratory wells,
including two on the Shelf and two onshore in south Louisiana. On the
Shelf, the Company is drilling the moderate risk, moderate potential
South Marsh Island 247 #1 well and the moderate risk, high potential
ST 41 #B-3 Cap Rock well which has been deemed a discovery with the
objectives seen to date and is preparing to drill to additional
targets. The Company's onshore south Louisiana exploratory wells
currently drilling include a moderate risk, moderate potential well
called Tiger Bait in Terrebonne Parish and one high risk, high
potential well called La Posada in Vermilion Parish. The Company plans
to spud an additional three wells before year-end, including two
moderate risk, high potential wells on the Shelf at EI 21 and ST 214.
In addition, the Company said today the planned development work on
the Raton discovery well is underway in Mississippi Canyon 248 located
in the deepwater GOM.
Richard A. Bachmann, EPL's Chairman and CEO, commented, "Our
results in the first half of this year have been heavily influenced by
the expenses from our M&A activity in 2006 and the debt tender offer
completed this past April, along with more dry hole cost in the period
than we have traditionally seen. The expenses resulting from our
tender offer, as well as associated legal fees and financial advisory
costs, are now behind us as we enter into the second half of the
year."
Bachmann added, "While we have had disappointments in this year's
exploratory program, we have made a number of good discoveries. Also,
we are encouraged that the #3 well is flowing naturally from just one
of the four deep sands. And, this is without the benefit of any
stimulation or fracturing techniques that could improve the already
strong production rates. We will continue to test the #3 (A-1) well
and sell the gas and condensate in the process, and use the
information being gathered to evaluate another well to go deeper to
test a large amplitude-supported target below our 14 discovery sands
to date. On another positive note, we should finish drilling the ST 41
B-3 well within the next couple of weeks. Due to the number of high
quality sands we have seen so far, it is already a commercial
discovery with more sands left to be seen before we reach final depth.
With the advantage of infrastructure already in place, the well is
forecasted to be on line before the end of the third quarter. Beyond
that, we still have six wells expected to be decisioned this year,
including three high potential wells."
Conference Call Information
EPL has scheduled a conference call for today, August 8, 2007 at
8:30 A.M. central time to review second quarter and first half 2007
results. On the call, management will discuss operational and
financial results, as well as provide third quarter and full year
guidance. The Company has also posted a slide to the Investor
Relations section of the Company's web site under "Conference Calls"
to accompany comments made during the call today. 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 10972480.
The call will be available for replay beginning two hours after
the call is completed through midnight of August 13, 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
10972480.
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 and the posted slide 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 June 30, 2007 to
be filed shortly, for a discussion of these risks.
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 Six Months Ended
June 30, June 30,
------------------- -------------------
2007 2006 2007 2006
-------- -------- -------- --------
Revenues:
Oil and natural gas $121,584 $121,080 $229,986 $230,204
Other 82 154 143 221
-------- -------- -------- --------
121,666 121,234 230,129 230,425
-------- -------- -------- --------
Costs and expenses:
Lease operating 17,437 17,121 34,186 29,486
Transportation expense 606 563 1,065 811
Taxes, other than on
earnings 2,199 2,191 5,069 5,186
Exploration expenditures,
dry hole costs and
impairments 37,375 22,783 59,176 42,379
Depreciation, depletion and
amortization 44,053 47,481 91,973 95,719
Accretion expense 1,103 2,151 2,203 1,058
General and administrative 13,507 12,281 35,902 24,737
Gain on insurance
recoveries - - (8,084) -
(Gain) loss on sale of
assets (7,020) 1,345 (7,020) 419
Other (8) 1,459 (8) 1,458
-------- -------- -------- --------
Total costs and expenses 109,252 107,375 214,462 201,253
-------- -------- -------- --------
Business interruption recovery - 10,594 9,084 23,283
Income from operations 12,414 24,453 24,751 52,455
-------- -------- -------- --------
Other income (expense):
Interest income 390 473 570 752
Interest expense (13,629) (5,199) (20,386) (10,283)
Unrealized gain on
derivative instruments 1,907 - 1,907 -
Loss on early
extinguishment of debt (10,838) - (10,838) -
-------- -------- -------- --------
(22,170) (4,726) (28,747) (9,531)
-------- -------- -------- --------
Income (loss) before income
taxes (9,756) 19,727 (3,996) 42,924
Income taxes 3,486 (7,142) 1,422 (15,536)
-------- -------- -------- --------
Net income (loss) (6,270) 12,585 (2,574) 27,388
Basic earnings (loss) per
share $ (0.18) $ 0.33 $ (0.07) $ 0.72
======== ======== ======== ========
Diluted earnings (loss) per
share $ (0.18) $ 0.31 $ (0.07) $ 0.68
======== ======== ======== ========
Weighted average common shares
used in computing earnings
(loss) per share:
Basic 34,581 38,315 37,364 38,185
Incremental common shares - 2,253 - 2,323
-------- -------- -------- --------
Diluted 34,581 40,568 37,364 40,508
======== ======== ======== ========
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,
------------------ ------------------
2007 2006 2007 2006
-------- -------- -------- --------
Cash flows from operating
activities:
Net income (loss) $ (6,270) $ 12,585 $ (2,574) $ 27,388
Adjustments to reconcile net
income (loss) to net cash
provided by operating
activities:
Depreciation, depletion,
amortization and
accretion 45,155 49,632 94,176 96,777
Gain (loss) on disposal
of assets (7,020) 2,830 (7,020) 2,830
Non-cash compensation 2,465 2,799 4,604 4,914
Non-cash loss on early
extinguishment of debt 3,398 - 3,398 -
Deferred income taxes (3,486) 7,142 (1,423) 15,819
Exploration expenditures 35,125 18,888 51,788 32,856
Amortization of deferred
financing costs 331 244 565 493
Unrealized gain on
derivative contracts (1,907) - (1,907) -
Gain on insurance
recoveries - - (8,084) -
Other 451 501 830 795
Changes in operating assets
and liabilities:
Trade accounts
receivable (488) (13,077) 3,330 (1,696)
Other receivables 340 (11,553) 56,346 (24,156)
Prepaid expenses (113) (1,156) (225) 968
Other assets (1,563) (518) (1,715) 332
Accounts payable and
accrued expenses (12,678) 43,132 (24,521) 18,102
Other liabilities (226) (389) (264) (492)
-------- -------- -------- --------
Net cash provided by operating
activities $ 53,514 $111,060 $167,304 $174,930
======== ======== ======== ========
Reconciliation of
discretionary cash flow:
Net cash provided by
operating activities 53,514 111,060 167,304 174,930
Changes in working
capital 14,728 (16,439) (32,951) 6,942
Non-cash exploration
expenditures (35,125) (18,888) (51,788) (32,856)
Total exploration
expenditures 37,375 22,783 59,176 42,379
-------- -------- -------- --------
Discretionary cash flow $ 70,492 $ 98,516 $141,741 $191,395
======== ======== ======== ========
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 Six Months Ended
June 30, June 30,
------------------ -----------------
2007 2006 2007 2006
-------- -------- ------- --------
PRODUCTION AND PRICING
- -------------------------------
Net Production (per day):
Oil (Bbls) 9,085 8,187 9,164 7,689
Natural gas (Mcf) 102,047 119,578 101,242 107,274
Total (Boe) 26,093 28,117 26,038 25,568
Oil and Natural Gas Revenues
(in thousands):
Oil $ 49,513 $ 45,981 $ 93,861 $ 84,234
Natural gas 72,071 75,099 136,125 145,970
Total 121,584 121,080 229,986 230,204
Average Sales Prices (1):
Oil (per Bbl) $ 59.89 $ 61.72 $ 56.59 $ 60.53
Natural gas (per Mcf) 7.76 6.90 7.43 7.52
Average (per Boe) 51.20 47.32 48.80 49.74
Impact of hedging:
Oil (per Bbl) $ - $ - $ - $ -
Natural gas (per Mcf) - - - (0.05)
OPERATIONAL STATISTICS
- -------------------------------
Average Costs (per Boe):
Lease operating expense $ 7.34 $ 6.69 $ 7.25 $ 6.37
Taxes, other than on earnings 0.93 0.86 1.08 1.12
Depreciation, depletion and
amortization 18.55 18.56 19.52 20.68
Accretion expense 0.46 0.84 0.47 0.23
ENERGY PARTNERS, LTD.
CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
June 30, December 31,
2007 2006
----------- ------------
(Unaudited)
ASSETS
- -------------------------------------------
Current assets:
Cash and cash equivalents $ 7,837 $ 3,214
Trade accounts receivable 70,802 74,132
Fair value of commodity derivative
instruments 1,661 -
Other receivables 1,923 58,269
Deferred tax asset 1,362 1,387
Prepaid expenses 3,795 3,570
----------- ------------
Total current assets 87,380 140,572
Property and equipment, at cost under the
successful efforts method of accounting
for oil and natural gas properties 1,453,649 1,527,304
Less accumulated depreciation, depletion
and amortization (641,171) (680,845)
----------- ------------
Net property and equipment 812,478 846,459
Other assets 14,753 13,029
Deferred financing costs -- net of
accumulated amortization 10,705 3,785
----------- ------------
$ 925,316 $ 1,003,845
=========== ============
LIABILITIES AND STOCKHOLDERS' EQUITY
- -------------------------------------------
Current liabilities:
Accounts payable $ 27,381 $ 47,154
Accrued expenses 116,048 133,198
Fair value of commodity derivative
instruments 382 1,552
----------- ------------
Total current liabilities 143,811 181,904
Long-term debt 474,501 317,000
Deferred income taxes 61,003 62,451
Asset retirement obligation 69,238 68,767
Fair value of commodity derivative
instruments 938 -
Other 1,554 1,453
----------- ------------
751,045 631,575
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 100,000,000 shares; issued
and outstanding: 2007 - 43,918,713
shares; 2006 - 42,501,726 shares 440 425
Additional paid-in capital 369,973 365,313
Accumulated other comprehensive loss (995) (994)
Retained earnings 62,393 64,966
Treasury stock, at cost. 2007 --
12,180,486 shares; 2006 -- 3,479,814
shares (257,540) (57,440)
----------- ------------
Total stockholders' equity 174,271 372,270
Commitments and contingencies
----------- ------------
$ 925,316 $ 1,003,845
=========== ============
CONTACT: Energy Partners, Ltd.
T.J. Thom, 504-799-4830
or
Al Petrie, 504-799-1953