Exhibit 99.1
EPL Announces Third Quarter 2007 Results and Provides Operational Update
EPL Announces Two Discoveries on the Shelf and Onshore South
Louisiana
NEW ORLEANS--(BUSINESS WIRE)--Nov. 7, 2007--Energy Partners, Ltd.
("EPL" or the "Company")(NYSE:EPL) today announced financial results
for the third quarter of 2007. The Company also announced that it has
recently drilled two discovery wells, including one on the Gulf of
Mexico ("GOM") Shelf in West Cameron 141 and one located onshore south
Louisiana in Terrebonne Parish.
Financial Results
EPL reported a net loss to common stockholders of $4.0 million for
the third quarter of 2007 compared to a net loss to common
stockholders of $25.2 million for the third quarter of 2006. The net
loss per diluted share for the third quarter 2007 was $0.12 compared
to a net loss per diluted share of $0.66 in the same quarter a year
ago.
The Company said a large part of the net loss for the third
quarter of 2007 was attributed to $7.4 million of pre-tax, non-cash
costs associated with a property impairment at East Cameron 196, a
small field located in the Company's Western offshore area, which is
near the end of its economic life. This non-cash cost reduced net
income on an after-tax basis by $4.9 million or $0.15 per share. The
loss in the third quarter of 2006 was primarily attributed to merger
and acquisition related expenses.
Revenue for the third quarter of 2007 was $110.4 million, a 3%
increase over third quarter 2006 revenues of $107.5 million.
Discretionary cash flow, which is cash flow from operating activities
before changes in working capital and exploration expense was $66.5
million, nearly triple the discretionary cash flow of $22.7 million
reported in the third quarter last year. (See reconciliation of
discretionary cash flow schedule in the tables.) Cash flow from
operating activities in the third quarter of 2007 was $62.5 million
versus $10.5 million in the same quarter a year ago.
Compared to the same period a year ago, EPL benefited from record
high oil prices and strong natural gas prices during the third quarter
of 2007, as well as a significant decrease in general and
administrative expense and depreciation, depletion and amortization
expense. These benefits were offset by an increase in interest expense
and lease operating expense ("Loe"). The increase in Loe to $19.0
million in the third quarter of 2007 from $15.2 million in the third
quarter of 2006 was primarily due to non-budgeted repair and workover
costs totaling $2.9 million.
Production for the third quarter of 2007 averaged 23,701 barrels
of oil equivalent ("Boe") per day, down from 25,421 Boe per day in the
third quarter of 2006. The decrease in third quarter 2007 production
volumes was due primarily to the sale of substantially all of the
Company's onshore south Louisiana gas producing assets which closed in
late second quarter 2007. Natural gas production in the third quarter
of 2007 averaged 92.6 million cubic feet ("Mmcf") per day, compared to
104.0 Mmcf per day in the third quarter of 2006. Oil production in the
most recent quarter averaged 8,271 barrels per day, a 2% rise from the
average of 8,092 barrels per day in the third quarter of 2006.
Oil price realizations for the third quarter of 2007 reached a
record high, averaging $70.89 per barrel, which was an 8% increase
from the prior record of $65.57 per barrel in the same period a year
ago. Natural gas price realizations in the quarter averaged $6.62 per
thousand cubic feet ("Mcf"), up from $6.12 per Mcf realized during the
third quarter of 2006. The Company, which discontinued cash flow hedge
accounting in the second quarter of 2007, recorded a loss on its
derivative instruments of $0.2 million during the third 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 nine months ended September 30, 2007, net loss to common
stockholders was $6.5 million, or $0.18 per diluted share. In the same
period of 2006, net income to common stockholders was $2.1 million, or
$0.05 per diluted share. Discretionary cash flow for the first three
quarters of 2007 totaled $208.2 million, compared with $214.1 million
in the same period a year ago. (See reconciliation of discretionary
cash flow in table.) Cash flow from operating activities in the first
nine months of 2007 was $229.9 million, up 24% from $185.4 million in
the same period of 2006.
For the first nine months of 2007, the Company said capital
expenditures for exploration and development activities totaled $267.5
million. As of September 30, 2007, the Company had cash on hand of
$14.4 million, total debt of $489.5 million, and a net debt to total
capitalization ratio of 73%. The Company also had $165.0 million of
remaining capacity available under its bank facility as of September
30, 2007, which has a borrowing base of $200.0 million.
Operational Highlights
The Company today announced a new discovery on the Shelf, the West
Cameron 141 #1 well. The moderate risk, moderate potential well
drilled to a total depth of 10,370 feet and encountered high quality
natural gas pay in its objective sand. The #1 well is expected to be
on line in the second quarter of 2008. EPL holds a 100% working
interest in this well. The Company also announced a new discovery
onshore in south Louisiana. The moderate risk, moderate potential
exploratory well, Tiger Bait, located in Terrebonne Parish, was
drilled to a total depth of 14,448 feet and encountered pay in a
single interval believed to be oil bearing. The well is expected to be
on line in early 2008. The Company holds a 40% working interest in
this well.
The Company further announced today that a moderate risk, moderate
potential Shelf exploratory well, South Marsh Island 247, in which the
Company held a 100% working interest, was determined to be a dry hole.
The Company recognized dry hole expense of $9.9 million in the third
quarter of 2007 in connection with the well.
For the year-to-date, the Company has announced seven discoveries
including one onshore discovery in Terrebonne Parish in south
Louisiana and six on the Shelf at South Timbalier 26, South Timbalier
41, West Cameron 252, West Cameron 141, and two discoveries in the
Eugene Island 311/312 area. Additionally, at EPL's 100% owned South
Timbalier 46 field, the Company is continuing to produce the #3 (A-1)
well in one of the four sands discovered in the deep hole section,
with high quality gas and associated condensate being sold directly
into the field's gas sales line.
EPL has been awarded one of the eight leases on which it was high
bidder at the MMS Central Lease Sale held in October of this year. The
lease covers South Timbalier 57. As previously announced, EPL's eight
high bids, located on the Shelf and in the deepwater GOM, totaled
$19.2 million to its interest.
Current Operations
The Company is currently drilling three high potential exploratory
wells, including two on the Shelf and one onshore in south Louisiana.
On the Shelf, the Company is drilling the moderate risk, high
potential South Timbalier 214 #2 well and the moderate risk, high
potential Eugene Island 21 #1 well. The Company is also currently
drilling a high risk, high potential well called La Posada in
Vermilion Parish. In addition, the Company said the development well
work is completed on the Raton discovery well in Mississippi Canyon
248 located in the deepwater GOM. First production from this deepwater
well is expected in early 2008, and the Company has increased its
working interest from 25% to 33% in the discovery area.
Richard A. Bachmann commented, "We are pleased with our two most
recent drilling successes, and are excited about the three high
potential wells currently drilling. We are also very pleased that the
development work on our first deepwater field is completed and is
still projected to be on line in early 2008. In addition, we are
awaiting word from the MMS about the awarding of the remaining leases
on which we were the high bidder during the long-awaited recent
central Gulf lease sale. Later this month our Board will be reviewing
our 2007 capital budget and finalizing our 2008 plans, including the
capital budget. Looking ahead to 2008, our spending plans will include
an exciting slate of exploratory wells from our existing portfolio.
Since we have identified prospects on all of the leases on which we
were the high bidder in the recent lease sale, some of them are likely
to enhance our 2008 program."
Conference Call Information
EPL has scheduled a conference call to review third quarter 2007
results on November 7, 2007 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 the balance of 2007. 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 21364087.
The call will be available for replay beginning two hours after
the call is completed through midnight of November 12, 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 21364087.
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 for the quarter ended
September 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 Web site at
www.eplweb.com, from the Securities and Exchange Commission's Web site
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 Nine Months Ended
September 30, September 30,
------------------- -------------------
2007 2006 2007 2006
-------- -------- -------- --------
Revenues:
Oil and natural gas $110,327 $107,390 $340,313 $337,594
Other 111 101 254 322
-------- -------- -------- --------
110,438 107,491 340,567 337,916
-------- -------- -------- --------
Costs and expenses:
Lease operating 19,041 15,230 53,227 44,716
Transportation expense 805 727 1,870 1,538
Exploration expenditures, dry
hole costs and impairments 22,692 12,112 81,868 54,491
Depreciation, depletion and
amortization 41,718 44,540 133,691 139,166
Accretion expense 1,127 1,099 3,330 3,250
Taxes, other than on earnings 2,379 5,762 7,448 10,948
General and administrative 12,465 68,457 48,367 93,194
Gain on insurance recoveries - - (8,084) -
(Gain) loss on sale of assets 920 - (6,100) 419
Other 2,395 667 2,387 2,125
-------- -------- -------- --------
Total costs and expenses 103,542 148,594 318,004 349,847
-------- -------- -------- --------
Business interruption recovery - 8,293 9,084 31,576
Income from operations 6,896 (32,810) 31,647 19,645
-------- -------- -------- --------
Other income (expense):
Interest income 216 328 786 1,080
Interest expense (12,901) (6,907) (33,287) (17,190)
Gain (loss) on derivative
instruments (185) - 1,722 -
Loss on early extinguishment
of debt - - (10,838) -
-------- -------- -------- --------
(12,870) (6,579) (41,617) (16,110)
-------- -------- -------- --------
Income (loss) before income
taxes (5,974) (39,389) (9,970) 3,535
Income taxes 2,011 14,147 3,433 (1,389)
-------- -------- -------- --------
Net income (loss) (3,963) (25,242) (6,537) 2,146
======== ======== ======== ========
Basic earnings (loss) per
share $ (0.12) $ (0.66) $ (0.18) $ 0.06
======== ======== ======== ========
Diluted earnings (loss) per
share $ (0.12) $ (0.66) $ (0.18) $ 0.05
======== ======== ======== ========
Weighted average common shares
used in computing earnings
(loss) per share:
Basic 31,734 38,414 35,435 38,254
Incremental common shares - - - 2,229
-------- -------- -------- --------
Diluted 31,734 38,414 35,435 40,483
======== ======== ======== ========
ENERGY PARTNERS, LTD.
CONSOLIDATED STATEMENTS OF NET CASH PROVIDED BY
OPERATING ACTIVITIES
(In thousands)
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
------------------ ------------------
2007 2006 2007 2006
-------- -------- -------- --------
Cash flows from operating
activities:
Net income (loss) $ (3,963) $(25,242) $ (6,537) $ 2,146
Adjustments to reconcile net
income (loss) to net cash
provided by operating
activities:
Depreciation, depletion,
amortization and accretion 42,845 45,639 137,021 142,416
(Gain) loss on disposal of
assets 2,428 667 (4,592) 3,497
Non-cash compensation 2,132 3,054 6,736 7,968
Non-cash loss on early
extinguishment of debt - - 3,398 -
Deferred income taxes (2,010) (14,147) (3,433) 1,672
Exploration expenditures 20,986 9,252 72,774 42,108
Amortization of deferred
financing costs 389 211 954 704
Unrealized (gain) loss on
derivative contracts 1,492 - (415) -
Gain on insurance recoveries - - (8,084) -
Other 461 400 1,291 1,195
Changes in operating assets
and liabilities:
Trade accounts receivable 2,629 5,668 5,959 3,972
Other receivables 60 (19,921) 56,406 (44,077)
Prepaid expenses 1,370 411 1,145 1,379
Other assets 95 370 (1,620) 702
Accounts payable and accrued
expenses (4,907) 4,474 (29,428) 22,576
Other liabilities (1,402) (382) (1,666) (874)
-------- -------- -------- --------
Net cash provided by operating
activities $ 62,605 $ 10,454 $229,909 $185,384
======== ======== ======== ========
Reconciliation of discretionary
cash flow:
Net cash provided by
operating activities 62,605 10,454 229,909 185,384
Changes in working capital 2,155 9,380 (30,796) 16,322
Non-cash exploration
expenditures (20,986) (9,252) (72,774) (42,108)
Total exploration
expenditures 22,692 12,112 81,868 54,491
-------- -------- -------- --------
Discretionary cash flow $ 66,466 $ 22,694 $208,207 $214,089
======== ======== ======== ========
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 Nine Months Ended
September 30, September 30,
------------------ -----------------
2007 2006 2007 2006
--------- ------- ------- --------
PRODUCTION AND PRICING
- --------------------------------
Net Production (per day):
Oil (Bbls) 8,271 8,092 8,862 7,824
Natural gas (Mcf) 92,579 103,975 98,322 106,162
Total (Boe) 23,701 25,421 25,249 25,518
Average Sales Prices:
Oil (per Bbl) $ 70.89 $ 65.57 $ 61.09 $ 62.29
Natural gas (per Mcf) 6.62 6.12 7.17 7.06
Average (per Boe) 50.60 45.92 49.37 48.46
Impact of hedging:
Oil (per Bbl) $ - $ - $ - $ -
Natural gas (per Mcf) - - - (0.03)
Oil and Natural Gas Revenues (in
thousands):
Oil $ 53,941 $ 48,814 $147,802 $133,048
Natural gas 56,386 58,576 192,511 204,546
Total 110,327 107,390 340,313 337,594
OPERATIONAL STATISTICS
- --------------------------------
Average Costs (per Boe):
Lease operating expense $ 8.73 $ 6.51 $ 7.72 $ 6.42
Depreciation, depletion and
amortization 19.13 19.04 19.40 19.98
Accretion expense 0.52 0.47 0.48 0.46
Taxes, other than on earnings 1.09 2.46 1.08 1.57
General and administrative 5.72 29.27 7.02 13.38
ENERGY PARTNERS, LTD.
CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
September 30, December 31,
2007 2006
------------- ------------
(Unaudited)
ASSETS
- ------------------------------------------
Current assets:
Cash and cash equivalents $ 14,425 $ 3,214
Trade accounts receivable 68,173 74,132
Fair value of commodity derivative
instruments 534 -
Other receivables 1,863 58,269
Deferred tax asset 878 1,387
Prepaid expenses 2,425 3,570
------------- ------------
Total current assets 88,298 140,572
Property and equipment, at cost under the
successful efforts method of accounting
for oil and natural gas properties 1,526,971 1,527,304
Less accumulated depreciation, depletion
and amortization (690,083) (680,845)
------------- ------------
Net property and equipment 836,888 846,459
Other assets 14,778 13,029
Deferred financing costs -- net of
accumulated amortization 10,612 3,785
------------- ------------
$ 950,576 $ 1,003,845
============= ============
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------------
Current liabilities:
Accounts payable $ 29,943 $ 47,154
Accrued expenses 126,085 133,198
Fair value of commodity derivative
instruments 419 1,552
------------- ------------
Total current liabilities 156,447 181,904
Long-term debt 489,501 317,000
Deferred income taxes 58,740 62,451
Asset retirement obligation 71,093 68,767
Fair value of commodity derivative
instruments 752 -
Other 1,529 1,453
------------- ------------
778,062 631,575
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 - 43,938,782
shares; 2006 - 42,501,726 shares 440 425
Additional paid-in capital 372,574 365,313
Accumulated other comprehensive loss (573) (994)
Retained earnings 58,429 64,966
Treasury stock, at cost. 2007 --
12,239,986 shares; 2006 -- 3,479,814
shares (258,356) (57,440)
------------- ------------
Total stockholders' equity 172,514 372,270
Commitments and contingencies
------------- ------------
$ 950,576 $ 1,003,845
============= ============
CONTACT: Energy Partners, Ltd.
T.J. Thom, 504-799-4830
or
Al Petrie, 504-799-1953