EPL Announces First Quarter 2006 Results and Provides Operational Update; Total Production Returning to Pre-Storm Levels as Ramp Up Continues.NEW ORLEANS New Orleans (ôr`lēənz –lənz, ôrlēnz`), city (2006 pop. 187,525), coextensive with Orleans parish, SE La., between the Mississippi River and Lake Pontchartrain, 107 mi (172 km) by water from the river mouth; founded -- Energy Partners, Ltd. ("EPL 1. EPL - Early PL/I. 2. EPL - Experimental Programming Language. 3. EPL - Eden Programming Language. U Washington. Based on Concurrent Euclid and used with the Eden distributed OS. Influenced Emerald and Distributed Smalltalk. ") (NYSE NYSE See: New York Stock Exchange :EPL) today announced financial results for the first quarter of 2006 and provided an update on operations. In the update, EPL said its total production has now returned to over 29,000 barrels of oil equivalent (Boe) per day, essentially the rate the Company was producing just prior to the storms in late August 2005. The Company also disclosed dis·close tr.v. dis·closed, dis·clos·ing, dis·clos·es 1. To expose to view, as by removing a cover; uncover. 2. To make known (something heretofore kept secret). that it has recently drilled a discovery well at Little Lake onshore on·shore adj. 1. Moving or directed toward the shore: an onshore wind. 2. Located on the shore: an onshore beacon; an onshore patrol. adv. in south Louisiana Louisiana (ləwē'zēăn`ə, l  ē'–), state in the S central United States. It is bounded by Mississippi, with the Mississippi R. . In addition, wells drilled at Grand Isle Grand Isle can refer to:
A peak, 4,342.6 m (14,238 ft) high, in the Rocky Mountains of central Colorado. 202 on the Gulf of Mexico Noun 1. Gulf of Mexico - an arm of the Atlantic to the south of the United States and to the east of Mexico Golfo de Mexico Atlantic, Atlantic Ocean - the 2nd largest ocean; separates North and South America on the west from Europe and Africa on the east Shelf were plugged and abandoned. Financial Results Net income available to common stockholders was $14.8 million for the first quarter of 2006 compared to $19.5 million for the first quarter of 2005. Net income per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share for the first quarter 2006 was $0.37 compared to $0.51 per diluted share in the same quarter a year ago. Revenue for the first quarter of 2006 rose to $110.1 million, a 13% increase over first quarter 2005 revenues of $97.5 million. Discretionary cash flow Discretionary cash flow Cash flow that is available after the funding of all positive net present value (NPV) capital investment projects; it is available for paying cash dividends, repurchasing common stock, retiring debt, and so on. , which is cash flow from operating activities before changes in working capital and exploration expenses, rose to $92.9 million, up 32% from $70.2 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 2006 was $63.9 million compared with $69.4 million in the same quarter a year ago. The first quarter of 2006 benefited from record oil prices and strong natural gas prices, and included $12.7 million in claims accrued ac·crue v. ac·crued, ac·cru·ing, ac·crues v.intr. 1. To come to one as a gain, addition, or increment: interest accruing in my savings account. 2. under the Company's business interruption insurance Noun 1. business interruption insurance - insurance that provides protection for the loss of profits and continuing fixed expenses resulting from a break in commercial activities due to the occurrence of a peril coverage. These benefits were reduced by lower production volumes due to hurricane hurricane, tropical cyclone in which winds attain speeds greater than 74 mi (119 km) per hr. Wind speeds reach over 190 mi (289 km) per hr in some hurricanes. related shut ins; increased exploration expenses associated with an expanded capital expenditure program; and higher depreciation, depletion depletion n. when a natural resource (particularly oil) is being used up. The annual amount of depletion may, ironically, provide a tax deduction for the company exploiting the resource because if the resource they are exploiting runs out, they will no longer be able , and amortization (DD&A) expenses. The Company said DD&A per Boe, which increased in the first quarter from prior periods, is expected to trend downward in the coming quarters. Production for the first quarter of 2006 averaged 22,991 Boe per day, up 24% from 18,583 Boe per day in the fourth quarter of 2005, but down 12% from 26,007 Boe per day in the first quarter of 2005. Natural gas production in the first quarter of 2006 averaged 94.8 million cubic feet (Mmcf) per day, a 16% rise from 82.0 Mmcf per day in the fourth quarter of 2005. Oil production in the most recent quarter averaged 7,185 barrels per day Barrels per day (abbreviated BPD, bbl/d, bpd, bd or b/d) is a measurement used to describe the amount of crude oil (measured in barrels) produced or consumed by an entity in one day. , a 46% rise from the average of 4,916 Boe per day in the fourth quarter of last year. First quarter 2006 production volumes were down compared to the first quarter of 2005 due to the impact of hurricane related shut ins but were up significantly from the fourth quarter of 2005 as new wells came on line and production continued to be restored following completion of repairs to third-party pipelines and processing facilities. The Company said production is currently averaging over 29,000 Boe per day. Richard Ri·chard , Joseph Henri Maurice Known as "Rocket." 1921-2000. Canadian hockey player. A right wing for the Montreal Canadiens (1942-1960), he led his team to eight Stanley Cup championships and was the first player to score 50 goals in a A. Bachmann Bachmann may refer to: People
Oil price realizations for the first quarter of 2006 averaged $59.16 per barrel barrel: see English units of measurement. , a 30% increase from $45.68 per barrel in the same period a year ago. Natural gas price realizations in the quarter averaged $8.30 per thousand cubic feet (Mcf), increasing 27% from $6.52 per Mcf in the first quarter of 2005. All commodity prices are stated net of hedging hedging, in commerce, method by which traders use two counterbalancing investment strategies so as to minimize any losses caused by price fluctuations. It is generally used by traders on the commodities market. impact. The Company maintains a complete and regularly updated schedule of hedging positions under "Hedging" in the Investor Relations Investor relations The process by which the corporation communicates with its investors. section of the Company's web site, www.eplweb.com. During the quarter, the Company said capital expenditures for exploration and development activities totaled $92.5 million. The Company also said that the projected 2006 capital budget of $360.0 million will be executed executed 1) adj. to have been completed. (Example: "it is an executed contract") 2) v. to have completed or fully performed. (Example: "he executed all the promises made in the contract") 3) v. with internally generated funds. As of March 31, 2006 total debt stood at $225.0 million, and the Company's debt to total capitalization Total capitalization The total long-term debt and all types of equity of a company that constitutes its capital structure. total capitalization See capitalization. ratio was 35%. Operational Highlights Lease Sale At the March 2006 Central Gulf of Mexico Lease Sale, EPL was the high bidder on 11 of 18 blocks on which the Company submitted bids. The successful bids represent approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. 52,500 gross acres, including two deepwater Deepwater or Deep Water may refer to:
Shelf and Onshore During the first quarter, the Company announced discoveries on four Shelf properties including the East Cameron 268 #1, South Timbalier 23 #CC-4st, West Cameron 3 #1, and West Cameron 176 #13. EPL owns a 50% working interest in the East Cameron 268 #1, 27% in South Timbalier 23 #CC-4, and 25% working interest in each of the other two wells. All of these wells had moderate reserve potential, and production from each well is expected by the end of the year. In addition to restoring wells shut in by the storms, five wells from discoveries in prior years commenced production at East Cameron 111, Eugene Island Eugene Island is a submerged mountain 70-85 miles off the Louisiana coast in the Gulf of Mexico. The nearby oil field Eugene Island 330 is best known for its unusual depletion profile. According to the article "Sustainable Oil?" by Chris Bennett WorldNetDaily. 141, North Padre Island Padre Island (päd`rē, păd`rē), low, sandy island, c.115 mi (185 km) long, less than 3 mi (4.8 km) wide, S Tex. It is characterized by large, irregular sand dunes, sparse vegetation, and a strong prevailing wind off the Gulf of Mexico. 913, and South Marsh Island 192 since January January: see month. 1, 2006. In the first quarter, the Louisiana State Lease 15016 #1 well testing the Denali prospect in South Pass 26 was determined to be non-commercial A non-commercial enterprise is work that values other considerations above and beyond that of making a profit. It differs from a non-profit enterprise in that seeking a profit is a part of their business, just not the main part. . The Company recognized dry hole expense of $7.5 million in the first quarter of 2006 in connection with the well. While there is a possibility for future tests of deeper horizons in the area, none are planned for 2006. In addition, the Company announced the well at Grand Isle 66 did not encounter hydrocarbons hydrocarbons (hīˈ·drō·kärˑ·b  nz),n. . This moderate potential well, operated by Walter Wal·ter , Bruno 1876-1962. German conductor noted for his interpretations of Mozart and Mahler. Noun 1. Walter - German conductor (1876-1962) Bruno Walter Oil and Gas Corporation in which EPL held a 50% working interest, was drilled to a total depth of 16,150 feet. The Company also announced that the non-operated high potential, high risk well at West Cameron 202, in which EPL held a 25% working interest, is being plugged and abandoned after it was drilled to a total depth of 15,876 feet, the point at which hole conditions prevented the well from being drilled deeper to test the higher potential targets. For the year to date, the Company has drilled six discoveries out of nine exploratory tests. The Company plans to drill at least 14 additional exploratory wells on the Shelf in the balance of 2006, with four of those wells having high reserve potential. Onshore in south Louisiana, the Company recently drilled a successful exploratory test in the Little Lake area in which it has 50% working interest, which should be on line late in the second quarter of 2006. EPL plans to commence drilling a deep, high risk, high potential exploratory test, the Lakeside Prospect, in Cameron Parish in mid to late May. At least one additional onshore deep exploratory test is planned for later in the year. Deepwater In February February: see month. , the Company announced its entry into the deepwater Gulf of Mexico with an agreement to acquire a 25% working interest in 23 undeveloped leases with 13 identified prospects from Noble Energy, Inc. The first well, Mississippi Mississippi, state, United States Mississippi (mĭs'əsĭp`ē), one of the Deep South states of the United States. It is bordered by Alabama (E), the Gulf of Mexico (S), Arkansas and Louisiana, with most of the border formed by Canyon canyon Very narrow, deep valley cut by a river through resistant rock and having steep, almost vertical sides. Canyons occur most often in arid or semiarid regions. Some canyons (e.g., the Grand Canyon) are spectacular natural features. See also submarine canyon. Block 204 #1, called Redrock, was drilled to a total measured depth of 23,365 feet and encountered its intended objectives. While the resource estimation estimation In mathematics, use of a function or formula to derive a solution or make a prediction. Unlike approximation, it has precise connotations. In statistics, for example, it connotes the careful selection and testing of a function called an estimator. is still ongoing, high quality pay was encountered in one objective as expected. The quality and extent of a second objective is still under evaluation, and further appraisal work on this discovery will continue this year and into 2007. The second well, called Raton Rat´on n. 1. A small rat. , which is at Mississippi Canyon 248, is currently drilling to a total measured depth of 20,000 feet and has multiple targets. Current Operations The Company is currently drilling two exploratory wells: the deepwater Mississippi Canyon 248 #1 and South Timbalier 42 #2. In addition, the Company said today that it has recently brought on line the South Timbalier 41 #B-2 well, a 2006 development well. The well, in which the Company owns a 60% working interest, is currently producing approximately 70 Mmcf and 1,200 barrels of condensate condensate, matter in the form of a gas of atoms, molecules, or elementary particles that have been so chilled that their motion is virtually halted and as a consequence they lose their separate identities and merge into a single entity. per day on a gross basis, and is EPL's highest rate well. Richard A. Bachmann continued, "Based on the operational pace we have established early in the year, we believe we are well positioned to meet our production goal to increase our annual production by 25% to 35%. With our entry into deepwater and our continued focus on the Shelf and onshore south Louisiana, we believe this will be one of our most exciting exploratory drilling programs." EPL has scheduled a conference call to review first quarter 2006 results for today, May 9, 2006 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 2006. To participate in the EPL conference call, callers in the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. and Canada Canada (kăn`ədə), independent nation (2001 pop. 30,007,094), 3,851,787 sq mi (9,976,128 sq km), N North America. Canada occupies all of North America N of the United States (and E of Alaska) except for Greenland and the French islands of can dial (877) 612-5303 and international callers can dial (706) 634-0487. The Conference I.D. for callers is 8556663. The call will be available for replay beginning two hours after the call is completed through midnight of May 14, 2006. 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 8556663. The conference call will be webcast live as well as for on-demand On-Demand refers to a service or feature which addresses the user's need for instant gratification and immediacy of use. In most cases the value proposition for an on-demand service is wrapped up in the fact that the user or consumer of the service avoids a significant up-front 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 CCBN Central Coast Bancorp CCBN Charles County Business Network 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. 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 forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. " 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 Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. for fiscal year ended December December: see month. 31, 2005 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,
------------------
2006 2005
-------- --------
Revenues:
Oil and natural gas $109,124 $ 97,453
Other 994 25
-------- --------
110,118 97,478
-------- --------
Costs and expenses:
Lease operating 12,365 12,443
Transportation expense 248 160
Taxes, other than on earnings 2,995 2,764
Exploration expenditures, dry hole costs and
impairments 19,596 10,755
Depreciation, depletion and amortization 47,145 25,513
General and administrative 12,456 9,900
-------- --------
Total costs and expenses 94,805 61,535
-------- --------
Business interruption recovery 12,689 -
Income from operations 28,002 35,943
-------- --------
Other income (expense):
Interest income 279 185
Interest expense (5,084) (4,048)
-------- --------
(4,805) (3,863)
-------- --------
Income before income taxes 23,197 32,080
Income taxes (8,394) (11,659)
-------- --------
Net income 14,803 20,421
Less dividends earned on preferred stock and
accretion of discount - (944)
-------- --------
Net income available to common stockholders $ 14,803 $ 19,477
======== ========
Basic earnings per share $ 0.39 $ 0.56
======== ========
Diluted earnings per share $ 0.37 $ 0.51
======== ========
Weighted average common shares used in computing
earnings per share:
Basic 38,028 35,026
Incremental common shares 2,340 5,241
-------- --------
Diluted 40,368 40,267
======== ========
ENERGY PARTNERS, LTD.
CONSOLIDATED STATEMENTS OF NET CASH PROVIDED BY
OPERATING ACTIVITIES
(In thousands)
(Unaudited)
Three Months
Ended
March 31,
----------------
2006 2005
-------- -------
Cash flows from operating activities:
Net income $ 14,803 $20,421
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation, depletion and amortization 47,145 25,513
Loss on disposition of oil and natural gas assets - 92
Non-cash compensation 2,115 1,883
Deferred income taxes 8,677 11,309
Exploration expenditures 13,968 4,728
Amortization of deferred financing costs 249 247
Other 294 -
Changes in operating assets and liabilities:
Trade accounts receivable 11,381 (2,683)
Other receivables (12,603) (81)
Prepaid expenses 2,124 1,282
Other assets 850 (1,292)
Accounts payable and accrued expenses (25,030) 8,152
Other liabilities (103) (128)
-------- -------
Net cash provided by operating activities $ 63,870 $69,443
======== =======
Reconciliation of discretionary cash flow:
Net cash provided by operating activities 63,870 69,443
Changes in working capital 23,381 (5,250)
Non-cash exploration expenditures (13,968) (4,728)
Total exploration expenditures 19,596 10,755
-------- -------
Discretionary cash flow $ 92,879 $70,220
======== =======
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,
----------------
2006 2005
-------- -------
PRODUCTION AND PRICING
-----------------------------------------------------
Net Production (per day):
Oil (Bbls) 7,185 9,978
Natural gas (Mcf) 94,833 96,172
Total (Boe) 22,991 26,007
Oil and Natural Gas Revenues (in thousands):
Oil $ 38,253 $ 41,019
Natural gas 70,871 56,434
Total 109,124 97,453
Average Sales Prices (1):
Oil (per Bbl) $ 59.16 $ 45.68
Natural gas (per Mcf) 8.30 6.52
Average (per Boe) 52.74 41.64
OPERATIONAL STATISTICS
-----------------------------------------------------
Average Costs (per Boe):
Lease operating expense $ 5.98 $ 5.32
Taxes, other than on earnings 1.45 1.18
Depreciation, depletion and amortization 22.78 10.90
(1) Prices are net of hedging transactions which had the following
impact:
-- Reduced natural gas price realizations by $0.11 per Mcf and none
for the first quarter of 2006 and 2005, respectively; and
-- Reduced oil price realizations by none and $1.17 per barrel for
the first quarter of 2006 and 2005, respectively.
ENERGY PARTNERS, LTD.
CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
March 31, December 31,
2006 2005
----------- ----------
(Unaudited)
ASSETS
------
Current assets:
Cash and cash equivalents $ 2,725 $ 6,789
Trade accounts receivable 66,945 78,326
Other receivables 61,906 49,303
Deferred tax asset 3,213 5,582
Prepaid expenses 1,055 3,179
----------- ----------
Total current assets 135,844 143,179
Property and equipment, at cost under the
successful efforts method of accounting for
oil and natural gas properties 1,265,479 1,189,078
Less accumulated depreciation, depletion and
amortization (463,793) (418,347)
----------- ----------
Net property and equipment 801,686 770,731
Other assets 12,434 13,284
Deferred financing costs -- net of accumulated
amortization 3,841 4,091
----------- ----------
$ 953,805 $ 931,285
=========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
-----------------------------------------------
Current liabilities:
Accounts payable $ 22,685 $ 28,810
Accrued expenses 118,810 108,087
Fair value of commodity derivative instruments 4,464 9,875
Current maturities of long-term debt - 109
----------- ----------
Total current liabilities 145,959 146,881
Long-term debt 225,000 235,000
Deferred income taxes 97,461 87,559
Asset retirement obligation 58,138 56,039
Other 6,750 11,213
----------- ----------
533,308 536,692
Stockholders' equity:
Common stock, par value $0.01 per share.
Authorized 50,000,000 shares; issued and
outstanding: 2006 - 41,575,739 shares;
2005 - 41,468,093 shares 417 415
Additional paid-in capital 353,579 348,863
Accumulated other comprehensive loss (6,228) (12,619)
Retained earnings 130,169 115,366
Treasury stock, at cost. 2006 -- 3,474,575
shares; 2005 -- 3,474,208 shares (57,440) (57,432)
----------- ----------
Total stockholders' equity 420,497 394,593
Commitments and contingencies
----------- ----------
$ 953,805 $ 931,285
=========== ==========
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