Energy Partners, Ltd. (EPL or the Company) (NYSE:EPL) today
reported financial and operational results for the first quarter
2012.
Highlights
- First quarter 2012 EBITDAX of $67.6 million and net income of
$1.5 million ($0.04 per share). Adjusted net income of $13.4
million ($0.34 per share). (see EBITDAX reconciliation in the
tables)
- First quarter 2012 revenue of $98.8 million, up 47% from the
first quarter 2011, aided by a 43% increase in oil production and
13% increase in realized crude oil prices versus that same
period
- First quarter oil production of 9,386 barrels (Bbls) per day;
total production averaged 79% oil on an oil equivalent basis.
- Operational results to date included 11 successful development
projects (7 successful workovers and 4 development wells) for an
85% success rate.
- Expanded share repurchase program from $20 million to $40
million, with approximately 1.2 million shares repurchased to
date.
Financial Results
Revenue for the first quarter of 2012 was $98.8 million,
compared to $67.2 million for the same period a year ago, driven by
higher realized oil production and prices from the Company's
continued focus on oil-weighted development projects.
For the first quarter of 2012, EPL reported net income to common
stockholders of $1.5 million, or $0.04 per diluted share, compared
to a net loss of $14.5 million, or $0.36 per diluted share for the
same period a year ago. Net income for the first quarter of 2012
included $16.5 million of non-cash unrealized losses on derivative
instruments and $2.3 million of non-cash costs attributable to
property impairments of small gas fields. Excluding the impact of
non-cash items, EPL's adjusted first quarter net income, a non-GAAP
measure, would have been $13.4 million, or $0.34 per diluted
share.
For the first quarter of 2012, EBITDAX was $67.6 million and
discretionary cash flow was $64.0 million, or $1.63 per share (see
reconciliation to GAAP of EBITDAX and discretionary cash flow in
the tables). Cash flow from operating activities in the first
quarter of 2012 was $57.1 million, a 285% increase over cash flow
from operating activities for the same quarter a year ago.
Gary C. Hanna, the Company's President and CEO, stated, "I am
pleased with our execution so far in 2012. This continues to be a
pivotal year for our Company as we continue to implement our
organic and acquisition growth strategy. We continue to stay
focused on the execution of high quality oil projects from our
inventory and sourcing targeted acquisitions, both of which
provided prudent growth for our Company. With our substantial
liquidity and continued free cash flow generation, we intend to
execute on selective acquisition targets to accelerate our growth
and provide additional opportunity sets. As it relates to our
organic growth, we announced a modest increase to our capital
budget from $168 million to $184 million to allow us to exploit a
few additional oil opportunities within our focus areas later this
year. Although the year is just underway, we are feeling
comfortable that our 2012 annual oil production should come within
the mid to upper end of our full year guidance range and
significantly ramp up during the second half of this year."
Production and Price Realizations
Oil production for the first quarter of 2012 averaged 9,386
Barrels (Bbls) per day, which was in the upper end of the Company's
guidance range. First quarter 2012 oil production volumes were 43%
higher than in the comparable quarter last year, primarily as a
result of oil production growth from the Company's acquire and
exploit strategy.
Natural gas production averaged 15.0 million cubic feet (Mmcf)
per day in the first quarter of 2012, which was flat compared to
gas production in the prior fourth quarter of 2011. The Company
continues to focus on the oil development opportunities within its
portfolio which have higher revenue generation capability.
Price realizations for the first quarter of 2012, all of which
are stated before the impact of derivative instruments, averaged
$114.87 per barrel for crude oil and $2.48 per thousand cubic feet
(Mcf) of natural gas, compared to $101.34 per barrel of crude oil
and $4.17 per Mcf of natural gas in the same quarter a year ago.
The Company's crude oil is advantaged by receiving Heavy Louisiana
Sweet and Light Louisiana Sweet crude oil basis
differentials.
Operating Expenses
Lease operating expenses (LOE) for the first quarter of 2012
totaled $18.4 million, while general and administrative (G&A)
expenses were $5.3 million. Reported LOE increased over the same
period a year ago mainly due to two property acquisitions concluded
during 2011 while G&A was essentially flat versus the
comparable period. G&A expenses included non-cash stock based
compensation recorded in the first quarter 2012 of $1.0
million.
Capital Expenditures and P&A
Operations
During the first three months of 2012, capital expenditures on
exploration and development projects totaled approximately $43.5
million. 2012 operational results to date include 11 successful
development projects for an 85% success rate year to date. The
successful projects include 7 workovers and 4 development wells
performed mainly within its East Bay field and West Delta
area. The Company also incurred $10.3 million of regional seismic
purchases surrounding EPL's focus areas from Main Pass to West
Delta and $3.5 million of facility related capital expenditures
during the first quarter.
Capital spending is expected to be front-loaded this year,
intended to drive both production and organic reserve
replacement. Major rig operations are ongoing, mainly
executing additional development work, as well as opportunities
within the Company's in field exploration drilling program.
Currently the Company has two operated and one non-operated rig
executing opportunities within its West Delta and Bay Marchand
fields, with three additional rigs expected to begin operations
within the second quarter and early third quarter. For full year
2012, EPL has increased its initial capital budget from $168
million to approximately $184 million as a result of adding
additional high quality oil projects within its core areas later
this year. The Company projects that 2012 annual oil production
should come within the mid to upper end of the current full year
guidance range of 9,000 to 10,000 Bbls per day, with a significant
ramp up expected during the second half of this year.
The Company continues to proactively spend on abandonment and
decommissioning of its idle infrastructure, which will serve to
reduce future maintenance and insurance costs. The Company plans to
spend approximately $27 million abandoning approximately 116 wells
and removing 35 jackets and 16 platforms in total for the
year. The program is well underway with 60 wells plugged and
abandoned and 25 jackets removed to date. Within two to three
years, EPL expects to be largely finished with the abandonment and
decommissioning of its current idle infrastructure, which
predominately resides within its East Bay field.
Liquidity and Capital Resources
As of March 31, 2012, the Company had unrestricted cash on hand
of $91.4 million and restricted cash of $6.0 million. The Company's
borrowing base under its $250 million credit facility has recently
been reaffirmed at $200 million. EPL continues to maintain
substantial liquidity of $291 million (the undrawn revolver
capacity of $200 million combined with $91.4 million of cash on
hand) and its net debt level remained low at $3.20 per Boe, on a
proved reserve basis, a non-GAAP measure.
Share Repurchase Program
Recently the Board of Directors authorized an increase to its
existing program for the repurchase of outstanding common stock
from an aggregate cash purchase price of $20 million to $40
million. Since the share repurchase was first implemented in
August, 2011, the Company has repurchased 1,199,000 shares at an
aggregate cash purchase price of approximately $15.9 million. The
repurchased shares are held in treasury and could be used to
provide available shares for possible resale in future public or
private offerings and employee benefit plans. As of April 27, the
Company had approximately 39.2 million shares of common stock
outstanding.
Second Quarter and Full Year 2012 Guidance
ESTIMATED EBITDAX
RANGES |
2012 EBITDAX Estimates Using the
Production Guidance and Various Realized Prices (1) |
|
Est. Production
Rates |
|
9000 Bopd/11 Mmcf/d |
9500 Bopd/13 Mmcf/d |
10,000 Bopd/15 Mmcf/d |
Realized Prices ($Bbl/$Mcf) |
|
|
|
$100/$2.50 |
$ 240 |
$ 260 |
$ 280 |
$110/$2.50 |
$ 270 |
$ 285 |
$ 300 |
$120/$2.50 |
$ 285 |
$ 305 |
$ 325 |
|
|
|
|
(1) All EBITDAX figures are
approximate using production and expense guidance and estimated
realized hedging impacts |
ESTIMATED PRODUCTION
& SWAP HEDGE VOLUMES |
Net Production (per day) |
2Q 2012 |
Full Year
2012 |
Oil, including NGLs (Bbls) |
9,300 |
- |
9,700 |
9,000 |
- |
10,000 |
Natural gas (Mcf) |
11,000 |
- |
15,000 |
11,000 |
- |
15,000 |
% Oil, including NGLs (using midpoint of
guidance) |
81% |
81% |
|
|
|
|
|
|
|
Swap Contracted Volume |
|
|
|
|
|
|
Oil (barrels) |
3,907 |
3,433 |
% of Oil swap contracted |
42% |
- |
40% |
38% |
- |
34% |
% of Boe swap contracted |
35% |
- |
32% |
32% |
- |
27% |
Average Swap Price Level |
$100.30 |
$101.48 |
|
|
|
|
|
|
|
ESTIMATED EXPENSES (in Millions,
unless otherwise noted) |
|
|
|
|
|
|
Lease Operating (including energy
insurance) |
$ 18.5 |
- |
$ 20.5 |
$ 70.0 |
- |
$ 78.0 |
General & Administrative (cash and
non-cash) |
$ 5.0 |
- |
$ 5.5 |
$ 19 |
- |
$ 23 |
Taxes, other than on earnings (% of
revenue) |
3% |
- |
5% |
3% |
- |
5% |
Exploration Expense |
$ 2 |
- |
$ 4 |
$ 14 |
- |
$ 18 |
DD&A ($/Boe) |
$ 20.00 |
- |
$ 26.00 |
$ 20.00 |
- |
$ 26.00 |
Interest Expense (including amortization
of discount and deferred financing costs) |
$ 5 |
- |
$ 6 |
$ 20 |
- |
$ 24 |
Conference Call
Information
EPL has scheduled a conference call for today, May 3, 2012, at
10:00 A.M. Central Time/11:00 A.M. Eastern Time to review results
for the first quarter 2012 and to discuss its outlook for the
remainder of the year. To participate in the EPL conference
call, callers in the United States and Canada can dial (866)
845-8624 and international callers can dial (706) 634-0487. The
Conference I.D. for callers is 74375236.
The call will be available for replay beginning two hours after
the call is completed through midnight of May 17, 2012. For
callers in the United States and Canada, the toll-free number for
the replay is (855) 859-2056. For international callers the number
is (404) 537-3406. The Conference I.D. for all callers to access
the replay is 74375236.
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 "Events and Webcasts"
link in the Investor Relations section of the site. The call will
also be available through the CCBN Investor Network.
Description of the Company
Founded in 1998, EPL is an independent oil and natural gas
exploration and production company based in New Orleans, Louisiana,
and Houston, Texas. The Company's operations are concentrated
in the U.S. Gulf of Mexico shelf, focusing on the state and federal
waters offshore Louisiana. For more information, please visit
www.eplweb.com.
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," "plans," "projects," "estimates" or
"anticipates" will or may occur in the future are forward-looking
statements. We believe these judgments are reasonable, but
actual results may differ materially due to a variety of important
factors. Among other items, such factors might include:
changes in general economic conditions; uncertainties in reserve
and production estimates; unanticipated recovery or production
problems; hurricane and other weather-related interference with
business operations; the effects of delays in completion of, or
shut-ins of, gas gathering systems, pipelines and processing
facilities; changes in legislative and regulatory requirements
concerning safety and the environment as they relate to operations;
oil and natural gas prices and competition; the impact of
derivative positions; production expenses and expense estimates;
cash flow and cash flow estimates; future financial performance;
planned and unplanned capital expenditures; drilling and operating
risks; our ability to replace oil and gas reserves; risks and
liabilities associated with properties acquired in acquisitions;
volatility in the financial and credit markets or in oil and
natural gas prices; and other matters that are discussed in EPL's
filings with the Securities and Exchange Commission.
(http://www.sec.gov/).
ENERGY PARTNERS,
LTD. |
CONSOLIDATED STATEMENTS
OF OPERATIONS |
(In
thousands) |
(Unaudited) |
|
Three Months Ended March
31, |
|
2012 |
2011 |
Revenue: |
|
|
Oil and natural gas |
$ 98,772 |
67,215 |
Other |
24 |
34 |
|
98,796 |
67,249 |
|
|
|
Costs and expenses: |
|
|
Lease operating |
18,411 |
15,331 |
Transportation |
151 |
135 |
Exploration expenditures - seismic and
other |
11,672 |
433 |
Exploration expenditures - dry hole
costs |
2,637 |
115 |
Impairments |
2,314 |
10,788 |
Depreciation, depletion and
amortization |
23,908 |
21,063 |
Accretion of liability for asset
retirement obligations |
3,148 |
3,575 |
General and administrative |
5,344 |
5,287 |
Taxes, other than on earnings |
3,741 |
3,318 |
Other |
175 |
130 |
Total costs and expenses |
71,501 |
60,175 |
|
|
|
Income from operations |
27,295 |
7,074 |
|
|
|
Other income (expense): |
|
|
Interest income |
38 |
10 |
Interest expense |
(4,874) |
(2,470) |
Loss on derivative instruments |
(20,062) |
(25,525) |
Loss on early extinguishment of debt |
- |
(2,377) |
|
(24,898) |
(30,362) |
|
|
|
Income (loss) before income
taxes |
2,397 |
(23,288) |
Income tax benefit (expense) |
(894) |
8,779 |
|
|
|
Net income (loss) |
$ 1,503 |
(14,509) |
|
|
|
|
|
|
Net income (loss), as
reported |
$ 1,503 |
(14,509) |
Add back: |
|
|
Unrealized loss due to the change in fair
market value of derivative contracts |
16,542 |
20,234 |
Impairments |
2,314 |
10,788 |
Loss on abandonment activities |
168 |
172 |
Deduct: |
|
|
Income tax adjustment for above
items |
(7,096) |
(11,760) |
|
|
|
Adjusted Non-GAAP net
income |
$ 13,431 |
4,925 |
|
|
|
EBITDAX Reconciliation: |
|
|
|
|
|
Net income (loss), as
reported |
$ 1,503 |
(14,509) |
Add back: |
|
|
Income taxes |
894 |
(8,779) |
Net interest expense |
4,836 |
2,460 |
Depreciation, depletion, amortization and
accretion |
27,056 |
24,638 |
Impairments |
2,314 |
10,788 |
Exploration expenditures and dry hole
costs |
14,309 |
548 |
Loss on abandonment activities |
168 |
172 |
Loss on early extinguishment of debt |
- |
2,377 |
Less impact of: |
|
|
Unrealized loss due to the change in fair
market value of derivative contracts |
16,542 |
20,234 |
|
|
|
EBITDAX |
$ 67,622 |
37,929 |
|
|
|
Weighted average dilutive common
shares outstanding |
39,298 |
40,080 |
|
|
|
EBITDAX is defined as net
income (loss) before income taxes, net interest expense,
depreciation, depletion, amortization and accretion, impairments,
exploration expenditures and dry hole costs, loss (gain) on
abandonment activities, loss on early extinguishment of debt and
cumulative effect of change in accounting principle, and further
deducts the unrealized gain or loss on our derivative contracts. We
have reported EBITDAX because we believe EBITDAX is a measure
commonly reported and widely used in our industry as an indicator
of a company's ability to internally fund exploration and
development activities and incur and service debt. EBITDAX is
not a calculation based on generally accepted accounting principles
(GAAP) in the United States and should not be considered in
isolation from or as a substitute for net income, as an indication
of operating performance or cash flows from operating activities or
as a measure of liquidity. Investors should carefully consider
the specific items included in our computation of
EBITDAX. Investors should be cautioned that EBITDAX as
reported by us may not be comparable in all instances to EBITDAX as
reported by other companies. In addition, EBITDAX does not
represent funds available for discretionary use. |
|
|
ENERGY PARTNERS,
LTD. |
CONSOLIDATED STATEMENTS
OF NET CASH PROVIDED BY |
OPERATING
ACTIVITIES |
(In
thousands) |
(Unaudited) |
|
|
|
|
|
|
|
Three Months Ended March
31, |
|
2012 |
2011 |
Cash flows from operating activities: |
|
|
Net income (loss) |
$ 1,503 |
(14,509) |
Adjustments to reconcile net income
(loss) to net cash provided by operating activities: |
|
|
Depreciation, depletion and
amortization |
23,908 |
21,063 |
Accretion of liability for asset
retirement obligations |
3,148 |
3,575 |
Loss on early extinguishment of debt |
- |
2,377 |
Unrealized loss on derivative
contracts |
16,542 |
20,234 |
Non-cash compensation |
991 |
502 |
Deferred income taxes |
594 |
(8,797) |
Exploration expenditures |
2,637 |
115 |
Impairments |
2,314 |
10,788 |
Amortization of deferred financing costs
and discount |
500 |
246 |
Other |
168 |
172 |
Changes in operating assets and
liabilities: |
|
|
Trade accounts receivable |
(2,516) |
(12,407) |
Other receivables |
- |
1,283 |
Prepaid expenses |
5,111 |
898 |
Other assets |
(4) |
79 |
Accounts payable and accrued
expenses |
11,247 |
(3,760) |
Asset retirement obligations |
(9,082) |
(7,033) |
|
|
|
Net cash provided by operating
activities |
$ 57,061 |
14,826 |
|
|
|
Reconciliation of discretionary cash
flow: |
|
|
Net cash provided by (used in) operating
activities |
57,061 |
14,826 |
Changes in working capital |
(4,756) |
20,940 |
Non-cash exploration expenditures and
impairments |
(4,951) |
(10,903) |
Total exploration expenditures, dry hole
costs and impairments |
16,623 |
11,336 |
Discretionary cash flow |
$ 63,977 |
36,199 |
|
|
|
|
|
|
The table above reconciles
discretionary cash flow to net cash provided by or used in
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 the Company 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, |
|
2012 |
2011 |
|
|
|
PRODUCTION AND PRICING |
|
|
Net Production (per day): |
|
|
|
|
|
Crude Oil (Bbls) |
8,927 |
6,279 |
Natural Gas Liquids (Bbls) |
459 |
288 |
Oil (Bbls) |
9,386 |
6,567 |
Natural gas (Mcf) |
14,950 |
22,995 |
Total (Boe) |
11,878 |
10,400 |
Average Sales Prices: |
|
|
Crude Oil (Bbls) |
$ 114.87 |
101.34 |
Natural Gas Liquids (Bbls) |
49.70 |
50.70 |
Oil (per Bbl) |
111.68 |
99.12 |
Natural gas (per Mcf) |
2.48 |
4.17 |
Average (per Boe) |
91.38 |
71.81 |
Oil and Natural Gas Revenues (in
thousands): |
|
|
Crude Oil |
$ 93,319 |
57,271 |
Natural Gas Liquids |
2,078 |
1,314 |
Oil |
95,397 |
58,585 |
Natural gas |
3,375 |
8,630 |
Total |
98,772 |
67,215 |
|
|
|
|
|
|
Impact of oil derivatives settled during the
period per Bbl (1): |
$ (4.12) |
(8.95) |
|
|
|
|
|
|
OPERATIONAL STATISTICS |
|
|
Average Costs (per Boe): |
|
|
Lease operating expense |
$ 17.03 |
16.38 |
Depreciation, depletion and
amortization |
22.12 |
22.50 |
Accretion expense |
2.91 |
3.82 |
Taxes, other than on earnings |
3.46 |
3.54 |
General and administrative |
4.94 |
5.65 |
|
|
|
(1) The derivative amounts
represent the realized portion of gains or losses on derivative
contracts settled during the period which are included in Other
income (expense) in the consolidated statements of operations. |
|
|
ENERGY PARTNERS,
LTD. |
CONSOLIDATED BALANCE
SHEETS |
(In thousands, except
share data) |
|
|
|
|
March 31, 2012 |
December 31, 2011 |
|
|
|
ASSETS |
|
|
Current assets: |
|
|
Cash and cash equivalents |
$ 91,420 |
$ 80,128 |
Trade accounts receivable - net |
35,410 |
31,817 |
Fair value of commodity derivative
instruments |
- |
587 |
Deferred tax assets |
1,773 |
- |
Prepaid expenses |
5,935 |
11,046 |
Total current assets |
134,538 |
123,578 |
|
|
|
Property and equipment |
1,131,027 |
1,082,248 |
Less accumulated depreciation, depletion,
amortization and impairments |
(331,333) |
(305,110) |
Net property and equipment |
799,694 |
777,138 |
|
|
|
Restricted cash |
6,023 |
6,023 |
Other assets |
3,033 |
3,029 |
Deferred financing costs - net of accumulated
amortization |
5,134 |
5,452 |
|
$ 948,422 |
$ 915,220 |
|
|
|
LIABILITIES AND STOCKHOLDERS'
EQUITY |
|
|
Current liabilities: |
|
|
Accounts payable |
$ 35,882 |
$ 25,393 |
Accrued expenses |
65,014 |
58,538 |
Asset retirement obligations |
21,080 |
25,578 |
Fair value of commodity derivative
instruments |
12,790 |
1,056 |
Deferred tax liabilities |
- |
2,823 |
Total current liabilities |
134,766 |
113,388 |
|
|
|
Long-term debt |
204,568 |
204,390 |
Asset retirement obligations |
76,840 |
73,769 |
Deferred tax liabilities |
36,965 |
31,775 |
Fair value of commodity derivative
instruments |
4,411 |
190 |
Other |
1,128 |
663 |
|
458,678 |
424,175 |
|
|
|
Commitments and contingencies |
|
|
|
|
|
Stockholders' equity: |
|
|
Preferred stock, $0.001 par value per
share. Authorized 1,000,000 shares; no shares issued and
outstanding at March 31, 2012 and December 31, 2011 |
- |
- |
Common stock, $0.001 par value per share.
Authorized 75,000,000 shares; shares issued 40,459,715 and
40,326,451 at March 31, 2012 and December 31, 2011, respectively;
shares outstanding 39,290,705 and 39,404,106 at March 31, 2012 and
December 31, 2011, respectively |
40 |
40 |
Additional paid-in capital |
506,246 |
505,235 |
Treasury stock, at cost, 1,169,010 and
922,345 shares at March 31, 2012 and December 31, 2011,
respectively |
(15,176) |
(11,361) |
Accumulated deficit |
(1,366) |
(2,869) |
Total stockholders' equity |
489,744 |
491,045 |
|
$ 948,422 |
$ 915,220 |
CONTACT: Investors/Media
T.J. Thom, Chief Financial Officer
504-799-1902
tthom@eplweb.com
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