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EPL Announces First Quarter 2013 Results

Stocks in this article: EPL

2013 and 2014 Hedge Position

The Company has layered in downside protection in the form of swaps and collars for 2013 and 2014 to protect its cash flow. For full year 2013, EPL has a total of 11,157 Bbls of oil per day hedged, the majority of which is hedged using Brent swaps at a fixed price averaging $106.01 per Bbl. For full year 2013, EPL has a total of 9,562 Mcf per day of gas hedged, all of which is hedged using swaps at a fixed price averaging $3.51 per Mcf. For full year 2014, EPL has a total of 8,715 Bbls of oil per day hedged, all of which is hedged using Brent swaps at a fixed price averaging $101.13 per Bbl. For full year 2014, EPL has a total of 5,000 Mcf per day of gas hedged, all of which is hedged using swaps at a fixed price averaging $4.01 per Mcf.

Second Quarter and Full Year 2013 Guidance

Note: This guidance is inclusive of the effects of the sale of the non-operated BM assets, closed April 2, 2013.

ESTIMATED PRODUCTION & SWAP HEDGE VOLUMES            
             
Net Production (per day)  2Q 2013   Full Year 2013 
Oil, including NGLs (Bbls)  17,000  18,000  17,000  18,500
Natural gas (Mcf)  27,000  33,000  24,000  30,000
Boe  21,500  23,500  21,000  23,500
% Oil, including NGLs (using midpoint of guidance)   78%     80%  
             
Swap Contracted Volume            
Oil (barrels)   12,577     10,157  
% of Oil swap contracted 74% 70% 60% 55%
% of Boe swap contracted 58% 54% 48% 43%
Average Swap Price Level   $104.59     $104.62  
             
ESTIMATED EXPENSES (in Millions, unless otherwise noted)            
             
Lease Operating (including energy insurance)  $ 37.5  $ 41.5  $ 150  $ 160
General & Administrative (cash and non-cash)  $ 6.5  $ 7.0  $ 26  $ 28
Taxes, other than on earnings (% of revenue) 1% 3% 1% 3%
Exploration Expense  $ 2  $ 4  $ 8  $ 16
DD&A ($/Boe)  $ 20.00  $ 24.00  $ 20.00  $ 24.00
Interest Expense (including amortization of discount and deferred financing costs)  $ 13.0  $ 14.0  $ 52  $ 56
             
ESTIMATED EBITDAX RANGE: $475 Million to $525 Million (Midpoint: $500 million)            
             
ESTIMATED FREE CASH FLOW: $100 Million to $150 Million (Midpoint: $125 million)            

Conference Call Information

EPL has scheduled a conference call for today, May 2, 2013, at 9:30 A.M. Central Time/10:30 A.M. Eastern Time to review results for the first quarter 2013 and to discuss its outlook for 2013. 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 53188302 .

The call will be available for replay beginning two hours after the call is completed through midnight of May 16, 2013. 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 53188302 .

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.

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: 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; stock market conditions; the trading price of EPL's common stock; cash demands caused by planned and unplanned capital expenditures; changes in general economic conditions; uncertainties in reserve and production estimates, particularly with respect to internal estimates that are not prepared by independent reserve engineers; unanticipated recovery or production problems; 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; drilling and operating risks; our ability to replace oil and gas reserves; risks and liabilities associated with properties acquired in acquisitions; integration of acquired assets; 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/)

     
     
EPL OIL & GAS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands)
(Unaudited)
     
  Three Months Ended March 31,
  2013 2012
Revenue:    
Oil and natural gas  $ 180,984  98,772
Other  1,365  24
   182,349  98,796
     
Costs and expenses:    
Lease operating  41,579  18,411
Transportation   650  151
Exploration expenditures and dry hole costs  1,933  14,309
Impairments  42  2,314
Depreciation, depletion and amortization  46,522  23,908
Accretion of liability for asset retirement obligations  6,032  3,148
General and administrative  7,092  5,344
Taxes, other than on earnings  2,860  3,741
Other  2,947  175
Total costs and expenses  109,657  71,501
     
Income from operations  72,692  27,295
     
Other income (expense):    
Interest income  10  38
Interest expense  (13,095)  (4,874)
Loss on derivative instruments  (13,951)  (20,062)
   (27,036)  (24,898)
     
Income before income taxes   45,656  2,397
Deferred income tax expense  (16,619)  (894)
     
Net income   $ 29,037  1,503
     
     
Net income, as reported  $ 29,037  1,503
Add back:    
Unrealized loss due to the change in fair value of derivative instruments  7,383  16,542
Impairments  42  2,314
Loss on abandonment activities  2,960  168
Deduct:    
Income tax adjustment for above items  (3,780)  (7,096)
     
Adjusted Non-GAAP net income  $ 35,642  13,431
     
EBITDAX Reconciliation:    
     
Net income, as reported  $ 29,037  1,503
Add back:    
Income taxes  16,619  894
Net interest expense  13,085  4,836
Depreciation, depletion, amortization and accretion  52,554  27,056
Impairments  42  2,314
Exploration expenditures and dry hole costs  1,933  14,309
Loss on abandonment activities  2,960  168
Less impact of:    
Unrealized loss due to the change in fair value of derivative instruments  7,383  16,542
     
     
EBITDAX  $ 123,613  67,622
     
Weighted average dilutive common shares outstanding  39,204  39,298
     
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 instruments. 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.    
 
     
     
EPL OIL & GAS, INC.
CONSOLIDATED STATEMENTS OF NET CASH PROVIDED BY
OPERATING ACTIVITIES
(In thousands)
(Unaudited)
     
     
  Three Months Ended March 31,
  2013 2012
Cash flows from operating activities:    
Net income  $ 29,037  1,503
Adjustments to reconcile net income to net cash provided by operating activities:    
Depreciation, depletion and amortization  46,522  23,908
Accretion of liability for asset retirement obligations  6,032  3,148
Unrealized loss on derivative contracts  7,383  16,542
Non-cash compensation  1,612  991
Deferred income taxes  16,519  594
Exploration expenditures  (87)  2,637
Impairments  42  2,314
Amortization of deferred financing costs and discount on debt  1,318  500
Other  2,960  168
Changes in operating assets and liabilities:    
Trade accounts receivable  (6,473)  (2,516)
Prepaid expenses  1,667  5,111
Other assets  210  (4)
Accounts payable and accrued expenses  (21,361)  11,247
Asset retirement obligation settlements  (7,139)  (9,082)
     
Net cash provided by operating activities  $ 78,242  57,061
     
Reconciliation of discretionary cash flow:    
Net cash provided by operating activities  78,242  57,061
Changes in working capital  33,096  (4,756)
Non-cash exploration expenditures and impairments  45  (4,951)
Total exploration expenditures, dry hole costs and impairments  1,975  16,623
Discretionary cash flow  $ 113,358  63,977
     
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.
     
     
EPL OIL & GAS, INC.
SELECTED PRODUCTION, PRICING AND OPERATIONAL STATISTICS
(Unaudited)
     
     
  Three Months Ended March 31, 
  2013 2012
     
PRODUCTION AND PRICING    
Net Production (per day):    
     
Crude Oil (Bbls)  16,691  8,927
Natural Gas Liquids (Bbls)  636  459
Oil (Bbls)  17,327  9,386
Natural gas (Mcf)  32,146  14,950
Total (Boe)  22,685  11,878
Average Sales Prices:    
Crude Oil (per Bbl)  $ 111.94  114.87
Natural Gas Liquids (per Bbl)  40.17  49.70
Oil (per Bbl)  109.30  111.68
Natural gas (per Mcf)  3.64  2.48
Average (per Boe)  88.65  91.38
Oil and Natural Gas Revenues (in thousands):    
Crude Oil  $ 168,148  93,319
Natural Gas Liquids  2,300  2,078
Oil   170,448  95,397
Natural gas  10,536  3,375
Total   180,984  98,772
     
Impact of derivative instruments settled during the period (1):    
Oil (per Bbl)  $ (4.27)  (4.12)
Natural gas (per Mcf)  0.03  - 
     
OPERATIONAL STATISTICS    
Average Costs (per Boe):    
Lease operating expense  $ 20.37  17.03
Depreciation, depletion and amortization  22.79  22.12
Accretion expense  2.95  2.91
Taxes, other than on earnings  1.40  3.46
General and administrative  3.47  4.94
 
(1) The derivative amounts represent the realized portion of gains or losses on derivative instruments settled during the period which are included in Other income (expense) in the consolidated statements of operations.
     
     
EPL OIL & GAS, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
(Unaudited)
     
     
  March 31, 2013 December 31, 2012
     
ASSETS    
Current assets:    
Cash and cash equivalents  $ 3,325  $ 1,521
Trade accounts receivable - net  74,464  67,991
Fair value of commodity derivative instruments  840  3,302
Deferred tax asset  5,117  3,322
Prepaid expenses  8,206  9,873
Total current assets  91,952  86,009
     
Property and equipment  2,051,435  2,025,647
Less accumulated depreciation, depletion, amortization and impairments  (459,894)  (427,580)
Net property and equipment  1,591,541  1,598,067
     
Restricted cash  6,023  6,023
Fair value of commodity derivative instruments  15  211
Deferred financing costs --- net of accumulated amortization  12,064  12,386
Other assets  2,721  2,931
Assets held for sale  35,242  -
   $ 1,739,558  $ 1,705,627
     
LIABILITIES AND STOCKHOLDERS' EQUITY    
Current liabilities:    
Accounts payable  $ 23,279  $ 34,772
Accrued expenses  109,244  117,372
Asset retirement obligations  29,363  30,179
Fair value of commodity derivative instruments  14,583  10,026
Liabilities associated with assets held for sale  7,037  -
Total current liabilities  183,506  192,349
     
Long-term debt  680,502  689,911
Asset retirement obligations  203,985  204,931
Deferred tax liabilities  86,009  67,694
Fair value of commodity derivative instruments  3,805  3,637
Other  1,226  1,132
Liabilities associated with assets held for sale  4,220  --
   1,163,253  1,159,654
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, 2013 and December 31, 2012  -  -
Common stock, $0.001 par value per share. Authorized 75,000,000 shares; shares issued 40,779,030 and 40,601,887 at March 31, 2013 and December 31, 2012, respectively; shares outstanding 39,256,817 and 39,103,203 at March 31, 2013 and December 31, 2012, respectively  40  40
Additional paid-in capital  512,340  510,469
Treasury stock, at cost, 1,522,213 and 1,498,684 shares at March 31, 2013 and December 31, 2012, respectively  (21,053)  (20,477)
Retained earnings  84,978  55,941
Total stockholders' equity  576,305  545,973
   $ 1,739,558  $ 1,705,627
CONTACT: Investors/Media
         T.J. Thom, Chief Financial Officer 
         504-799-1902 
         tthom@eplweb.com

EPL Oil & Gas, Inc. Logo

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