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EPL Announces First Quarter 2013 Results



EPL Announces First Quarter 2013 Results

NEW ORLEANS, May 2, 2013 (GLOBE NEWSWIRE) -- EPL Oil & Gas, Inc. (EPL or the
Company) (NYSE:EPL) today reported financial and operational results for the
first quarter 2013.

Highlights

  * 1Q13 EBITDAX rose 83% versus 1Q12 to $123.6 million and adjusted non-GAAP
    net income of $35.6 million ($0.91 per diluted share) respectively (see
    EBITDAX reconciliation in the tables)
  * 1Q13 oil production rose 85% versus 1Q12 to 17,327 Barrels of oil per day
    (Bopd) and was above guidance impacted by organic growth from ongoing
    operational activities and the first full quarter of production from the
    Hilcorp acquisition that closed late last year
  * 2013 capital budget remains at $300 million, up 34% over 2012 and
    dominated by oil projects intended to drive both production and organic
    reserve growth
  * Continued focus on free cash flow and balance sheet strength, supported by
    a strong oil hedge position: current net debt to projected 2013 EBITDAX
    estimated at 1.3x. Liquidity in the form of cash plus undrawn revolver
    availability estimated at $290 million

Financial Results

Revenue for the first quarter of 2013 was $182.3 million, compared to $98.8
million for the same period a year ago, driven by higher realized oil
production from the Company's focus on oil-weighted acquisitions and organic
exploitation projects.

For the first quarter of 2013, EPL reported net income to common stockholders
of $29.0 million, or $0.73 per diluted share, compared to net income of $1.5
million, or $0.04 per diluted share, for the same period a year ago. The net
income for the first quarter of 2013 included $10.4 million of non-cash costs,
primarily attributable to unrealized losses on derivative instruments.
Excluding the impact of these non-cash items, EPL's adjusted first quarter net
income, a non-GAAP measure, would have been $35.6 million, or $0.91 per
diluted share.

For the first quarter of 2013, EBITDAX was $123.6 million and discretionary
cash flow was $113.4 million, or $2.89 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 2013 was $78.2 million, a 37%
increase compared to 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 during this transformational year. The integration of the
Hilcorp acquisition is behind us and the properties are performing even better
than we anticipated. Although the year is just underway, we are feeling
comfortable that our 2013 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.

"We remain focused on achieving organic growth in terms of production,
reserves, and inventory expansion from our high quality acreage. We are just
now seeing the reprocessed seismic over the Hilcorp properties come in-house
which will allow our technical teams to work the properties' upside potential,
and which will undoubtedly over time add substantially to our already robust
inventory. With our growing liquidity, continued free cash flow generation and
balanced acquire and exploit strategy, we also intend to continue executing on
additional prudent acquisition targets to accelerate our growth and provide
additional opportunity sets."

Production and Price Realizations

Oil production for the first quarter of 2013 averaged 17,327 Barrels (Bbls)
per day, which was above the Company's guidance range and a new record high
for the Company. Oil production volumes were 85% higher than in the comparable
quarter last year, primarily as a result of the recent Hilcorp acquisition of
oil-weighted properties that closed late last year and the continued focus on
oil-weighted projects.

Natural gas production averaged 32.1 million cubic feet (Mmcf) per day in the
first quarter of 2013, which was on the high end of the Company's guidance
range. EPL has continued its focus on oil development opportunities which have
higher revenue generation capability than natural gas.

Price realizations for the first quarter of 2013, all of which are stated
before the impact of derivative instruments, averaged $111.94 per barrel for
crude oil and $3.64 per thousand cubic feet (Mcf) of natural gas, compared to
$114.87 per barrel of crude oil and $2.48 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 2013 totaled $41.6
million, while general and administrative (G&A) expenses were $7.1 million.
Reported LOE and G&A increased over the same periods a year ago mainly due to
property acquisitions. G&A expenses included non-cash stock based compensation
recorded in the first quarter of 2013 of $1.6 million.

Capital Expenditures and P&A Operations

During the first three months of 2013, costs incurred for development and
exploration activities totaled approximately $71.8 million, which combined
with $0.5 million spent on seismic purchases, resulted in a total expenditure
of $72.3 million. So far to date, the Company has completed 11 operations,
including 7 successful sidetracks and drillwells and 3 successful workovers,
with an overall 91% success rate. Additionally, during the first quarter, the
Company was the high bidder at $2.1 million on 5 leases comprising 13,892
acres in the shallow Gulf of Mexico shelf. Over the last two years, EPL has
purchased approximately 41,000 acres of leasehold that has enhanced the
acreage position surrounding its prolific core field areas.

The Company still plans for its 2013 capital budget to total approximately
$300 million, consisting of oil-dominated development and exploration
activities, which is intended to drive production growth and organic reserve
replacement. Development and infield exploration spending is budgeted
primarily in the West Delta, East Bay, South Timbalier, and Ship Shoal core
field areas. The Company has continued its active drilling program with six
rigs currently working within its core field areas and secured the barge,
hydraulic workover and jack-up rigs necessary to execute its capital program.
In addition, the Company plans to spend approximately $30 million in 2013 on
plugging and abandonment and other decommissioning activities, which will
serve to reduce future maintenance and insurance costs. The Company spent
approximately $7.1 million in the first quarter on these activities.

Liquidity and Capital Resources

As of March 31, 2013, the Company had unrestricted cash on hand of $3.3
million and restricted cash of $6.0 million. As recently announced, on April
2, 2013, EPL sold certain shallow water Gulf of Mexico shelf oil and natural
gas interests located within the non-operated Bay Marchand field to the
property operator for $51.5 million in cash and the buyer's assumption of
liabilities recorded on its balance sheet of $11.3 million resulting in total
consideration of $62.8 million, subject to customary adjustments to reflect
the January 1, 2013 economic effective date. From time to time, EPL may decide
to divest of certain assets that do not meet its capital expenditure risk,
rate of return, operational control or other criteria in an effort to
high-grade its overall portfolio of assets.

After giving effect to the sale, EPL's current liquidity, in the form of cash
plus undrawn revolver availability is approximately $290 million. 2013 EBITDAX
is still expected to range between $475 million to $525 million. EPL's current
leverage is estimated at 1.3x debt to projected 2013 EBITDAX using the
midpoint of the guidance. (See the guidance section contained in this press
release and the discussion of EBITDAX in the tables).

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                  78%                       80%      
guidance)
                                                                       
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  $ 37.5  -        $ 41.5   $ 150   -        $ 160
energy insurance)
General & Administrative    $ 6.5   -        $ 7.0    $ 26    -        $ 28
(cash and non-cash)
Taxes, other than on       1%       -       3%       1%       -       3%
earnings (% of revenue)
Exploration Expense         $ 2     -        $ 4      $ 8     -        $ 16
DD&A ($/Boe)                $ 20.00 -        $ 24.00  $ 20.00 -        $ 24.00
Interest Expense
(including amortization of  $ 13.0  -        $ 14.0   $ 52    -        $ 56
discount and deferred
financing costs)
                                                                       
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  1,933              14,309
costs
Impairments                            42                 2,314
Depreciation, depletion and            46,522             23,908
amortization
Accretion of liability for asset       6,032              3,148
retirement obligations
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   7,383              16,542
fair value of derivative instruments
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  52,554             27,056
and accretion
Impairments                            42                 2,314
Exploration expenditures and dry hole  1,933              14,309
costs
Loss on abandonment activities         2,960              168
Less impact of:                                           
Unrealized loss due to the change in   7,383              16,542
fair value of derivative instruments
                                                          
                                                          
EBITDAX                                $ 123,613          67,622
                                                          
Weighted average dilutive common       39,204             39,298
shares outstanding
                                                          
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          6,032               3,148
retirement obligations
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  1,318               500
and discount on debt
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            $ 78,242            57,061
activities
                                                              
Reconciliation of discretionary cash                          
flow:
Net cash provided by operating            78,242              57,061
activities
Changes in working capital                33,096              (4,756)
Non-cash exploration expenditures and     45                  (4,951)
impairments
Total exploration expenditures, dry hole  1,975               16,623
costs and impairments
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,    December 31, 2012
                                                2013
                                                              
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,        (459,894)    (427,580)
amortization and impairments
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  12,064       12,386
amortization
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      7,037        -
sale
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      4,220        --
sale
                                                 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  40           40
December 31, 2012, respectively; shares
outstanding 39,256,817 and 39,103,203 at March
31, 2013 and December 31, 2012, respectively
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  (21,053)     (20,477)
31, 2012, respectively
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

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