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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
________________________
FORM 8-K
Current Report
Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
July 17, 2003
Date of Report (Date of earliest event reported)
ENERGY PARTNERS, LTD.
(Exact name of registrant as specified in its charter)
Delaware 001-16179 72-1409562
(State or other jurisdiction of (Commission (I.R.S. Employer
incorporation or organization) file number) Identification No.)
201 St. Charles Avenue, Suite 3400
New Orleans, Louisiana 70170
(Address of principal executive offices)
(504) 569-1875
(Registrant's telephone number, including area code)
Not Applicable
(Former name or former address, if changed since last report)
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Item 9. Regulation FD Disclosure.
In accordance with General Instruction B.2 of Form 8-K, the information
furnished pursuant to Item 9, including Exhibits 99.1 and 99.2, shall not be
deemed to be "filed" for the purposes of Section 18 of the Securities and
Exchange Act of 1934, as amended, nor shall it be deemed incorporated by
reference into any registration statement or other filing pursuant to the
Securities Act of 1933, as amended, except as otherwise expressly stated in such
filing.
On July 21, 2003, we issued a press release announcing that we intend to
offer $150 million of Senior Notes due 2010 in a private placement. The press
release is furnished as Exhibit 99.1 to this Current Report on Form 8-K and
incorporated by reference herein.
The information contained in this Current Report on Form 8-K, including
Exhibit 99.1 hereto, is neither an offer to sell nor a solicitation of an offer
to purchase any of the securities offered. The securities to be offered will not
be registered under the Securities Act of 1933, as amended, or applicable state
securities laws and may not be offered or sold in the United States absent
registration or an applicable exemption from the registration requirements of
the Securities Act and applicable state securities laws.
At June 30, 2003, we had $40 million outstanding and $60 million of credit
capacity available under our bank credit facility. In connection with the
proposed senior notes offering, we will amend our bank credit facility. The
proposed amendments will include the consent from our bank credit facility
lenders to the senior notes offering and will amend the facility to make related
changes. The amendment also would reduce the borrowing base under our bank
credit facility to $60 million upon consummation of the offering.
On July 3, 2003, we filed a registration statement with the Securities and
Exchange Commission ("SEC") registering 2,500,000 shares of our common stock for
sale by Evercore Capital Partners L.P. and its affiliates ("Evercore"). The
registration statement was declared effective on July 11, 2003. As of June 30,
2003, Evercore beneficially owned approximately 22% of our outstanding shares of
common stock.
On July 17, 2003, our Board of Directors elected T. Rodney Dykes as Senior
Vice President--Production and William Flores, Jr. as Senior Vice
President--Drilling. Mr. Dykes joined us in April 2001 and was previously our
Vice President of Exploitation. Mr. Flores will join us in August 2003. Also on
July 17, our Board of Directors announced that they increased our capital
expenditure budget for 2003 to $110 million. A copy of the press release
announcing these actions is attached hereto as Exhibit 99.2. Clinton W. Coldren,
former Executive Vice President and Chief Operating Officer, is no longer with
the Company and is pursuing other interests.
The following information is contained in the preliminary offering circular
dated July 18, 2003 relating to the proposed private placement of the senior
notes.
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We have budgeted to drill at least 19 prospects in 2003 and expect to
identify a number of additional prospects and leads as we continue to evaluate
our geoscience and technical databases. As of June 30, 2003, we had drilled
wells on seven of these prospects, six of which resulted in discoveries.
As of June 30, 2003, we operated approximately 89% of our production.
Our senior management team has an average of 25 years of oil and natural
gas industry experience and beneficially owns 16% of our common stock.
At March 31, 2003, we had interests in 21 producing fields and 4 fields
under development, all of which are located in the Gulf of Mexico Shelf region.
Our Eastern area operations accounted for approximately 57% of our net
daily production during the first quarter of 2003 and 37% ($9.0 million) of our
first quarter 2003 capital expenditures. During the month of March 2003, 52% of
our net daily production came from our East Bay field.
Our Central area operations accounted for approximately 13% of our net
daily production during the first quarter of 2003 and 14% ($3.4 million) of our
first quarter 2003 capital expenditures.
Our Western area is comprised of 14 producing fields and 4 under
development consisting primarily of those acquired in the Hall-Houston
acquisition. Our Western area operations accounted for approximately 30% of our
net daily production during the first quarter of 2003 and accounted for 49%
($11.9 million) of our first quarter 2003 capital expenditures.
We enter into hedging transactions with major financial institutions to
reduce exposure to fluctuations in the price of oil and natural gas. Our hedged
volume as of June 30, 2003 approximated 27% of our estimated production from
proved reserves through the balance of the terms of the contracts. Had these
contracts been terminated at June 30, 2003, we estimate the loss would have been
$4.3 million. We use a sensitivity analysis technique to evaluate the
hypothetical effect that changes in the market value of crude oil and natural
gas may have on fair value of our derivative instruments. At June 30, 2003, the
potential change in the fair value of commodity derivative instruments assuming
a 10% adverse movement in the underlying commodity price was a $3.7 million
increase in the combined estimated loss.
Statement of Financial Accounting Standards No. 141, "Business
Combinations," and No. 142, "Goodwill and Intangible Assets," became effective
for us on July 1, 2001 and January 1, 2002, respectively. On adoption, we
believe that companies in our industry did not believe that these statements
changed the existing authoritative literature specific to accounting for oil and
natural gas producing properties. We believe the SEC is currently reviewing the
application of the accounting prescribed by these statements to the oil and
natural gas industry. The result may be to require that mineral use rights, such
as leasehold interests, be separately classified in
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the balance sheets of oil and natural gas companies. Specifically, these
standards may require that mineral use rights, including proved leaseholds
acquired in a business combination, be classified on the balance sheet as
intangible assets for all leaseholds acquired subsequent to June 30, 2001.
Accordingly, in a future filing we may be required to reclassify, on the balance
sheets presented, mineral use rights, including leasehold interests, acquired
subsequent to July 1, 2001. The reclassification would result in amounts being
reclassified from "property and equipment" to "intangible acquired proved
leaseholds" and "unproved intangible oil and natural gas properties." The
amounts reclassified from "net property and equipment" would have no effect on
depreciation, depletion and amortization, net income (loss) available to common
stockholders, total assets or total accumulated depreciation, depletion and
amortization for the periods presented.
All statements other than statements of historical fact contained in this
Current Report on Form 8-K and other periodic reports filed by us under the
Securities Exchange Act of 1934 and other written or oral statements made by us
or on our behalf, are forward-looking statements. When used herein, the words
"anticipates", "expects", "believes", "goals", "intends", "plans", or "projects"
and similar expressions are intended to identify forward-looking statements. It
is important to note that forward-looking statements are based on a number of
assumptions about future events and are subject to various risks, uncertainties
and other factors that may cause our actual results to differ materially from
the views, beliefs and estimates expressed or implied in such forward-looking
statements. We refer you specifically to the section "Additional Factors
Affecting Business" in Items 1 and 2 of our annual report on Form 10-K for the
fiscal year ended December 31, 2002. Although we believe that the assumptions on
which any forward-looking statements in this Current Report and other periodic
reports filed by us are reasonable, no assurance can be given that such
assumptions will prove correct. All forward-looking statements in this Current
Report are expressly qualified in their entirety by the cautionary statements in
this paragraph.
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EXHIBIT INDEX
Exhibit No. Description
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99.1 Press Release, dated July 21, 2003
99.2 Press Release, dated July 17, 2003
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Dated: July 21, 2003
ENERGY PARTNERS, LTD.
By: /s/ Suzanne V. Baer
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Suzanne V. Baer
Executive Vice President and Chief
Financial Officer
(Authorized Officer and Principal
Financial Officer)