Hart Energy Publishing

Energy Partners’ Borrowing Base Lowered $105MM Following Lending Group Re-Determination

Expects financial report to indicate "substantial doubt" about the company’s ability to continue as a going concern.

March 17, 2009
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Energy Partners Ltd., New Orleans, (NYSE: EPL) reports its bank lending group has lowered its borrowing base from $150 million to $45 million following a semi-annual re-determination.
           

Energy Partners has $83 million drawn under this facility, which results in a borrowing base deficiency of $38 million. The company has been in discussions with the bank lender group about potential financial and other covenant breaches that are likely to occur during 2009 under its revolving credit facility.


Energy Partners and its financial advisor, Parkman Whaling LLC, are discussing with the bank lender group the company’s options to remedy the borrowing base deficiency, as permitted under the credit agreement, as well as discussing amendments to the agreement to provide waivers of compliance with financial and other covenants.


Chairman and chief executive Richard Bachmann has resigned, and the board has formed a restructuring committee consisting of independent directors Jerry Carlisle, Jim Latimer and Bryant Patton. This committee will negotiate with the ad hoc committee regarding the terms of a possible debt for equity exchange that is in the best interest of the company and acceptable to the senior unsecured noteholders.

Management anticipates that the report of KPMG LLP, Energy Partners’ independent public accountants, relative to the company’s 2008 consolidated financial statements will contain an explanatory paragraph indicating substantial doubt about the company’s ability to continue as a going concern.


Energy Partners has oil and gas operations focused along the U. S. Gulf Coast, both onshore in south Louisiana and offshore in the Gulf of Mexico.