Energy Partners Has Deep Water Success (EPL, NBL)

Buy-recommended Energy Partners Ltd. (EPL) is a 25% participant in a deep water drilling success announced on April 12 by Noble Energy (NBL). Like an investor seeing a stock go up immediately after purchase, management sees a new strategic move rewarded on the first well. Philip Gobe, president of EPL, rejoins his former boss from the successful Gulf of Mexico explorer Vastar, Charles Davidson, Chairman of Noble, in 23 acreage blocks. The success at “Redrock” may lead to a field with about 20 millions barrels equivalent for EPL or about a third of the company’s total proven reserves.

Meanwhile new production of about 6,000 barrels equivalent daily from six new sources is estimated to come on stream by mid-July adding more than 25% to first quarter volume before normal decline. A decided turn to more positive news is more than welcome at the New Orleans explorer hit hard by last year’s hurricanes, an onshore reserve writedown and lack of definitive success in its much discussed Denali project. The stock has appreciation potential to estimated net present value of $29 a share tied to a long-term oil price of $50 a barrel.

Original publication date: April 13, 2006

Kurt Wulff's McDep Associates offers realtime, independent research services for investors in the energy and utilities sectors. For more information, go to www.mcdep.com or email Mr. Wulff at [e-mail].