Independent energy exploration company
EPL Oil & Gas, Inc.
) recently announced that it will be offering 8.25% senior
unsecured notes in a private placement of $250 million, due in
2018. The company plans to offer these notes to qualified
CONOCOPHILLIPS (COP): Free Stock Analysis
EPL OIL&GAS INC (EPL): Free Stock Analysis
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Net proceeds from the offering will be deposited by the company
into escrow to complete its pending Hilcorp acquisition. Earlier
in September, EPL agreed to acquire certain shallow water Gulf of
Mexico (GoM) assets from privately-held Hilcorp Energy GOM
EPL will fund the purchase value for the above acquisition upon
realization of net proceeds from escrow.
If the Hilcorp deal is terminated due to any reason, then EPL
will use the escrowed funds to buy back the senior notes along
with accrued interest up to the redemption date.
EPL reported second quarter 2012 adjusted earnings per share of
52 cents on August 2, beating the Zacks Consensus Estimate of 46
cents by 13% and the year-ago profit of 33 cents by 58%. Revenues
of $99.3 million were up 7% year over year from $92.8 million,
surpassing the Zacks Consensus Estimate of $97.0 million.
The company ended second quarter of 2012 with cash and cash
equivalents of $60.8 million and long-term borrowings of $204.7
EPL, based in New Orleans and Houston, is a GoM-focused upstream
player that has attractive value characteristics and remains well
positioned to maintain a strong earnings growth trajectory in the
near- to medium-term. It is engaged in the exploration and
development of crude oil and natural gas resources in the U.S.
GoM shelf off the coast of Louisiana.
EPL - which counts U.S. supermajor
) as one of its major customers - currently holds a Zacks #1
Rank, which translates into a short-term Strong Buy rating.
Based on the success of the company's acquire-and-exploit policy,
we believe earnings growth will be strong for EPL over the next
couple of years.