Energy Partners Proves the Difficulty of Expanding Oil and Gas Production

Investors reacted sharply to EPL's report of second quarter results that fell short of expectations.  Natural gas volumes failed to show the sharp growth management promised only three months ago.  The shortfall is attributed to delays in getting rigs to drill the additional wells required. 

We are surprised, but only moderately so as we appreciate how difficult it is to grow production.  Our projections have been cut back quite sharply (see Tables EPL-1 and EPL-2 in August 6, 2001; MR Tables: Small Cap Natural Gas Stocks - McDep Ratio, Present Value and Cash Flow).  Yet, the decline in stock price has more than compensated for reduced expectations and a low McDep Ratio continues to point to appreciation potential.