Revenue for the first quarter of 2005 rose to $97.5 million, a 54% increase over first quarter 2004 revenues of $63.5 million. Net income available to common stockholders was $19.5 million for the first quarter of 2005, a threefold increase from $6.5 million in the first quarter of 2004. Net income per diluted share for the first quarter 2005 rose two and a half times to reach $0.51 compared to $0.20 per diluted share in the same quarter a year ago.
Cash flow from operating activities in the first quarter of 2005 was $69.4 million, rising more than threefold to a record high from $20.6 million in the same quarter a year ago. Discretionary cash flow, which is cash flow from operating activities before changes in working capital and exploration expenses, rose to $70.2 million, another record high for EPL, up from $41.1 million in the first quarter last year.
The Company said that its record performance across a broad set of metrics was primarily driven by record high production volumes combined with continued strength in commodity prices. While costs increased on an absolute basis compared to the first quarter of 2004, the Company was successful in reducing cash operating costs on a unit of production basis, with cash operating costs defined as lease operating expense, taxes other than on income, and general and administrative costs.
Richard A. Bachmann, EPL's Chairman, President, and CEO, commented, "We are very pleased to get off to a strong start in 2005. The first quarter continued a stretch of quarters going back nearly two years that has produced a series of new records for the Company, and we expect that trend to continue, as the first quarter did not include a full quarter's production from our recent south Louisiana acquisition. While there are surely many challenges ahead, we believe that our first quarter results are just the start to what should be a great year for us."
Natural gas production in the first quarter of 2005 averaged 96.2 million cubic feet ("Mmcf") per day, a 25% increase from 77.1 Mmcf per day in the first quarter of 2004. Oil production in the most recent quarter averaged 9,978 barrels per day, a 25% rise from the average of 7,989 in the same period a year ago. On a barrels of oil-equivalent ("Boe") basis, production for the first quarter of 2005 was a record 26,007 Boe per day, increasing 25% compared to 20,845 Boe per day in the first quarter last year. The Company also said production is currently averaging over 28,000 Boe per day.
Oil price realizations for the first quarter 2005 averaged $45.68 per barrel, a 43% increase from oil price realizations of $31.87 in the same period a year ago. Natural gas price realizations in the quarter averaged $6.52 per Mcf, increasing 14% from $5.73 in the first quarter of 2004. All commodity prices are stated net of hedging impact.
Expenditures for exploration and development in the first quarter totaled $63.9 million. During the quarter, EPL also invested $174.0 million in acquisitions, including $146.0 million for the acquisition of south Louisiana properties and $21.0 million for the acquisition of additional interest at South Timbalier 26. To fund these purchases, the Company used $97.0 million in available cash at the time of closing and borrowed the remainder on its bank credit facility, with $60.0 million outstanding at quarter end. As of March 31, total debt stood at $210.2 million, and the Company's debt to capitalization ratio was 39%.
Also in the first quarter, the Company called its outstanding convertible preferred stock for redemption, and by the end of the quarter all outstanding shares of preferred had been converted into a total of 4,032,772 common shares.
At the March 2005 Federal Outer Continental Shelf Lease Sale, EPL was the high bidder on 22 of 27 blocks on which the Company submitted bids. The successful bids represent approximately 85,000 gross acres, including tracts around the East Bay and South Timbalier 41 fields as well as other areas on the Gulf of Mexico Shelf. EPL's share of the lease bonuses for the successful high bids totaled $15.1 million, and to date four of the high bid blocks have been awarded. The Company also recently acquired additional acreage in Louisiana state waters at the April state lease sale, submitting the high bid of $400,000 for acreage in West Cameron 25.
EPL also announced three new exploratory successes offshore, the Eugene Island 27 #2, the Eugene Island 277 #A-2 ST, and the Galveston 341-S #1. The Eugene Island 27 #2 was drilled to a vertical depth of 10,963 feet and encountered apparent natural gas pay in a single interval. EPL is the operator of the well and holds a 100% working interest, and production is expected in the second quarter.
The Eugene Island 277 #A-2ST was drilled to a vertical depth of 11,615 feet and encountered apparent oil pay in two intervals. EPL is the operator of the well with a 50% working interest, and initial production is also expected in the second quarter.
The Galveston 341-S #1 was drilled to a vertical depth of 9,500 feet and encountered apparent natural gas pay in two intervals. EPL holds a 50% working interest in the well, and initial production is expected by the end of the year.
In the Company's onshore south Louisiana operations, EPL has recently decisioned three additional exploratory wells, two successful and one unsuccessful. For the year to date, the Company has five exploratory discoveries out of seven wells onshore and nine discoveries out of eleven wells offshore, for a total of fourteen discoveries in eighteen attempts. EPL currently has five exploratory drilling operations underway offshore, at West Delta 51, East Cameron 111, Eugene Island 141, Eugene Island 247, and West Cameron 31. Onshore, the Company has two exploratory wells and one development well currently drilling.
Richard A. Bachmann continued, "We have great confidence that we have built an organization that can execute against the challenging goals we have set for the year, as evidenced by the operational pace we have established early in the year, not only offshore but also onshore where we have been operating for only three months. We plan to drill at least twice as many exploratory wells this year as last and to increase our annual production by at least 25%. We believe our results thus far put us on or even ahead of schedule to deliver on those goals."
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