Compared to the second quarter of 2004, revenues rose 41% from $75.1 million and net income available to common stockholders rose 31% from $13.8 million. Cash flow from operating activities in the most recent quarter was $75.1 million, a 56% increase from $48.0 million in the second quarter last year. Discretionary cash flow, which is cash flow from operating activity before changes in working capital and exploration expense, rose to $77.2 million, a 44% increase from $53.7 million in the same quarter last year (see reconciliation of discretionary cash flow in table). Both cash flow from operations and discretionary cash flow in the most recent quarter were record highs for EPL.
The Company said that its record results on a number of metrics reflect success in bringing new production on line in a strong commodity price environment. Offsetting the record levels of revenue and cash flow were higher exploration expense associated with the Company's expanded exploratory program and increased industry operating costs associated with drilling and production activities.
Production volumes in the second quarter averaged 27,126 barrels of oil equivalent (Boe) per day, rising 18% from 22,920 Boe per day in the second quarter last year. Natural gas production in the second quarter of 2005 averaged 99.9 million cubic feet (Mmcf) per day and oil averaged 10,469 barrels per day. Compared to the second quarter of 2004, natural gas production in the second quarter of 2005 was up 15% and oil production was up 24%.
Price realizations for natural gas in the quarter were $6.88 per thousand cubic feet (Mcf), a 10% increase from $6.26 per Mcf in the same quarter last year. Oil price realizations in the quarter averaged $45.80 per barrel, up 38% from $33.20 per barrel in the second quarter of 2004. All commodity prices are stated net of hedging.
Richard A. Bachmann, EPL's Chairman and CEO, commented, "We are pleased to report another strong quarter this morning, with record levels for production, revenue, and cash flow. While exploration expense was higher than in past quarters, more than anything else this reflects the increased scale and pace of our exploratory operations in 2005. With the increased capital budget that our Board recently approved, we expect that we will drill over 50 exploratory wells in 2005, and we are still on track to deliver on our guidance of 25% to 35% production growth over 2004."
For the six months ended June 30, 2005, net income available to common stockholders was $37.5 million, or $0.95 per diluted share. This figure represents an 84% increase from net income available to common stockholders in the same period of 2004, which was $20.4 million, or $0.58 per diluted share.
Discretionary cash flow for the first two quarters of 2005 totaled $147.4 million, up 55% from $94.8 million in the same period a year ago. (See reconciliation of discretionary cash flow in table.) Cash flow from operating activities in the first six months of 2005 was $144.5 million, more than double the total of $68.7 million in the same period of 2004.
For the first six months of 2005, exploration and development expenditures totaled $165.2 million including lease sale acquisition costs. At the most recent Board meeting, the Company's directors approved an increase in the 2005 capital budget to approximately $305 million, excluding acquisitions. This revised capital budget represents a 60% increase over the 2004 capital budget of $190 million, with the most recent increase directed in part to completion of early 2005 exploratory successes as well as increased industry costs. The Company said it expects to fully fund its expanded capital program from internally generated cash flow. EPL has also spent an additional $172.1 million on acquisitions year to date.
On June 30, 2005, cash stood at $5.7 million, long term debt totaled $222.2 million, and the Company's debt to capitalization was 38%. EPL also said that it had $78 million of remaining capacity available under its current bank facility.
For the year to date, EPL has drilled a total of 34 exploratory wells, with 20 offshore and 14 onshore in south Louisiana. The Company has had a total of 14 discoveries offshore and 10 onshore, for an overall exploratory success rate of 71%.
EPL currently has exploratory tests ongoing at five locations, two onshore and three offshore. The three offshore exploratory wells currently underway are at Eugene Island 4, West Cameron 98, and West Delta 52.
Also in the second quarter, EPL was awarded leases on 21 of 22 blocks on which the Company submitted the high bid at the 2005 Central Gulf Lease Sale.
Bachmann continued, "With 24 discoveries in 34 exploratory tests year to date, we are ahead of the curve to complete our 2005 exploratory program. We have already drilled more wells in 2005 than we did in all of 2004, and at the same time we are near our historical success rate. Looking ahead to the third and fourth quarters, we are particularly focused on ramping up production as we are scheduled to bring on a number of new wells. While Tropical Storm Cindy and Hurricane Dennis did force us to delay some production in July, our production is near record levels now and we are poised for our results in the second half of 2005 to be even better than the first."
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