EPL Rejects ATS' Unsolicited Offer

Energy Partners, Ltd. (NYSE:EPL), says that its Board of Directors has rejected as inadequate the unsolicited conditional offer to acquire EPL for $23.00 per share in cash made by ATS Inc., a wholly-owned subsidiary of Woodside Petroleum, Ltd., and recommends that its stockholders not tender their shares into the Offer.

The EPL Board reached its recommendation after a review of the Offer with its independent financial and legal advisors. That review included the opinions of Petrie Parkman & Co, Inc., Evercore Group L.L.C., and Banc of America Securities LLC that, as of September 13, 2006, the $23.00 per share being offered by ATS is inadequate, from a financial point of view, to EPL stockholders other than Woodside and its affiliates. The Board believes that the Company, both on a stand-alone basis and on a combined basis with Stone Energy Corporation (NYSE: SGY), should provide greater value to stockholders than the Offer.

As previously disclosed, the Company has filed an action for a declaratory judgment to eliminate any doubt as to its right under the Stone merger agreement to engage in "developing, soliciting, considering, communicating, exchanging information, negotiating, disclosing, entering into or consummating potential or definitive strategic alternatives for Energy Partners, including internally generated or third party proposals." The Company filed this action on September 7, 2006 in the Court of Chancery for New Castle County, Delaware, and the Court has expedited the litigation and set a trial on the Company's claims on September 22, 2006.

Richard A. Bachmann, EPL's Chairman and Chief Executive Officer, said, "Our Board is always looking to maximize stockholder value and believes that the Offer is opportunistic and significantly undervalues EPL. Given our solid track record of operational success and the strong potential of our attractive Gulf of Mexico assets, we believe that ATS' offer is clearly not in the best interests of EPL stockholders and therefore urge them not to tender their shares."

In making its determination to reject the Offer, EPL's Board considered a number of factors, including:

  • The Board's belief - based on its familiarity with the business of the Company, its financial condition, results of operations and prospects, and the Board's familiarity with the oil and natural gas exploration and production industry, and the prospects for, and the Company's position in, that industry - that the Company, both on a stand-alone basis and on a combined basis with Stone, should provide greater value to stockholders than the Offer.
  • The Board's belief that the fair value and unaffected price of the Company's stock is substantially higher than the prevailing market price at the time ATS launched the Offer. The Board noted that the $23.00 per share offer price is a 29% discount to the Company's 52-week high (which was $32.27 on September 29, 2005), and a 7% discount to the Company's average closing stock price over the 90 trading days preceding the announcement of the Company's offer to acquire Stone.
  • The opinions of Petrie Parkman & Co., Inc., Evercore Group L.L.C., and Banc of America Securities LLC, the Company's financial advisors, to the effect that, as of September 13, 2006, and based upon and subject to various assumptions and limitations set forth in each opinion, the $23.00 per share being offered was inadequate, from a financial point of view, to the Company's stockholders (other than Woodside and its affiliates).
  • The Board's belief that the Company's prospect inventory, including those prospects on the Gulf of Mexico Shelf and in the deepwater Gulf of Mexico, is expected to generate increasing returns over the next few years, and that neither the Company's current stock price nor the Offer reflects the value of these assets or their potential.
  • The Board's belief that the Offer represents an opportunistic attempt by Woodside to acquire a unique and valuable collection of oil and natural gas exploration and production assets and employees at a favorable time to Woodside at a price well below the true value that these assets and employees represent.
  • The conditionality of the Offer, which includes many stringent, open-ended or subjective conditions that, unless waived by ATS, may result in the Offer not being consummated.
  • The fact that there is nothing to prevent ATS or any other party from making a proposal to acquire the combined company that would result from the merger of the Company and Stone, and thus nothing to prevent the shareholders of the Company from receiving a control premium for their shares in the future
  • In order to allow the Company sufficient time to act in the best interests of EPL stockholders, the Board has adopted a stockholder rights plan with a term of six months.

    Further details regarding today's announcements, including a description of the Rights Plan and other actions taken by the Board, are outlined in the Company's Schedule 14D-9, which is being filed today with the Securities and Exchange Commission and which will be mailed shortly to all EPL stockholders.

    Petrie Parkman & Co., Inc., Evercore Group L.L.C., and Banc of America Securities LLC are acting as financial advisors to EPL. Cahill Gordon & Reindel LLP, Wachtell, Lipton, Rosen & Katz and Abrams & Laster, LLP are acting as legal counsel to EPL.

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