EPL was notified by the administrative agent for its bank lending group that the semi-annual re-determination of the borrowing base under its revolving credit facility was performed, resulting in a new borrowing base of $45 million, down from the prior borrowing base of $150 million.
The Company currently has $83 million drawn under this facility, which results in a borrowing base deficiency of $38 million. The Company has been in discussions with the bank lender group about potential financial and other covenant breaches that are likely to occur during 2009 under its revolving credit facility.
The Company, along with its recently retained financial advisor, Parkman Whaling LLC, are discussing with the bank lender group the Company’s options to remedy the borrowing base deficiency, as permitted under the credit agreement, as well as discussing amendments to the agreement to provide waivers of compliance with financial and other covenants.
Management anticipates that the report of KPMG LLP, the Company's independent public accountants, relative to the Company's 2008 consolidated financial statements will contain an explanatory paragraph indicating substantial doubt about the Company's ability to continue as a going concern.
Founded in 1998, EPL is an independent oil and natural gas exploration and production company based in New Orleans, Louisiana. The Company's operations are focused along the U. S. Gulf Coast, both onshore in south Louisiana and offshore in the Gulf of Mexico.
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