PROSPECTUS SUPPLEMENT TO PROSPECTUS DATED JULY 11, 2003
2,500,000 Shares
Energy Partners, Ltd.
Common Stock
____________
The selling stockholders are selling all shares of common stock offered by
this prospectus supplement. We will not receive any of the proceeds from the
shares of common stock sold by the selling stockholders.
Our common stock is listed on The New York Stock Exchange under the symbol
"EPL." The last reported sale price on August 7, 2003 was $10.88 per share.
Investing in our Common Stock involves risks. See "Risk Factors" on page 1
of the accompanying prospectus.
Underwriting Proceeds to
Price to Discounts and Selling
Public Commissions Stockholders
----------- ----------- ------------
Per Share......... $10.40 $0.36 $10.04
Total............. $26,000,000 $900,000 $25,100,000
Delivery of the shares of common stock will be made on or about August 13,
2003.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if this
prospectus supplement or the accompanying prospectus to which it relates is
truthful or complete. Any representation to the contrary is a criminal offense.
Credit Suisse First Boston
The date of this prospectus supplement is August 7, 2003.
_______________
TABLE OF CONTENTS
Prospectus Supplement
Page Page
---- ----
FORWARD LOOKING STATEMENTS................ S-1 UNDERWRITING.............................. S-4
ABOUT ENERGY PARTNERS, LTD................ S-2 NOTICE TO CANADIAN RESIDENTS.............. S-5
OUR OUTSTANDING SHARES LEGAL MATTERS............................. S-6
OF COMMON STOCK....................... S-2 WHERE YOU CAN FIND
SELLING STOCKHOLDERS...................... S-3 MORE INFORMATION...................... S-6
Prospectus
Page Page
---- ----
RISK FACTORS.............................. 1 PLAN OF DISTRIBUTION...................... 5
OUR COMPANY............................... 3 LEGAL MATTERS............................. 6
USE OF PROCEEDS........................... 3 EXPERTS................................... 6
SELLING SECURITYHOLDERS................... 4 WHERE YOU CAN FIND MORE
INFORMATION........................... 6
_______________
You should rely only on the information contained in this document or
documents to which we have referred you. We have not authorized anyone to
provide you with information that is different. This document may only be used
where it is legal to sell these securities. The information in this document may
only be accurate on the date of this document.
We provide information to you about this offering in two separate documents
that are combined together. The first document is the prospectus supplement,
which describes the specific terms of this offering. The second part is the
accompanying prospectus, which provides general information, some of which may
not apply to this offering. Generally, when we refer to the prospectus, we are
referring to both documents combined. If information in the prospectus
supplement is inconsistent with the accompanying prospectus, you should rely on
this prospectus supplement.
FORWARD LOOKING STATEMENTS
All statements other than statements of historical fact contained in this
prospectus supplement, the accompanying prospectus, the documents incorporated
by reference in this prospectus supplement and the accompanying prospectus and
other written or oral statements made by us or on our behalf, are
forward-looking statements. When used herein and therein, the words
"anticipates," "expects," "believes," "goals," "intends," "plans," or "projects"
and similar expressions are intended to identify forward-looking statements. It
is important to note that forward-looking statements are based on a number of
assumptions about future events and are subject to various risks, uncertainties
and other factors that may cause our actual results to differ materially from
the views, beliefs and estimates expressed or implied in such forward-looking
statements. We refer you specifically to the section entitled "Risk Factors" in
the accompanying prospectus as well as the disclosure contained in our latest
annual report on Form 10-K and the other documents incorporated by reference
herein. Although we believe that the assumptions on which any forward-looking
statements in this prospectus supplement and the accompanying prospectus, and
periodic reports filed by us are reasonable, no assurance can be given that such
assumptions will prove correct. All forward-looking statements in this document
are expressly qualified in their entirety by the cautionary statements in this
paragraph and elsewhere in this prospectus supplement and the accompanying
prospectus and in the documents incorporated by reference.
S-1
ABOUT ENERGY PARTNERS, LTD.
We are an independent oil and natural gas exploration and production
company focused on the shallow to moderate depth waters of the Gulf of Mexico
Shelf. We concentrate on the Gulf of Mexico Shelf region because that area
provides us with favorable geologic and economic conditions, including multiple
reservoir formations, regional economies of scale, extensive infrastructure and
comprehensive geologic databases. We believe that this region offers a balanced
and expansive array of existing and prospective exploration, exploitation and
development opportunities in both established productive horizons and deeper
geologic formations. As of December 31, 2002, we had estimated proved reserves
of approximately 127.0 billion cubic feet of natural gas and 26.4 million
barrels of oil, or an aggregate of approximately 47.5 million barrels of oil
equivalent, with a present value of estimated pre-tax future net cash flows of
$608.3 million, and of estimated after-tax future net cash flows of $476.9
million based upon year-end 2002 prices and a discount rate of 10%.
Since our incorporation in January 1998 by Richard A. Bachmann, our
founder, chairman, president and chief executive officer, we have assembled a
team of geoscientists and management professionals with considerable
region-specific geological, geophysical, technical and operational experience.
We have grown through a combination of exploration, exploitation and development
drilling and multi-year, multi-well drill-to-earn programs, as well as strategic
acquisitions of mature oil and natural gas fields in the Gulf of Mexico Shelf
area, and in particular the acquisition of Hall-Houston Oil Company
("Hall-Houston") in early 2002.
Our strategy is to grow our reserves and production through a balanced
investment program including low risk exploitation and development activities in
and around our existing fields and moderate risk exploration activities in the
shallow to moderate depth waters of the central region of the Gulf of Mexico
Shelf. A limited amount of our exploration budget each year will be allocated to
higher risk, higher potential exploration prospects in this region.
Our principal executive offices are located at 201 St. Charles Avenue,
Suite 3400, New Orleans, Louisiana 70170. Our telephone number is (504)
569-1875. We also maintain a web site at www.eplweb.com which contains
information about us, including links to our annual report on Form 10-K,
quarterly reports on Form 10-Q, current reports on Form 8-K and related
amendments. Our web site and the information contained in it and connected to it
shall not be deemed incorporated by reference into this prospectus supplement or
in the accompanying prospectus.
OUR OUTSTANDING SHARES OF COMMON STOCK
As of July 31, 2003, we had outstanding 32,056,912 shares of common stock,
excluding:
o 371,048 shares of Series D preferred stock convertible into 4,344,824
shares of common stock;
o warrants expiring January 2007 to purchase 3,990,575 shares of common
stock, of which 3,000,000 are exercisable at $11.00 per share and 990,575
are exercisable at $9.00 per share; and
o stock options to purchase an aggregate of 2,295,165 shares of common stock
with a weighted average exercise price of $9.50, of which 1,013,946 options
were exercisable as of July 31, 2003 with a weighted average exercise price
of $9.56.
S-2
SELLING STOCKHOLDERS
The following table sets forth certain information, as of July 31,
2003, regarding beneficial ownership of our common stock by each selling
stockholder. Beneficial ownership is determined in accordance with SEC rules and
generally includes voting or investment power with respect to securities. Shares
of our common stock that are issuable upon the exercise of outstanding options,
warrants, conversion of preferred stock or exercise of other purchase rights are
treated as outstanding for purposes of computing such selling stockholder's
ownership, to the extent exercisable or convertible within sixty days of the
date of this prospectus supplement, but are not deemed outstanding for purposes
of computing the ownership of any other selling stockholder.
Number of
Shares Beneficially Owned Shares Shares Beneficially Owned
Prior to the Offering Offered After Offering
--------------------------- ------------ -----------------------------
Name Number Percent Number Percent
---- ------ ------- ------ -------
Evercore Capital Partners L.P.(1) 4,613,843 14.4% 1,637,375 2,976,468 9.3%
Evercore Capital Offshore Partners 1,219,000 3.8% 432,603 786,397 2.5%
L.P.(1)
Evercore Capital Partners (NQ) 1,111,453 3.5% 394,436 717,017 2.2%
L.P.(1)
Evercore Co-Investment Partnership 100,276 * 35,586 64,690 *
L.P.(1)
All selling stockholders, as a 7,044,572 22.0% 2,500,000 4,544,572 14.2%
group
_______________________
* Represents beneficial ownership of less than 1%.
(1) Based on a Schedule 13G filed with the Securities and Exchange
Commission on February 14, 2003, as adjusted for the April 2003 offering of
shares of our common stock by Evercore. The address of Evercore is 65 East
55th Street, 33rd Floor, New York, New York 10022.
(2) Evercore Partners L.L.C. is the general partner of the first three
Evercore entities listed above and has sole voting and dispositive power of
their shares. Evercore Co-Investment G.P. L.L.C. is the general partner of
Evercore Co-Investment Partnership L.P. and has sole voting and dispositive
power with respect to its shares. Two of our directors, Mr. Austin M.
Beutner and Mr. William O. Hiltz, are principals of Evercore and disclaim
beneficial ownership of shares of our common stock owned by Evercore.
Additionally, Mr. Hiltz acquired 150,000 shares of our common stock prior
to joining Evercore and prior to Evercore's investment in us. Mr. Hiltz
sold 30,000 of these shares in our April 2003 stock offering. Evercore
disclaims beneficial ownership of these shares of common stock owned by Mr.
Hiltz.
S-3
UNDERWRITING
Under the terms and subject to the conditions contained in an underwriting
agreement dated August 7, 2003, the selling stockholders have agreed to sell to
Credit Suisse First Boston LLC, the underwriter, the 2,500,000 shares of common
stock offered hereby.
The underwriting agreement provides that the underwriter is obligated to
purchase all the shares of common stock in the offering if any are purchased.
The underwriter proposes to offer the shares of common stock initially at
the public offering price on the cover page of this prospectus supplement and to
selling group members at that price less a selling concession of $0.10 per
share. After the initial public offering, the underwriter may change the public
offering price and concession and discount to broker/dealers.
The following table summarizes the estimated expenses we will pay and the
compensation the selling stockholders will pay:
Per Share Total
--------- -----
Expenses payable by us........................................................... $0.03 $ 75,000
Underwriting Discounts and Commissions paid by the selling stockholders.......... $0.36 $900,000
We have agreed that we will not offer, sell, contract to sell, pledge or
otherwise dispose of, directly or indirectly, or file with the Securities and
Exchange Commission a registration statement under the Securities Act relating
to, any shares of our common stock or securities convertible into or
exchangeable or exercisable for any shares of our common stock, or publicly
disclose the intention to make any offer, sale, pledge, disposition or filing,
without the prior written consent of Credit Suisse First Boston LLC for a period
of 30 days after the date of this prospectus supplement, except for grants of
stock awards, phantom units and employee stock options to purchase shares of
common stock under plans existing on the date of this prospectus supplement and
for issuances of shares of common stock pursuant to the exercise or conversion
of employee stock options, preferred stock or warrants outstanding on the date
of this prospectus supplement.
The selling stockholders and each of our directors who is an affiliate of a
selling stockholder have agreed that they will not offer, sell, contract to
sell, pledge or otherwise dispose of, directly or indirectly, any shares of our
common stock or securities convertible into or exchangeable for any shares of
our common stock, enter into a transaction that would have the same effect, or
enter into any swap, hedge or other arrangement that transfers, in whole or in
part, any of the economic consequences of ownership of our common stock, whether
any of these transactions are to be settled by delivery of our common stock or
other securities, in cash or otherwise, or publicly disclose the intention to
make any offer, sale, pledge or disposition, or to enter into any transaction,
swap, hedge or other arrangement, without, in each case, the prior written
consent of Credit Suisse First Boston LLC for a period of 45 days after the date
of this prospectus supplement.
We and the selling stockholders have agreed to indemnify the underwriter
against liabilities under the Securities Act, or contribute to payments that the
underwriter may be required to make in that respect.
From time to time Credit Suisse First Boston LLC has provided investment
banking and other advisory services to us for which it has received customary
compensation and we expect them to continue to provide similar services in the
future. Credit Suisse First Boston LLC was among the underwriters of our April
2003 common stock offering and among the initial purchasers of our August 2003
senior unsecured notes offering and received customary commissions for its
services.
S-4
In connection with the offering, the underwriter may engage in stabilizing
transactions, over-allotment transactions, syndicate covering transactions and
penalty bids in accordance with Regulation M under the Exchange Act.
o Stabilizing transactions permit bids to purchase the underlying
security so long as the stabilizing bids do not exceed a specified
maximum.
o Over-allotment involves sales by the underwriter of shares in excess
of the number of shares the underwriter is obligated to purchase,
which creates a syndicate short position. The underwriter may close
out a short position by purchasing shares in the open market.
o Syndicate covering transactions involve purchases of the common stock
in the open market after the distribution has been completed in order
to cover syndicate short positions.
o Penalty bids permit the underwriter to reclaim a selling concession
from a syndicate member when the common stock originally sold by the
syndicate member is purchased in a stabilizing or syndicate covering
transaction to cover syndicate short positions.
These stabilizing transactions, syndicate covering transactions and penalty bids
may have the effect of raising or maintaining the market price of our common
stock or preventing or retarding a decline in the market price of the common
stock. As a result the price of our common stock may be higher than the price
that might otherwise exist in the open market. These transactions may be
effected on The New York Stock Exchange or otherwise, and if commenced, may be
discontinued at any time.
The aggregate maximum compensation that members of the NASD or independent
broker-dealers will receive in connection with the sale of any securities
pursuant to this prospectus supplement and the registration statement of which
it forms a part will not be greater than 8% of the gross proceeds of such sale.
A prospectus supplement and the accompanying prospectus in electronic
format may be made available on the web sites maintained by the underwriter or
selling group members, if any, participating in this offering. The underwriter
may agree to allocate a number of shares to selling group members for sale to
their online brokerage account holders. Internet distributions will be allocated
by the underwriter and selling group members that will make internet
distributions on the same basis as other allocations.
NOTICE TO CANADIAN RESIDENTS
Resale Restrictions
The distribution of the common stock in Canada is being made only on a
private placement basis exempt from the requirement that we and the selling
stockholders prepare and file a prospectus with the securities regulatory
authorities in each province where trades of common stock are made. Any resale
of the common stock in Canada must be made under applicable securities laws
which will vary depending on the relevant jurisdiction, and which may require
resales to be made under available statutory exemptions or under a discretionary
exemption granted by the applicable Canadian securities regulatory authority.
Purchasers are advised to seek legal advice prior to any resale of the common
stock.
Representations of Purchasers
By purchasing common stock in Canada and accepting a purchase confirmation
a purchaser is representing to us, the selling stockholders and the dealer from
whom the purchase confirmation is received that
o the purchaser is entitled under applicable provincial securities laws
to purchase the common stock without the benefit of a prospectus
qualified under those securities laws,
S-5
o where required by law, that the purchaser is purchasing as principal
and not as agent, and
o the purchaser has reviewed the text above under Resale Restrictions.
Rights of Action - Ontario Purchasers Only
Under Ontario securities legislation, a purchaser who purchases a security
offered by this prospectus supplement during the period of distribution will
have a statutory right of action for damages, or while still the owner of the
shares, for rescission against us and the selling stockholders in the event that
this prospectus contains a misrepresentation. A purchaser will be deemed to have
relied on the misrepresentation. The right of action for damages is exercisable
not later than the earlier of 180 days from the date the purchaser first had
knowledge of the facts giving rise to the cause of action and three years from
the date on which payment is made for the shares. The right of action for
rescission is exercisable not later than 180 days from the date on which payment
is made for the shares. If a purchaser elects to exercise the right of action
for rescission, the purchaser will have no right of action for damages against
us or the selling stockholders. In no case will the amount recoverable in any
action exceed the price at which the shares were offered to the purchaser and if
the purchaser is shown to have purchased the securities with knowledge of the
misrepresentation, we and the selling stockholders will have no liability. In
the case of an action for damages, we and the selling stockholders will not be
liable for all or any portion of the damages that are proven to not represent
the depreciation in value of the shares as a result of the misrepresentation
relied upon. These rights are in addition to, and without derogation from, any
other rights or remedies available at law to an Ontario purchaser. The foregoing
is a summary of the rights available to an Ontario purchaser. Ontario purchasers
should refer to the complete text of the relevant statutory provisions.
Enforcement of Legal Rights
All of our directors and officers as well as the experts named herein and
the selling stockholders may be located outside of Canada and, as a result, it
may not be possible for Canadian purchasers to effect service of process within
Canada upon us or those persons. All or a substantial portion of our assets and
the assets of those persons may be located outside of Canada and, as a result,
it may not be possible to satisfy a judgment against us or those persons in
Canada or to enforce a judgment obtained in Canadian courts against us or those
persons outside of Canada.
Taxation and Eligibility for Investment
Canadian purchasers of common stock should consult their own legal and tax
advisors with respect to the tax consequences of an investment in the common
stock in their particular circumstances and about the eligibility of the common
stock for investment by the purchaser under relevant Canadian legislation.
LEGAL MATTERS
Certain legal matters with respect to the common stock offered hereby will
be passed upon by Cahill Gordon & Reindel LLP, New York, New York. Simpson
Thacher & Bartlett LLP, New York, New York will act as counsel to the selling
stockholders. Certain legal matters in connection with this offering will be
passed upon for the underwriter by Baker Botts L.L.P., Houston, Texas. Baker
Botts L.L.P. acted as counsel to Evercore in connection with its $60 million
investment in our company in 1999, and served as our Texas local counsel in
connection with the Hall-Houston acquisition.
WHERE YOU CAN FIND MORE INFORMATION
We have filed with the Commission under the Securities Act a registration
statement on Form S-3 with respect to the common stock offered by this
prospectus supplement and the accompanying prospectus. This prospectus
supplement and the accompanying prospectus, which constitute part of the
registration statement, does
S-6
not contain all the information set forth in the registration statement or the
exhibits that are part of the registration statement, portions of which are
omitted as permitted by the rules and regulations of the Commission. Statements
made in this prospectus supplement and the accompanying prospectus regarding the
contents of any contract or other document are summaries of the material terms
of the contract or document. With respect to each contract or document filed as
an exhibit to the registration statement, reference is made to the corresponding
exhibit. For further information pertaining to us and the common stock offered
by this prospectus supplement and the accompanying prospectus, reference is made
to the registration statement, including the exhibits, copies of which may be
inspected without charge at the public reference facilities of the Commission at
450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549. Copies of all or any
portion of the registration statement may be obtained from the Commission at
prescribed rates. Information on the public reference facilities may be obtained
by calling the Commission at 1-800-SEC-0330. In addition, the Commission
maintains a web site that contains reports, proxy and information statements and
other information that is filed through the Commission's EDGAR System. The web
site can be accessed at www.sec.gov. Our common stock is listed on the New York
Stock Exchange, and reports, proxy statements and other information concerning
us can be inspected at the offices of the Exchange at 20 Broad Street, New York,
New York 10005.
We "incorporate by reference" information that we file with the Commission,
which means that we can disclose important information to you by referring you
to those documents. The information incorporated by reference is an important
part of this prospectus supplement and the accompanying prospectus and more
recent information automatically updates and supersedes more dated information
contained or incorporated by reference in this prospectus supplement and the
accompanying prospectus. Our Commission file number is 001-16179.
We have previously filed the following documents with the Commission and
incorporate them by reference into this prospectus supplement and the
accompanying prospectus:
o our annual report on Form 10-K for the fiscal year ended December 31,
2002;
o our quarterly report on Form 10-Q for the quarter ended March 31,
2003;
o our current reports on Form 8-K filed and/or furnished on March 17,
2003, April 3, 2003, July 3, 2003, July 21, 2003 and August 7, 2003
(other than paragraphs 6, 20 and 21 of the press release attached
thereto, which are not incorporated by reference into this prospectus
supplement and the accompanying prospectus); and
o the description of our common stock contained in our registration
statement on Form S-3 filed March 14, 2003, as amended by the
Company's amended and restated by-laws filed as Exhibit 3.1 to the
Company's Current Report on Form 8-K filed April 3, 2003.
All documents subsequently filed by us pursuant to Section 13(a), 13(c), 14
or 15(d) of the Securities Exchange Act of 1934, as amended, prior to the sale
of the shares of common stock offered by this prospectus supplement and the
accompanying prospectus or prior to the filing of a post-effective amendment
which indicates that all securities offered have been sold, shall be deemed to
be incorporated by reference and a part of this prospectus supplement and the
accompanying prospectus from the date such documents are filed. Also, all such
documents filed by us after the date of the initial registration statement of
which this prospectus supplement and the accompanying prospectus forms a part
and prior to effectiveness of the registration statement shall also be deemed
incorporated by reference and a part of this prospectus supplement and the
accompanying prospectus from the date such documents are filed.
We will provide without charge to each person, including any beneficial
owner, to whom a copy of this prospectus supplement and the accompanying
prospectus have been delivered, on the written or oral request of such person, a
copy of any or all documents referred to above which have been or may be
incorporated by reference in this prospectus supplement and the accompanying
prospectus, not including exhibits to such incorporated
S-7
information that are not specifically incorporated by reference into such
information. Requests for such copies should be directed to us at the following
address: Energy Partners, Ltd., 201 St. Charles Avenue, Suite 3400, New Orleans,
Louisiana 70170, Attention: Corporate Secretary, telephone number: (504)
569-1875.
S-8
PROSPECTUS
ENERGY PARTNERS, LTD.
2,500,000 Shares of Common Stock
______________________
Evercore Capital Partners L.P. and certain of its affiliates, the selling
securityholders, are offering up to 2,500,000 shares of our common stock. The
selling securityholders currently own 7,044,572 shares, or 22.0% of our common
stock. These selling securityholders may include "affiliates," as defined in
Rule 405 under the Securities Act of 1933, as amended.
We expect that sales made pursuant to this prospectus will be made:
o in broker's transactions;
o in transactions directly with market makers; or
o in negotiated sales or otherwise.
The selling securityholders will determine when they will sell their
shares, and in all cases they will sell their shares at the current market price
or at prices negotiated at the time of the sale. We will not receive any
proceeds from these sales.
The brokers and dealers the selling securityholders utilize in selling
these shares may receive compensation in the form of underwriting discounts,
concessions or commissions from the sellers or purchasers of the shares. Any
compensation may exceed customary commissions. The selling securityholders and
the brokers and dealers they utilize may be deemed to be "underwriters" within
the meaning of the securities laws, and any commissions received and any profits
realized by them upon the sale of shares may be considered to be underwriting
compensation.
Our common stock is listed on the New York Stock Exchange under the symbol
"EPL." On July 2, 2003, the last reported sale price of our common stock as
reported on the New York Stock Exchange was $11.20 per share.
______________________
This investment involves risks. See the "Risk Factors" section on page 1.
______________________
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of the securities or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
______________________
This prospectus is dated July 11, 2003.
TABLE OF CONTENTS
Page
----
RISK FACTORS..........................................................1
OUR COMPANY...........................................................3
USE OF PROCEEDS.......................................................3
SELLING SECURITYHOLDERS...............................................4
PLAN OF DISTRIBUTION..................................................5
LEGAL MATTERS.........................................................6
EXPERTS...............................................................6
WHERE YOU CAN FIND MORE INFORMATION...................................6
No person is authorized to give any information or to make any
representations other than those contained in this prospectus, and, if given or
made, such information or representations must not be relied upon as having been
authorized. This prospectus does not constitute an offer to sell or a
solicitation of an offer to buy such securities in any circumstance in which
such offer or solicitation is unlawful. Neither the delivery of this prospectus
nor any sale made hereunder shall, under any circumstances, create any
implication that there has been no change in our affairs since the date hereof
or that the information contained or incorporated by reference herein is correct
as of any time subsequent to the date of this prospectus.
FORWARD LOOKING STATEMENTS
All statements other than statements of historical fact contained in this
prospectus, the documents incorporated by reference in this prospectus and other
written or oral statements made by us or on our behalf, are forward-looking
statements. When used herein, the words "anticipates," "expects," "believes,"
"goals," "intends," "plans," or "projects" and similar expressions are intended
to identify forward-looking statements. It is important to note that
forward-looking statements are based on a number of assumptions about future
events and are subject to various risks, uncertainties and other factors that
may cause our actual results to differ materially from the views, beliefs and
estimates expressed or implied in such forward-looking statements. We refer you
specifically to the section entitled "Risk Factors," as well as the disclosure
contained in our latest annual report on Form 10-K and the other documents
incorporated by reference herein. Although we believe that the assumptions on
which any forward-looking statements in this prospectus and periodic reports
filed by us are reasonable, no assurance can be given that such assumptions will
prove correct. All forward-looking statements in this document are expressly
qualified in their entirety by the cautionary statements in this paragraph.
RISK FACTORS
You should consider carefully the following factors, as well as those
discussed elsewhere in this prospectus. In addition to the factors below, please
refer to the disclosure contained in our latest annual report on Form 10-K for
the fiscal year ended December 31, 2002. Please read "Items 1 & 2. Business and
Properties -- Regulatory Matters" and "-- Additional Factors Affecting Business"
in our latest annual report for these risk factors. Please also read "Where You
Can Find More Information."
The market price of our common stock could be adversely affected by sales of
substantial amounts of our common stock in the public markets.
Our largest stockholders, Evercore Capital Partners L.P. and affiliates
("Evercore"), Energy Income Fund, L.P. and Richard A. Bachmann, our chairman,
president and chief executive officer, could sell a substantial number of shares
of our common stock in the public market, either pursuant to exemptions afforded
to affiliates under Rule 144 under the Securities Act of 1933, as amended (the
"Securities Act") or pursuant to an effective registration statement. Evercore
and Energy Income Fund, L.P. together sold approximately 3,600,000 shares in a
public offering in April 2003 and Evercore may sell up to an additional
2,500,000 shares pursuant to this prospectus. Affiliates may sell under Rule 144
of the Securities Act the greater of 1% of the number of shares of common stock
then outstanding and the average weekly trading volume of our common stock on
the New York Stock Exchange during the four calendar weeks preceding the filing
of a required notice of such sale. Such sales by our largest stockholders, sales
by other securityholders or the perception that such sales might occur, could
have a material adverse effect on the price of our common stock or could impair
our ability to obtain capital through an offering of equity securities.
Additionally, in connection with the acquisition of Hall-Houston Oil
Company ("Hall-Houston"), we issued warrants and Series D exchangeable
convertible preferred stock that can be exchanged or exercised for a total of up
to approximately 8,400,000 shares of our common stock. All of the common stock
underlying the warrants and Series D preferred stock are freely tradable upon
resale pursuant to a prospectus filed with the Securities and Exchange
Commission. Also in connection with our acquisition of Hall-Houston, we entered
into an earnout agreement which, depending on the performance of the oil and
natural gas properties subject to the agreement, could obligate us to issue up
to $40,000,000 market value of our common stock to the participants in the
agreement, and such common stock is required to be publicly registered under the
agreement.
The market price of our common stock has experienced substantial volatility and
may continue to do so in the future.
Since our initial public offering in November 2000 at a price of $15.00 per
share, the trading price for our common stock on the New York Stock Exchange has
declined to $11.20 as of July 2, 2003. The market price of our common stock may
not exceed or even remain at current levels. The following factors may have an
adverse impact on the market price of our common stock:
o lack of success in our drilling activities, including exploratory
drilling;
o fluctuations in oil and natural gas prices;
o market conditions for oil and natural gas stocks;
o market conditions generally;
o governmental regulation; and
o fluctuations in our operating results.
Provisions in our organizational documents and under Delaware law could delay or
prevent a change in control of our company, which could adversely affect the
market price of our common stock.
The existence of some provisions in our organizational documents and under
Delaware law could delay or prevent a change in control of our company, which
could adversely affect the market price of our common stock. The provisions in
our certificate of incorporation and bylaws that could delay or prevent an
unsolicited change in control of our company include:
1
o the board of directors' ability to issue shares of preferred stock and
determine the terms of the preferred stock without securityholder
approval; and
o a prohibition on the right of securityholders to call meetings and a
limitation on the right of securityholders to act by written consent
and to present proposals or make nominations at securityholder
meetings.
In addition, Delaware law imposes some restrictions on mergers and other
business combinations between us and any holder of 15% or more of our
outstanding common stock. Evercore is generally exempted from these provisions.
2
OUR COMPANY
We are an independent oil and natural gas exploration and production
company focused on the shallow to moderate depth waters of the Gulf of Mexico
Shelf. We concentrate on the Gulf of Mexico Shelf region because that area
provides us with favorable geologic and economic conditions, including multiple
reservoir formations, regional economies of scale, extensive infrastructure and
comprehensive geologic databases. We believe that this region offers a balanced
and expansive array of existing and prospective exploration, exploitation and
development opportunities in both established productive horizons and deeper
geologic formations. As of December 31, 2002, we had estimated proved reserves
of approximately 127.0 billion cubic feet of natural gas and 26.4 million
barrels of oil, or an aggregate of approximately 47.5 million barrels of oil
equivalent, with a present value of estimated pre-tax future net cash flows of
$608.3 million, and of estimated after-tax future net cash flows of $476.9
million based upon year-end 2002 prices and a discount rate of 10%.
Since our incorporation in January 1998 by Richard A. Bachmann, our
founder, chairman, president and chief executive officer, we have assembled a
team of geoscientists and management professionals with considerable
region-specific geological, geophysical, technical and operational experience.
We have grown through a combination of exploration, exploitation and development
drilling and multi-year, multi-well drill-to-earn programs, as well as strategic
acquisitions of mature oil and natural gas fields in the Gulf of Mexico Shelf
area, and in particular the acquisition of Hall-Houston in early 2002.
Our strategy is to grow our reserves and production through a balanced
investment program including low risk exploitation and development activities in
and around our existing fields and moderate risk exploration activities in the
shallow to moderate depth waters of the central region of the Gulf of Mexico
Shelf. A limited amount of our exploration budget each year will be allocated to
higher risk, higher potential exploration prospects in this region.
Our principal executive offices are located at 201 St. Charles Avenue,
Suite 3400, New Orleans, Louisiana 70170. Our telephone number is (504)
569-1875. We also maintain a web site at www.eplweb.com which contains
information about us, including links to our annual report on Form 10-K,
quarterly reports on Form 10-Q, current reports on Form 8-K and related
amendments. Our web site and the information contained in it and connected to it
shall not be deemed incorporated by reference into this prospectus.
USE OF PROCEEDS
We will not receive any of the proceeds from the offer and sale of the
shares of our common stock by the selling securityholders.
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SELLING SECURITYHOLDERS
We have filed a registration statement, of which this prospectus forms a
part, in order to permit the selling securityholders to resell to the public up
to 2,500,000 shares of our common stock.
The table below sets forth with respect to the selling securityholders,
based upon information available to us as of June 13, 2003, the number of shares
of common stock beneficially owned, the number of shares of our common stock
which may be offered by this prospectus and the number and percentage of
outstanding common stock that will be owned assuming the sale of all of the
registered shares of our common stock under this prospectus. The shares offered
by this prospectus may be sold by selling securityholders from time to time. The
number of shares, if any, offered by each selling securityholder and the
corresponding number of shares beneficially owned by each selling securityholder
after each sale will vary depending upon the terms of the individual sales.
Beneficial ownership is determined in accordance with Securities and Exchange
Commission rules and generally includes voting or investment power with respect
to securities. Shares of our common stock that are issuable upon the exercise of
outstanding options, warrants, conversion of preferred stock or exercise of
other purchase rights are treated as outstanding for purposes of such selling
securityholder's ownership, to the extent exercisable or convertible within
sixty days of the date of this prospectus.
Number of
Shares
Shares Beneficially Owned Which May Be Shares Beneficially Owned
Prior to the Offering Offered After Offering
--------------------------- ------------ -----------------------------
Name Number Percent Number Percent
---- ------ ------- ------ -------
Evercore Capital Partners L.P.(1) 4,613,843 14.4% 1,637,375 2,976,468 9.3%
Evercore Capital Offshore Partners 1,219,000 3.8% 432,603 786,397 2.5%
L.P.(1)
Evercore Capital Partners (NQ) 1,111,453 3.5% 394,436 717,017 2.2%
L.P.(1)
Evercore Co-Investment Partnership 100,276 * 35,586 64,690 *
L.P.(1)
All selling stockholders, as a 7,044,572 22.0% 2,500,000 4,544,572 14.2%
group
_______________________
* Represents beneficial ownership of less than 1%.
(1) Based on a Schedule 13G filed with the Securities and Exchange Commission on
February 14, 2003, as adjusted for the April 2003 offering of shares of our
common stock by Evercore. The address of Evercore is 65 East 55th Street, 33rd
Floor, New York, New York 10022.
Evercore Partners L.L.C. is the general partner of the first three
Evercore entities listed above and has sole voting and dispositive
power of their shares. Evercore Co-Investment G.P. L.L.C. is the
general partner of Evercore Co-Investment Partnership L.P. and has sole
voting and dispositive power with respect to its shares. Two of our
directors, Mr. Austin M. Beutner and Mr. William O. Hiltz, are
principals of Evercore and disclaim beneficial ownership of shares of
our common stock owned by Evercore. Additionally, Mr. Hiltz acquired
150,000 shares of our common stock prior to joining Evercore and prior
to Evercore's investment in us. Mr. Hiltz sold 30,000 of these shares
in our April 2003 stock offering. Evercore disclaims beneficial
ownership of these shares of common stock owned by Mr. Hiltz.
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PLAN OF DISTRIBUTION
The selling securityholders have not advised us of any specific plan for
distribution of the shares offered hereby, but it is anticipated that the shares
will be sold from time to time by the selling securityholders or by permitted
pledgees, donees, transferees or other permitted successors in interest. Such
sales by the selling securityholders may be made in any of the following
manners:
o on the New York Stock Exchange in transactions pursuant to and in
accordance with the rules of such exchange;
o in the over-the-counter market;
o in public or privately negotiated transactions;
o in transactions involving principals or brokers;
o in a combination of such methods of sale; or
o any other lawful methods.
Although sales of the shares are, in general, expected to be made at market
prices prevailing at the time of sale, the shares may also be sold at prices
related to such prevailing market prices or at negotiated prices, which may
differ considerably.
In offering the shares covered by this prospectus, each of the selling
securityholders and any broker-dealers who sell the shares for the selling
securityholders may be "underwriters" within the meaning of the Securities Act,
and any profits realized by such selling securityholders and the compensation of
such broker-dealers may be underwriting discounts and commissions.
Sales through brokers may be made by any method of trading authorized by
any stock exchange or market on which the shares may be listed, including block
trading in negotiated transactions. Without limiting the foregoing, such brokers
may act as dealers by purchasing any or all of the shares covered by this
prospectus, either as agents for others or as principals for their own accounts,
and reselling such shares pursuant to this prospectus. The selling
securityholders may effect such transactions directly, or indirectly through
underwriters, broker-dealers or agents acting on their behalf. In connection
with such sales, such broker-dealers or agents may receive compensation in the
form of commissions, concessions, allowances or discounts, any or all of which
might be in excess of customary amounts.
Each of the selling securityholders is acting independently of us in making
decisions with respect to the timing, manner and size of each sale of shares. We
have not been advised of any definitive selling arrangement at the date of this
prospectus between any selling securityholder and any broker-dealer or agent.
To the extent required, the names of any agents, broker-dealers or
underwriters and applicable commissions, concessions, allowances or discounts,
and any other required information with respect to any particular offer of the
shares by the selling securityholders, will be set forth in a prospectus
supplement.
The expenses of preparing and filing this prospectus and the related
registration statement with the Securities and Exchange Commission will be paid
entirely by us. Shares of common stock covered by this prospectus also may
qualify to be sold pursuant to Rule 144 under the Securities Act, rather than
pursuant to this prospectus. The selling securityholders have been advised that
they are subject to the applicable provisions of the Securities Exchange Act of
1934, as amended, including, without limitation, Rule 10b-5 thereunder.
Neither we nor the selling securityholders can estimate at the present time
the amount of commissions or discounts, if any, that will be paid by the selling
securityholders on account of their sales of the shares from time to time.
5
LEGAL MATTERS
The validity of our common stock offered hereby will be passed upon for us
by Cahill Gordon & Reindel LLP, New York, New York.
EXPERTS
The consolidated financial statements of Energy Partners, Ltd. as of
December 31, 2002 and 2001, and for each of the years in the three-year period
ended December 31, 2002, have been incorporated by reference herein and in the
registration statement in reliance upon the reports of KPMG LLP, independent
accountants, incorporated by reference herein, and upon the authority of said
firm as experts in accounting and auditing. The audit report covering the
December 31, 2001 consolidated financial statements refers to a change in the
method of accounting for derivative instruments and hedging activities.
The estimated reserve data of Netherland, Sewell & Associates, Inc. and
Ryder Scott Company, L.P., independent petroleum engineering consultants,
incorporated by reference in this prospectus and the registration statement of
which this prospectus is a part have been incorporated by reference in reliance
on the authority of said firms as experts in petroleum engineering.
WHERE YOU CAN FIND MORE INFORMATION
We have filed with the Commission under the Securities Act a registration
statement on Form S-3 with respect to the common stock offered by this
prospectus. This prospectus, which constitutes part of the registration
statement, does not contain all the information set forth in the registration
statement or the exhibits that are part of the registration statement, portions
of which are omitted as permitted by the rules and regulations of the
Commission. Statements made in this prospectus regarding the contents of any
contract or other document are summaries of the material terms of the contract
or document. With respect to each contract or document filed as an exhibit to
the registration statement, reference is made to the corresponding exhibit. For
further information pertaining to us and the common stock offered by this
prospectus, reference is made to the registration statement, including the
exhibits to the prospectus, copies of which may be inspected without charge at
the public reference facilities of the Commission at 450 Fifth Street, N.W.,
Room 1024, Washington, D.C. 20549. Copies of all or any portion of the
registration statement may be obtained from the Commission at prescribed rates.
Information on the public reference facilities may be obtained by calling the
Commission at 1-800-SEC-0330. In addition, the Commission maintains a web site
that contains reports, proxy and information statements and other information
that is filed through the Commission's EDGAR System. The web site can be
accessed at www.sec.gov. Our common stock is listed on the New York Stock
Exchange, and reports, proxy statements and other information concerning us can
be inspected at the offices of the Exchange at 20 Broad Street, New York, New
York 10005.
We "incorporate by reference" information that we file with the Commission,
which means that we can disclose important information to you by referring you
to those documents. The information incorporated by reference is an important
part of this prospectus and more recent information automatically updates and
supersedes more dated information contained or incorporated by reference in this
prospectus. Our Commission file number is 001-16179.
We have previously filed the following documents with the Commission and
incorporate them by reference into this prospectus:
o our annual report on Form 10-K for the fiscal year ended December 31,
2002;
o our quarterly report on Form 10-Q for the fiscal quarter ended March
31, 2003;
o our current reports on Form 8-K filed on March 17, April 3 and July 3,
2003; and
o the description of our common stock contained in our registration
statement on Form S-3 filed March 14, 2003.
All documents subsequently filed by us pursuant to Section 13(a), 13(c), 14
or 15(d) of the Securities Exchange Act of 1934, as amended, prior to the filing
of a post-effective amendment which indicates that all securities offered have
been sold or which deregisters all securities then remaining unsold, shall be
deemed to be incorporated by reference and a part of this prospectus from the
date such documents are filed. Also, all such documents filed by us after the
date of the initial regis-
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tration statement of which this prospectus forms a part and prior to
effectiveness of the registration statement shall also be deemed incorporated by
reference and a part of this prospectus from the date such documents are filed.
We will provide without charge to each person, including any beneficial
owner, to whom a copy of this prospectus has been delivered, on the written or
oral request of such person, a copy of any or all documents referred to above
which have been or may be incorporated by reference in this prospectus (not
including exhibits to such incorporated information that are not specifically
incorporated by reference into such information). Requests for such copies
should be directed to us at the following address: Energy Partners, Ltd., 201
St. Charles Avenue, Suite 3400, New Orleans, Louisiana 70170, Attention:
Corporate Secretary, telephone number: (504) 569-1875.
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Energy Partners, Ltd.