EPL to fund $550 million acquisition with cash, new high-yield debt

By Lisa Kerner

Charlotte, N.C., Sept. 17 - EPL Oil & Gas, Inc., formerly Energy Partners, Ltd., has "plenty of capacity" to complete the $550 million all-cash acquisition of some shallow-water Gulf of Mexico shelf oil and gas interests of Hilcorp Energy GOM Holdings, LLC on an all-debt basis, EPL president and chief executive officer Gary Hanna said during a conference call on Monday.

"We think we are well positioned with lots of optionally as we seek to fund this transaction with our current under-levered balance sheet," Hanna said.

In addition to using cash on hand, EPL has fully underwritten financing from Bank of Montreal in place that includes an increase in its senior secured credit facility to $750 million from $250 million. The borrowing base under the expanded credit facility has been increased to $450 million from $200 million.

EPL also has a $200 million fully underwritten senior unsecured bridge loan facility provided by Bank of Montreal and BMO Capital Markets that is expected to remain unutilized as EPL expects to access the high-yield markets, according to Hanna.

The transaction is expected to close by Oct. 31.

EPL is an independent oil and natural gas exploration and production company based in New Orleans and Houston.

Hilcorp is a Houston-based exploration and production company.

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