EPL: Energy Partners Limited

EPL: Energy Partners Limited
Sentiment: Bullish
Current Price: $24.35
Est Market Cap: $925M
Est P/E: 13.6
52 Week Range: $19.06 - $32.98

Instead of wading into the waters with some slow, value plays...why not jump right into the hot topic of the last 18 months? Energy

Energy Partners Limited (EPL) has popped up on a couple of radars recently - both on Fox's Saturday morning business show and just last Thursday on Jim Cramer's Mad Money.

Cramer said:

Cramer said that Energy Partners is one of the greatest buy opportunities since he started "Mad Money."

Energy Partners is a company that is most levered to finding new oil, and there's nothing more important than getting to new oil.

It's a risky business, but it can be a lucrative one, he said. Not only is there a tremendous demand for companies finding fresh oil, but also this stock is cheap and can give you the most upside.

The company has been deepwater drilling in the Gulf of Mexico, and it was successful finding new oil, which could add almost 10% to the reserves, Cramer said.

Energy Partners had an 88% success rate last year, completing 52 projects. If the company is able to keep this output up, "the stock should soar."

Hurricanes Katrina and Rita did not permanently damage Energy Partners' operations in the Gulf of Mexico, but the stock is trading exactly where it was 12 months ago.

Cramer said Energy Partners may be a ripe, attractive target for a takeover at a big premium.

Of course, we shouldn't buy anything just because Cramer recommends it. In fact, you probably should never touch anything Cramer recommends in the first few days after his comments. But, EPL does meet my criteria of popping up on my radar screen from multiple directions.

Morningstar, of course, is no Cramer when it comes to risk. So, their March 6, 2006 release that cited EPL as one of their 5 Energy Stocks to Watch was also promising:

Energy Partners (EPL)
Eric Chenoweth, CFA
Fair Value Estimate: $34.00
Consider Buy: $21.70

From the Analyst Report: Energy Partners sees potential in a place that many others consider mature: the Gulf Coast. The firm is planning to spend a record $360 million in 2006 on exploration and production. Given the big jump in spending, the success or failure of next year's drilling program could have a large effect on Energy Partners' value. While many of its projects hold low to moderate risk, several could have a much bigger financial impact. Denali, in the East Bay off the southeastern tip of Louisiana, is particularly important. The well will cost close to $20 million and require drilling to a depth of around 22,000 feet, making it one of the riskiest projects on Energy Partners' plate in 2006. But the potential reward is also estimated to be quite large, ranging from hundreds of billion cubic feet to 1 trillion cubic feet.

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. It has interests in 38 producing fields and 5 fields under development located in the Gulf of Mexico Shelf and the Gulf Coast onshore regions. As of December 31, 2005, the company had estimated proved reserves of approximately 166.9 billion cubic feet of natural gas and 31.5 million barrels of oil.

EPL is currently trading at $24.35. The markets were closed on Friday, and were therefore unable to react to Cramer's comments.