<PAGE> 1
Exhibit 99.1
[LETTERHEAD OF NETHERLAND, SEWELL & ASSOCIATES, INC.]
August 21, 2000
Energy Partners, Ltd.
Suite 3400
201 St. Charles Avenue
New Orleans, Louisiana 70170
Dear Ladies and Gentlemen:
In accordance with your request, we have estimated the proved reserves and
future revenue, as of July 1, 2000, to the Energy Partners, Ltd. (EPL) interest
in certain oil and gas properties located in Bay Marchand, Main Pass 122/133,
South Pass 24/27/39, South Timbalier 26, and South Timbalier 27 Fields, state
and federal waters offshore Louisiana, as listed in the accompanying
tabulations. This report has been prepared using constant prices and costs and
conforms to the guidelines of the Securities and Exchange Commission (SEC).
As presented in the accompanying summary projections, Tables I through IV,
we estimate the net reserves and future net revenue to the EPL interest, as of
July 1, 2000, to be:
<TABLE>
<CAPTION>
Net Reserves Future Net Revenue
Net Gas ----------------------- --------------------------
Produced Oil Gas Sold(1) Present Worth
Category (MCF) (Barrels) (MCF) Total at 10%
------------------ ---------- ---------- ----------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Proved Developed
Producing 22,354,556 17,176,757 (1,313,606) $185,509,100 $178,122,400
Non-Producing 37,402,599 8,068,173 31,818,440 $272,004,300 $185,226,700
Proved Undeveloped 11,751,003 2,537,324 11,161,363 $ 88,730,900 $ 56,062,700
Total Proved 71,508,158 27,782,254 41,666,197 $546,244,300 $419,411,800
</TABLE>
----------
(1) Net gas sold reserves include the effect of gas consumed in operations.
The oil reserves shown include crude oil and condensate. Oil volumes are
expressed in barrels which are equivalent to 42 United States gallons. Gas
volumes are expressed in thousands of standard cubic feet (MCF) at the contract
temperature and pressure bases. Gas sales volumes at Bay Marchand Field are
based on produced wet gas volumes. Gas sales volumes at Main Pass 122/133 Field
are adjusted for shrinkage to account for fuel, flare, and processing losses.
The gas price for Main Pass 122/133 properties is adjusted to include the effect
of natural gas liquids revenue. Gas sales volumes at South Pass 24/27/39 Field
are adjusted for our estimates of shrinkage to account for fuel and flare
losses. Gas sales volumes at South Timbalier 26 Field are adjusted for EPL's
estimates of shrinkage to account for fuel and flare losses.
As shown in the Table of Contents, this report includes summary projections
of reserves and revenue for each reserve category. Included for each field are
summary projections of reserves and
<PAGE> 2
[LETTERHEAD OF NETHERLAND, SEWELL & ASSOCIATES, INC.]
revenue by reserve category along with one-line summaries of reserves,
economics, and basic data by lease. Supplemental data summaries are also
included by reserve category for each field. For the purposes of this report,
the term "lease" refers to a single economic projection.
The estimated reserves and future revenue shown in this report are for
proved developed producing, proved developed non-producing, and proved
undeveloped reserves. In accordance with SEC guidelines, our estimates do not
include any value for probable or possible reserves which may exist for these
properties. This report does not include any value which could be attributed to
interests in undeveloped acreage beyond those tracts for which undeveloped
reserves have been estimated.
Future gross revenue to the EPL interest is prior to deducting state
production taxes. Future net revenue is after deducting these taxes, future
capital costs, and operating expenses, but before consideration of federal
income taxes; future net revenue for South Pass 24/27/39, South Timbalier 26,
and South Timbalier 27 Fields is also after deducting abandonment costs. In
accordance with SEC guidelines, the future net revenue has been discounted at an
annual rate of 10 percent to determine its "present worth." The present worth
is shown to indicate the effect of time on the value of money and should not be
construed as being the fair market value of the properties.
For the purposes of this report, a field inspection of the properties has
not been performed nor has the mechanical operation or condition of the wells
and their related facilities been examined. We have not investigated possible
environmental liability related to the properties; therefore, our estimates do
not include any costs which may be incurred due to such possible liability. Our
estimates of future revenue do not include any salvage value for the lease and
well equipment nor the cost to abandon the Bay Marchand or Main Pass 122/133
properties. Future revenue estimates for South Pass 24/27/39, South Timbalier
26, and South Timbalier 27 properties also do not include any salvage value for
the lease and well equipment, but do include EPL's estimates of the costs to
abandon the wells, platforms, and production facilities. Abandonment costs are
included with other capital investments.
Oil prices used in this report are based on a June 30, 2000 NYMEX West
Texas Intermediate spot market price of $32.50 per barrel, adjusted by lease for
gravity, transportation fees, and regional price differentials. Gas prices used
in this report are based on a June 30, 2000 NYMEX Henry Hub spot market price of
$4.48 per MMBTU, adjusted by lease for energy content, transportation fees, and
regional price differentials. Oil and gas prices are held constant in
accordance with SEC guidelines.
Lease and well operating costs are based on operating expense records of
EPL. Lease and well operating costs include only direct lease and field level
costs. As requested, these costs do not include the per-well overhead expenses
allowed under joint operating agreements nor do they include the headquarters
general and administrative overhead expenses of EPL. Lease and well operating
costs are held constant in accordance with SEC guidelines. Capital costs are
included as required for workovers, new development wells, and production
equipment.
<PAGE> 3
[LETTERHEAD OF NETHERLAND, SEWELL & ASSOCIATES, INC.]
We have made no investigation of potential gas volume and value imbalances
which may have resulted from overdelivery or underdelivery to the EPL interest.
Therefore, our estimates of reserves and future revenue do not include
adjustments for the settlement of any such imbalances; our projections are based
on EPL receiving its net revenue interest share of estimated future gross gas
production.
The reserves included in this report are estimates only and should not be
construed as exact quantities. They may or may not be recovered; if recovered,
the revenues therefrom and the costs related thereto could be more or less than
the estimated amounts. A substantial portion of these reserves are for behind
pipe zones, undeveloped locations, and producing wells that lack sufficient
production history upon which performance-related estimates of reserves can be
based. Therefore, these reserves are based on estimates of reservoir volumes
and recovery efficiencies along with analogies to similar production. As such
reserve estimates are usually subject to greater revision than those based on
substantial production and pressure data, it may be necessary to revise these
estimates up or down in the future as additional performance data become
available. The sales rates, prices received for the reserves, and costs
incurred in recovering such reserves may vary from assumptions included in this
report due to governmental policies and uncertainties of supply and demand.
Also, estimates of reserves may increase or decrease as a result of future
operations.
In evaluating the information at our disposal concerning this report, we
have excluded from our consideration all matters as to which legal or
accounting, rather than engineering and geological, interpretation may be
controlling. As in all aspects of oil and gas evaluation, there are
uncertainties inherent in the interpretation of engineering and geological data;
therefore, our conclusions necessarily represent only informed professional
judgments.
The titles to the properties have not been examined by Netherland, Sewell &
Associates, Inc., nor has the actual degree or type of interest owned been
independently confirmed. The data used in our estimates were obtained from
Energy Partners, Ltd. and the nonconfidential files of Netherland, Sewell &
Associates, Inc. and were accepted as accurate. We are independent petroleum
engineers, geologists, and geophysicists; we do not own an interest in these
properties and are not employed on a contingent basis. Basic geologic and field
performance data together with our engineering work sheets are maintained on
file in our office.
Very truly yours,
/s/ FREDERIC D. SEWELL
JND:CLM
