Energy Partners, Ltd. has executed an exploration agreement (EB Deep Exploration Agreement) with Phoenix Exploration Company LP to explore deeper depths within the Company's 100% owned East Bay field. The EB Deep Exploration Agreement covers the prospective areas beneath EPL's current producing horizons below approximately 14,000 feet. Technical teams from both companies will collectively use the 223 square miles of newly reprocessed seismic data owned by EPL covering the East Bay field and surrounding areas to generate prospects. The agreement provides for EPL to farm out acreage in the East Bay field, with a promoted overriding royalty interest in favor of EPL on interest Phoenix earns within successful prospect areas.

Gary Hanna, EPL's CEO, commented, "This alliance is designed to exploit the unexplored moderate deeper depths underlying our large East Bay field. Phoenix was selected above others because of their expertise and excellent track record exploring similar plays in this region. By leveraging our respective skill-sets, the agreement allows us to more efficiently generate and drill high-impact prospects below our existing shallow productive horizons. The plays we are targeting are at moderate prospect depths of 14,000 to 20,000 feet, and thus are far from costly ultra-deep depths. This sets up a compelling risk-reward, as we are prospecting for high-potential resources on the Gulf of Mexico shelf for shallow water costs."

Exploration Agreement and Area Highlights: • Exploration agreement to cover depths below 14,000 feet in the East Bay field, and EPL has retained the right to participate up to a 50% working interest in each prospect area • EPL expects to drill a first well late this year in depths ranging from 14,000 to 20,000 feet with total drill costs expected to be in the range of $12 to $20 million • Prospective area largely located within Louisiana state waters where the state currently offers deep drilling incentives for oil and gas exploration through severance tax suspension on wells with a true vertical depth of 15,000 feet or more • Availability of high capacity existing infrastructure to expedite project cycle times

Tags: Energy Partners