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Woodside Unit Extends Hostile Takeover Offer for EPL Again

New Orleans-based independent producer Energy Partners Ltd. reiterated its opposition to the $23/share takeover offer from Woodside Petroleum subsidiary ATS, which extended the tender offer to EPL shareholders for a third time Thursday to Nov. 17 despite garnering less than 1% of EPL shares to date.

"We are committed to continuing our process of exploring all options to maximize stockholder value, including a possible sale of the company," said EPL CEO Richard A. Bachmann. "A number of parties have already signed or have agreed to sign confidentiality agreements, and we are entertaining interest from others. Woodside's ultimatum and disingenuous rhetoric will not deter our board of directors from pursuing the best interests of all EPL stockholders.

"Woodside's self-serving behavior is very disappointing," he added. "We have not heard a word from them since our board announced its process to explore strategic alternatives on Oct. 12, and they have not sought to participate in this process, as many other companies are doing. In addition, Woodside has backtracked on its promise to pass through to EPL stockholders the savings from a reduced Stone termination fee, effectively reducing its original offer."

EPL canceled plans two weeks ago to buy Lafayette, LA-based Stone for $2.2 billion after the deal was not well received in the marketplace. At the same time, EPL was under pressure from the $800 million ATS takeover bid (see Daily GPI, Oct. 13, Oct. 23). Merrill Lynch analyst John Herrlin said the Stone deal was terminated mainly because it was "very earnings dilutive." EPL management decided to pursue other potential transactions but shunned the ATS offer.

EPL said Thursday that it still believes a strategic-alternatives process offers greater opportunity to maximize stockholder value. "It is clear that EPL stockholders continue to agree with the board's determination, as for the third time, ATS has reported that significantly fewer than 1% of EPL's outstanding shares have been tendered," the company said, adding that it intends to "vigorously oppose ATS' attempt to replace EPL's experienced directors with its own handpicked, paid nominees who are intended to facilitate a transaction between EPL and ATS at a price the EPL board has already determined is inadequate and not in the best interests of stockholders."

Meanwhile, ATS said its latest extension would be the "final deadline" for EPL stockholders. The company also said it decided against continuing a protracted legal battle over the break-up fee EPL paid to Stone. EPL said it paid an $8 million termination fee, but ATS said the payments approached $50 million. ATS had promised that if a portion of the break-up fee was returned to EPL it would be able to offer EPL shareholders $24/share. ATS has now fixed its tender offer at $23.

ATS said it still intends to commence its consent solicitation to remove current EPL board members and replace them with its own nominees, who would help facilitate a merger and would remove a poison pill adopted by the current EPL board.

"The current board elected to take the company into a merger with Stone Energy Co., which it later said was not in the best interests of stockholders, and in the process handed over more than $50 million -- around $1.34 per share -- in termination fees it should never have had to pay," ATS President Mark Chatterji said. "This is just one of the recent decisions by the company's board which appears to have reduced EPL's financial resources without any discernible return to its stockholders.

"EPL stockholders must remember that their shares were trading at $18.40 on the last trading day before ATS announced this tender, significantly less than the $23 per share ATS is offering," he added. Chatterji also noted that ATS is maintaining its purchase price despite a 16% decline in 2007 oil prices and a 17% drop in 2007 natural gas prices.

Woodside Petroleum is Australia's largest oil and gas production company. Energy Partners has interests in 38 producing fields and five fields under development in the Gulf of Mexico Shelf and the Gulf Coast onshore regions. As of Dec. 31, 2005, the company had estimated proved reserves of 166.9 Bcf of natural gas and 31.5 million barrels of oil.

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