(16) Supplemental Condensed Consolidating Financial Information

In connection with the offering of the 2011 Senior Notes and the 2012 Senior Notes described in Note 7, all of our existing direct and indirect domestic subsidiaries (other than immaterial subsidiaries) each of which is 100% owned by EPL Oil & Gas, Inc. (the “Guarantor Subsidiaries”) jointly and severally guarantee the payment obligations under our 2011 Senior Notes and 2012 Senior Notes. The guarantees are full and unconditional, as those terms are used in Rule 3-10 of Regulation S-X, except that a Guarantor Subsidiary can be automatically released and relieved of its obligations under certain customary circumstances contained in the indentures governing the 2011 Senior Notes and the 2012 Senior Notes. So long as other applicable provisions of the indentures are adhered to, these customary circumstances include: when a Guarantor Subsidiary is declared “unrestricted” for covenant purposes, when the requirements for legal defeasance or covenant defeasance or to discharge the indenture have been satisfied, or when the Guarantor Subsidiary is sold or sells all of its assets. The following supplemental financial information sets forth, on a consolidating basis, the balance sheets, statements of operations and cash flow information for EPL Oil & Gas, Inc. (Parent Company Only) and for the Guarantor Subsidiaries. We have not presented separate financial statements and other disclosures concerning the Guarantor Subsidiaries because management has determined that such information is not material to investors.

The supplemental condensed consolidating financial information has been prepared pursuant to the rules and regulations for condensed financial information and does not include all disclosures included in annual financial statements. Certain reclassifications were made to conform all of the financial information to the financial presentation on a consolidated basis. The principal eliminating entries eliminate investments in subsidiaries, intercompany balances and intercompany revenues and expenses.

Supplemental Condensed Consolidating Balance Sheet

As of December 31, 2012


	Parent
	Company		Guarantor
	Only		Subsidiaries		Eliminations		Consolidated
	(In thousands)
ASSETS
Current assets:
Cash and cash equivalents	$	1,521	$	-	$	-	$	1,521
Trade accounts receivable - net		66,994		997		-		67,991
Intercompany receivables		55,575		-		(55,575)		-
Fair value of commodity derivative instruments		3,302		-				3,302
Deferred tax asset		3,322		-		-		3,322
Prepaid expenses		9,873		-				9,873
Total current assets		140,587		997		(55,575)		86,009
Property and equipment		1,754,294		271,353		-		2,025,647
Less accumulated depreciation, depletion, amortization and impairments		(353,526)		(74,054)		-		(427,580)
Net property and equipment		1,400,768		197,299		-		1,598,067
Investment in affiliates		111,191		-		(111,191)		-
Restricted cash		6,023		-		-		6,023
Fair value of commodity derivative instruments		211		-		-		211
Deferred financing costs		12,386		-		-		12,386
Other assets		2,841		90		-		2,931
Total assets	$	1,674,007	$	198,386	$	(166,766)	$	1,705,627
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	34,740	$	32	$	-	$	34,772
Intercompany payables		-		55,575		(55,575)		-
Accrued expenses		117,245		127		-		117,372
Asset retirement obligations		23,982		6,197		-		30,179
Fair value of commodity derivative instruments		10,026		-		-		10,026
Total current liabilities		185,993		61,931		(55,575)		192,349
Long-term debt		689,911		-		-		689,911
Asset retirement obligations		187,790		17,141		-		204,931
Deferred tax liabilities		59,571		8,123		-		67,694
Fair value of commodity derivative instruments		3,637		-		-		3,637
Other		1,132		-		-		1,132
Total liabilities		1,128,034		87,195		(55,575)		1,159,654
Stockholders’ equity:
Preferred stock		-		-		-		-
Common stock		40		-		-		40
Additional paid-in capital		510,469		85,479		(85,479)		510,469
Treasury stock, at cost		(20,477)		-		-		(20,477)
Retained earnings (accumulated deficit)		55,941		25,712		(25,712)		55,941
Total stockholders’ equity		545,973		111,191		(111,191)		545,973
Total liabilities and stockholders' equity	$	1,674,007	$	198,386	$	(166,766)	$	1,705,627

Supplemental Condensed Consolidating Balance Sheet

As of December 31, 2011


	Parent
	Company		Guarantor
	Only		Subsidiaries		Eliminations		Consolidated
	(In thousands)
ASSETS
Current assets:
Cash and cash equivalents	$	80,128	$	-	$	-	$	80,128
Trade accounts receivable - net		31,686		131		-		31,817
Intercompany receivables		62,196		-		(62,196)		-
Fair value of commodity derivative instruments		587		-		-		587
Prepaid expenses		11,046		-		-		11,046
Total current assets		185,643		131		(62,196)		123,578
Property and equipment		833,932		248,316		-		1,082,248
Less accumulated depreciation, depletion, amortization and impairments		(251,948)		(53,162)		-		(305,110)
Net property and equipment		581,984		195,154		-		777,138
Investment in affiliates		91,768		-		(91,768)		-
Notes receivable, long-term		-		69,000		(69,000)		-
Restricted cash		6,023		-		-		6,023
Deferred financing costs		5,452		-		-		5,452
Other assets		3,029		-		-		3,029
Total assets	$	873,899	$	264,285	$	(222,964)	$	915,220
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	24,380	$	1,013	$	-	$	25,393
Intercompany payables		-		62,196		(62,196)		-
Accrued expenses		58,538		-		-		58,538
Asset retirement obligations		16,178		9,400		-		25,578
Fair value of commodity derivative instruments		1,056		-		-		1,056
Deferred tax liabilities		2,823		-		-		2,823
Total current liabilities		102,975		72,609		(62,196)		113,388
Long-term debt		204,390		69,000		(69,000)		204,390
Asset retirement obligations		50,805		22,964		-		73,769
Deferred tax liabilities		23,831		7,944		-		31,775
Fair value of commodity derivative instruments		190		-		-		190
Other		663		-		-		663
Total liabilities		382,854		172,517		(131,196)		424,175
Stockholders’ equity:
Preferred stock		-		3		(3)		-
Common stock		40		98		(98)		40
Additional paid-in capital		505,235		84,900		(84,900)		505,235
Treasury stock		(11,361)		-		-		(11,361)
Retained earnings (accumulated deficit)		(2,869)		6,767		(6,767)		(2,869)
Total stockholders’ equity		491,045		91,768		(91,768)		491,045
Total liabilities and stockholders' equity	$	873,899	$	264,285	$	(222,964)	$	915,220

Supplemental Condensed Consolidating Statement of Operations

Year Ended December 31, 2012


	Parent
	Company		Guarantor
	Only		Subsidiaries		Eliminations		Consolidated
	(In thousands)
Revenue:
Oil and natural gas	$	318,749	$	103,780	$	-	$	422,529
Other		15,152		952		(15,000)		1,104
Total revenue		333,901		104,732		(15,000)		423,633
Costs and expenses:
Lease operating		71,002		23,848		-		94,850
Transportation		611		4		-		615
Exploration expenditures and dry hole costs		18,790		9		-		18,799
Impairments		8,883		-		-		8,883
Depreciation, depletion and amortization		92,689		20,892		-		113,581
Accretion of liability for asset retirement obligations		10,551		5,014		-		15,565
General and administrative		22,845		15,363		(15,000)		23,208
Taxes, other than on earnings		1,162		11,845		-		13,007
Other		5,496		(818)		-		4,678
Total costs and expenses		232,029		76,157		(15,000)		293,186
Income from operations		101,872		28,575		-		130,447
Other income (expense):
Interest income		136		-		-		136
Interest expense		(28,568)		-		-		(28,568)
Loss on derivative instruments		(13,305)		-		-		(13,305)
Income from equity investments		18,945		-		(18,945)		-
Total other income (expense)		(22,792)		-		(18,945)		(41,737)
Income before provision for income taxes		79,080		28,575		(18,945)		88,710
Provision for income taxes:
Current		-		-		-		-
Deferred		(20,270)		(9,630)		-		(29,900)
Total provision for income taxes		(20,270)		(9,630)		-		(29,900)
Net income	$	58,810	$	18,945	$	(18,945)	$	58,810

Supplemental Condensed Consolidating Statement of Operations

Year Ended December 31, 2011


	Parent
	Company		Guarantor
	Only		Subsidiaries		Eliminations		Consolidated
	(In thousands)
Revenue:
Oil and natural gas	$	245,567	$	102,640	$	-	$	348,207
Other		15,007		113		(15,000)		120
Total revenue		260,574		102,753		(15,000)		348,327
Costs and expenses:
Lease operating		51,618		18,663		-		70,281
Transportation		766		13		-		779
Exploration expenditures and dry hole costs		14,045		223		-		14,268
Impairments		32,532		(66)		-		32,466
Depreciation, depletion and amortization		82,168		22,456				104,624
Accretion of liability for asset retirement obligations		9,013		6,929				15,942
General and administrative		18,281		15,460		(15,000)		18,741
Taxes, other than on earnings		(733)		15,098		-		14,365
Other		9,940		(205)		-		9,735
Total costs and expenses		217,630		78,571		(15,000)		281,201
Income from operations		42,944		24,182		-		67,126
Other income (expense):
Interest income		102		-		-		102
Interest expense		(17,548)		-		-		(17,548)
Loss on derivative instruments		(5,870)		-		-		(5,870)
Loss on early extinguishment of debt		(2,377)		-		-		(2,377)
Income from equity investments		15,532		-		(15,532)		-
Total other income (expense)		(10,161)		-		(15,532)		(25,693)
Income before provision for income taxes		32,783		24,182		(15,532)		41,433
Provision for income taxes:
Current		-		-		-		-
Deferred		(6,172)		(8,650)		-		(14,822)
Total provision for income taxes		(6,172)		(8,650)		-		(14,822)
Net income	$	26,611	$	15,532	$	(15,532)	$	26,611

Supplemental Condensed Consolidating Statement of Operations

Year Ended December 31, 2010


	Parent
	Company		Guarantor
	Only		Subsidiaries		Eliminations		Consolidated
	(In thousands)
Revenue:
Oil and natural gas	$	171,176	$	68,594	$	-	$	239,770
Other		15,008		131		(15,000)		139
Total revenue		186,184		68,725		(15,000)		239,909
Costs and expenses:
Lease operating		34,004		18,361		-		52,365
Transportation		1,306		-		-		1,306
Exploration expenditures and dry hole costs		3,237		3,204				6,441
Impairments		25,478		664				26,142
Depreciation, depletion and amortization		83,672		20,889				104,561
Accretion of liability for asset retirement obligations		6,018		6,827		-		12,845
General and administrative		17,737		15,341		(15,000)		18,078
Taxes, other than on earnings		681		9,452		-		10,133
Other		897		(168)		-		729
Total costs and expenses		173,030		74,570		(15,000)		232,600
Income from operations		13,154		(5,845)		-		7,309
Other income (expense):
Interest income		113		-		-		113
Interest expense		(9,807)		-		-		(9,807)
Loss on derivative instruments		(4,865)						(4,865)
Loss on early extinguishment of debt		(5,627)						(5,627)
Loss from equity investments		(3,846)		-		3,846		-
Total other income (expense)		(24,032)		-		3,846		(20,186)
Loss before provision for income taxes		(10,878)		(5,845)		3,846		(12,877)
Provision for income taxes:
Current		-		-		-		-
Deferred		2,410		1,999		-		4,409
Total provision for income taxes		2,410		1,999		-		4,409
Net income (loss)	$	(8,468)	$	(3,846)	$	3,846	$	(8,468)

Supplemental Condensed Consolidating Statement of Cash Flows

Year Ended December 31, 2012


	Parent
	Company		Guarantor
	Only		Subsidiaries		Eliminations		Consolidated
	(In thousands)
Net cash provided by operating activities	$	190,851	$	23,020	$	-	$	213,871
Cash flows provided by (used in) investing activities:
Property acquisitions		(575,372)		(3,000)		-		(578,372)
Exploration and development expenditures		(165,308)		(19,542)		-		(184,850)
Other property and equipment additions		(1,265)		(478)		-		(1,743)
Net cash used in investing activities		(741,945)		(23,020)		-		(764,965)
Cash flows provided by (used in) financing activities:
Proceeds from indebtedness		509,313		-		-		509,313
Repayments of indebtedness		(20,000)		-		-		(20,000)
Deferred financing costs		(8,469)		-		-		(8,469)
Purchase of shares into treasury		(8,798)		-		-		(8,798)
Exercise of stock options		441		-		-		441
Net cash provided by financing activities		472,487		-		-		472,487
Net decrease in cash and cash equivalents		(78,607)		-		-		(78,607)
Cash and cash equivalents at beginning of period		80,128		-		-		80,128
Cash and cash equivalents at end of period	$	1,521	$	-	$	-	$	1,521

Supplemental Condensed Consolidating Statement of Cash Flows

Year Ended December 31, 2011


	Parent
	Company		Guarantor
	Only		Subsidiaries		Eliminations		Consolidated
	(In thousands)
Net cash provided by operating activities	$	136,245	$	35,007	$	-	$	171,252
Cash flows provided by (used in) investing activities:
Decrease in restricted cash		2,466		-		-		2,466
Property acquisitions		(235,486)		-		-		(235,486)
Exploration and development expenditures		(40,996)		(35,007)		-		(76,003)
Other property and equipment additions		(1,568)		-		-		(1,568)
Net cash used in investing activities		(275,584)		(35,007)		-		(310,591)
Cash flows provided by (used in) financing activities:
Proceeds from indebtedness		203,794		-		-		203,794
Deferred financing costs		(6,646)		-		-		(6,646)
Purchase of shares into treasury		(11,353)		-		-		(11,353)
Exercise of stock options		119		-		-		119
Net cash provided by financing activities		185,914		-		-		185,914
Net increase in cash and cash equivalents		46,575		-		-		46,575
Cash and cash equivalents at beginning of period		33,553		-		-		33,553
Cash and cash equivalents at end of period	$	80,128	$	-	$	-	$	80,128

Supplemental Condensed Consolidating Statement of Cash Flows

Year Ended December 31, 2010


	Parent
	Company		Guarantor
	Only		Subsidiaries		Eliminations		Consolidated
	(In thousands)
Net cash provided by operating activities	$	84,613	$	42,767	$	-	$	127,380
Cash flows provided by (used in) investing activities:
Decrease in restricted cash		13,658		-		-		13,658
Exploration and development expenditures		(15,416)		(42,767)		-		(58,183)
Other property and equipment additions		(755)		-		-		(755)
Property acquisitions		(623)		-		-		(623)
Net cash used in investing activities		(3,136)		(42,767)		-		(45,903)
Cash flows provided by (used in) financing activities:
Proceeds from indebtedness		20,394		-		-		20,394
Repayments of indebtedness		(94,882)		-		-		(94,882)
Deferred financing costs		(181)		-		-		(181)
Net cash used in financing activities		(74,669)		-		-		(74,669)
Net increase in cash and cash equivalents		6,808		-		-		6,808
Cash and cash equivalents at beginning of period		26,745		-		-		26,745
Cash and cash equivalents at end of period	$	33,553	$	-	$	-	$	33,553