(16) Supplemental Condensed Consolidating Financial Information

In connection with issuing the 8.25% 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 guaranteed the payment obligations under our 8.25% 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 2011 Indenture. So long as other applicable provisions of the indenture 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, or for any individual Guarantor Subsidiary, 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, 2013


	Parent
	Company		Guarantor
	Only		Subsidiaries		Eliminations		Consolidated
	(In thousands)
ASSETS
Current assets:
Cash and cash equivalents	$	8,812	$	-	$	-	$	8,812
Trade accounts receivable - net		70,520		187		-		70,707
Intercompany receivables		39,085		-		(39,085)		-
Fair value of commodity derivative instruments		501		-		-		501
Deferred tax asset		8,949		-		-		8,949
Prepaid expenses		6,868		-		-		6,868
Total current assets		134,735		187		(39,085)		95,837
Property and equipment		2,041,689		313,530		-		2,355,219
Less accumulated depreciation, depletion, amortization and impairments		(526,736)		(92,052)		-		(618,788)
Net property and equipment		1,514,953		221,478		-		1,736,431
Investment in affiliates		122,697		-		(122,697)		-
Deposit for Nexen Acquisition		7,040		-		-		7,040
Restricted cash		6,023		-		-		6,023
Fair value of commodity derivative instruments		238		-		-		238
Deferred financing costs		10,106		-		-		10,106
Other assets		2,067		89		-		2,156
Total assets	$	1,797,859	$	221,754	$	(161,782)	$	1,857,831
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	58,758	$	673	$	-	$	59,431
Intercompany payables		-		39,085		(39,085)		-
Accrued expenses		131,111		14		-		131,125
Asset retirement obligations		51,601		-		-		51,601
Fair value of commodity derivative instruments		29,636		-		-		29,636
Total current liabilities		271,106		39,772		(39,085)		271,793
Long-term debt		627,355		-		-		627,355
Asset retirement obligations		160,466		43,383		-		203,849
Deferred tax liabilities		106,910		15,902		-		122,812
Fair value of commodity derivative instruments		2,136		-		-		2,136
Other		673		-		-		673
Total liabilities		1,168,646		99,057		(39,085)		1,228,618
Stockholders’ equity:
Preferred stock		-		-		-		-
Common stock		41		-		-		41
Additional paid-in capital		519,114		85,479		(85,479)		519,114
Treasury stock, at cost		(31,157)		-		-		(31,157)
Retained earnings		141,215		37,218		(37,218)		141,215
Total stockholders’ equity		629,213		122,697		(122,697)		629,213
Total liabilities and stockholders' equity	$	1,797,859	$	221,754	$	(161,782)	$	1,857,831

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		(20,477)		-		-		(20,477)
Retained earnings		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 Statement of Operations

Year Ended December 31, 2013


	Parent
	Company		Guarantor
	Only		Subsidiaries		Eliminations		Consolidated
	(In thousands)
Revenue:
Oil and natural gas	$	606,743	$	82,000	$	-	$	688,743
Other		689		3,606		-		4,295
Total revenue		607,432		85,606		-		693,038
Costs and expenses:
Lease operating		140,605		25,236		-		165,841
Transportation		3,548		20		-		3,568
Exploration expenditures and dry hole costs		22,265		4,290		-		26,555
Impairments		2,937		-		-		2,937
Depreciation, depletion and amortization		178,427		21,932		-		200,359
Accretion of liability for asset retirement obligations		23,196		5,103		-		28,299
General and administrative		28,137		-		-		28,137
Taxes, other than on earnings		1,084		10,406		-		11,490
Gain on sale of assets		(28,219)		(462)		-		(28,681)
Other		34,072		870		-		34,942
Total costs and expenses		406,052		67,395		-		473,447
Income from operations		201,380		18,211		-		219,591
Other income (expense):
Interest income		99		-		-		99
Interest expense		(52,368)		-		-		(52,368)
Loss on derivative instruments		(32,361)		-		-		(32,361)
Income from equity investments		11,506		-		(11,506)		-
Total other income (expense)		(73,124)		-		(11,506)		(84,630)
Income before provision for income taxes		128,256		18,211		(11,506)		134,961
Deferred income tax expense		(42,982)		(6,705)		-		(49,687)
Net income	$	85,274	$	11,506	$	(11,506)	$	85,274

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
Deferred income tax expense		(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)
Loss from equity investments		15,532		-		(15,532)		-
Total other income (expense)		(10,161)		-		(15,532)		(25,693)
Loss before provision for income taxes		32,783		24,182		(15,532)		41,433
Deferred income tax expense		(6,172)		(8,650)		-		(14,822)
Net income	$	26,611	$	15,532	$	(15,532)	$	26,611

Supplemental Condensed Consolidating Statement of Cash Flows

Year Ended December 31, 2013


	Parent
	Company		Guarantor
	Only		Subsidiaries		Eliminations		Consolidated
	(In thousands)
Net cash provided by operating activities	$	356,597	$	30,962	$	-	$	387,559
Cash flows provided by (used in) investing activities:
Property acquisitions		(27,560)		-		-		(27,560)
Deposit for Nexen Acquisition		(7,040)		-		-		(7,040)
Exploration and development expenditures		(284,073)		(37,967)		-		(322,040)
Other property and equipment additions		(2,016)		-		-		(2,016)
Proceeds from sale of assets		45,312		7,005		-		52,317
Net cash used in investing activities		(275,377)		(30,962)		-		(306,339)
Cash flows provided by (used in) financing activities:
Repayments of indebtedness		(65,000)		-		-		(65,000)
Deferred financing costs		(674)		-		-		(674)
Purchase of shares into treasury		(9,640)		-		-		(9,640)
Exercise of stock options		1,385		-		-		1,385
Net cash used in financing activities		(73,929)		-		-		(73,929)
Net decrease in cash and cash equivalents		7,291		-		-		7,291
Cash and cash equivalents at beginning of period		1,521		-		-		1,521
Cash and cash equivalents at end of period	$	8,812	$	-	$	-	$	8,812

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 increase 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