Jan. 30--Wexford Capital LLC, a Greenwich-based private equity firm, is pushing for major changes at Energy Partners Ltd., one of its portfolio

companies.

Arthur Amron, Wexford's partner and general counsel, on Monday sent a letter to the New Orleans-based oil and natural gas exploration company urging its board of directors to terminate senior management and cancel "change in control" severance agreements with its executives.

Amron also wrote that Wexford, which was founded in 1994, is calling on Energy Partners to "reduce significantly" its overhead, restructure its debt and reduce the size of its board.

Wexford, which manages more than $6 billion of assets through hedge and private equity funds in energy, real estate and other sectors, has "watched with increasing dismay in the company's loss in enterprise value," and its poor performance is exacerbated by its lack of urgency to do anything about it, Amron said in the letter.

"Management, it would seem, is content to proceed with business as usual as the Company continues to decline in value," he wrote.

Wexford is the third-

largest holder of Energy Partners' stock with 2.7 million, or 8.4 percent, of outstanding shares.

The firm's contentions include that Energy Partners has four to five times the overhead expenses of other companies the same size and should reduce its annual expenses by $20 million. Energy Partners also has failed to replace its oil reserves from 2005

to 2007 by discovering only 16 million barrels of oil while producing 27 million barrels, and its

reserves are expected to be less than 40 million barrels, according to 2008 performance data.

Amron's letter further states that the company is "over-leveraged" with $450 million in debt and $43 million in debt service.

Energy Partners' board has received the letter and is reviewing it, said Al Petrie, investor relations coordinator for Energy Partners.

"We will make an appropriate response once we have had a chance to review it," he said.

Funding sources use several tactics to ensure their directives are followed, said Matteo Tonello, associate director of corporate governance for the Conference Board in New York City.

"Normally, funds start with less confrontational tools and become more aggressive if ignored by the company," he said.

Private equity firms usually "pull the plug" on investments that do not follow their directives, said Joyce Gioia, president and chief executive officer of a Greensboro, N.C.-based management consulting firm.

"It has been my experience that companies like this don't have a choice," she said.

-- Staff Writer Michael C. Juliano can be reached at michael.juliano@scni.com or 964-2417.

Info Box

-----

To see more of The Stamford Advocate, or to subscribe to the newspaper, go to http://www.stamfordadvocate.com.

Copyright (c) 2009, The Stamford Advocate, Conn.

Distributed by McClatchy-Tribune Information Services.

For reprints, email tmsreprints@permissionsgroup.com, call 800-374-7985 or 847-635-6550, send a fax to 847-635-6968, or write to The Permissions Group Inc., 1247 Milwaukee Ave., Suite 303, Glenview, IL 60025, USA.

NYSE:EPL,

A service of YellowBrix, Inc.