There was a time when upstart oil and gas companies looked to New Orleans to establish roots and make their foray into the profitable waters of the northern Gulf of Mexico.

But with the restructuring of Energy Partners Ltd., the independent exploration and production business in the Crescent City is becoming a dry hole. McMoRan Exploration stands as one the few remaining New Orleans-based E&P companies still operating, and you could call it a one-horse town if you eliminate the out-of-town and foreign-owned ventures.

"Three years ago, (Energy Partners) was a darling for Wall Street," said Peter Ricchiuti, assistant dean of Tulane University's Freeman School of Business.

"If you were to ask oil and gas companies just starting, 'What do you want to be when you grow up?' the answer would have been EPL."

In late September 2005 -- just a month after Hurricane Katrina hit the heart of its facilities -- EPL stock commanded in excess of $33 a share on the New York Stock Exchange. It was a record high for the company that had gone public just five years earlier.

Riding that momentum, founder Richard Bachmann looked to take the next step in the company's growth. EPL already had a foothold in the East Bay and South Timbalier fields and expanded into the Central Gulf and onshore through acquisitions.

In June 2006, Bachmann targeted Stone Energy of Lafayette for buyout. But before the $2.2 billion deal could be struck, Woodside Petroleum of Australia attempted a hostile takeover of Energy Partners. Its $833 million offer would have paid EPL shareholders a 25 percent premium. Priced near $18 just before Woodside made its bid Aug. 25, 2006, EPL shares went up to $24.50 within a week. Feeling the Woodside offer didn't reflect the company's value, the EPL board held out.

Energy Partners had offered $51 a share for Stone, but the deal dissolved while Woodstone made its advances. EPL ended its courting of Stone in November 2006 when Bachmann announced he was exploring the sale of his company. He said 14 potential bidders expressed interest but solid offers never materialized, leading him to pull EPL from the selling block in March 2007 when shares went below $20.

In August 2007, with shares near $15, the company began a $50 million stock buyback to appease investors. It paid $22 per share, creating a leverage that Ricchiuti said was difficult to overcome.

In 2008, EPL cut its spending 43 percent to help with debt relief, but even oil prices exceeding $100 a barrel could not reverse the Wall Street slide. When the commodity price peaked at $147 during the summer, EPL stock rebounded to only about $16.

"You get the feeling that what sunk Energy Partners didn't have anything to do with oil and gas," Ricchiuti said.

Once EPL shares dipped below $2, shareholders had enough. In January, the Connecticut investment firm holding a lion's share of EPL stock pushed for a management shakeup. After four board members stepped down in February, Bachmann turned in his keys last week.

While signs point to the demise of one of New Orleans' last independent E&P ventures, Energy Partners could be resurrected under another flag as other companies are likely evaluating EPL's leases and reserves.

"It has a very good geological team that did a great job of finding reserves that the majors have passed by," Ricchiuti said.

Stone Energy saw its shares drop to $1.55 earlier this month, but they have climbed slowly as the commodity posts four-month highs. But it's a far cry from the $74 mark it approached over the summer, a height likely envied by EPL shareholders.

As for McMoRan, its summer surge reached only $35 but its March low was $3.14. With its Flatrock and Blackbeard finds holding promise, the company stands poised to enjoy a rebound when, not if, oil prices rise.

Credit: Greg LaRose

(Copyright 2009 Dolan Media Newswires)

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