<PAGE>

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                            ------------------------
                                    FORM 10-Q

(Mark One)

[X]     QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
                EXCHANGE ACT OF 1934

                   For The Quarterly Period Ended June 30, 2005

                                       OR

[ ]     TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
                EXCHANGE ACT OF 1934

                        Commission file number 001-16179
                        --------------------------------

                              ENERGY PARTNERS, LTD.
             (Exact name of registrant as specified in its charter)

                        Delaware                          72-1409562
              (State or other jurisdiction             (I.R.S. employer
            of incorporation or organization)       identification number)

           201 St. Charles Avenue, Suite 3400
                 New Orleans, Louisiana                       70170
        (Address of principal executive offices)            (Zip code)

       Registrant's telephone number, including area code: (504) 569-1875

                        --------------------------------

      Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.

        Yes [X] No [ ]

      Indicate by check mark whether the registrant is an accelerated filer (as
defined by Rule 12b-2 of the Exchange Act). Yes [X] No [ ]

      As of August 3, 2005, there were 37,745,056 shares of the Registrant's
Common Stock, par value $0.01 per share, outstanding.

================================================================================

                                      -1-
<PAGE>

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                                Page
                                                                                                ----
<S>                                                                                             <C>
PART I FINANCIAL STATEMENTS

   Item 1. Financial Statements:
           Consolidated Balance Sheets as of June 30, 2005 and
                December 31, 2004............................................................     3

           Consolidated Statements of Operations for the three and six months ended
                June 30, 2005 and 2004.......................................................     4

           Consolidated Statements of Cash Flows for the six months ended
                June 30, 2005 and 2004.......................................................     5

           Notes to Consolidated Financial Statements .......................................     6

   Item 2.  Management's Discussion and Analysis of Financial Condition and
                Results of Operations........................................................    18

   Item 3. Quantitative and Qualitative Disclosures about Market Risk........................    25

   Item 4. Controls and Procedures...........................................................    26

PART II OTHER INFORMATION

   Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.......................    27

   Item 4. Submission of Matters to the Vote of Security Holders.............................    27

   Item 6. Exhibits..........................................................................    28
</TABLE>

                                      -2-
<PAGE>

                     ENERGY PARTNERS, LTD. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                        (In thousands, except share data)

<TABLE>
<CAPTION>
                                                                                          June 30,      December 31,
                                                                                            2005            2004
                                                                                         -----------    ------------
                                                                                         (Unaudited)
<S>                                                                                      <C>            <C>
                                                   ASSETS
Current assets:
      Cash and cash equivalents......................................................    $     5,694    $     93,537
      Trade accounts receivable......................................................         67,761          59,341
      Other receivables..............................................................         10,500           5,600
      Deferred tax assets............................................................          3,203           1,906
      Prepaid expenses...............................................................          6,227           2,285
                                                                                         -----------    ------------
              Total current assets...................................................         93,385         162,669

Property and equipment, at cost under the successful efforts
      method of accounting for oil and natural gas properties........................      1,082,137         769,331
Less accumulated depreciation, depletion and amortization............................       (356,710)       (304,997)
                                                                                         -----------    ------------
              Net property and equipment.............................................        725,427         464,334

Other assets.........................................................................         13,920          15,970
Deferred financing costs -- net of accumulated amortization
      of $4,671 in 2005 and $4,174 in 2004...........................................          4,584           4,705
                                                                                         -----------    ------------
                                                                                         $   837,316    $    647,678
                                                                                         ===========    ============

                                      LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
      Accounts payable...............................................................    $    38,122    $     21,255
      Accrued expenses...............................................................         86,667          59,387
      Fair value of commodity derivative instruments.................................          6,771           1,749
      Current maturities of long-term debt...........................................            164             108
                                                                                         -----------    ------------
              Total current liabilities..............................................        131,724          82,499

Long-term debt.......................................................................        222,000         150,109
Deferred tax liabilities.............................................................         72,132          53,686
Asset retirement obligation..........................................................         49,631          45,064
Other................................................................................          5,135           1,271
                                                                                         -----------    ------------
                                                                                             480,622         332,629

Stockholders' equity:
      Preferred stock, $1 par value. Authorized 1,700,000 shares;
          issued and outstanding: 2005 - no shares; 2004 - 344,399
          shares. Aggregate liquidation value: 2004 - $34,440........................              -          33,504
      Common stock, par value $0.01 per share. Authorized 50,000,000
          shares; issued and outstanding: 2005 - 41,095,780 shares;
          2004 - 36,618,084 shares...................................................            412             367
      Additional paid-in capital.....................................................        339,736         296,460
      Accumulated other comprehensive loss -- net of deferred taxes of
          $3,805 in 2005 and $630 in 2004............................................         (6,764)         (1,119)
      Retained earnings..............................................................         80,742          43,215
      Treasury stock, at cost. 2005 -- 3,474,208 shares; 2004 -- 3,480,441 shares....        (57,432)        (57,378)
                                                                                         -----------    ------------
              Total stockholders' equity.............................................        356,694         315,049
      Commitments and contingencies..................................................
                                                                                         -----------    ------------
                                                                                         $   837,316    $    647,678
                                                                                         ===========    ============
</TABLE>

          See accompanying notes to consolidated financial statements.

                                      3
<PAGE>

                     ENERGY PARTNERS, LTD. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (Unaudited)
                      (In thousands, except per share data)

<TABLE>
<CAPTION>
                                                                        Three Months Ended      Six Months Ended
                                                                             June 30,               June 30,
                                                                       --------------------   ---------------------
                                                                          2005       2004        2005       2004
                                                                       ---------   --------   ---------   ---------
<S>                                                                    <C>         <C>        <C>         <C>
Revenue:
      Oil and natural gas..........................................    $ 106,230   $ 74,977   $ 203,683   $ 138,396
      Other........................................................          (74)        90         (49)        143
                                                                       ---------   --------   ---------   ---------
                                                                         106,156     75,067     203,634     138,539
                                                                       ---------   --------   ---------   ---------

Costs and expenses:
      Lease operating..............................................       14,114      9,720      26,557      19,359
      Transportation expense.......................................          345         82         505         217
      Taxes, other than on earnings................................        2,658      2,078       5,422       4,320
      Exploration expenditures and dry hole costs..................       18,872      7,467      29,627      16,932
      Depreciation, depletion and amortization.....................       27,639     22,215      53,152      40,952
      General and administrative:
          Stock-based compensation.................................        1,874        662       3,757       1,519
          Other general and administrative.........................        8,288      6,434      16,305      13,750
                                                                       ---------   --------   ---------   ---------
                  Total costs and expenses.........................       73,790     48,658     135,325      97,049
                                                                       ---------   --------   ---------   ---------

Income from operations.............................................       32,366     26,409      68,309      41,490
                                                                       ---------   --------   ---------   ---------

Other income (expense):
      Interest income..............................................          110        221         295         463
      Interest expense.............................................       (4,335)    (3,586)     (8,383)     (7,160)
                                                                       ---------   --------   ---------   ---------
                                                                          (4,225)    (3,365)     (8,088)     (6,697)
                                                                       ---------   --------   ---------   ---------

                  Income before income taxes.......................       28,141     23,044      60,221      34,793
Income taxes.......................................................      (10,091)    (8,388)    (21,750)    (12,691)
                                                                       ---------   --------   ---------   ---------

                  Net income.......................................       18,050     14,656      38,471      22,102

Less dividends earned on preferred stock and accretion of
      discount and issuance costs..................................            -       (821)       (944)     (1,750)
                                                                       ---------   --------   ---------   ---------

                  Net income available to common stockholders......    $  18,050   $ 13,835   $  37,527   $  20,352
                                                                       =========   ========   =========   =========

      Basic earnings per share.....................................    $    0.48   $   0.42   $    1.03   $    0.62
                                                                       =========   ========   =========   =========

      Diluted earnings per share...................................    $    0.45   $   0.38   $    0.95   $    0.58
                                                                       =========   ========   =========   =========

Weighted average common shares used in
      Computing income per share:
          Basic....................................................       37,558     32,913      36,299      32,667
          Incremental common shares................................        2,968      5,437       4,121       5,461
                                                                       ---------   --------   ---------   ---------
          Diluted..................................................       40,526     38,350      40,420      38,128
                                                                       =========   ========   =========   =========

</TABLE>

          See accompanying notes to consolidated financial statements.

                                      -4-
<PAGE>

                     ENERGY PARTNERS, LTD. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (Unaudited)
                                 (In thousands)

<TABLE>
<CAPTION>
                                                                           Six Months Ended
                                                                               June 30,
                                                                       ------------------------
                                                                           2005          2004
                                                                       ----------      --------
<S>                                                                    <C>             <C>
Cash flows from operating activities:
      Net income....................................................   $   38,471      $ 22,102
      Adjustments to reconcile net income to net cash
          provided by operating activities:
              Depreciation, depletion and amortization..............       53,152        40,952
              Loss on disposition of oil and natural gas assets.....           92             -
              Non cash-based compensation...........................        3,807         1,568
              Deferred income taxes.................................       21,401        12,688
              Exploration expenditures..............................       21,332        13,272
              Amortization of deferred financing costs..............          497           457
              Other.................................................          379           104
              Changes in operating assets and liabilities:
                  Trade accounts receivable.........................       (8,420)      (15,653)
                  Other receivables.................................       (4,900)       (4,857)
                  Prepaid expenses..................................       (3,942)       (3,423)
                  Other assets......................................       (1,602)         (489)
                  Accounts payable and accrued expenses.............       24,397         2,524
                  Other liabilities.................................         (131)         (587)
                                                                       ----------      --------

                      Net cash provided by operating activities.....      144,533        68,658
                                                                       ----------      --------

Cash flows used in investing activities:
      Acquisition of business, net of cash acquired.................         (863)       (2,166)
      Property acquisitions.........................................     (183,986)       (4,792)
      Exploration and development expenditures......................     (122,364)      (72,376)
      Other property and equipment additions........................         (792)         (353)
                                                                       ----------      --------

                      Net cash used in investing activities.........     (308,005)      (79,687)
                                                                       ----------      --------

Cash flows provided by financing activities:
      Repayments of long-term debt..................................      (33,053)         (148)
      Deferred financing costs......................................         (357)           (7)
      Equity offering costs.........................................          (87)            -
      Proceeds from long-term debt..................................      105,000        (1,212)
      Exercise of stock options and warrants........................        4,126         2,628
                                                                       ----------      --------

                      Net cash provided by financing activities.....       75,629         1,261
                                                                       ----------      --------

                      Net decrease in cash and cash equivalents.....      (87,843)       (9,768)
Cash and cash equivalents at beginning of period....................       93,537       104,392
                                                                       ----------      --------

Cash and cash equivalents at end of period..........................   $    5,694      $ 94,624
                                                                       ==========      ========
</TABLE>

          See accompanying notes to consolidated financial statements.

                                      -5-
<PAGE>

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)

(1) BASIS OF PRESENTATION

      Certain information and footnote disclosures normally in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted pursuant to rules and regulations of the
Securities and Exchange Commission; however, management believes the disclosures
which are made are adequate to make the information presented not misleading.
These financial statements and footnotes should be read in conjunction with the
financial statements and notes thereto included in Energy Partners, Ltd.'s (the
Company) Annual Report on Form 10-K for the year ended December 31, 2004 and
Management's Discussion and Analysis of Financial Condition and Results of
Operations. The Company maintains a website at www.eplweb.com which contains
information about the Company including links to the Company's Annual Report on
Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and all
related amendments. The Company's website and the information contained in it
and connected to it shall not be deemed incorporated by reference into this
report on Form 10-Q.

      The financial information as of June 30, 2005 and for the three and six
month periods ended June 30, 2005 and 2004 has not been audited. However, in the
opinion of management, all adjustments (which include only normal recurring
adjustments) necessary to present fairly the results of operations for the
periods presented have been included therein. The results of operations for the
first six months of the year are not necessarily indicative of the results of
operations, which might be expected for the entire year.

(2) STOCK-BASED COMPENSATION

      The Company has two stock award plans, the Amended and Restated 2000 Long
Term Stock Incentive Plan, as amended, and the Amended and Restated 2000 Stock
Incentive Plan for Non-Employee Directors (the Plans). The Company accounts for
its stock-based compensation in accordance with Accounting Principles Board's
Opinion No. 25, "Accounting For Stock Issued to Employees" (Opinion No. 25).
Statement of Financial Accounting Standards No. 123 (Statement 123), "Accounting
For Stock-Based Compensation" and Statement of Financial Accounting Standards
No. 148, "Accounting For Stock-Based Compensation - Transition and Disclosure,"
(Statement 148) permit the continued use of the intrinsic value-based method
prescribed by Opinion No. 25, but require additional disclosures, including
pro-forma calculations of earnings and net earnings per share as if the fair
value method of accounting prescribed by Statement 123 had been applied. If
compensation expense for the Plans had been determined using the fair-value
method in Statement 123, the Company's net income and earnings per share would
have been as shown in the pro forma amounts below:

<TABLE>
<CAPTION>
                                                        THREE MONTHS ENDED       SIX MONTHS ENDED
                                                             JUNE 30,                JUNE 30,
                                                         2005        2004         2005       2004
                                                      ---------   ----------   ---------   ---------
                                                         (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S>                                                   <C>         <C>          <C>         <C>
Net income available to common stockholders:
   As reported.....................................   $  18,050   $   13,835   $  37,527   $  20,352
   Less: Pro forma net stock based employee
      compensation cost, after tax.................        (251)        (351)       (171)       (369)
                                                      ---------   ----------   ---------   ---------
   Pro forma.......................................   $  17,799   $   13,484   $  37,356   $  19,983
                                                      ---------   ----------   ---------   ---------
Basic earnings per share:
   As reported.....................................   $    0.48   $     0.42   $    1.03   $    0.62
   Pro forma.......................................   $    0.47   $     0.41   $    1.03   $    0.61
Diluted earnings per share:
   As reported.....................................   $    0.45   $     0.38   $    0.95   $    0.58
   Pro forma.......................................   $    0.44   $     0.37   $    0.95   $    0.57
Stock-option based employee compensation cost,
  net of tax, included in net income as reported...   $     120   $       --   $     468   $     340
</TABLE>

                                      -6-
<PAGE>

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)

(3) ACQUISITIONS

      In connection with a business combination in 2002, the Company issued
among other things, $38.4 million liquidation preference of newly authorized and
issued Series D Exchangeable Convertible Preferred Stock (the Series D Preferred
Stock), with an issue date fair value of $34.7 million discounted to give effect
to the increasing dividend rate, and $38.4 million of 11% Senior Subordinated
Notes (the Notes) due 2009 (immediately callable at par). On February 28, 2005,
the Company gave notice of the redemption of all of the Series D Preferred Stock
issued in connection with the acquisition that remained outstanding on the
redemption date of March 21, 2005. The redemption price was $100 per share plus
accrued and unpaid dividends to the redemption date. Holders of record had the
right to convert their shares into shares of common stock through the close of
business on March 18, 2005. All holders exercised their right to convert their
shares and there were no preferred shares outstanding as of the close of
business on March 18, 2005.

      The Company also issued warrants to purchase four million shares of the
Company's common stock in the same business combination. Of the warrants, one
million had a strike price of $9.00 and three million had a strike price of
$11.00 per share. The warrants became exercisable on January 15, 2003 and expire
on January 15, 2007. At June 30, 2005 there were 767,141 warrants outstanding
with a strike price of $9.00 per share and 2,673,124 warrants outstanding with a
strike price of $11.00 per share.

      In addition, former preferred stockholders of the acquired company have
the right to receive contingent consideration based upon a percentage of the
amount by which the before tax net present value of proved reserves related, in
general, to exploratory prospect acreage held by the acquired company as of the
closing date of the acquisition (the Ring-Fenced Properties) exceeds the net
present value discounted at 30%. The potential consideration is determined
annually from March 3, 2003 until March 1, 2007. The cumulative percentage
remitted to the participants was 20% for the March 3, 2003, 30% for the March 1,
2004 and 35% for the March 1, 2005 determination dates and is 40% for the March
1, 2006 and 50% for the March 1, 2007 determination dates. The contingent
consideration, if any, may be paid in the Company's common stock or cash at the
Company's option (with a minimum of 20% in cash) and in no event will exceed a
value of $50 million. In the first six months of 2005 and 2004, the Company
capitalized, as additional purchase price, and paid additional consideration in
cash, of $0.9 million and $2.2 million related to the March 1, 2005 and the
March 1, 2004 contingent consideration determination dates, respectively. Due to
the uncertainty inherent in estimating the value of future contingent
consideration which includes annual revaluations based upon, among other things,
drilling results from the date of the prior revaluation, and development,
operating and abandonment costs and production revenues (actual historical and
future projected, as contractually defined, as of each revaluation date) for the
Ring-Fenced Properties, total final consideration will not be determined until
March 1, 2007. All additional contingent consideration will be capitalized as
additional purchase price.

      On January 20, 2005, the Company closed an acquisition of properties and
reserves in south Louisiana for approximately $146.0 million in cash, after
adjustments for the exercise of preferential rights by third parties and
preliminary closing adjustments. The entire purchase price was allocated to
property and equipment. The terms of the acquisition did not contain any
contingent consideration, options or future commitments. The acquisition is
composed of nine fields, four of which were producing at the time of the closing
through 14 wells, with estimated proved reserves of 51.2 billion cubic feet
equivalent. Also included were interests in 22 exploratory prospects. The
transaction expands the Company's exploration opportunities in its expanded
focus area and further reduces the concentration of its reserves and production.
Upon the signing of the purchase agreement, the Company paid a $5.0 million
deposit in 2004 toward the purchase price which was recorded as other assets in
the consolidated balance sheet at December 31, 2004. Concurrent with the
closing, the borrowing base under the Company's bank credit facility was
increased to $150 million, of which $60 million was drawn to fund the
acquisition. In connection with the acquisition, the Company has also entered
into a two-year agreement with the seller of the properties that defines an area
of mutual interest (AMI) encompassing over one million acres. The Company
intends to continue to explore and develop oil and natural gas reserves in the
AMI over the next two years jointly with the seller.

                                      -7-
<PAGE>

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
                                   (UNAUDITED)

The proved reserves, prospects and AMI are in the southern portions of
Terrebone, Lafourche and Jefferson Parishes in Louisiana.

      The following unaudited pro forma information for the three and six months
ended June 30, 2004 presents a summary of the consolidated results of operations
as if the acquisition occurred on January 1, 2004 with pro forma adjustments to
give effect to depreciation, depletion and amortization, interest expense and
related income tax effects.

<TABLE>
<CAPTION>
                                                         THREE MONTHS ENDED    SIX MONTHS ENDED
                                                           JUNE 30, 2004         JUNE 30, 2004
                                                         ------------------    ----------------
                                                          (UNAUDITED, IN THOUSANDS, EXCEPT PER
                                                                     SHARE AMOUNTS)
<S>                                                      <C>                   <C>
Pro forma:
   Revenue......................................            $    80,118           $ 148,641
   Income from operations.......................                 28,514              45,699
   Net income...................................                 15,889              24,550
   Basic income per common share................            $      0.46           $    0.70
   Diluted income per common share..............            $      0.41           $    0.64
</TABLE>

      On March 8, 2005, the Company closed the acquisition of the remaining 50%
gross working interest in South Timbalier 26 above approximately 13,000 feet
subsea that it did not already own for approximately $21.0 million after
preliminary closing adjustments from the effective date of December 1, 2004. The
entire purchase price was allocated to property and equipment. The terms of the
acquisition did not contain any contingent consideration, options or future
commitments. As a result of the acquisition, the Company now owns a 100% gross
working interest in the producing horizons in this field. The acquisition
expands the Company's interest in its core Greater Bay Marchand area and gives
the Company additional flexibility in undertaking the future development of the
South Timbalier 26 field.

      The Company has included the results of operations from the acquisitions
discussed above from their respective closing dates. The Company has experienced
substantial revenue and production growth as a result of these acquisitions. For
the foregoing reasons these acquisitions will affect the comparability of the
Company's historical results of operations with future periods.

(4) EARNINGS PER SHARE

      Basic earnings per share are computed by dividing income available to
common stockholders by the weighted average number of common shares outstanding
during the period. Diluted earnings per share is computed in the same manner as
basic earnings per share except that the denominator is increased to include the
number of additional common shares that could have been outstanding assuming the
conversion of convertible preferred stock shares, and the exercise of warrants
and stock options and the potential shares associated with restricted share
units that would have a dilutive effect on earnings per share.

                                       -8-
<PAGE>

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
                                   (UNAUDITED)

      The following tables reconcile the net earnings and common shares
outstanding used in the calculations of basic and diluted earnings per share for
the three and six month periods ended June 30, 2005 and 2004.

<TABLE>
<CAPTION>
                                                                          WEIGHTED
                                                          NET INCOME       AVERAGE
                                                          AVAILABLE        COMMON
                                                          TO COMMON        SHARES         EARNINGS
                                                         STOCKHOLDERS    OUTSTANDING      PER SHARE
                                                         ------------    -----------      ---------
                                                          (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S>                                                      <C>             <C>              <C>
Three months ended June 30, 2005:
        Basic.....................................         $  18,050       37,558          $ 0.48
        Effect of dilutive securities:
              Stock options.......................                 -          867
              Warrants............................                 -        1,926
              Restricted share units..............                 -          175
                                                           ---------       ------
        Diluted...................................         $  18,050       40,526          $ 0.45
                                                           ---------       ------
</TABLE>

<TABLE>
<CAPTION>
                                                                          WEIGHTED
                                                          NET INCOME       AVERAGE
                                                          AVAILABLE        COMMON
                                                          TO COMMON        SHARES         EARNINGS
                                                         STOCKHOLDERS    OUTSTANDING      PER SHARE
                                                         ------------    -----------      ---------
                                                          (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S>                                                      <C>             <C>              <C>
Three months ended June 30, 2004:
        Basic.....................................         $  13,835       32,913          $ 0.42
        Effect of dilutive securities:
              Preferred stock.....................               821        4,057
              Stock options.......................                 -          503
              Warrants............................                 -          868
              Restricted share units..............                 -            9
                                                           ---------       ------
        Diluted...................................         $  14,656       38,350          $ 0.38
                                                           ---------       ------
</TABLE>

<TABLE>
<CAPTION>
                                                                          WEIGHTED
                                                          NET INCOME       AVERAGE
                                                          AVAILABLE        COMMON
                                                          TO COMMON        SHARES         EARNINGS
                                                         STOCKHOLDERS    OUTSTANDING      PER SHARE
                                                         ------------    -----------      ---------
                                                          (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S>                                                      <C>             <C>              <C>
Six months ended June 30, 2005:
        Basic.....................................         $  37,527       36,299          $  1.03
        Effect of dilutive securities:
              Preferred stock.....................               944        1,096
              Stock options.......................                 -          946
              Warrants............................                 -        1,907
              Restricted share units..............                 -          172
                                                           ---------       ------
        Diluted...................................         $  38,471       40,420          $  0.95
                                                           ---------       ------
</TABLE>

                                       -9-
<PAGE>

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                           WEIGHTED
                                           NET INCOME       AVERAGE
                                           AVAILABLE        COMMON
                                           TO COMMON        SHARES         EARNINGS
                                          STOCKHOLDERS    OUTSTANDING      PER SHARE
                                          ------------    -----------      ---------
                                           (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S>                                       <C>             <C>              <C>
Six months ended June 30, 2004:
        Basic.............................  $  20,352       32,667          $  0.62
        Effect of dilutive securities:
              Preferred stock.............      1,750        4,057
              Stock options...............          -          541
              Warrants....................          -          855
              Restricted share units......          -            8
                                            ---------       ------
        Diluted...........................  $  22,102       38,128          $  0.58
                                            ---------       ------
</TABLE>

(5) HEDGING ACTIVITIES

      The Company enters into hedging transactions with major financial
institutions to reduce exposure to fluctuations in the price of oil and natural
gas. Any gains or losses resulting from the change in fair value from hedging
transactions that are determined to be ineffective are recorded in other
revenue, whereas gains and losses from the settlement of hedging contracts are
recorded in oil and natural gas revenue in the statements of operations. Crude
oil hedges are settled based on the average of the reported settlement prices
for West Texas Intermediate crude on the New York Mercantile Exchange (NYMEX)
for each month. Natural gas hedges are settled based on the average of the last
three days of trading of the NYMEX Henry Hub natural gas contract for each
month. The Company also uses financially-settled crude oil and natural gas
swaps, zero-cost collars and options that provide floor prices with varying
upside price participation.

      With a financially-settled swap, the counterparty is required to make a
payment to the Company if the settlement price for any settlement period is
below the hedged price for the transaction, and the Company is required to make
a payment to the counterparty if the settlement price for any settlement period
is above the hedged price for the transaction. With a zero-cost collar, the
counterparty is required to make a payment to the Company if the settlement
price for any settlement period is below the floor price of the collar, and the
Company is required to make a payment to the counterparty if the settlement
price for any settlement period is above the cap price for the collar. In some
hedges, we may modify our collar to provide full upside participation after a
limited non-participation range.

      The Company had the following hedging contracts as of June 30, 2005:

<TABLE>
<CAPTION>
                             NATURAL GAS POSITIONS
------------------------------------------------------------------------------------
                                                                    VOLUME (MMBTU)
                                                                  ------------------
  REMAINING CONTRACT TERM  CONTRACT TYPE  STRIKE PRICE ($/MMBTU)  DAILY      TOTAL
-------------------------  -------------  ----------------------  ------   ---------
<S>                        <C>            <C>                     <C>      <C>
07/05 - 12/05............      Collar         $ 4.50/$10.75       20,000   3,680,000
07/05 - 12/05............      Collar         $ 5.00/$10.00       15,000   2,760,000
01/06 - 12/06............      Collar         $ 5.00/$ 9.51       15,000   5,475,000
01/07 - 12/07............      Collar         $ 5.00/$ 8.00       10,000   3,650,000
</TABLE>

<TABLE>
<CAPTION>
                             CRUDE OIL POSITIONS
------------------------------------------------------------------------------------
                                                                    VOLUME (BBLS)
                                                                  ------------------
 REMAINING CONTRACT TERM   CONTRACT TYPE  STRIKE PRICE ($/BBL)    DAILY      TOTAL
-------------------------  -------------  --------------------    ------   ---------
<S>                        <C>            <C>                     <C>      <C>
07/05 - 12/05............      Collar         $ 31.00/$44.05      2,000     368,000
</TABLE>


      Settlements of hedging contracts reduced crude oil revenues by $1.7
million and $2.7 million in the three and six month periods ended June 30, 2005
and had no effect on natural gas revenues in the three and six month periods
ended June 30, 2005. The Company has not discontinued hedge accounting treatment
in the periods presented, and therefore, has not reclassified any gains or
losses into earnings as a result.

                                      -10-
<PAGE>

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
                                  (UNAUDITED)


      The following tables reconcile the change in accumulated other
comprehensive income for the six month periods ending June 30, 2005 and 2004.

<TABLE>
<CAPTION>
                                                                                      SIX MONTHS ENDED
                                                                                       JUNE 30, 2005
                                                                                   ----------------------
                                                                                       (IN THOUSANDS)
<S>                                                                                <C>          <C>
Accumulated other comprehensive loss as of December 31, 2004                                    $  (1,119)
Net income......................................................................   $   38,471
Other comprehensive loss - net of tax
      Hedging activities
              Reclassification adjustments for settled contracts - net of
                taxes of $(989).................................................        1,759
              Changes in fair value of outstanding hedging positions- net of
                taxes of $4,164.................................................       (7,404)
                                                                                   ----------
                    Total other comprehensive loss..............................       (5,645)     (5,645)
                                                                                   ----------   ---------
Comprehensive income............................................................   $   32,826
                                                                                   ==========
Accumulated other comprehensive loss as of June 30, 2005........................                $  (6,764)
                                                                                                =========
</TABLE>

<TABLE>
<CAPTION>
                                                                                      SIX MONTHS ENDED
                                                                                        JUNE 30, 2004
                                                                                   ----------------------
                                                                                        (IN THOUSANDS)
<S>                                                                                <C>          <C>
Accumulated other comprehensive loss as of December 31, 2003                                    $  (2,441)
Net income......................................................................   $   22,102
Other comprehensive loss - net of tax
      Hedging activities
             Reclassification adjustments for settled contracts-net of
               taxes of $(1,585)................................................        2,818
             Changes in fair value of outstanding hedging positions-net of
               taxes of $2,042..................................................       (3,629)
                                                                                   ----------
                   Total other comprehensive loss...............................         (811)       (811)
                                                                                   ----------   ---------
Comprehensive income............................................................   $   21,291
                                                                                   ==========
Accumulated other comprehensive loss as of June 30, 2004........................                $  (3,252)
                                                                                                =========
</TABLE>

      Based upon current prices, the Company expects to transfer approximately
$6.8 million of pretax net deferred losses in accumulated other comprehensive
loss as of June 30, 2005 to earnings during the next twelve months when the
forecasted transactions actually occur.

                                      -11-
<PAGE>

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
                                   (UNAUDITED)

(6) ASSET RETIREMENT OBLIGATION

   Accounting and reporting standards require entities to record the fair value
of a liability for an asset retirement obligation in the period in which it is
incurred and a corresponding increase in the carrying amount of the related
long-lived asset. The following table reconciles the beginning and ending
aggregate recorded amount of the asset retirement obligation for the six months
ended June 30, 2005.

<TABLE>
<CAPTION>
                                     SIX MONTHS ENDED
                                      JUNE 30, 2005
                                     ----------------
                                      (IN THOUSANDS)
<S>                                  <C>
December 31, 2004..................  $         45,064
   Accretion expense...............             1,927
   Liabilities incurred............             2,694
   Liabilities settled.............               (54)
                                     ----------------
June 30, 2005......................  $         49,631
                                     ================
</TABLE>

(7) COMMON STOCK

   On July 16, 2004 the Company filed a universal shelf registration statement
(Shelf Registration Statement) which allowed the Company to issue an aggregate
of $300 million in common stock, preferred stock, senior debt and subordinated
debt in one or more separate offerings with the size, price and terms to be
determined at the time of the sale. On November 10, 2004 the Company sold
approximately 3.5 million shares of its common stock to the public pursuant to
this shelf registration statement. Concurrent with this offering, the Company
entered into a stock purchase agreement with Energy Income Fund, L.P. (EIF) in
which it purchased approximately 3.5 million shares of common stock owned by EIF
at a price per share equal to the net proceeds per share received in the
offering, before expenses. The Company therefore did not retain any of the
proceeds from this offering and the stock has been recorded as treasury stock on
the consolidated balance sheet at cost. The Company restored the Shelf
Registration Statement to $300 million in May 2005. The Company has no immediate
plans to enter into any additional transactions under this registration
statement, but plans to use the proceeds for general corporate purposes, which
may include debt repayment, acquisitions, expansion and working capital.

   In the second quarter of 2005, the Company acquired 2,312 shares of its
common stock as a result of tax withholding in connection with employee benefit
transactions. All of these shares are reflected in treasury stock in the
Consolidated Balance Sheet.

(8) INDEBTEDNESS

   On August 5, 2003, the Company issued $150 million of 8.75% Senior Notes Due
2010 (the Senior Notes) in a Rule 144A private offering (the Debt Offering)
which allows unregistered transactions with qualified institutional buyers. In
October 2003, the Company consummated an exchange offer pursuant to which it
exchanged registered Senior Notes (the Registered Senior Notes) having
substantially identical terms as the Senior Notes for the privately placed
Senior Notes. After discounts and commissions and estimated offering expenses,
the Company received $145.3 million, which was used to redeem all of the
outstanding 11% Senior Subordinated Notes Due 2009, that had been issued in
connection with a business combination in 2002, and to repay substantially all
of the borrowings outstanding under the Company's bank credit facility. In
January 2005 the remainder of the net proceeds were used to purchase properties
in south Louisiana as discussed in note (3).

                                      -12-
<PAGE>

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
                                   (UNAUDITED)

   The Registered Senior Notes mature on August 1, 2010 with interest payable
each February 1 and August 1, commencing February 1, 2004. The indenture
relating to the Registered Senior Notes contains certain restrictions on the
Company's ability to incur additional debt, pay dividends on its common stock,
make investments, create liens on its assets, engage in transactions with its
affiliates, transfer or sell assets and consolidate or merge substantially all
of its assets. The Registered Senior Notes are not subject to any sinking fund
requirements.

     On August 3, 2004, the Company amended and extended to August 3, 2008 its
bank credit facility. The borrowing base was increased to $150 million at the
time of the Company's purchase of south Louisiana properties and reserves in
January 2005. At June 30, 2005 the Company had $75.0 million outstanding under
the bank credit facility. The borrowing base remains subject to redetermination
based on the proved reserves of the oil and natural gas properties that serve as
collateral for the bank credit facility as set out in the reserve report
delivered to the banks each April 1 and October 1. The Company's borrowing base
was reaffirmed effective April 1, 2005.

(9) NEW ACCOUNTING PRONOUNCEMENTS

   In November 2004, the FASB issued Statement of Financial Accounting Standards
No. 151 "Inventory Costs, an amendment of ARB No. 43, Chapter 4" (Statement
151). The amendments made by Statement 151 clarify that abnormal amounts of idle
facility expense, freight, handling costs, and wasted materials (spoilage)
should be recognized as current-period charges and require the allocation of
fixed production overheads to inventory based on the normal capacity of the
production facilities. The guidance is effective for inventory costs incurred
during fiscal years beginning after June 15, 2005. Earlier application is
permitted for inventory costs incurred during fiscal years beginning after
November 23, 2004. The Company's assessment of the provisions of Statement 151
is that it is not expected to have an impact on the financial position, results
of operations or cash flows of the Company.

   In December 2004, the FASB issued Statement of Financial Accounting Standards
No. 153 "Exchanges of Non-monetary assets - an amendment of APB Opinion No. 29"
(Statement 153). Statement 153 amends Accounting Principles Board (APB) Opinion
29 to eliminate the exception for nonmonetary exchanges of similar productive
assets and replaces it with a general exception for exchanges of nonmonetary
assets that do not have commercial substance. A nonmonetary exchange has
commercial substance if the future cash flows of the entity are expected to
change significantly as a result of the exchange. Statement 153 does not apply
to a pooling of assets in a joint undertaking intended to fund, develop, or
produce oil or natural gas from a particular property or group of properties.
The provisions of Statement 153 shall be effective for nonmonetary asset
exchanges occurring in fiscal periods beginning after June 15, 2005. Early
adoption is permitted and the provisions of Statement 153 should be applied
prospectively. The Company's assessment of the provisions of Statement 153 is
that it is not expected to have an impact on the financial position, results of
operations or cash flows of the Company.

   In December 2004, the FASB issued Statement of Financial Accounting Standards
No. 123-Revised 2004, "Share-Based Payment," (Statement 123R). This is a
revision of Statement of Financial Accounting Standards No. 123, "Accounting for
Stock-Based Compensation", and supersedes APB No. 25, "Accounting for Stock
Issued to Employees." The Company currently accounts for stock-based
compensation under the provisions of APB No. 25. Under Statement 123R, the
Company will be required to measure the cost of employee services received in
exchange for stock based on the grant-date fair value (with limited exceptions).
That cost will be recognized as expense over the period during which an employee
is required to provide service in exchange for the award (usually the vesting
period). The fair value will be estimated using an option-pricing model. Excess
tax benefits, as defined in Statement 123R, will be recognized as an addition to
paid-in capital. This will be effective for the Company as of the beginning of
the first annual reporting period that begins after June 15, 2005. The Company
is currently in the process of evaluating the impact of Statement 123R on its
financial statements, including different option-pricing models. Note (2)
illustrates the current effect on net income and earnings per share if the
Company had applied the fair value recognition provisions of Statement 123.

                                      -13-
<PAGE>

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
                                   (UNAUDITED)

   In May 2005, the FASB issued Statement of Financial Accounting Standards No.
154, "Accounting Changes and Error Corrections -- a replacement of APB Opinion
No. 20 and FASB Statement No. 3," (Statement 154). Statement 154 provides
guidance on the accounting for and reporting of accounting changes and error
corrections. It establishes, unless impracticable, retrospective application as
the required method for reporting a change in accounting principle in the
absence of explicit transition requirements specific to Statement 154. The
provisions of Statement 154 shall be effective for accounting changes and
corrections of errors made in fiscal years beginning after December 15, 2005.

(10) SUPPLEMENTAL CONDENSED CONSOLIDATING FINANCIAL INFORMATION

   In connection with the Debt Offering discussed above, all of the Company's
current active subsidiaries (the Guarantor Subsidiaries) jointly, severally and
unconditionally guaranteed the payment obligations under the Debt Offering. The
following supplemental financial information sets forth, on a consolidating
basis, the balance sheet, statement of operations and cash flow information for
Energy Partners, Ltd. (Parent Company Only) and for the Guarantor Subsidiaries.
The Company has 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, although the Company believes that the disclosures made are adequate
to make the information presented not misleading. 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.

                                      -14-
<PAGE>

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
                                   (UNAUDITED)

               SUPPLEMENTAL CONDENSED CONSOLIDATING BALANCE SHEET
                               AS OF JUNE 30, 2005

<TABLE>
<CAPTION>
                                                   PARENT
                                                   COMPANY    GUARANTOR
                                                    ONLY     SUBSIDIARIES  ELIMINATIONS  CONSOLIDATED
                                                  ---------  ------------  ------------  ------------
                                                                     (IN THOUSANDS)
<S>                                               <C>        <C>           <C>           <C>
                                     ASSETS

Current assets:
   Cash and cash equivalents..................... $   5,694  $         --  $         --  $      5,694
   Accounts receivable...........................   232,968      (154,707)           --        78,261
   Other current assets..........................     9,371            59            --         9,430
                                                  ---------  ------------  ------------  ------------
       Total current assets......................   248,033      (154,648)           --        93,385

Property and equipment...........................   698,717       383,420            --     1,082,137
Less accumulated depreciation, depletion
   and amortization..............................  (258,440)      (98,270)           --      (356,710)
                                                  ---------  ------------  ------------  ------------
       Net property and equipment................   440,277       285,150            --       725,427

Investment in affiliates.........................    91,415            --       (91,415)           --
Notes receivable, long-term......................        --        70,362       (70,362)           --
Other assets.....................................    18,525           (21)           --        18,504
                                                  ---------  ------------  ------------  ------------
                                                  $ 798,250  $    200,843  $   (161,777) $    837,316
                                                  =========  ============  ============  ============

                                LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
   Accounts payable and accrued expenses......... $ 123,374  $      1,415  $         --  $    124,789
   Fair value of commodity derivative
     instruments.................................     6,771            --            --         6,771
   Current maturities of long-term debt..........        --           164            --           164
                                                  ---------  ------------  ------------  ------------
       Total current liabilities.................   130,145         1,579            --       131,724

Long-term debt...................................   222,000        70,362       (70,362)      222,000
Other liabilities................................    89,411        37,487            --       126,898
                                                  ---------  ------------  ------------  ------------
                                                    441,556       109,428       (70,362)      480,622
Stockholders' equity:
   Common stock..................................       412            --            --           412
   Additional paid-in capital....................   339,736            --            --       339,736
   Accumulated other comprehensive loss..........    (6,764)           --            --        (6,764)
   Retained earnings.............................    80,742        91,415       (91,415)       80,742
   Treasury stock................................   (57,432)           --            --       (57,432)
                                                  ---------  ------------  ------------  ------------
       Total stockholders' equity                   356,694        91,415       (91,415)      356,694
                                                  ---------  ------------  ------------  ------------
                                                  $ 798,250  $    200,843  $   (161,777) $    837,316
                                                  =========  ============  ============  ============
</TABLE>

                                      -15-
<PAGE>

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
                                   (UNAUDITED)

          SUPPLEMENTAL CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
                         SIX MONTHS ENDED JUNE 30, 2005

<TABLE>
<CAPTION>
                                                   PARENT
                                                   COMPANY    GUARANTOR
                                                    ONLY     SUBSIDIARIES  ELIMINATIONS  CONSOLIDATED
                                                  ---------  ------------  ------------  ------------
                                                                    (IN THOUSANDS)
<S>                                               <C>        <C>           <C>           <C>
Revenue:
   Oil and natural gas........................... $ 147,725  $     55,958  $         --  $    203,683
   Other.........................................    14,484           218       (14,751)          (49)
                                                  ---------  ------------  ------------  ------------
                                                    162,209        56,176       (14,751)      203,634

Costs and expenses:
   Lease operating expenses......................    24,482         2,580            --        27,062
   Taxes, other than on earnings.................       742         4,680            --         5,422
   Exploration expenditures......................    14,720        14,907            --        29,627
   Depreciation, depletion and amortization......    34,543        18,609            --        53,152
   General and administrative....................    19,405         8,157        (7,500)       20,062
                                                  ---------  ------------  ------------  ------------
       Total costs and expenses..................    93,892        48,933        (7,500)      135,325

Income from operations...........................    68,317         7,243        (7,251)       68,309

Interest expense,net.............................    (8,096)            8            --        (8,088)
                                                  ---------  ------------  ------------  ------------

Income before income taxes.......................    60,221         7,251        (7,251)       60,221

Income taxes.....................................   (21,750)           --            --       (21,750)
                                                  ---------  ------------  ------------  ------------

Net income....................................... $  38,471  $      7,251  $     (7,251) $     38,471
                                                  =========  ============  ============  ============
</TABLE>

                                      -16-
<PAGE>

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
                                   (UNAUDITED)

          SUPPLEMENTAL CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
                         SIX MONTHS ENDED JUNE 30, 2005

<TABLE>
<CAPTION>
                                                PARENT
                                                COMPANY    GUARANTOR
                                                 ONLY     SUBSIDIARIES  ELIMINATIONS  CONSOLIDATED
                                               ---------  ------------  ------------ -------------
                                                                  (IN THOUSANDS)
<S>                                            <C>        <C>           <C>          <C>
Net cash provided by operating activities....  $ (56,457) $    200,990  $         -- $     144,533

Cash flows used in investing activities:
   Acquisition of business, net of cash
     acquired................................       (863)           --            --          (863)
   Property acquisitions.....................    (42,149)     (141,837)           --      (183,986)
   Exploration and development
     expenditures............................    (63,264)      (59,100)           --      (122,364)
   Other property and equipment
     additions...............................       (792)           --            --          (792)
                                               ---------  ------------  ------------ -------------
Net cash used in investing  activities.......   (107,068)     (200,937)           --      (308,005)
                                               ---------  ------------  ------------ -------------

Cash flows provided by financing activities:
   Deferred financing costs..................       (357)           --            --          (357)
   Repayments of long-term debt..............    (33,000)          (53)           --       (33,053)
   Equity offering costs.....................        (87)           --            --           (87)
   Proceeds from long-term debt..............    105,000            --            --       105,000
   Exercise of stock options and warrants....      4,126            --            --         4,126
                                               ---------  ------------  ------------ -------------
Net cash provided by financing
   activities................................     75,682           (53)           --        75,629
                                               ---------  ------------  ------------ -------------

Net decrease in cash and cash equivalents....    (87,843)           --            --       (87,843)

Cash and cash equivalents at beginning of
   period....................................     93,537            --            --        93,537
                                               ---------  ------------  ------------ -------------

Cash and cash equivalents at end of
   period....................................  $   5,694  $         --  $         -- $       5,694
                                               =========  ============  ============ =============
</TABLE>

(11) CONTINGENCIES

   In the ordinary course of business, the Company is a defendant in various
legal proceedings. The Company does not expect its exposure in these
proceedings, individually or in the aggregate, to have a material adverse effect
on the financial position, results of operations or liquidity of the Company.

(12) RECLASSIFICATIONS

   Certain reclassifications have been made to the prior period financial
statements in order to conform to the classification adopted for reporting in
fiscal 2005.

                                      -17-
<PAGE>

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

OVERVIEW

   We were incorporated in January 1998 and operate in a single segment as an
independent oil and natural gas exploration and production company. Our current
operations are concentrated in the shallow to moderate depth waters of the Gulf
of Mexico Shelf and the Gulf Coast onshore region.

   During the first six months of 2005, we reported another period of growth and
progress in implementing our long-term growth strategy. Our strong cash flow
provided us the flexibility to make necessary and appropriate investments to
continue our strategy. Our long-term strategy is to increase our oil and natural
gas reserves and production while keeping our finding and development costs and
operating costs competitive with our industry peers. We will implement this
strategy through drilling exploratory wells from our inventory of available
prospects that we have evaluated for geologic and mechanical risk and future
reserve or resource potential, through drilling development wells and working
over and recompleting existing wells, and by making acquisitions. Our drilling
program contains some higher risk, higher reserve potential opportunities as
well as some lower risk, lower reserve potential opportunities, in order to
achieve a balanced program of reserve and production growth.

   We use the successful efforts method of accounting for our investment in oil
and natural gas properties. Under this method, we capitalize lease acquisition
costs, costs to drill and complete exploration wells in which proven reserves
are discovered and costs to drill and complete development wells. Exploratory
drilling costs are charged to expense if and when the well is determined not to
have found reserves in commercial quantities. Seismic, geological and
geophysical and delay rental expenditures are expensed as they are incurred. We
conduct many of our exploration and development activities jointly with others
and, accordingly, recorded amounts for our oil and natural gas properties
reflect only our proportionate interest in such activities. Our annual report on
Form 10-K for the fiscal year ended December 31, 2004, includes a discussion of
our critical accounting policies, which have not changed significantly since the
end of the fiscal year.

   On August 5, 2003, we issued $150 million of 8.75% Senior Notes Due 2010 in a
Rule 144A private offering (the "Debt Offering") which allows unregistered
transactions with qualified institutional buyers. In October 2003, we
consummated an exchange offer pursuant to which we exchanged registered 8.75%
Senior Notes Due 2010 having substantially identical terms for the privately
placed 8.75% Senior Notes due 2010. After discounts and commissions and
estimated offering expenses, we received $145.3 million, which was used to (i)
redeem all of our outstanding 11% Senior Subordinated Notes Due 2009 (the
"Notes"), which had been issued in connection with a business combination in
2002, and (ii) repay substantially all of the borrowings outstanding under our
bank credit facility. In January 2005 the remainder of the net proceeds were
used to purchase properties in south Louisiana.

   On July 16, 2004, we filed a universal shelf registration statement (the
"Registration Statement") which allowed us to issue an aggregate of $300 million
in common stock, preferred stock, senior debt and subordinated debt in one or
more separate offerings with the size, price and terms to be determined at the
time of the sale. On November 10, 2004 we sold approximately 3.5 million shares
of our common stock to the public pursuant to the Registration Statement.
Concurrent with this offering, we entered into a stock purchase agreement with
Energy Income Fund, L.P. ("EIF") pursuant to which we purchased an equal number
of shares of common stock owned by EIF at a price per share equal to the
proceeds per share received in the offering, before expenses. We did not retain
any of the proceeds from the offering and the shares are now held as treasury
shares, at cost. We restored the Shelf Registration Statement to $300 million in
May 2005. We have no immediate plans to enter into any additional transactions
under the Registration Statement, but plan to use the proceeds of any future
offering under the Registration Statement for general corporate purposes, which
may include debt repayment, acquisitions, expansion and working capital.

   On August 3, 2004, we amended and extended to August 3, 2008 our bank credit
facility. The borrowing base was increased to $150 million at the time of our
purchase of south Louisiana properties and reserves in January 2005. At June 30,
2005 the Company had $75.0 million outstanding under the bank credit facility.
The borrowing base remains subject to redetermination based on the proved
reserves of the oil and natural gas properties that serve as collateral for the
bank credit facility. The Company's borrowing base was reaffirmed effective
April 1, 2005.

                                      -18-
<PAGE>

   On January 20, 2005, we closed an acquisition of properties and reserves in
south Louisiana for $146.0 million in cash, after adjustments for the exercise
of preferential rights by third parties and preliminary closing adjustments. The
acquisition is composed of nine fields, four of which were producing at the time
of the closing through 14 wells, with estimated proved reserves of 51.2 billion
cubic feet equivalent. Also included were interests in 22 exploratory prospects.
The transaction expands the exploration opportunities in our expanded focus area
and further reduces the concentration of our reserves and production. Upon the
signing of the purchase agreement, we paid a $5.0 million deposit in 2004 toward
the purchase price which is recorded as other assets in the consolidated balance
sheet, and concurrent with the closing, the borrowing base under our bank credit
facility was increased to $150 million, of which $60 million was drawn to fund
the acquisition. In connection with the acquisition, we also entered into a
two-year agreement with the seller of the properties that defines an area of
mutual interest ("AMI") encompassing over one million acres. We intend to
continue to explore and develop oil and natural gas reserves in the AMI over the
next two years jointly with the seller. The proved reserves, prospects and the
AMI are in the southern portions of Terrebone, Lafourche and Jefferson Parishes
in Louisiana.

   On March 8, 2005, we closed the acquisition of the remaining 50% gross
working interest in South Timbalier 26 above approximately 13,000 feet subsea
that we did not already own for approximately $21.0 million after preliminary
closing adjustments from the effective date of December 1, 2004. As a result of
the acquisition, we now own a 100% gross working interest in the producing
horizons in this field. The acquisition expands our interest in our core Greater
Bay Marchand area and gives us additional flexibility in undertaking the future
development of the South Timbalier 26 field.

   We have included the results of operations from the acquisitions discussed
above from their respective closing dates. We have experienced substantial
revenue and production growth as a result of these acquisitions. For the
foregoing reasons these acquisitions will affect the comparability of our
historical results of operations with future periods.

   In the second quarter of 2005, the Company acquired 2,312 shares of its
common stock as a result of tax withholding in connection with employee benefit
transactions. All of these shares are reflected in treasury stock in the
Consolidated Balance Sheet.

   Our revenue, profitability and future growth rate depend substantially on
factors beyond our control, such as economic, political and regulatory
developments and competition from other sources of energy. Oil and natural gas
prices historically have been volatile and may fluctuate widely in the future.
Sustained periods of low prices for oil and natural gas could materially and
adversely affect our financial position, our results of operations, the
quantities of oil and natural gas reserves that we can economically produce and
our access to capital.

   We currently have an extensive inventory of drillable prospects in-house, we
are generating more prospects internally and we are exploring new opportunities
through relationships with industry partners. Despite our expanded budget in
2005, strong commodity prices together with growing production volumes should
enable us to adhere to our policy of funding our exploration and development
expenditures with internally generated cash flow. This strategy allows us to
preserve our strong balance sheet to finance acquisitions and other capital
intensive projects that might result from exploration and development
activities. In addition to the south Louisiana and South Timbalier 26 property
acquisitions already completed this year, we believe this year will provide us a
number of opportunities to acquire targeted properties, including those within
our focus area.

                                      -19-
<PAGE>

RESULTS OF OPERATIONS

The following table presents information about our oil and natural gas
operations.

<TABLE>
<CAPTION>
                                                               THREE MONTHS ENDED       SIX MONTHS ENDED
                                                                    JUNE 30,                 JUNE 30,
                                                               -------------------   ----------------------
                                                                 2005       2004        2005        2004
                                                               ---------  --------   ----------  ----------
<S>                                                            <C>        <C>        <C>         <C>
Net production (per day):
     Oil (Bbls)..............................................     10,469     8,411       10,225       8,200
     Natural gas (Mcf).......................................     99,941    87,054       98,067      82,094
         Total barrels of oil equivalent (Boe)...............     27,126    22,920       26,570      21,882
Oil and natural gas revenues (in thousands):
     Oil.....................................................  $  43,637  $ 25,412   $   84,656  $   48,583
     Natural gas.............................................     62,593    49,565      119,027      89,813
         Total...............................................    106,230    74,977      203,683     138,396
Average sales prices, net of hedging:
     Oil (per Bbl)...........................................  $   45.80  $  33.20   $    45.74  $    32.55
     Natural gas (per Mcf)...................................       6.88      6.26         6.71        6.01
         Total (per Boe).....................................      43.03     35.95        42.35       34.75
Impact of hedging:
     Oil (per Bbl)...........................................  $   (1.74) $  (3.40)  $    (1.46) $    (2.54)
     Natural gas (per Mcf)...................................         --     (0.01)          --       (0.04)
Average costs (per Boe):
     Lease operating expense.................................  $    5.72  $   4.66   $     5.52  $     4.86
     Taxes, other than on earnings...........................       1.08      1.00         1.13        1.08
     Depreciation, depletion and amortization................      11.20     10.65        11.05       10.28

Increase in oil and natural gas revenues between periods
presented (net of hedging) due to:
     Changes in prices of oil................................  $   9,649             $   19,432
     Changes in production volumes of oil....................      8,576                 16,641
         Total increase in oil sales.........................     18,225                 36,073

     Changes in prices of natural gas........................  $   4,930             $   10,197
     Changes in production volumes of natural gas............      8,098                 19,017
         Total increase in natural gas sales.................     13,028                 29,214
</TABLE>

REVENUES AND NET INCOME

   Our oil and natural gas revenues increased to $106.2 million in the second
quarter of 2005 from $75.0 million in the second quarter of 2004. Our oil and
natural gas revenues increased to $203.7 million in the first half of 2005 from
$138.4 million in the first half of 2004. The increase for this period is in
part the result of sharply increased oil prices and higher natural gas prices
combined with an increase in production from 28 new natural gas wells brought on
production since the end of the second quarter of 2004. In addition, the
acquisitions, in the first quarter of 2005, of the south Louisiana properties
and the additional interest in South Timbalier 26 added incremental production.
These increases were partially offset by natural reservoir declines.

   We recognized net income of $18.1 million in the second quarter of 2005
compared to net income of $14.7 million in the second quarter of 2004. We
recognized net income of $38.5 million in the first half of 2005 compared to net
income of $22.1 million in the first half of 2004. The increase was primarily a
result of the increase in oil and natural gas revenues discussed above partially
offset by increased costs discussed below.

                                      -20-
<PAGE>

OPERATING EXPENSES

   Operating expenses during the three and six month periods ended June 30, 2005
and 2004 were affected by the following:

-     Lease operating expense increased in the second quarter of 2005 to $14.1
      million compared to $9.7 million in the second quarter of 2004. Lease
      operating expense increased to $26.6 million in the first half of 2005
      from $19.4 million in the first half of 2004. This increase in both
      periods is a result of new wells coming on stream in new fields,
      acquisitions during the first quarter 2005, workovers in the current
      periods, as well as a general increase in the cost of oilfield industry
      services.

-     Taxes, other than on earnings, increased to $2.7 million in the second
      quarter of 2005 from $2.1 million in the second quarter of 2004. Taxes,
      other than on earnings, increased to $5.4 million in the first half of
      2005 from $4.3 million in the first half of 2004. The increase was due to
      the increase in commodity prices and production from non-federal leases as
      a result of the south Louisiana property acquisition. These taxes are
      expected to fluctuate from period to period depending on our production
      volumes from non-federal leases and the commodity prices received.

-     Exploration expenditures, including dry hole costs, increased to $18.9
      million in the second quarter of 2005 from $7.5 million in the second
      quarter of 2004. The expense in the second quarter of 2005 is comprised of
      $15.9 million of costs for exploratory wells or portions thereof which
      were found to be not commercially productive, $0.7 million of proved
      property impairments at two of our fields which had reached the end of
      their economic lives and $2.3 million of seismic expenditures and delay
      rentals, whereas the expense in the second quarter of 2004 is comprised of
      $5.5 million of costs for exploratory wells or portions thereof which were
      found to be not commercially productive and $2.0 million for seismic
      expenditures and delay rentals.

      Exploration expenditures, including dry hole costs, increased to $29.6
      million in the first half of 2005 from $16.9 million in the first half of
      2004. The expense in the first half of 2005 is comprised of $20.6 million
      of costs for exploratory wells or portions thereof which were found to be
      not commercially productive, $0.7 million of proved property impairments
      noted above and $8.3 million of seismic expenditures and delay rentals,
      whereas the expense in the first half of 2004 is comprised of $6.4 million
      of costs for exploratory wells or portions thereof which were found to be
      not commercially productive, $6.9 million of proved property impairments
      at our East Cameron 378 field and $3.7 million of seismic expenditures and
      delay rentals.

      Our exploration expenditures, including dry hole charges, will vary
      depending on the amount of our capital budget dedicated to exploration
      activities and the level of success we achieve in exploratory drilling
      activities.

-     Depreciation, depletion and amortization increased to $27.6 million in the
      second quarter of 2005 from $22.2 million in the second quarter of 2004.
      Depreciation, depletion and amortization increased to $53.2 million in the
      first half of 2005 from $41.0 million in the first half of 2004. Each
      increase was due to higher production from an increased asset base and a
      shift in the production contribution from our various fields.

      In addition, in both periods, the shift in the production contribution
      amongst our various fields also increased our expense per Boe. Some fields
      carry a higher depreciation burden than others; therefore, changes in the
      sources of our production will directly impact this expense.

-     Other general and administrative expenses increased to $8.3 million in the
      second quarter of 2005 from $6.4 million in the second quarter of 2004.
      The change was due to increased personnel costs resulting from our overall
      increased level of activity and expanded asset base in addition to
      increased insurance costs.

                                      -21-
<PAGE>

      Other general and administrative expenses increased to $16.3 million in
      the first half of 2005 from $13.8 million in the first half of 2004. The
      change was also due to increased personnel costs resulting from our
      overall increased level of activity and expanded asset base in addition to
      increased consulting fees.

-     Non-cash stock-based compensation expense of $1.9 million was recognized
      in the second quarter of 2005 compared to $0.7 million in the second
      quarter of 2004. Non-cash stock-based compensation expense of $3.8 million
      was recognized in the first half of 2005 compared to $1.5 million in the
      first half of 2004. The increased expense relates to the increased
      amortization of new restricted stock and performance share awards made to
      employees in late 2004 and early 2005 as well as accelerated vesting of
      stock for two former employees.

OTHER INCOME AND EXPENSE

      Interest expense increased to $4.3 million in the second quarter of 2005
from $3.6 million in the second quarter of 2004. Interest expense increased to
$8.4 million in the first half of 2005 from $7.2 million in the first half of
2004. The increase was a result of interest expense on borrowings under our bank
credit facility to finance acquisitions.

LIQUIDITY AND CAPITAL RESOURCES

      The trend of increased revenues we have experienced from 2004 into the
first six months of 2005 has continued to provide strong cash flows from
operations which totaled $144.5 million in the first six months of the year. We
intend to fund our exploration and development expenditures from internally
generated cash flows, which we define as cash flows from operations before
changes in working capital plus total exploration expenditures. Our cash on hand
at June 30, 2005 was $5.7 million. Our future internally generated cash flows
will depend on our ability to maintain and increase production through our
development and exploratory drilling program, as well as the prices we receive
for oil and natural gas. We may, from time to time, use our bank credit facility
to fund working capital needs.

      Our bank credit facility, as amended on August 3, 2004, consists of a
revolving line of credit with a group of banks available through August 3, 2008
(the "bank credit facility"). The bank credit facility currently has a borrowing
base of $150 million that is subject to redetermination based on the proved
reserves of the oil and natural gas properties that serve as collateral for the
bank credit facility as set out in the reserve report delivered to the banks
each April 1 and October 1. The bank credit facility permits both prime rate
borrowings and London interbank offered rate ("LIBOR") borrowings plus a
floating spread. The spread will float up or down based on our utilization of
the bank credit facility. The spread can range from 1.25% to 2.00% above LIBOR
and 0% to 0.75% above prime. The borrowing base under the bank credit facility
is secured by substantially all of our assets. We used our bank credit facility
to fund a portion of the purchase of the south Louisiana properties in January
2005 and the acquisition of the additional interest in South Timbalier 26 in
March 2005. At August 3, 2005 we had $95.0 million outstanding and
$55.0 million of credit capacity available under the bank credit facility. In
addition, we pay an annual fee on the unused portion of the bank credit facility
ranging between 0.375% to 0.5% based on utilization. The bank credit facility
contains customary events of default and various financial covenants, which
require us to: (i) maintain a minimum current ratio, as defined in our bank
credit facility agreement, of 1.0 and (ii) maintain a minimum EBITDAX to
interest ratio, as defined in our bank credit facility agreement, of 3.5. We
were in compliance with the bank credit facility covenants as of June 30, 2005.

      On August 5, 2003, we issued $150 million of our 8.75% senior notes due
2010 which were exchanged in October 2003 for registered 8.75% senior notes due
2010 (the "Senior Notes") with substantially the same terms. The Senior Notes
bear interest at a rate of 8.75% per annum with interest payable semi-annually
on February 1 and August 1, beginning February 1, 2004. We may redeem the Senior
Notes at our option, in whole or in part, at any time on or after August 1, 2007
at a price equal to 100% of the principal amount plus accrued and unpaid
interest, if any, plus a specified premium which decreases yearly from 4.375% in
2007 to 0% in 2009 and thereafter. In addition, at any time prior to August 1,
2006, we may redeem up to a maximum of 35% of the aggregate principal amount
with the net proceeds of certain equity offerings at a price equal to 108.75% of
the principal amount, plus accrued and unpaid interest. The notes are unsecured
obligations and rank equal in right of payment to all

                                      -22-
<PAGE>

existing and future senior debt, including the bank credit facility, and will
rank senior or equal in right of payment to all existing and future subordinated
indebtedness. The indenture relating to the Senior Notes contains certain
restrictions on our ability to incur additional debt, pay dividends on our
common stock, make investments, create liens on our assets, engage in
transactions with our affiliates, transfer or sell assets and consolidate or
merge substantially all of our assets. The Senior Notes are not subject to any
sinking fund requirements.

      Net cash of $308.0 million used in investing activities in the first six
months of 2005 consisted primarily of the acquisition of south Louisiana
properties and of an additional interest in South Timbalier 26, as well as oil
and natural gas exploration and development expenditures. Dry hole costs
resulting from exploration expenditures are excluded from operating cash flows
and included in investing activities. During the first six months of 2005, we
completed 41 drilling projects, 29 of which were successful, and 21
recompletion/workover projects, 17 of which were successful. During the first
six months of 2004, we completed 15 drilling projects, 12 of which were
successful, and 10 recompletion/workover projects, eight of which were
successful.

      Our 2005 capital exploration and development budget is focused on
exploration, exploitation and development activities on our proved properties
combined with moderate risk and higher risk exploratory activities on
undeveloped leases and our proved properties, and does not include acquisitions.
We currently intend to allocate approximately 55% of our budget on an annual
basis to low risk development and exploitation activities, approximately 30% to
moderate risk exploration opportunities and approximately 15% to higher risk,
higher potential exploration opportunities. Our exploration and development
budget for 2005 is currently approximately $307 million inclusive of expected
incremental drilling expenditures on properties acquired through acquisitions
closed thus far during the year. We do not budget for acquisitions. During the
first six months of 2005, capital and exploration expenditures were
approximately $337.3 million inclusive of a $0.9 million contingent
consideration payment resulting from an acquisition during 2002 and $189.0
million related to the acquisition of leases and producing assets in 2005. The
level of our capital and exploration expenditure budget is based on many
factors, including results of our drilling program, oil and natural gas prices,
industry conditions, participation by other working interest owners and the
costs and availability of drilling rigs and other oilfield goods and services.
Should actual conditions differ materially from expectations, some projects may
be accelerated or deferred and, consequently, may increase or decrease total
2005 capital expenditures.

      We have experienced and expect to continue to experience substantial
working capital requirements, primarily due to our active capital expenditure
program. We believe that internally generated cash flows will be sufficient to
meet our budgeted capital requirements for at least the next twelve months.
Availability under the bank credit facility may be used to balance short-term
fluctuations in working capital requirements. However, additional financing may
be required in the future to fund our growth.

      Our annual report on Form 10-K for the year ended December 31, 2004
included a discussion of our contractual obligations. There have been no
material changes to that disclosure during the six months ended June 30, 2005.
In addition, we do not maintain any off balance sheet transactions,
arrangements, obligations or other relationships with unconsolidated entities or
others that are reasonably likely to have a material current or future effect on
our financial condition, changes in financial condition, revenues and expenses,
results of operations, liquidity, capital expenditures or capital resources.

NEW ACCOUNTING PRONOUNCEMENTS

      In November 2004, the FASB issued Statement of Financial Accounting
Standards No. 151 "Inventory Costs, an amendment of ARB No. 43, Chapter 4"
("Statement 151"). The amendments made by Statement 151 clarify that abnormal
amounts of idle facility expense, freight, handling costs, and wasted materials
(spoilage) should be recognized as current-period charges and require the
allocation of fixed production overheads to inventory based on the normal
capacity of the production facilities. The guidance is effective for inventory
costs incurred during fiscal years beginning after June 15, 2005. Earlier
application is permitted for inventory costs incurred during fiscal years
beginning after November 23, 2004. Our assessment of the provisions of Statement
151 is that it is not expected to have an impact on our financial position,
results of operations or cash flows.

      In December 2004, the FASB issued Statement of Financial Accounting
Standards No. 153 "Exchanges of Non-monetary assets - an amendment of APB
Opinion No. 29" ("Statement 153"). Statement 153 amends Accounting Principles
Board ("APB") Opinion 29 to eliminate the exception for

                                      -23-
<PAGE>

nonmonetary exchanges of similar productive assets and replaces it with a
general exception for exchanges of nonmonetary assets that do not have
commercial substance. A nonmonetary exchange has commercial substance if the
future cash flows of the entity are expected to change significantly as a result
of the exchange. Statement 153 does not apply to a pooling of assets in a joint
undertaking intended to fund, develop, or produce oil or natural gas from a
particular property or group of properties. The provisions of Statement 153
shall be effective for nonmonetary asset exchanges occurring in fiscal periods
beginning after June 15, 2005. Early adoption is permitted and the provisions of
Statement 153 should be applied prospectively. Our assessment of the provisions
of Statement 153 is that it is not expected to have an impact on our financial
position, results of operations or cash flows.

      In December 2004, the FASB issued Statement of Financial Accounting
Standards No. 123-Revised 2004, "Share-Based Payment," ("Statement 123R"). This
is a revision of Statement of Financial Accounting Standards No. 123,
"Accounting for Stock-Based Compensation", and supersedes APB No. 25,
"Accounting for Stock Issued to Employees." We currently account for stock-based
compensation under the provisions of APB 25. Under Statement 123R, we will be
required to measure the cost of employee services received in exchange for
stock, based on the grant-date fair value (with limited exceptions). That cost
will be recognized as expense over the period during which an employee is
required to provide service in exchange for the award (usually the vesting
period). The fair value will be estimated using an option-pricing model. Excess
tax benefits, as defined in Statement 123R, will be recognized as an addition to
paid-in capital. This will be effective for us as of the beginning of the first
annual reporting period that begins after June 15, 2005. We are currently in the
process of evaluating the impact of Statement 123R on our financial statements,
including different option-pricing models. Note (2)(j) of the Notes to
Consolidated Financial Statements illustrates the current effect on net income
and earnings per share if we had applied the fair value recognition provisions
of Statement 123.

      In May 2005, the FASB issued Statement of Financial Accounting Standards
No. 154, "Accounting Changes and Error Corrections -- a replacement of APB
Opinion No. 20 and FASB Statement No. 3," (Statement 154). Statement 154
provides guidance on the accounting for and reporting of accounting changes and
error corrections. It establishes, unless impracticable, retrospective
application as the required method for reporting a change in accounting
principle in the absence of explicit transition requirements specific to
Statement 154. The provisions of Statement 154 shall be effective for accounting
changes and corrections of errors made in fiscal years beginning after December
15, 2005.

FORWARD LOOKING INFORMATION

      All statements other than statements of historical fact contained in this
Report on Form 10-Q ("Report") and other periodic reports filed by us under the
Securities Exchange Act of 1934 and other written or oral statements made by us
or on our behalf, are forward-looking statements. When used herein, the words
"anticipates", "expects", "believes", "goals", "intends", "plans", or "projects"
and similar expressions are intended to identify forward-looking statements. It
is important to note that forward-looking statements are based on a number of
assumptions about future events and are subject to various risks, uncertainties
and other factors that may cause our actual results to differ materially from
the views, beliefs and estimates expressed or implied in such forward-looking
statements. We refer you specifically to the section "Additional Factors
Affecting Business" in Items 1 and 2 of our Annual Report on Form 10-K for the
year ended December 31, 2004. Although we believe that the assumptions on which
any forward-looking statements in this Report and other periodic reports filed
by us are reasonable, no assurance can be given that such assumptions will prove
correct. All forward-looking statements in this document are expressly qualified
in their entirety by the cautionary statements in this paragraph.

                                      -24-
<PAGE>

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

INTEREST RATE RISK

      We are exposed to changes in interest rates. Changes in interest rates
affect the interest earned on our cash and cash equivalents and the interest
rate paid on borrowings under our bank credit facility. Currently, we do not use
interest rate derivative instruments to manage exposure to interest rate
changes. At June 30, 2005, $72.0 million of our long-term debt had variable
interest rates while the remaining long-term debt had fixed interest expense. If
the market interest rates had averaged 1% higher in the second quarter of 2005,
interest rates for the period on variable rate debt outstanding during the
period would have increased, and net income before income taxes would have
decreased by approximately $0.2 million based on total variable debt outstanding
during the period. If market interest rates had averaged 1% lower in the second
quarter of 2005, interest expense for the period on variable rate debt would
have decreased, and net income before income taxes would have increased by
approximately $0.2 million.

COMMODITY PRICE RISK

      Our revenues, profitability and future growth depend substantially on
prevailing prices for oil and natural gas. Prices also affect the amount of cash
flow available for capital expenditures and our ability to borrow and raise
additional capital. The amount we can borrow under our bank credit facility is
subject to periodic redetermination based in part on changing expectations of
future prices. Lower prices may also reduce the amount of oil and natural gas
that we can economically produce. We currently sell all of our oil and natural
gas production under price sensitive or market price contracts.

      We use derivative commodity instruments to manage commodity price risks
associated with future oil and natural gas production. As of June 30, 2005, we
had the following contracts in place:

<TABLE>
<CAPTION>
                             Natural Gas Positions
------------------------------------------------------------------------------------
                                                                    VOLUME (MMBTU)
                                                                  ------------------
  REMAINING CONTRACT TERM  CONTRACT TYPE  STRIKE PRICE ($/MMBTU)  DAILY      TOTAL
-------------------------  -------------  ----------------------  ------   ---------
<S>                        <C>            <C>                     <C>      <C>
07/05 - 12/05............      Collar         $ 4.50/$10.75       20,000   3,680,000
07/05 - 12/05............      Collar         $ 5.00/$10.00       15,000   2,760,000
01/06 - 12/06............      Collar         $ 5.00/$ 9.51       15,000   5,475,000
01/07 - 12/07............      Collar         $ 5.00/$ 8.00       10,000   3,650,000
</TABLE>

<TABLE>
<CAPTION>
                             Crude Oil Positions
------------------------------------------------------------------------------------
                                                                    VOLUME (BBLS)
                                                                  ------------------
 REMAINING CONTRACT TERM   CONTRACT TYPE  STRIKE PRICE ($/BBL)    DAILY      TOTAL
-------------------------  -------------  --------------------    ------   ---------
<S>                        <C>            <C>                     <C>      <C>
07/05 - 12/05............      Collar         $ 31.00/$44.05      2,000     368,000
</TABLE>

      Our hedged volume as of June 30, 2005 approximated 12% of our estimated
production from proved reserves for the balance of the terms of the contracts.
Had these contracts been terminated at June 30, 2005, we estimate the pre-tax
loss would have been $10.6 million.

      We use a sensitivity analysis technique to evaluate the hypothetical
effect that changes in the market value of crude oil and natural gas may have on
the fair value of our derivative instruments. At June 30, 2005, the potential
change in the fair value of commodity derivative instruments assuming a 10%
increase in the underlying commodity price was a $5.4 million increase in the
combined estimated pre tax loss.

      For purposes of calculating the hypothetical change in fair value, the
relevant variables are the type of commodity (crude oil or natural gas), the
commodities futures prices and volatility of commodity prices. The hypothetical
fair value is calculated by multiplying the difference between the hypothetical
price and the contractual price by the contractual volumes.

                                      -25-
<PAGE>

ITEM 4. CONTROLS AND PROCEDURES

      CONCLUSION REGARDING THE EFFECTIVENESS OF DISCLOSURE CONTROLS AND
      PROCEDURES

      Under the supervision and with the participation of certain members of our
management, including the Chief Executive Officer and Chief Financial Officer,
we completed an evaluation of the effectiveness of our disclosure controls and
procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities
Exchange Act of 1934, as amended). Based on this evaluation, our Chief Executive
Officer and Chief Financial Officer believe that the disclosure controls and
procedures were effective as of the end of the period covered by this report
with respect to timely communication to them and other members of management
responsible for preparing periodic reports and all material information required
to be disclosed in this report as it relates to our Company and its consolidated
subsidiaries. There was no change in our internal control over financial
reporting during the fiscal quarter ended June 30, 2005 that has materially
affected, or is reasonably likely to materially affect, our internal control
over financial reporting.

      A control system, no matter how well conceived and operated, can provide
only reasonable, not absolute, assurance that the objectives of the control
system are met. Further, the design of a control system must reflect the fact
that there are resource constraints, and the benefits of controls must be
considered relative to their costs. Because of the inherent limitations in all
control systems, no evaluation of controls can provide absolute assurance that
all control issues and instances of fraud, if any, within the company have been
detected. These inherent limitations include the realities that judgments in
decision-making can be faulty, and that breakdowns can occur because of simple
error or mistake. Additionally, controls can be circumvented by the individual
acts of some persons or by collusion of two or more people. The design of any
system of controls also is based in part upon certain assumptions about the
likelihood of future events, and there can be no assurance that any design will
succeed in achieving its stated goals under all potential future conditions;
over time, controls may become inadequate because of changes in conditions, or
the degree of compliance with the policies or procedures may deteriorate.
Because of the inherent limitations in a cost-effective control system,
misstatements due to error or fraud may occur and not be detected. Accordingly,
our disclosure controls and procedures are designed to provide reasonable, not
absolute, assurance that the objectives of our disclosure control system are met
and, as set forth above, our Chief Executive Officer and Chief Financial Officer
have concluded, based on their evaluation as of the end of the period, that our
disclosure controls and procedures were sufficiently effective to provide
reasonable assurance that the objectives of our disclosure control system were
met.

                                      -26-
<PAGE>

PART II. OTHER INFORMATION

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

<TABLE>
<CAPTION>
                                                           (c) Total Number
                                                               of Shares
                                                           Purchased as Part   (d) Maximum Number of
                                                              of Publicly     Shares that May Yet Be
                  (a) Total Number of  (b) Average Price   Announced Plans or    Purchased Under the
     Period        Shares Purchased    Paid per Share (1)     Programs (1)      Plans or Programs (1)
----------------  -------------------  ------------------  ------------------  ----------------------
                    (in thousands)
<S>               <C>                  <C>                 <C>                 <C>
4/1/05 - 4/30/05             -                n/a                  n/a                   n/a
5/1/05 - 5/31/05         2,312             $23.49                  n/a                   n/a
6/1/05 - 6/30/05             -                n/a                  n/a                   n/a
                        ------
Total                    2,312             $23.49                  n/a
                        ------
</TABLE>

(1) Shares were acquired from employees as part of a benefit plan agreement and
    were not purchased as part of a publicly announced plan or program.

ITEM 4. SUBMISSION OF MATTERS TO THE VOTE OF SECURITY HOLDERS

a)    At the Annual Meeting of Stockholders of the Company held on May 12, 2005,
   the stockholders elected 10 directors to serve until the 2006 Annual Meeting
   of Stockholders, approved the Amended and Restated 2000 Stock Incentive Plan
   for Non-Employee Directors and ratified the appointment of KPMG as the
   Company's independent public accountants for the year ended December 31,
   2005.

      The voting tabulation is as follows:

<TABLE>
<CAPTION>
                                            FOR       WITHHELD
<S>                                      <C>         <C>
Election as a Director of the Company:
Richard A. Bachmann                      30,023,788   2,839,985
John C. Bumgarner, Jr.                   31,044,788   1,818,985
Jerry D. Carlisle                        31,127,696   1,736,077
Harold D. Carter                         30,446,280   2,417,493
Enoch L. Dawkins                         20,117,304  12,746,469
Robert D. Gershen                        30,456,143   2,407,630
William R. Herrin                        31,166,351   1,697,422
William O. Hiltz                         31,134,856   1,728,917
John G. Phillips                         31,047,431   1,816,342
Norman D. Francis                        31,167,444   1,696,329
</TABLE>

<TABLE>
<CAPTION>
                                                      FOR       AGAINST   ABSTAIN
<S>                                                <C>         <C>        <C>
Approve the Amended and Restated 2000 Stock
Incentive Plan for Non-Employee Directors:         23,074,221  4,030,651   25,739
</TABLE>

<TABLE>
<CAPTION>
                                                      FOR       AGAINST   ABSTAIN
<S>                                                <C>          <C>       <C>
Ratify appointment of KPMG LLP as the Company's
independent public accountants:                    32,785,677    68,698    9,398
</TABLE>

                                      -27-
<PAGE>

ITEM 6. EXHIBITS

Exhibits:

10.1  General Release between William Flores, Jr. and Energy Partners, Ltd.
      dated July 6, 2005.

31.1  Rule 13a-14(a)/15d-14(a) Certification of Chairman and Chief Executive
      Officer of Energy Partners, Ltd.

31.2  Rule 13a-14(a)/15d-14(a) Certification of Executive Vice President and
      Chief Financial Officer of Energy Partners, Ltd.

32.0  Section 1350 Certifications.

                                      -28-
<PAGE>


                                    SIGNATURE

      Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

                     ENERGY PARTNERS, LTD.

Date: August 8, 2005   By: /s/ David R. Looney
                           -----------------------------------------------------
                           David R. Looney
                           Executive Vice President and Chief Financial Officer
                           (Authorized and Principal Financial Officer)

                                      -29-
<PAGE>


EXHIBIT INDEX

<TABLE>
<CAPTION>
Exhibit
Number                             Description of Exhibit
-------    ---------------------------------------------------------------------
<S>        <C>
10.1       General Release between William Flores, Jr. and Energy Partners, Ltd.
           dated July 6, 2005.

31.1       Rule 13a-14(a)/15d-14(a) Certification of Chairman and Chief
           Executive Officer of Energy Partners, Ltd.

31.2       Rule 13a-14(a)/15d-14(a) Certification of Executive Vice President
           and Chief Financial Officer of Energy Partners, Ltd.

32.0       Section 1350 Certifications.
</TABLE>

                                             -30-