What happened

Shares of oil and gas producer EP Energy (NYSE:EPE) were up 13.6% as of 11 a.m. EDT today after the company announced first-quarter results following Tuesday's market close. Even though the company's bottom-line results didn't quite live up to Wall Street's expectations, the company made up for it by increasing its production guidance for the year. I'm also sure that today's rising oil prices are helping shares as well.

So what

After adjusting earnings for a one-time gain related to the early extinguishing of some debt, EP Energy ended the quarter with a loss of $0.07 per share. Wall Street consensus estimates had it losing $0.06 per share. 

What was more encouraging in EP's results was that its production levels came in higher than management had previously guided, with total production at 45,400 barrels of oil equivalent per day. EP was able to achieve these results even though its capital expenditures were lower than originally anticipated, which means that it's getting much better results out of each well. 

Oil pumpjacks at sunset.

Image source: Getty Images.

These recent results gave management enough confidence to raise production guidance as well as lower its capital spending rate for the next quarter. So even though the bottom-line number this past quarter wasn't up to snuff, there was more than enough good news to justify some enthusiasm.

Now what

So EP is upping production on a lower spending rate at a time when oil prices are around $70 a barrel. What's not to like? Well, this is an exploration & production company with a small production base, and it's up to its eyeballs in debt -- total debt outstanding was $4.1 billion. If we were to see sustained strength in oil prices, then perhaps the company would be able to start paying down those debts and become a more attractive investment. However, until that happens, there are much better options in the oil patch today that are on a more-stable financial foundation and don't need high oil prices to sustain themselves over the long run. 

Tyler Crowe has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.