Apparently, you've got to be crazy to want to stay in the Gulf of Mexico. After all, companies like Houston Exploration (NYSE:THX) and EnCana (NYSE:ECA) have been selling assets, and even BP (NYSE:BP) has been adjusting its portfolio. Then again, sometimes "crazy" is just genius in its awkward adolescent phase. That's certainly the hope for Energy Partners (NYSE:EPL) -- a rather small energy producer focused largely on the Gulf of Mexico.

Forget about companies like Apache (NYSE:APA) that I've talked about in the past -- Energy Partners is not Apache. This quarter, Energy Partners produced about 23,000 barrels of oil equivalent each day -- very roughly about one-twentieth of that larger company's production. And while that amount was down about 12% from last year because of lingering hurricane shut-ins, it was a pronounced improvement over the prior quarter.

Looking at the earnings for this period, it's probably useful to remember that this is still largely a story about the future. Revenue growth of 13% wasn't bad, but earnings were affected by pretty significant dry hole expenses (expenses for failed prospective wells) and boosted by an insurance settlement. On a more positive note, basic operating expenses don't seem out of control.

As I said, this is a story about the future. Although it seems that there are plenty of skeptics on the potential of Gulf assets, Energy Partners has done pretty well in the past few years with boosting reserves through the drill bit. Building on success in shallow waters (and a small onshore position), the company is now getting more active in deepwater assets -- largely through the acquisition of working interests in projects with Noble Energy (NYSE:NBL).

Assuming that these exploratory assets work out and that the company can get enough crew and equipment, there could be pretty robust production growth in the coming years -- something that's not necessarily common across the sector these days. Of course, that all comes with risk -- risk of hurricanes, risk of dry holes, risk of energy price declines, and so on.

As a result, this is a "yeah, but" stock for me -- as in "yeah, it's undervalued, but it's not for everybody." If you have a bit of a wildcat streak in you and some patience, this could be an interesting growth story. But if you can't stand seeing a 10%-20% drop in a stock for little or no reason, this might be a little too spicy for you.

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Fool contributor Stephen Simpson has no financial interest in any stocks mentioned (that means he's neither long nor short the shares).