- Production capacity approximates 52,000 BOE/d, 70% oil
- Second horizontal at West Delta delivers initial production of 1,800 BOE/d
- First well in Vermilion joint venture to spud this month
- Davy Jones discovery well nearing completion
HOUSTON, Nov. 7, 2012 (GLOBE NEWSWIRE) -- Energy XXI EXXI EXXI today announced fiscal first-quarter results and provided an operations update on activities in the Gulf of Mexico.
For the 2013 fiscal first quarter, Energy XXI reported earnings before interest, taxes, depreciation, depletion and amortization (EBITDA) of $140.0 million, compared with $186.9 million in the 2012 fiscal first quarter. Net income attributable to common stockholders for the 2013 fiscal first quarter was $15.4 million, or $0.19 per diluted share, on revenues of $270 million, compared with fiscal 2012 first quarter net income attributable to common stockholders of $62.6 million, or $0.76 per diluted share, on revenue of $285 million.
Production for the fiscal first quarter averaged 37,300 barrels of oil equivalent per day (BOE/d), with 70 percent being oil. Current production approximates 46,000 BOE/d, with another 6,000 BOE/d temporarily offline, including 2,300 BOE/d due to pipeline and water handling facility repairs at the West Delta 30 field that are expected to be completed within 10 days.
"Oil dominates our production mix, which is expected to continue because it is the primary focus of our capital program," Energy XXI Chairman and CEO John Schiller said. "We have recovered from the hurricane and resumed ramping production through our horizontal development drilling program. We have two new horizontal wells on production and another 13 on the drilling schedule, representing a concerted effort to increase the ultimate recovery of the oil in place in our large fields."
Exploration and Development Activity
At West Delta 73 (WI 100%/ NRI 83%), the Weimer well, Energy XXI's second horizontal well in the field, was drilled to 8,312 feet true vertical depth (TVD)/9,800 feet measured depth (MD), including a 175 foot horizontal section in the F-45 oil sand. Weimer was placed on production at 1,800 BOE/d, gross. Big Sky 2, the company's first horizontal well, was placed on production from the F-30 sand in September at nearly 3,000 Bbl/d and averaged approximately 2,000 Bbl/d in the first month of production. Based on the historical results of nine horizontal wells drilled in this field in the late 1990s, the estimated ultimate recovery from Big Sky 2 and Weimer should exceed 1 million barrels of oil each, compared with average recoveries of about 350,000 barrels of oil from vertical wells in the field. A third horizontal well at West Delta 73, Hyden, has begun drilling to a proposed 8,750 feet TVD/ 11,800 feet MD targeting the G-20 sand.
The Cake development well at Grand Isle 16/18 (100% WI/ 86% NRI) was drilled to 7,208 feet TVD/8,080 feet MD, updip of a past producer. Cake was dual completed as a high-angle well in the BF-1 and BF-2 sands and placed on production in late October at 800 BOE/d gross from the BF-1 sand. The larger BF-2 sand will be brought online after additional facilities work, with production from the well expected to reach 2,500 BOE/d within the next two weeks. The next development well at Grand Isle, DrO, is proposed as a horizontal drilled to 6,945 feet TVD/ 7,750 feet MD targeting the BF-2 sand with an expected uplift of 3,800 BOE/d gross.
At the South Pass 49 field, a workover is underway on the A-7 well (57% WI/ 47% NRI). Since April 2012, the well had been producing 2 million cubic feet per day (MMcf/d) of natural gas plus 60 BBl/d of condensate from the D-65 sand, which had never previously been produced in the field. The well is being worked over to install a gravel pack for sand control across the lower portion of the D-65 reservoir, to separately test the upper portion of the D-65 not previously perforated, and to gather more data about the reservoir and to increase production rates.
Within the recently formed Vermilion joint venture area, Energy XXI is preparing to spud Pendragon, the first of two exploration wells required to earn a 50 percent working interest in the joint venture. Pendragon is targeting multiple sands on the south side of a salt dome, with a proposed total depth of 16,500 feet TVD/ 20,400 feet MD.
Within the shallow-water ultra-deep exploration program with McMoRan, the Davy Jones discovery well is proceeding toward first production and the company is participating in the Blackbeard West #2, Lomond North and Lineham Creek wells.
The Davy Jones discovery well, the first shallow-water, ultra-deep sub-salt completion on the Gulf of Mexico shelf, is being completed. The wellbore was cleaned out to enable testing of all 165 feet of perforated sands in the Wilcox and the final steps of installing the wellhead are underway. Once these steps are complete, flow testing is expected to commence. Energy XXI holds a 15.8 percent working interest (12.6 percent net revenue interest) in the Davy Jones discovery well. Total net investment in Davy Jones #1 through Sept. 30, 2012 was approximately $87.6 million.
Completion and testing of the Davy Jones offset appraisal well (Davy Jones #2) is expected to commence following review of results from the Davy Jones discovery well.
At Blackbeard West #2 on Ship Shoal Block 188, has been drilled to 24,500 feet. McMoRan has applied for a permit to deepen the well to 25,500 feet. Recent logs indicate the presence of potential low-resistivity pay zones and wireline logs have indicated Middle Miocene sands with 24 percent porosity. The presence of sands with high porosity indicates that sands can retain excellent characteristics in a high-pressure environment below the salt weld. Energy XXI holds a 22.9 percent working interest and a 17.5 percent net revenue interest in Ship Shoal Block 188. Total net investment in Blackbeard West No. 2 approximated $21.8 million at Sept. 30, 2012.
The Lineham Creek exploration prospect, located onshore in Cameron Parish, Louisiana, approximately 55 miles northwest of Davy Jones, is drilling below the salt weld at 24,450 feet. The well is targeting Eocene and Paleocene objectives below the salt weld with a proposed total depth of 29,000 feet. Chevron U.S.A. Inc., as operator of the well, holds a 50 percent working interest. Energy XXI holds a 9 percent working interest and a 6.75 percent in the well. Total net investment in Lineham Creek was approximately $10.8 million at Sept. 30, 2012.
Drilling has commenced in the Highlander project area on the Lomond North ultra-deep prospect, located in St. Martin Parish, Louisiana. The well is drilling below 8,850 feet toward a proposed total depth of 30,000 feet and is targeting Eocene, Paleocene and Cretaceous objectives below the salt weld. McMoRan has identified multiple exploratory prospects in the Highlander area, where it controls rights to approximately 80,000 gross acres in Iberia, St. Martin, Assumption and Iberville Parishes. Lomond North is approximately 65 miles north of Davy Jones. Energy XXI holds an 18 percent working interest in Lomond North, where its total net investment approximated $1.4 million at Sept. 30, 2012.
Capital Expenditures
During the 2013 fiscal first quarter, capital expenditures, including plug-and-abandonment costs, totaled $194 million, with $31 million in exploration and $163 million in development and other investments.
Conference Call Today, Nov. 7, at 9 a.m. CST, 3 p.m. London Time
Energy XXI will host its fiscal first-quarter conference call today, Nov. 7, at 9 a.m. CST (3 p.m. London time). The dial-in numbers are 1 (631) 813-4724 (U.S.) and (0) 80 0051 3806 (U.K.), and the confirmation code is 47026680. For complete instructions on how to actively participate in the conference call, or to listen to the live audio webcast or a replay, please refer to www.EnergyXXI.com.
The Energy XXI logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=3587
Forward-Looking Statements
All statements included in this release relating to future plans, projects, events or conditions and all other statements other than statements of historical fact included in this release are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based upon current expectations and are subject to a number of risks, uncertainties and assumptions, including changes in long-term oil and gas prices or other market conditions affecting the oil and gas industry, reservoir performance, the outcome of commercial negotiations and changes in technical or operating conditions, among others, that could cause actual results, including project plans and related expenditures and resource recoveries, to differ materially from those described in the forward-looking statements. Energy XXI assumes no obligation and expressly disclaims any duty to update the information contained herein except as required by law.
Competent Person Disclosure
The technical information contained in this announcement relating to operations adheres to the standard set by the Society of Petroleum Engineers. Bobby Poirrier Jr., Vice President of Corporate Development, a Petroleum Engineer, is the qualified person who has reviewed and approved the technical information contained in this announcement.
About the Company
Energy XXI is an independent oil and natural gas exploration and production company whose growth strategy emphasizes acquisitions, enhanced by its value-added organic drilling program. The company's properties are located in the U.S. Gulf of Mexico waters and the Gulf Coast onshore. Seymour Pierce is Energy XXI's listing broker in the United Kingdom. To learn more, visit the Energy XXI website at www.EnergyXXI.com.
ENERGY XXI (BERMUDA) LIMITED
RECONCILIATION OF GAAP TO NON-GAAP MEASURES
(In Thousands, except per share information)
(Unaudited)
As required under Regulation G of the Securities Exchange Act of 1934, provided below is a reconciliation of net income to EBITDA. We define EBITDA as earnings before interest, taxes, depreciation, depletion and amortization. EBITDA is not a measure of performance calculated in accordance with accounting principles generally accepted in the United States ("GAAP"). Although not proscribed under GAAP, the company believes EBITDA is relevant because it helps investors to understand the company's operating performance and makes it easier to compare its results with other oil and gas exploration and production companies that may have different financing and capital structures or tax rates. EBITDA should not be considered in isolation of, or as a substitute for, net income as an indicator of operating performance or cash flows from operating activities as a measure of liquidity. EBITDA, as the company calculates it, may not be comparable to EBITDA measures reported by other companies. In addition, EBITDA does not represent funds available for discretionary use.
The following table presents a reconciliation of our consolidated net income available for common stockholders to our consolidated EBITDA for the periods presented.
Three Months Ended | ||
September 30, | ||
2012 | 2011 | |
Net Income Available for Common Stockholders | $15,384 | $62,625 |
Total interest expense - net | 26,186 | 27,179 |
Depreciation, depletion and amortization | 84,795 | 84,803 |
Income tax expense | 10,710 | 8,573 |
Preferred stock dividends | 2,876 | 3,706 |
EBITDA | $139,951 | $186,886 |
EBITDA Per Share | ||
Basic | $1.77 | $2.44 |
Diluted | $1.76 | $2.15 |
Weighted Average Number of Common Shares Outstanding | ||
Basic | 79,162 | 76,465 |
Diluted | 79,337 | 87,054 |
ENERGY XXI (BERMUDA) LIMITED | ||
CONSOLIDATED BALANCE SHEETS | ||
(In Thousands, except share information) | ||
September 30, 2012 | June 30, 2012 | |
ASSETS | (Unaudited) | |
Current Assets | ||
Cash and cash equivalents | $48,765 | $117,087 |
Accounts receivable | ||
Oil and natural gas sales | 119,719 | 126,107 |
Joint interest billings | 3,592 | 3,840 |
Insurance and other | 3,599 | 5,420 |
Prepaid expenses and other current assets | 50,537 | 63,029 |
Derivative financial instruments | 11,761 | 32,497 |
Total Current Assets | 237,973 | 347,980 |
Property and Equipment | ||
Oil and natural gas properties - full cost method of accounting, including $433.8 million and $418.8 million of unevaluated properties not being amortized at September 30, 2012 and June 30, 2012, respectively | 2,796,471 | 2,698,213 |
Other property and equipment | 16,520 | 9,533 |
Total Property and Equipment, net of accumulated depreciation, depletion, amortization and impairment | 2,812,991 | 2,707,746 |
Other Assets | ||
Derivative financial instruments | 26,118 | 45,496 |
Debt issuance costs, net of accumulated amortization | 25,700 | 27,608 |
Equity method investments | 16,068 | 2,117 |
Total Other Assets | 67,886 | 75,221 |
Total Assets | $3,118,850 | $3,130,947 |
LIABILITIES | ||
Current Liabilities | ||
Accounts payable | $155,302 | $156,959 |
Accrued liabilities | 93,402 | 118,818 |
Notes payable | 13,677 | 22,211 |
Asset retirement obligations | 29,885 | 34,457 |
Derivative financial instruments | 4,703 | — |
Current maturities of long-term debt | 5,474 | 4,284 |
Total Current Liabilities | 302,443 | 336,729 |
Long-term debt, less current maturities | 1,050,135 | 1,014,060 |
Deferred income taxes | 98,065 | 104,280 |
Asset retirement obligations | 272,596 | 266,958 |
Derivative financial instruments | 450 | — |
Other liabilities | 4,144 | 3,080 |
Total Liabilities | 1,727,833 | 1,725,107 |
Stockholders' Equity | ||
Preferred stock, $0.001 par value, 7,500,000 shares authorized at September 30, 2012 and June 30, 2012, respectively | ||
7.25% Convertible perpetual preferred stock, 8,000 shares issued and outstanding at September 30, 2012 and June 30, 2012, respectively | — | — |
5.625% Convertible perpetual preferred stock, 813,720 and 814,117 shares issued and outstanding at September 30, 2012 and June 30, 2012, respectively | 1 | 1 |
Common stock, $0.005 par value, 200,000,000 shares authorized and 79,292,779 and 79,147,340 shares issued and 79,292,116 and 78,837,697 shares outstanding at September 30, 2012 and June 30, 2012, respectively | 396 | 396 |
Additional paid-in capital | 1,508,561 | 1,501,785 |
Accumulated deficit | (144,111) | (153,945) |
Accumulated other comprehensive income, net of income tax expense | 26,170 | 57,603 |
Total Stockholders' Equity | 1,391,017 | 1,405,840 |
Total Liabilities and Stockholders' Equity | $3,118,850 | $3,130,947 |
ENERGY XXI (BERMUDA) LIMITED | ||
CONSOLIDATED STATEMENTS OF INCOME | ||
(In Thousands, except per share information) | ||
(Unaudited) | ||
Three Months Ended September 30, |
||
2012 | 2011 | |
Revenues | ||
Oil sales | $247,330 | $246,917 |
Natural gas sales | 22,897 | 37,966 |
Total Revenues | 270,227 | 284,883 |
Costs and Expenses | ||
Lease operating | 82,481 | 71,033 |
Production taxes | 1,247 | 2,174 |
Gathering and transportation | 7,991 | 6,153 |
Depreciation, depletion and amortization | 84,795 | 84,803 |
Accretion of asset retirement obligations | 7,652 | 9,688 |
General and administrative expense | 23,888 | 19,321 |
(Gain) loss on derivative financial instruments | 5,522 | (10,372) |
Total Costs and Expenses | 213,576 | 182,800 |
Operating Income | 56,651 | 102,083 |
Other Income (Expense) | ||
Loss from equity method investees | (1,495) | — |
Other income - net | 359 | 9 |
Interest expense | (26,545) | (27,188) |
Total Other Expense | (27,681) | (27,179) |
Income Before Income Taxes | 28,970 | 74,904 |
Income Tax Expense | 10,710 | 8,573 |
Net Income | 18,260 | 66,331 |
Preferred Stock Dividends | 2,876 | 3,706 |
Net Income Available for Common Stockholders | $15,384 | $62,625 |
Earnings Per Share | ||
Basic | $0.19 | $0.82 |
Diluted | $0.19 | $0.76 |
Weighted Average Number of Common Shares Outstanding | ||
Basic | 79,162 | 76,465 |
Diluted | 79,337 | 87,054 |
ENERGY XXI (BERMUDA) LIMITED | ||
CONSOLIDATED STATEMENTS OF CASH FLOWS | ||
(In Thousands) | ||
(Unaudited) | ||
Three Months Ended September 30, |
||
2012 | 2011 | |
Cash Flows From Operating Activities | ||
Net income | $18,260 | $66,331 |
Adjustments to reconcile net income to net cash provided by | ||
(used in) operating activities: | ||
Depreciation, depletion and amortization | 84,795 | 84,803 |
Deferred income tax expense | 10,789 | 8,725 |
Change in derivative financial instruments | ||
Proceeds from sale of derivative instruments | 61 | 49,598 |
Other – net | (5,347) | (19,246) |
Accretion of asset retirement obligations | 7,652 | 9,688 |
Loss from equity method investees | 1,495 | — |
Amortization and write-off of debt issuance costs | 1,891 | 1,823 |
Stock-based compensation | 456 | 8,925 |
Changes in operating assets and liabilities | ||
Accounts receivable | 10,755 | 12,694 |
Prepaid expenses and other current assets | 16,037 | (9,133) |
Settlement of asset retirement obligations | (10,136) | (587) |
Accounts payable and accrued liabilities | (34,543) | (37,490) |
Net Cash Provided by Operating Activities | 102,165 | 176,131 |
Cash Flows from Investing Activities | ||
Acquisitions | — | 65 |
Capital expenditures | (186,698) | (112,749) |
Insurance payments received | — | 780 |
Contributions to equity investees | (15,524) | — |
Property deposit | (3,500) | — |
Other | 372 | 254 |
Net Cash Used in Investing Activities | (205,350) | (111,650) |
Cash Flows from Financing Activities | ||
Proceeds from the issuance of common and preferred stock, net of offering costs | 4,691 | 9,146 |
Dividends to shareholders | (8,426) | (3,706) |
Proceeds from long-term debt | 223,812 | 236,470 |
Payments on long-term debt | (186,813) | (316,234) |
Other | 1,599 | (96) |
Net Cash Provided by (Used in) Financing Activities | 34,863 | (74,420) |
Net Decrease in Cash and Cash Equivalents | (68,322) | (9,939) |
Cash and Cash Equivalents, beginning of period | 117,087 | 28,407 |
Cash and Cash Equivalents, end of period | $48,765 | $18,468 |
ENERGY XXI (BERMUDA) LIMITED | |||||
CONSOLIDATED OPERATIONAL INFORMATION (Unaudited) | |||||
Quarter Ended | |||||
Sept. 30, 2012 |
June 30, 2012 |
Mar. 31, 2012 |
Dec. 31, 2011 |
Sept. 30, 2011 |
|
Operating Highlights | |||||
Operating revenues | |||||
Crude oil sales | $242,830 | $314,639 | $315,723 | $306,064 | $249,767 |
Natural gas sales | 17,396 | 19,657 | 19,154 | 21,659 | 28,138 |
Hedge gain | 10,001 | 7,650 | 1,119 | 12,855 | 6,978 |
Total revenues | 270,227 | 341,946 | 335,996 | 340,578 | 284,883 |
Percent of operating revenues from crude oil | |||||
Prior to hedge gain | 93% | 94% | 94% | 93% | 90% |
Including hedge gain | 92% | 92% | 93% | 91% | 87% |
Operating expenses | |||||
Lease operating expense | |||||
Insurance expense | 8,992 | 6,825 | 7,138 | 7,096 | 7,462 |
Workover and maintenance | 10,113 | 21,070 | 15,885 | 12,805 | 6,653 |
Direct lease operating expense | 63,376 | 59,306 | 55,424 | 54,233 | 56,918 |
Total lease operating expense | 82,481 | 87,201 | 78,447 | 74,134 | 71,033 |
Production taxes | 1,247 | 2,414 | 1,499 | 1,174 | 2,174 |
Gathering and transportation | 7,991 | 4,358 | 2,465 | 3,395 | 6,153 |
DD&A | 84,795 | 106,644 | 88,448 | 87,568 | 84,803 |
General and administrative | 23,888 | 19,733 | 25,075 | 22,147 | 19,321 |
Other – net | 13,174 | 5,186 | 13,257 | 14,174 | (684) |
Total operating expenses | 213,576 | 225,536 | 209,191 | 202,592 | 182,800 |
Operating income | $56,651 | $116,410 | $126,805 | $137,986 | $102,083 |
Sales volumes per day | |||||
Natural gas (MMcf) | 67.1 | 92.5 | 83.7 | 72.8 | 77.0 |
Crude oil (MBbls) | 26.1 | 32.2 | 31.4 | 30.6 | 28.0 |
Total (MBOE) | 37.3 | 47.6 | 45.3 | 42.7 | 40.8 |
Percent of sales volumes from crude oil | 70% | 68% | 69% | 72% | 69% |
Average sales price | |||||
Natural gas per Mcf | $2.82 | $2.34 | $2.52 | $3.23 | $3.97 |
Hedge gain per Mcf | 0.89 | 0.55 | 0.54 | 1.43 | 1.39 |
Total natural gas per Mcf | $3.71 | $2.89 | $3.06 | $4.66 | $5.36 |
Crude oil per Bbl | $101.03 | $107.34 | $110.54 | $108.80 | $97.11 |
Hedge gain (loss) per Bbl | 1.87 | 1.03 | (1.05) | 1.17 | (1.11) |
Total crude oil per Bbl | $102.90 | $108.37 | $109.49 | $109.97 | $96.00 |
Total hedge gain per BOE | $2.91 | $1.77 | $0.27 | $3.27 | $1.86 |
Operating revenues per BOE | $78.72 | $78.90 | $81.43 | $86.67 | $75.91 |
Operating expenses per BOE | |||||
Lease operating expense | |||||
Insurance expense | 2.62 | 1.57 | 1.73 | 1.81 | 1.99 |
Workover and maintenance | 2.95 | 4.86 | 3.85 | 3.26 | 1.77 |
Direct lease operating expense | 18.46 | 13.68 | 13.43 | 13.80 | 15.17 |
Total lease operating expense | 24.03 | 20.11 | 19.01 | 18.87 | 18.93 |
Production taxes | 0.36 | 0.56 | 0.36 | 0.30 | 0.58 |
Gathering and transportation | 2.33 | 1.01 | 0.60 | 0.86 | 1.64 |
DD&A | 24.70 | 24.61 | 21.44 | 22.28 | 22.60 |
General and administrative | 6.96 | 4.55 | 6.08 | 5.64 | 5.15 |
Other – net | 3.84 | 1.20 | 3.22 | 3.60 | (0.18) |
Total operating expenses | 62.22 | 52.04 | 50.71 | 51.55 | 48.72 |
Operating income per BOE | $16.50 | $26.86 | $30.72 | $35.12 | $27.19 |
GLOSSARY
Barrel – unit of measure for oil and petroleum products, equivalent to 42 U.S. gallons.
BOE – barrels of oil equivalent, used to equate natural gas volumes to liquid barrels at a general conversion rate of 6,000 cubic feet of gas per barrel.
BOE/d – barrels of oil equivalent per day.
MMcf/d – million cubic feet of gas per day.
MD – total measured depth of a well.
Net Pay – cumulative hydrocarbon-bearing formations.
NRI, Net Revenue Interest – the percentage of production revenue allocated to the working interest after first deducting proceeds allocated to royalty and overriding interest.
TD – target total depth of a well.
TVD –total vertical depth of a well.
WI, Working Interest – the interest held in lands by virtue of a lease, operating agreement, fee title or otherwise, under which the owner of the interest is vested with the right to explore for, develop, produce and own oil, gas or other minerals and bears the proportional cost of such operations.
Workover / Recompletion – operations on a producing well to restore or increase production. A workover or recompletion may be performed to stimulate the well, remove sand or wax from the wellbore, to mechanically repair the well, or for other reasons.
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