updated 4/28/2011 7:46:30 AM ET 2011-04-28T11:46:30

  • Year-over-year quarterly volumes rise 63 percent, EBITDA climbs 78 percent
  • Debt reduced $80 million in the quarter
  • Exploration and development program advances

HOUSTON, April 27, 2011 (GLOBE NEWSWIRE) -- Energy XXI (Nasdaq: EXXI) (LSE:EXXI) today announced fiscal third-quarter results for the period ended March 31, 2011 and provided an operational update.

Energy XXI Logo (EPR)




For the 2011 fiscal third quarter, Energy XXI reported earnings before other income (expense), taxes, depreciation, depletion and amortization (adjusted EBITDA) of $155.4 million, compared with $87.3 million in the 2010 fiscal third quarter. Net income attributable to common shareholders for the 2011 fiscal third quarter was $14 million, or $0.19 per diluted share, on revenues of $258.6 million and production of 41,400 barrels of oil equivalent per day (BOE/d). The results include a $10.9 million after-tax loss on the retirement of debt during the quarter. Oil represented 66 percent of the volumes and 88 percent of pre-hedge revenues during the quarter. In the 2010 fiscal third quarter, the company had net income attributable to common shareholders of $9.1 million, or $0.18 per diluted share, on revenues of $150.1 million and production of 25,400 BOE/d.

"Energy XXI clearly is benefitting from the transformational acquisition of ExxonMobil Gulf of Mexico shelf assets in December 2010. Increased production and cash flow drove continued balance sheet strengthening, with an $80 million reduction in debt during the quarter, while exploration and development activities highlighted a good quarter for the company," Energy XXI Chairman and CEO John Schiller said. "Early success in operating the acquired properties lends encouragement for our future capital program."

Production Update

Production in the 2011 fiscal third quarter averaged 41,400 BOE/d. Volumes were positively affected by the December acquisition of Gulf of Mexico properties, partially offset by temporary issues such as pipeline and processing outages, delays in gaining operatorship of certain of the acquired properties, and freezing production equipment early in the quarter.

Exploration and Development Activity

As previously announced, Energy XXI has remained active in developing its core producing properties and pursuing high-potential exploration. Summarized below is the status of select wells.

  • The McMoRan-operated Valentine Pontiff well in St. Mary Parish, Louisiana, which was tested at a gross rate of 54 million cubic feet of natural gas per day (MMcf/d) (approximately 8 MMcf/d net to Energy XXI), is being placed online today. Energy XXI has an 18.75 percent working interest and a 15 percent net revenue interest in the well. 
     
  • At Main Pass 72, the Ashton well successfully penetrated seven hydrocarbon-bearing sands totaling 300 net feet of pay before entering the salt body at 6,380 feet. Success at the Ashton well, which is the company's first test of its reinterpreted salt-related seismic data in the Main Pass 72 field, sets up other opportunities nearby, including the Onyx well that is expected to start drilling next month. 
     
  • The Davy Jones offset well, which has been drilled to 30,546 feet, is in the process of being logged to evaluate the established Wilcox pay sands as well as the deeper Cretaceous section. Energy XXI has a 15.8 percent working interest and 12.6 percent net revenue interest in Davy Jones. 
     
  • The Blackbeard East ultra-deep exploration well at South Timbalier Block 144 is continuing to make progress recovering drill pipe and tools stuck in the hole while drilling the well to 32,559 feet.  The operator has washed over and recovered 1,866 feet of stuck pipe and is proceeding with recovery efforts. The top of the stuck pipe currently is at 27,526 feet, with the drill bit at about 28,900 feet. Energy XXI has an 18 percent working interest and 14.35 percent net revenue interest in Blackbeard East. 
     
  • The Lafitte ultra-deep exploration well on Eugene Island Block 223 currently is drilling below 21,185 feet towards a proposed total depth of 29,950 feet.  Energy XXI has an 18 percent working interest and a 14.6 percent net revenue interest in Lafitte.

Capital Expenditures

During the 2011 fiscal third quarter, capital expenditures, excluding acquisitions but including plug-and-abandonment costs, totaled $68.4 million, with $25 million in exploration and $43.4 million in development and other investments. The board of directors has approved an increase in the fiscal 2011 capital program, up to $380 million from the original $250 million, largely related to the acquired Gulf of Mexico properties and the shallow-water ultra-deep drilling program.

Conference Call Tomorrow, April 28, at 9 a.m. CDT, 3 p.m. London Time

Energy XXI will host its quarterly conference call tomorrow, April 28, at 9 a.m. CDT (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 37266770. 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

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. Tom O'Donnell, Vice President of Exploitation, a registered 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 .

The Energy XXI logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=3587



 

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 are reconciliations of net income to the following non-GAAP financial measure: Adjusted EBITDA. The company uses this non-GAAP measure as a key metric for the management of the company and to demonstrate the company's ability to internally fund capital expenditures and service debt.
 
  Three Months Ended Nine Months Ended
  March 31, March 31,
  2011 2010 2011 2010
         
Net Income as Reported $18,371 $11,088 $29,438 $15,234
         
 Total other (income) expense 43,602 21,824 96,699 37,487
 Depreciation, depletion and amortization 91,301 50,761 208,300 131,084
 Income tax expense 2,132 3,651 4,162 21,104
         
Adjusted EBITDA $155,406 $87,324 $338,599 $204,909
         
Adjusted EBITDA Per Share        
 Basic $2.09 $1.72 $5.33 $5.42
 Diluted $2.09 $1.44 $5.31 $5.37
         
Weighted Average Number of Common Shares Outstanding        
 Basic 74,221 50,713 63,490 37,790
 Diluted 74,421 60,730 63,732 38,126
         




 

ENERGY XXI (BERMUDA) LIMITED
CONSOLIDATED BALANCE SHEETS
(In Thousands, except share information)
     
  March 31, June 30,
  2011 2010
ASSETS (Unaudited)  
Current Assets    
Cash and cash equivalents $33,106 $14,224
Accounts receivable    
Oil and natural gas sales 125,908 68,675
Joint interest billings 5,943 4,388
Insurance and other 2,839 4,471
Prepaid expenses and other current assets 26,040 34,479
Derivative financial instruments 1,265 19,757
Total Current Assets 195,101 145,994
     
Property and Equipment, net of accumulated depreciation, depletion and amortization    
Oil and natural gas properties - full cost method of accounting, including $451.4 million and $144.3 million unevaluated properties at March 31, 2011 and June 30, 2010, respectively 2,594,970 1,378,222
Other property and equipment 8,364 8,028
Total Property and Equipment 2,603,334 1,386,250
Other Assets    
Derivative financial instruments 2,655 14,610
Deferred income taxes 51,402
Debt issuance costs, net of accumulated amortization and other assets 36,959 19,637
Total Other Assets 91,016 34,247
 Total Assets $2,889,451 $1,566,491
LIABILITIES    
Current Liabilities    
Accounts payable $118,200 $87,103
Accrued liabilities 101,348 68,783
Asset retirement obligations 30,919 35,154
Derivative financial instruments 123,355 1,701
Current maturities of long-term debt 2,709 2,518
Total Current Liabilities 376,531 195,259
Long-term debt, less current maturities 1,228,094 772,082
Deferred income taxes 37,215
Asset retirement obligations, net of current portion 310,081 124,123
Derivative financial instruments 128,606 511
Other liabilities 8,207 740
Total Liabilities 2,051,519 1,129,930
Commitments and Contingencies    
Stockholders' Equity    
7.25 % Preferred stock, $0.01 par value, 2,500,000 shares authorized and 96,500 and 1,100,000 shares issued and outstanding at March 31, 2011 and June 30, 2010, respectively. 1 11
5.625 % Preferred stock, $0.001 par value, 2,500,000 shares authorized and 1,150,000 and -0- shares issued and outstanding at March 31, 2011 and June 30, 2010, respectively. 1
Common stock, $0.005 par value, 200,000,000 shares authorized and 74,269,851 and 50,819,109 shares issued and 74,269,198 and 50,636,719 shares outstanding at March 31, 2011 and June 30, 2010, respectively 371 254
Additional paid-in capital 1,474,122 901,457
Accumulated deficit (491,967) (492,867)
Accumulated other comprehensive income (loss), net of income tax expense (benefit) (144,596) 27,706
Total Stockholders' Equity 837,932 436,561
 Total Liabilities and Stockholders' Equity $2,889,451 $1,566,491

 

ENERGY XXI (BERMUDA) LIMITED
CONSOLIDATED STATEMENTS OF OPERATIONS
(In Thousands, except per share information)
 (Unaudited)
     
  Three Months Ended

March 31,
Nine Months Ended

March 31,
 
  2011 2010 2011 2010
         
Revenues        
Oil sales $216,711 $114,095 $479,080 $278,438
Natural gas sales 41,925 36,032 97,509 81,102
Total Revenues 258,636 150,127 576,589 359,540
         
Costs and Expenses        
Lease operating expense 70,066 40,832 159,487 101,307
Production taxes 721 870 2,131 3,152
Depreciation, depletion and amortization 91,301 50,761 208,300 131,084
Accretion of asset retirement obligations 9,907 6,335 22,229 17,641
General and administrative expense 23,155 14,452 57,538 36,540
Loss (gain) on derivative financial instruments (619) 314 (3,395) (4,009)
Total Costs and Expenses 194,531 113,564 446,290 285,715
         
Operating Income 64,105 36,563 130,299 73,825
         
Other Income (Expense)        
Bridge loan commitment fees (4,500)
Loss on retirement of debt (12,199) (17,383)
Other income 15 13 176 29,657
Interest expense (31,418) (21,837) (74,992) (67,144)
Total Other Income (Expense) (43,602) (21,824) (96,699) (37,487)
         
Income Before Income Taxes 20,503 14,739 33,600 36,338
         
Income Tax Expense 2,132 3,651 4,162 21,104
         
Net Income 18,371 11,088 29,438 15,234
Induced Conversion of Preferred Stock 44 19,840
Preferred Stock Dividends 4,278 1,994 8,698 2,326
Net Income Attributable to Common Stockholders $14,049 $9,094 $900 $12,908
         
Net Income Per Share Attributable to Common Stockholders        
Basic $0.19 $0.18 $0.01 $0.34
Diluted $0.19 $0.18 $0.01 $0.34
         
Weighted Average Number of Common Shares Outstanding        
Basic 74,221 50,713 63,490 37,790
Diluted 74,421 60,730 63,732 38,126



 

ENERGY XXI (BERMUDA) LIMITED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
(Unaudited)
     
  Three Months Ended

March 31,
Nine Months Ended

March 31,
 
  2011 2010 2011 2010
         
Cash Flows From Operating Activities        
Net income $18,371 $11,088 $29,438 $15,234
Adjustments to reconcile net income to net cash provided by        
 (used in) operating activities:        
Depreciation, depletion and amortization 91,301 50,761 208,300 131,084
Deferred income tax expense 2,132 3,651 4,162 21,104
Change in derivative financial instruments        
Proceeds from sale of derivative instruments 5,000 42,577 5,000
 Other – net (9,773) (8,577) (25,987) (25,692)
Accretion of asset retirement obligations 9,907 6,335 22,229 17,641
Amortization of deferred gain on debt and debt discount and premium (389) (2,748) (43,521) (33,615)
Amortization and write-off of debt issuance costs 6,568 1,584 10,822 6,043
Stock-based compensation 946 839 3,126 2,580
Payment of interest in-kind 2,225
Changes in operating assets and liabilities        
Accounts receivable (14,732) 17,242 (54,703) (21,143)
Prepaid expenses and other current assets 10,717 6,218 8,439 (14,967)
Settlement of asset retirement obligations (19,537) (16,374) (54,155) (58,823)
Accounts payable and accrued liabilities 50,744 29,092 70,756 35,994
Net Cash Provided by Operating Activities 146,255 104,111 223,708 80,440
         
Cash Flows from Investing Activities        
Acquisitions (9,113) (846) (1,022,124) (275,364)
Capital expenditures (61,571) (36,827) (190,196) (98,689)
Insurance payments received 807 53,985
Transfer to restricted cash (2,160)
Proceeds from the sale of properties 75 475
Other (52) (40) 31 94
Net Cash Used in Investing Activities (70,661) (36,906) (1,211,814) (322,134)
         
Cash Flows from Financing Activities        
Proceeds from the issuance of common and preferred stock, net of offering costs 1,187 562,090 294,468
Conversion of preferred stock to common (44) (11,956)
Dividends to shareholders (6,153) (1,994) (8,326) (1,994)
Proceeds from long-term debt 378,526 22,687 1,538,526 98,525
Payments on long-term debt (458,084) (82,582) (1,044,851) (206,025)
Payments for debt issuance costs and other 2,089 (10,469) (28,495) (14,088)
Net Cash Provided by (Used in) Financing Activities (82,479) (72,358) 1,006,988 170,886
         
Net Increase (Decrease) in Cash and Cash Equivalents (6,885) (5,153) 18,882 (70,808)
         
Cash and Cash Equivalents, beginning of period 39,991 23,270 14,224 88,925
         
Cash and Cash Equivalents, end of period $33,106 $18,117 $33,106 $18,117

 

ENERGY XXI (BERMUDA) LIMITED
CONSOLIDATED OPERATIONAL INFORMATION (In thousands) (Unaudited)
ENERGY XXI (BERMUDA) LIMITED
  Quarter Ended
  Mar. 31,

2011
Dec. 31,

2010
Sept. 30,

2010
June 30,

2010
Mar. 31,

2010
 
Operating revenues          
Crude oil sales $233,081 $156,273 $118,263 $113,908 $117,932
Natural gas sales 32,193 18,301 19,446 19,945 22,872
Hedge gain (loss) (6,638) (621) 6,291 5,538 9,323
Total revenues 258,636 173,953 144,000 139,391 150,127
Percent of operating revenues from crude oil          
 Prior to hedge gain (loss) 87.9% 89.5% 85.9% 85.1% 83.8%
 Including hedge gain (loss) 83.8% 84.2% 80.4% 78.6% 76.0%
Operating expenses          
 Lease operating expense          
Insurance expense 7,278 6,498 6,143 7,220 6,602
Workover and maintenance 4,317 4,105 7,618 5,269 8,452
Direct lease operating expense 58,471 34,644 30,413 28,816 25,778
 Total lease operating expense 70,066 45,247 44,174 41,305 40,832
 Production taxes 721 716 694 1,065 870
DD&A 91,301 62,922 54,077 50,556 50,761
 General and administrative 23,155 15,786 18,597 13,127 14,452
 Other – net 9,288 4,710 4,836 5,116 6,649
 Total operating expenses 194,531 129,381 122,378 111,169 113,564
Operating income $64,105 $44,572 $21,622 $28,222 $35,563
           
Sales volumes per day          
Natural gas (MMcf) 84.6 53.7 48.1 48.2 48.4
Crude oil (MBbls) 27.3 20.4 17.9 17.3 17.3
Total (MBOE) 41.4 29.4 25.9 25.3 25.4
Percent of sales volumes from crude oil 65.9% 69.5% 69.1% 68.3% 68.3%
           
Average sales price          
Natural gas per Mcf $4.23 $3.70 $4.39 $4.55 $5.25
Hedge gain per Mcf 1.28 1.85 1.97 2.27 3.03
Total natural gas per Mcf $5.51 $5.55 $6.36 $6.82 $8.28
           
Crude oil per Bbl $94.94 $83.14 $71.79 $72.42 $75.54
Hedge loss per Bbl (6.67) (5.18) (1.48) (2.80) (2.46)
Total crude oil per Bbl $88.27 $77.96 $70.31 $69.62 $73.08
           
Total hedge gain (loss) per BOE $(1.78) $(0.23) $2.64 $2.40 $4.08
           
Operating revenues per BOE $69.46 $64.34 $60.37 $60.50 $65.65
Operating expenses per BOE          
Lease operating expense          
Insurance expense 1.95 2.40 2.58 3.13 2.89
Workover and maintenance 1.16 1.52 3.19 2.29 3.70
Direct lease operating expense 15.70 12.81 12.75 12.51 11.27
 Total lease operating expense 18.81 16.73 18.52 17.93 17.86
 Production taxes 0.19 0.26 0.29 0.46 0.38
DD&A 24.52 23.27 22.67 21.94 22.20
General and administrative 6.22 5.84 7.80 5.70 6.32
Other – net 2.49 1.74 2.02 2.22 2.91
Total operating expenses 52.23 47.84 51.30 48.25 49.67
Operating income per BOE $17.23 $16.50 $9.07 $12.25 $15.98

GLOSSARY

Barrel – unit of measure for oil and petroleum products, equivalent to 42 U.S. gallons.

Bcfe – billion cubic feet equivalent, used to equate liquid barrels to natural gas volumes at a general conversion rate of 6,000 cubic feet of gas per barrel.

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.

Field – an area consisting of a single reservoir or multiple reservoirs all grouped on, or related to, the same individual geological structural feature or stratigraphic condition. The field name refers to the surface area, although it may refer to both the surface and the underground productive formations.

MBOE – thousand barrels of oil equivalent.

MMBOE – million barrels of oil equivalent.

MD – measured depth.

Net Pay – cumulative hydrocarbon-bearing formations.

Net Revenue Interest – the percentage of production revenue allocated to the working interest after first deducting proceeds allocated to royalty and overriding interest.

Spud – to begin drilling a well.

TD – target total depth of a well.

TD'd – to finish drilling a well.

TVD – total vertical depth.

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.

CONTACT: ENQUIRIES OF THE COMPANY
         Energy XXI
         Stewart Lawrence
         Vice President, Investor Relations and Communications
         713-351-3006
         slawrence@energyxxi.com
         Greg Smith
         Director, Investor Relations
         713-351-3149
         gsmith@energyxxi.com
         
         Seymour Pierce
         Nominated Adviser: Jonathan Wright,
         Jeremy Porter
         Corporate Broking: Richard Redmayne
         Tel: +44 (0) 20 7107 8000
         
         Pelham Bell Pottinger
         James Henderson
         jhenderson@pelhambellpottinger.co.uk
         Mark Antelme
         mantelme@pelhambellpottinger.co.uk
         +44 (0) 20 7861 3232

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