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Energy XXI Reports Audited Fiscal Year-End Results and Provides Operational Update

HOUSTON, Sept. 7, 2010 (GLOBE NEWSWIRE) -- Energy XXI (Nasdaq:EXXI) (LSE:EXXI) today announced audited fiscal fourth-quarter and full-year financial and operating results for the period ended June 30, 2010, and provided an operational update.
/ Source: GlobeNewswire

    HOUSTON, Sept. 7, 2010 (GLOBE NEWSWIRE) -- Energy XXI (Nasdaq:EXXI) (LSE:EXXI) today announced audited fiscal fourth-quarter and full-year financial and operating results for the period ended June 30, 2010, and provided an operational update.

    For the full year, earnings before interest, taxes, depreciation, depletion and amortization (EBITDA) was $283.7 million, compared with $277.0 million in fiscal 2009. The company reported net income available for common shareholders of $23.0 million ($0.56 per share – diluted) for fiscal 2010, on revenues of $498.9 million and production of 21,800 barrels of oil equivalent per day (BOE/d). These results compare with a net loss for fiscal 2009 of $571.6 million ($19.77 per share), which included the impact of non-cash ceiling test write-downs.

    For the 2010 fiscal fourth quarter, EBITDA totaled $78.8 million on revenues of $139.4 million, as volumes averaged 25,300 BOE/d.  These results compared with 2009 fiscal fourth-quarter EBITDA of $66.5 million on revenues of $101.1 million and volumes of 18,700 BOE/d.  Net income available for common shareholders in the 2010 fiscal fourth quarter totaled $10.1 million ($0.20 per share – diluted), compared with a fiscal 2009 fourth-quarter net loss of $17.2 million ($0.59 per share).

    "As we pre-announced last month, Energy XXI achieved significant growth in fiscal 2010, including a 42 percent increase in proved reserves and a similar increase in daily production rates from June 2009 to June 2010," Energy XXI Chairman and CEO John Schiller said. "Our oil-focused production portfolio continues to generate industry-leading margins, providing more than enough cash to fund the capital program and to reduce debt, even as we press ahead with exploration and development activity at the high-potential ultra-deep-shelf play. We currently expect first production from the Davy Jones discovery in the second half of next calendar year, less than 20 months after finishing drilling the discovery well. Drilling is progressing at the Davy Jones offset well, and we are encouraged with the drilling of the Blackbeard East exploration well. Fiscal 2011 is shaping up to be a watershed year for Energy XXI."

    Shelf Exploration and Development Activity

    Energy XXI has remained active within its core producing properties and has received permits to perform workovers, recompletions and sidetracks for wells in its Main Pass 61, South Timbalier 21, East Cameron 334 and Eugene Island 275 and 330 fields. To date, none of the company's production, drilling activities or future plans has been materially affected by the deepwater Gulf of Mexico oil spill.

    Within the ultra-deep shelf program, including Davy Jones and Blackbeard West, the McMoRan-operated partnership (in which the company has various interests) has identified 15 sub-salt prospects in shallow water near existing infrastructure. The partnership's near-term sub-salt-shelf drilling plans include the Blackbeard East and Lafitte exploratory wells and the delineation well at Davy Jones.

    In February 2010, the Davy Jones discovery well on South Marsh Island Block 230 was drilled to a total depth of 29,000 feet.  As reported in January 2010, McMoRan logged 200 net feet of pay in multiple Eocene/Paleocene (Wilcox) sands in the well.  In March 2010, a production liner was set and the well was temporarily abandoned until necessary equipment for the completion is available.  Flow testing will be required to confirm the ultimate hydrocarbon flow rates from the well.  Long-lead-time equipment needed to complete, test and produce the well has been ordered, with first flow expected in the third calendar quarter of 2011.

    On April 7, 2010, the partnership commenced drilling the Davy Jones offset appraisal well (Davy Jones #2) on South Marsh Island Block 234, two and a half miles southwest of the discovery well. The well is drilling below 15,000 feet on its way to a proposed total depth of 29,950 feet. Davy Jones #2 is expected to test similar sections up-dip to the discovery well, as well as deeper objectives, including potential additional Wilcox and possibly Cretaceous (Tuscaloosa) sections.

    Davy Jones involves a large structure encompassing four lease blocks (20,000 acres). Energy XXI is funding 14.1 percent of the exploratory costs to earn a 15.8 percent working interest and 12.6 percent net revenue interest in Davy Jones. The company's investment in both wells at Davy Jones to date has totaled about $27 million.

    The Blackbeard East exploration well commenced drilling on March 8, 2010 and is drilling below 21,500 feet. The well, which is located in 80 feet of water on South Timbalier Block 144, has a proposed total depth of 29,950 feet, targeting Middle and Deep Miocene objectives seen below 30,000 feet in Blackbeard West, nine miles away, as well as younger Miocene objectives.  Energy XXI is funding 16 percent of the exploratory costs to earn an 18 percent working interest and 14.35 percent net revenue interest in Blackbeard East. The company's investment in the well to date has totaled about $14 million.

    The Lafitte exploration well is expected to commence drilling in 2010 with Energy XXI funding 16 percent of the exploratory costs to earn an 18 percent working interest and a 14.6 percent net revenue interest. Like Blackbeard East, Lafitte will target Middle and Deep Miocene objectives. Lafitte is located on Eugene Island Block 223 in 140 feet of water.

    Conference Call Tomorrow, Sept. 8, at 9 a.m. CDT, 3 p.m. London Time

    Energy XXI will host its year-end conference call tomorrow, Sept. 8, 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 98319514. 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 . 

    Copies of Annual Report

    A copy of the company's annual report will be posted to shareholders in due course and a copy will be available on the company's website at .

    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 Corporate Development, 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 .

    The Energy XXI logo is available at


    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.

    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.

    MBBL – thousand barrels of oil.

    MBOE – thousand barrels of oil equivalent.

    CF – thousand cubic feet of gas.

    MMBOE – million barrels of oil equivalent.

    MMCF – million cubic feet of gas.

    PV10 – the estimated present value of the resource, discounted at a 10 percent annual rate.

    CONTACT: Energy XXI Stewart Lawrence, Vice President, Investor Relations and Communications 713-351-3006 Seymour Pierce Nominated Adviser: Jonathan Wright Jeremy Porter Corporate Broking: Richard Redmayne +44 (0) 20 7107 8000 Pelham Bell Pottinger James Henderson Mark Antelme +44 (0) 20 7861 3232