Energy XXI Makes Headway in 2008 Drilling Program

Energy XXI has provided an operational update for its fiscal first-quarter results for the period ended Sept. 30, 2008.

Energy XXI has become operator of the E.A. McIlhenny #1 well on the Cote de Mer prospect, located in Vermillion Parish, Louisiana. Before being temporarily abandoned ahead of Hurricanes Gustav and Ike, this well was drilled to a depth of 21,504 feet on its way to the proposed depth of 22,000 feet. Operating difficulties were encountered following the barge rig's return on Sept. 18. The well has since been cleaned out to 19,262 feet, and efforts are underway to clean out to 19,800 feet, where the well is expected to be side-tracked. Energy XXI holds a 33 percent working interest (WI) and a 24 percent net revenue interest (NRI).

The Kaplan prospect, being drilled with the Green & Broussard #1ST2 well in Vermillion Parish, Louisiana, (100 percent WI, 74 percent NRI), was drilled to 18,400 feet, logging a tight interval over the objective section, indicating that the sand was penetrated on the edge of the channel. The well was sidetracked at 14,674 feet and is currently drilling at 16,897 feet toward a revised bottom-hole location within the channel identified on seismic at 18,100 feet.

The Blackbeard West prospect (20 percent WI, 16 percent NRI) has been announced as a potential major discovery and will be completed and tested. The prospect, drilled with the South Timbalier Block 168 No. 1 exploratory well in 70 feet of water offshore Louisiana, was reentered on March 18, 2008, and has been drilled to 32,997 feet. Logs indicate four potential hydrocarbon-bearing zones below 30,067 feet that require further evaluation. The well will be temporarily abandoned while the necessary long-lead-time completion equipment is procured for this high-pressure test. The well is located on the top of the targeted structure. Seismic data on the prospect indicates the potential for significantly thicker sands on the flanks of the structure as confirmed in several major deepwater discoveries.

Based on information obtained to date in the South Timbalier Block 168 well, Energy XXI believes additional drilling on the flanks could result in significant reserves potential. Energy XXI's investment in the South Timbalier Block 168 well has totaled $23 million. Energy XXI will continue to review additional drilling opportunities on the flanks of the structure and on other acreage it holds in the ultra-deep trend.


Central Gulf Highlights

South Timbalier 21 (100% WI/83.33% NRI)

During the fiscal first quarter, South Timbalier 21 net production averaged 4,650 BOE/d as the company continued to bring disrupted production back online from Hurricanes Gustav and Ike. Recent activity includes:

  • ST 21 #48 - recompleted to the D-8 sand at 12,160 feet in August 2008, yielding initial gross daily test rates of 289 barrels of oil and 1.76 million cubic feet of natural gas.
  • ST #139 (Bordeaux Prospect) - drilled to 8,970 feet before being shut-in for Hurricanes Gustav and Ike. The well has been temporarily abandoned, awaiting repairs on a nearby structure.
  • ST 21 #82 (Barolo Prospect) - spud 10/02/08, drilling ahead at 12,190 feet, targeting the Sߛ3/S-4 and D-2, D-3, D-7 and D-10 sands with a proposed TD of 13,200 feet.

East Cameron 334/335

The EC 335 B-10 well (51% WI/43% NRI) was recompleted to the HA sand at 11,408 feet and tested at 9.1 million cubic feet per day of natural gas.

Eastern Gulf Highlights

The Eastern Gulf properties averaged 4,890 BOE/d in the fiscal first quarter, down from the 2008 fiscal fourth-quarter volumes of 5,500 BOE/d due to hurricane shut-ins. Recent highlights include:

  • Main Pass 147 #1 (50%WI/42% NRI) - spud July 4 and drilled to a TD of 10,353 feet; renamed as the MP 73 #7 and successfully sidetracked and drilled to a TD of 7,015 feet, logging 27 feet of net oil pay in the BA-2 objective; facility installation should be complete and the well placed on-line in January 2009.

Onshore/Gulf Coast Highlights

Lake Salvador

  • In the Golden Meadow oil and gas field, a southern extension of the Lake Salvador focus area in Lafourche Parish, Louisiana, the LL&E #236 well (25% WI/19% NRI) has logged 77 feet of net pay in the Tex W3 sand, which appears to be oil bearing, and 120 feet of net pay in the Big Hum section, which appears to be natural gas bearing. The well, which was spud Sept. 5, 2008 and drilled to 16,220 feet, is the company's fifth successful well at Golden Meadow, where Energy XXI and partners have invested approximately $30 million and found an estimated 8 million BOE of proved reserves. Another well, the LL&E #233, was spud Oct. 15, 2008 and is currently drilling at 10,288 feet to test Duval and Dulac sand objectives, with a proposed TD of 14,000 feet. Several additional prospects remain in inventory.
  • In the Joe McHugh field (50% WI/40% NRI), the Breazeale #1ST and Foret #1 wells have continued to perform well, producing at a combined rate of 1,800 BOE/d net.

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