Energy XXI Posts Fiscal First-Quarter Results

Energy XXI has announced fiscal first-quarter results for the period ended Sept. 30, 2009 and has provided an operational update.

For the 2010 fiscal first quarter, Energy XXI reported net cash provided by operating activities of $27.3 million and earnings before interest, taxes, depreciation, depletion and amortization (EBITDA) of $51.3 million, compared with $71.1 million and $75.9 million, respectively, in the 2009 fiscal first quarter.

The company reported a 2010 fiscal first-quarter net loss of $12.3 million, or $0.08 per share, on revenues of $84.9 million and production of 15,500 barrels of oil equivalent per day (BOE/d). The loss includes $9.2 million of non-cash deferred tax expense primarily resulting from changes in other comprehensive income related to the value of the hedge portfolio. In the 2009 fiscal first quarter, the company had a net loss of $4.7 million, or $.03 per share, on revenues of $119.7 million and production of 18,800 BOE/d. The net realized price received for the company's production in the 2010 fiscal first quarter averaged $59.59 per BOE, compared with $69.23 per BOE in the 2009 fiscal first quarter.

"The capital program is generating excellent results, reversing the fiscal first-quarter production decline," Energy XXI Chairman and CEO John Schiller said. "Shut-in of a key well at our South Timbalier 21 field and the virtual shut-down of the capital program in the last quarter of our 2009 fiscal year resulted in lower volumes in the just-completed 2010 fiscal first quarter. Today, we are capable of producing nearly 20,000 BOE/d, and we still have significant volumes pending from new wells and the restoration of hurricane-affected properties."

Volumes have been increased at the Main Pass 61 oil field offshore Louisiana, in which Energy XXI has a 50 percent working interest (WI), a 39.2 percent net revenue interest (NRI) and serves as operator. The MP 61 #C-9 well, which was spud Sept. 5 and drilled to a total vertical depth (TVD) of 9,000 feet, was completed in the J-6 sand and placed on production at a net rate of 1,026 BOE/d. The MP #A-10 well, which was spud Sept. 7 and drilled to 7,187 feet TVD, was completed in the J-6 sand and placed on production at a net rate of 1,013 BOE/d. The MP 61 #A-11 well, which was spud Sept. 14 and drilled to 7,386 feet TVD, was completed in the J-6 sand and placed on production at an initial net rate of 550 BOE/d, which is continuing to ramp up.

In addition, the Newfield-operated Fastball discovery at Vioska Knoll 1003 offshore Louisiana, in which Energy XXI holds a 16.7 percent NRI, has been placed online at a currently constrained net rate of 770 BOE/d.

Onshore Louisiana, in Vermillion Parish, the Energy XXI operated Cote de Mer discovery also is nearing first production. This project, in which Energy XXI holds a 23.6 percent NRI, is expected to be placed online in November at a rate of between 750 and 1,200 BOE per day, net to Energy XXI.

Several significant company properties offshore Louisiana continue to be curtailed due to hurricane damage on third-party pipelines. The Eugene Island 280 field (21.4 percent NRI) is expected to return to service in November at between 250 and 300 BOE per day, net to Energy XXI; the East Cameron 334/335 field (42.5 percent NRI) is expected to return to service in December at between 900 and 1,100 BOE per day, net to Energy XXI; and the South Pass 49 field (21.2 percent NRI) is expected to return to service in February at between 700 and 800 BOE per day, net to Energy XXI.

In addition to development activities, Energy XXI is funding 14.1 percent of the exploratory costs to earn a 15.8 percent WI and 12.6 percent NRI at the ultra-deep Davy Jones prospect at South Marsh Island Block 230 on the Gulf of Mexico shelf, offshore Louisiana. This McMoRan-operated well, which is in 20 feet of water, has been drilled to 26,300 feet toward a proposed target depth of 28,000 feet, seeking to test the Eocene (Wilcox), Paleocene and possibly Cretaceous (Tuscaloosa) sections within a large ultra-deep structure encompassing four OCS lease blocks.

Capital Expenditures

During the 2010 fiscal first quarter, capital expenditures totaled $36.9 million, excluding plug-and-abandonment costs, with $6.2 million in exploration and $30.7 million in development and other investments.

 

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