Energy XXI Seals Deal for Core Operated GOM Oil Properties
Energy XXI has completed the acquisition of certain Gulf of Mexico shelf oil and natural gas interests from MitEnergy Upstream LLC, a subsidiary of Mitsui & Co., Ltd.
The transaction essentially doubled the company's interests in the same group of properties Energy XXI purchased from Pogo Producing Company in June 2007. The properties include 22 core fields currently producing approximately 8,000 net barrels of oil equivalent (BOE) per day, about 77 percent of which is oil. Upon restoration of volumes pending repair of third party pipelines damaged by hurricanes in 2008, net production from the acquired interests is expected to reach 10,000 BOE per day, taking total company production to an expected 30,000 BOE per day.
"This acquisition is a watershed event for Energy XXI, doubling our interests in the most oil-weighted and highest-margin properties in our portfolio," Energy XXI Chairman and CEO John Schiller said. "Beyond the obvious synergies gained by consolidating interests in properties we already operate, this transaction -- which closed one month after announcement -- puts the company back on solid financial footing. Our strong balance sheet and greatly enhanced cash flows from the expanded asset base increase our ability to continue growing through our acquire-and-exploit strategy."
The transaction was funded through common and preferred equity offerings that closed last week, raising $268.7 million after deducting underwriting discounts and commissions. Actual funding requirements at closing totaled $259 million, reflecting downward adjustments to the purchase price to reflect revenues generated since the effective date of July 1, 2009.
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