For the 2010 fiscal second quarter, Energy XXI reported earnings before interest, taxes, depreciation, depletion and amortization (EBITDA) of $66.3 million, compared with $68.8 million in the 2009 fiscal second quarter. Net income for the 2010 fiscal second quarter was $16.4 million ($0.46 per share - diluted) on revenues of $124.5 million and production of 20,900 barrels of oil equivalent per day (BOE/d), with an average of 35.8 million shares (diluted) outstanding for the period, adjusted for the recently effected reverse split. These results reflect a partial contribution from the company's Dec. 22, 2009 acquisition of certain Gulf of Mexico interests. The results also include a $17.8 million after-tax ($26.7 million pre-tax) non-cash gain due to the retirement of bonds previously repurchased at a discount to face value. In the 2009 fiscal second quarter, the company had a net loss of $429.2 million, or $14.88 per share (reverse-split-adjusted), on revenues of $106.9 million and production of 19,200 BOE/d. The 2009 fiscal second-quarter loss included a $415.5 million after-tax ceiling test impairment ($459.1 million pre-tax).
"The past four months have been the most momentous period in the company's history," Energy XXI Chairman and CEO John Schiller said. "In November, we completed a bond exchange offer that reduced the face amount of our debt by $69 million, completed a private placement of new bonds and common shares to further strengthen the balance sheet, and announced a major acquisition that increased our proved reserves and daily production more than 40 percent. We closed the acquisition in just 30 days, following an equity road show in December that raised a total of $276 million after expenses. Those accomplishments were followed in January by the Davy Jones discovery, which has the potential to be a very significant discovery for Energy XXI. Between the expanded producing-property portfolio and the success of our ultra-deep-shelf exploration program, we expect to increase future capital programs while still targeting further debt reduction with free cash flow. We look to the future with continued excitement."
Production volumes in January 2010 averaged approximately 23,000 BOE/d, positively affected by the December acquisition of Gulf of Mexico interests, partially offset by temporary shut-ins caused by a number of factors, including third-party-pipeline outages and dredging operations conducted by the U.S. Corps of Engineers. Current production approximates 26,000 BOE/d, with the capacity to produce 27,500 BOE/d. Following restoration of hurricane-affected properties, expected within a month, production capacity is expected to exceed 30,000 BOE/d.
Ultra-Deep Shelf Update
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 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 declared a major discovery with a combined 200 net feet of hydrocarbon-bearing pay sands. After being drilled to 28,603 feet, logging and coring operations were completed and drilling has resumed, toward a proposed total depth of 29,000 feet.
During the first half of fiscal 2010, capital expenditures totaled $64.7 million, excluding acquisition costs, with $13.6 million in exploration and $51.1 million in development and other investments.
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