Energy XXI Announces Q1 Results
Energy XXI (Bermuda) Limited, a rapidly growing independent oil and gas exploration and production company with operations in and along the U.S. Gulf of Mexico, has announced its 1st Quarter results for the three months ended 30 September 2006.
--Production for the quarter averaged 13.8 thousand barrels of oil equivalent per day ("boepd"), an increase of 42% over the daily average for the fourth quarter of 2006 --Increase reflects completion on 28 July, 2006 of the acquisition from Private Seller --Production increase also reflects production enhancement through exploitation program --Continued acceleration of exploration, development and appraisal program to further enhance production and increase 2P reserves --3 inland water rigs and 2 offshore rigs --8 wells drilled and 3 workovers completed in the first quarter --Re-evaluation of previously shut-in wells beginning to show positive results --In the last quarter there have been a number of significant drilling results:
- South Timbalier: * ST 21 #133/#133D (Feta) on production and currently producing 6.7 MMCFD and 1.5 MBOD * ST 21 #D10ST2 (Colby 1) initial production rates: 1.2 MMCFD and 1.2 MBOD @ 3000 psi flowing tubing pressure * ST 27 #D9ST2 (Colby 2) currently completing: expect results similar to Colby 1 - Manila Village: * SL 18143 #1 initial production rate: 5.9 MMCFD and 0.018 MBOD @ 5625 psi flowing tubing pressure - Lake Boudreaux: * VA Ragan #1 initial test rates: 4.1 MMCFD at 10,137 psi flowing tubing pressure; shut in tubing pressure 10294 psi
--Oil and gas sales of US$68.6 million, an increase of 46% over fourth quarter 2006 --Operating cash flow (Operating income + DD&A) of US$46.8 million for the quarter ended 30 September 2006, a 40% increase over fourth quarter 2006, respectively --Prudent hedging has benefited results, adding $3.67 / bbl to revenues --Resulted in net realized price of approximately $54 / bbl in the first quarter, versus $55 / bbl in fourth quarter 2006, despite significantly lower commodity prices --Hedges added $3.67 / bbl in first quarter versus $1.67 / bbl in fourth quarter, 2006 --Lease Operating Expenses reduced by 21% on a unit cost basis, primarily as a result of increased production and lower operating costs associated with the acquired properties --Settled Marlin post-closing adjustments in October 2006, resulting in US$14 million cash payment to Energy XXI
--Average daily production increase anticipated in Q2 due to full quarter effect of 28 July 2006 acquisition and further acceleration of exploitation as 1 additional workover rig has been added since end of the first quarter --Liquidity and cash flow remains strong to support the proposed fiscal 2007 US$250 million exploration, development and appraisal program, with improvement in daily production rates expected throughout fiscal 2007 --US$93 million of availability under corporate revolver --Filing of Form 10 with the U.S. Securities and Exchange Commission completed on 30 October 2006 --Energy XXI will continue process of targeting assets in production and development with a geographical focus on offshore reserves around the world
--Approval received from claims adjustor for further US$24.5m insurance reimbursement for damage inflicted by Hurricane Katrina, which is expected to be completed in late November 2006 --Initiation of registration of shares and pursuit of dual listing of Energy XXI's common shares on the AIM market of the London Stock Exchange and a senior U.S. exchange expected upon Form 10 being declared effective
Review by Competent Person
Steve Nelson is Vice President of Drilling and Production for Energy XXI with 24 years of experience. Mr. Nelson has reviewed the technical information contained in this announcement.
John Schiller, Chairman and Chief Executive Officer, commented:
"Operations remained very much on track for Energy XXI in the first quarter with further increases in production and the continuation of an intensive exploration and development program. The production growth combined with the prudent hedging of production has generated strong financial results.
"The outlook is extremely promising, with a further overall production increase expected in the second quarter with the continued success in the exploitation of our reserves."
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