Energy XXI Reports on Solid Financial Progress, Trims Capital Expenditures

Energy XXI has announced fiscal first-quarter results for the period ended Sept. 30, 2008.

"Energy XXI has made solid progress early in our 2009 fiscal year, in regards to both our high-impact exploration program and our storm recovery efforts," Energy XXI Chairman and CEO John Schiller said.

"Despite two hurricanes and the financial market's collapse, we continue to have extensive liquidity, with a large cash position and credit facility. Furthermore, our strong, hedge-protected cash flow is expected to fully fund our fiscal 2009 capital program, including development of our key exploration projects."

As of Oct. 31, 2008, total debt, net of $136 million of cash on hand, was $805 million, reflecting in part the purchase of $100 million of the company's $750 million high-yield issue maturing June 15, 2013, at a total cost of $77.6 million. The $22.4 million gain will be realized over the remaining life of the bonds. Total undrawn capacity under the corporate revolver was $155 million as of Oct. 31, 2008, providing substantial liquidity.

For the 2009 fiscal first quarter, Energy XXI reported net cash provided by operating activities of $79.5 million and earnings before interest, taxes, depreciation, depletion and amortization (EBITDA) of $75.9 million, compared with $76.7 million and $102.4 million, respectively, in the 2008 fiscal first quarter.

Due to storm-related production delays, the company reported a 2009 fiscal first-quarter net loss of $4.7 million, or $0.03 per diluted share, on revenues of $119.7 million and production of 18,800 barrels of oil equivalent per day (BOE/d). In the 2008 fiscal first quarter, the company had net income of $1.9 million, or $.02 per diluted share, on revenues of $143.6 million and production of 26,200 BOE/d. The net realized price received for the company's production in the 2009 fiscal first quarter averaged $69.23 per BOE, compared with $59.63 per BOE in the 2008 fiscal first quarter.

Capital Expenditures

Energy XXI expects capital expenditures to range from $240 million to $260 million for the fiscal year ending June 30, 2009, compared with fiscal 2008 capital expenditures of $330 million, excluding acquisitions. The company's Board of Directors previously had approved a fiscal 2009 budget of $380 million.

"Our anticipated oil and natural gas production volumes and hedges should generate cash flows and economic returns sufficient to fund the revised capital program," Schiller said. "We are adjusting capital expenditures downward in the current fiscal year to preserve liquidity and our financial flexibility to pursue opportunities in these volatile markets."

During the 2009 fiscal first quarter, capital expenditures totaled $88.6 million, with $46.8 million in exploration, $30.7 million in development and $11.1 million in other investments such as land and seismic data.