Energy XXI's Quarterly Production Slightly Down Due to Hurricanes
Energy XXI has provided a production update for its fiscal first-quarter results for the period ended Sept. 30, 2008.
Energy XXI shut in a majority of its production ahead of Hurricanes Gustav and Ike, and has since been working to restore volumes. As previously reported, although damage to company-operated facilities was minimal, the loss of facilities serving two non-operated fields resulted in a combined 2,000 BOE/d, or about 7 percent, long-term reduction of the company's pre-storm net production. The Laphroaig natural gas discovery in south Louisiana generated gross cash flow of approximately $140 million in its first year on production, triggering a reduction in the company's net revenue interest from 25 percent to 15 percent. As a result, the company's net production has been reduced by 750 BOE/d. The well continues to produce more than 41 million cubic feet per day of gas and nearly 800 barrels per day of liquids on a gross basis.
The company's current net production approximates 18,000 BOE/d, which primarily is constrained due to pipeline outages that are expected to be resolved within the next several months. Onshore and coastal Gulf Coast production was restored by Sept. 30, 2008. All major repairs at the South Timbalier 21 field have been completed and the field is currently producing approximately 4,600 BOE/d, with production expected to reach 6,500 BOE/d within the next month, aided by the pending return to service of a tripod platform handling 1,300 BOE/d of net volumes that has been repaired and is awaiting approval from the U.S. Minerals Management Service. The current status of other key Gulf of Mexico fields follows.
- Main Pass 61 - Approximately 4,500 BOE/d of net production was fully restored in September;
- Main Pass 72/73 - Approximately 980 BOE/d of net production was fully restored in September;
- South Pass 49 - All top side facilities are ready to flow; pre-storm volumes of 830 BOE/d remain shut-in due to the loss of third-party-operated sales lines. Production is expected to be restored by March 2009.
- East Cameron 334/335 - Approximately 250 BOE/d of pre-storm net production is expected to be restored in December following repairs to the third-party pipeline servicing the area, as well as volumes from a recompletion performed in October that tested 1,500 BOE/d (640 BOE/d net).
- Five operated fields representing approximately 780 BOE/d of pre-storm net production and five non-operated fields representing approximately 950 BOE/d of pre-storm net production remain off-line due to third-party pipelines that are expected to be repaired during the next several months.
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