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Energy XXI Reports Fiscal Second-Quarter Results And Provides Operations Update

The Lineham Creek exploration prospect, located onshore in Cameron Parish, Louisiana, approximately 55 miles northwest of Davy Jones, is drilling below the salt weld at 26,500 feet. The well is targeting Eocene and Paleocene objectives below the salt weld with a proposed total depth of 29,000 feet.  Chevron U.S.A. Inc., as operator of the well, holds a 50 percent working interest. Energy XXI holds a 9 percent working interest and a 6.75 percent net revenue interest in the well. Total net investment in Lineham Creek was approximately $13.6 million at Dec. 31, 2012.

Acquisition Activity

Energy XXI purchased McMoRan Exploration's interest in the Laphroaig field for cash consideration, before closing adjustments, of $80 million effective Jan. 1, 2013. The consideration has been financed from Energy XXI's existing cash and available revolver facility. Energy XXI previously held an 18.75 percent WI in the field, and now holds a 56.25 percent WI and has assumed operatorship of the assets. The acquisition adds 2,000 BOE/d of production to Energy XXI from the field's two producing wells.  

"This acquisition affords Energy XXI the opportunity to operate and lead future development and delineation of this field, which we believe offers significant upside to current proved reserves and production," Schiller said. "The original Peterson discovery and Landers development wells to date have produced approximately 60 billion cubic feet (Bcf) of natural gas, with estimated recovery of 100 Bcf combined. The Duplantis well we intend to drill this year offers the potential to recover an additional 100 Bcf." 

Capital Expenditures

During the 2013 fiscal second quarter, capital expenditures, including plug-and-abandonment and excluding acquisition costs, totaled $204 million, with $45 million in exploration and $159 million in development and other costs. Capital expenditures for the full fiscal year ending June 30, 2013, excluding acquisitions, are expected to increase to between $730 million and $760 million.

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