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

The following table presents a reconciliation of our consolidated net income available for common stockholders to our consolidated EBITDA for the periods presented.

  Three Months Ended Six Months Ended
  December 31, December 31,
  2012 2011 2012 2011
         
Net Income as Reported $41,332 $97,089 $59,592 $163,420
         
Interest expense-net 26,569 28,348 52,755 55,527
Depreciation, depletion and amortization 105,856 87,568 190,651 172,371
Income tax expense 25,020 12,549 35,730 21,122
         
EBITDA $198,777 $225,554 $338,728 $412,440
         
EBITDA Per Share        
Basic $2.51 $2.95 $4.27 $5.39
Diluted $2.27 $2.59 $4.27 $4.73
         
Weighted Average Number of Common Shares Outstanding        
Basic 79,314 76,498 79,238 76,481
Diluted 87,468 87,227 79,367 87,138
         
 
ENERGY XXI (BERMUDA) LIMITED
CONSOLIDATED BALANCE SHEETS
(In Thousands, except share information)
 
  December 31, June 30,
  2012 2012
ASSETS (Unaudited)  
Current Assets    
Cash and cash equivalents $40,895 $117,087
Accounts receivable    
Oil and natural gas sales 136,349 126,107
Joint interest billings 5,558 3,840
Insurance and other 5,125 5,420
Prepaid expenses and other current assets 42,397 63,029
Derivative financial instruments 14,879 32,497
Total Current Assets 245,203 347,980
Property and Equipment    
Oil and natural gas properties - full cost method of accounting, including $498.3 million and $418.8 million of unevaluated properties not being amortized at December 31, 2012 and June 30, 2012, respectively 2,936,850 2,698,213
Other property and equipment 16,401 9,533
Total Property and Equipment, net of accumulated depreciation, depletion, amortization and impairment 2,953,251 2,707,746
Other Assets    
Derivative financial instruments 20,744 45,496
Debt issuance costs, net of accumulated amortization 30,619 27,608
Equity method investments 15,486 2,117
Total Other Assets 66,849 75,221
 Total Assets $3,265,303 $3,130,947
LIABILITIES    
Current Liabilities    
Accounts payable $180,001 $156,959
Accrued liabilities 76,240 118,818
Notes payable 2,346 22,211
Asset retirement obligations 29,815 34,457
Derivative financial instruments 782
Current maturities of long-term debt 7,782 4,284
Total Current Liabilities 296,966 336,729
Long-term debt, less current maturities 1,141,172 1,014,060
Deferred income taxes 116,849 104,280
Asset retirement obligations 278,432 266,958
Derivative financial instruments 2,629
Other liabilities 10,149 3,080
Total Liabilities 1,846,197 1,725,107
Stockholders' Equity    
Preferred stock, $0.001 par value, 7,500,000 shares authorized at December 31, 2012 and June 30, 2012, respectively    
7.25% Convertible perpetual preferred stock, 8,000 shares issued and outstanding at December 31, 2012 and June 30, 2012, respectively
5.625% Convertible perpetual preferred stock, 813,277 and 814,117 shares issued and outstanding at December 31, 2012 and June 30, 2012, respectively 1 1
Common stock, $0.005 par value, 200,000,000 shares authorized and 79,356,865 and 79,147,340 shares issued and 79,356,202 and 78,837,697 shares outstanding at December 31, 2012 and June 30, 2012, respectively 397 396
Additional paid-in capital 1,509,828 1,501,785
Accumulated deficit (111,205) (153,945)
Accumulated other comprehensive income, net of income tax expense 20,085 57,603
 Total Stockholders' Equity 1,419,106 1,405,840
Total Liabilities and Stockholders' Equity $3,265,303 $3,130,947
 
 
ENERGY XXI (BERMUDA) LIMITED
CONSOLIDATED STATEMENTS OF INCOME
(In Thousands, except per share information)
(Unaudited)
 
  Three Months Ended December 31, Six Months Ended December 31,
  2012 2011 2012 2011
         
Revenues        
Oil sales $285,824 $309,347 $533,154 $556,264
Natural gas sales 34,695 31,231 57,592 69,197
Total Revenues 320,519 340,578 590,746 625,461
         
Costs and Expenses        
Lease operating 85,922 74,134 168,403 145,167
Production taxes 1,166 1,174 2,413 3,348
Gathering and transportation 6,098 3,395 14,089 9,548
Depreciation, depletion and amortization 105,856 87,568 190,651 172,371
Accretion of asset retirement obligations 7,756 9,803 15,408 19,491
General and administrative expense 19,319 22,147 43,207 41,468
(Gain) loss on derivative financial instruments 865 4,371 6,387 (6,001)
Total Costs and Expenses 226,982 202,592 440,558 385,392
         
Operating Income 93,537 137,986 150,188 240,069
         
Other Income (Expense)        
Loss from equity method investees (616) (2,111)
Other income - net 543 15 902 24
Interest expense (27,112) (28,363) (53,657) (55,551)
Total Other Expense (27,185) (28,348) (54,866) (55,527)
         
Income Before Income Taxes 66,352 109,638 95,322 184,542
         
Income Tax Expense 25,020 12,549 35,730 21,122
Net Income 41,332 97,089 59,592 163,420
Preferred Stock Dividends 2,874 3,706 5,749 7,412
Net Income Available for Common Stockholders $38,458 $93,383 $53,843 $156,008
         
Earnings Per Share        
Basic $0.48 $1.22 $0.68 $2.04
Diluted $0.47 $1.11 $0.68 $1.88
         
Weighted Average Number of Common Shares Outstanding        
Basic 79,314 76,498 79,238 76,481
Diluted 87,468 87,227 79,367 87,138
 
 
ENERGY XXI (BERMUDA) LIMITED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
(Unaudited)
 
  Three Months Ended December 31, Six Months Ended December 31,
  2012 2011 2012 2011
Cash Flows From Operating Activities        
Net income $41,332 $97,089 $59,592 $163,420
Adjustments to reconcile net income to net cash provided by (used in) operating activities:        
Depreciation, depletion and amortization 105,856 87,568 190,651 172,371
Deferred income tax expense 22,025 12,547 32,814 21,272
Change in derivative financial instruments        
Proceeds from sale of derivative instruments 100 15,931 161 65,529
Other – net (8,671) (6,445) (14,018) (25,691)
Accretion of asset retirement obligations 7,756 9,803 15,408 19,491
Loss from equity method investees 616  — 2,111  —
Amortization and write-off of debt issuance costs 1,907 1,882 3,798 3,705
Stock-based compensation 1,200 1,189 1,656 10,114
Changes in operating assets and liabilities        
Accounts receivable (18,153) (30,275) (7,397) (17,581)
Prepaid expenses and other current assets 4,685 4,067 20,722 (5,066)
Settlement of asset retirement obligations (14,673) (1,407) (24,809) (1,994)
Accounts payable and accrued liabilities (4,509) (96) (39,053) (37,586)
Net Cash Provided by Operating Activities 139,471 191,853 241,636 367,984
         
Cash Flows from Investing Activities        
Acquisitions (41,156) (6,242) (41,156) (6,177)
Capital expenditures (192,352) (125,695) (379,050) (238,444)
Insurance payments received  — 5,692  — 6,472
Contributions to equity investees  —  — (15,524)  —
Proceeds from the sale of properties  — 2,767  — 2,767
Property deposit 3,500  —  —  —
Other (17) (1,062) 355 (808)
Net Cash Used in Investing Activities (230,025) (124,540) (435,375) (236,190)
         
Cash Flows from Financing Activities        
Proceeds from the issuance of common and preferred stock, net of offering costs 69 310 4,760 9,456
Dividends to shareholders - common (5,553) (11,103)  —
Dividends to shareholders - preferred (2,874) (3,706) (5,750) (7,412)
Proceeds from long-term debt 385,637 285,854 609,449 522,324
Payments on long-term debt (294,446) (288,084) (481,259) (604,318)
Other (149) (759) 1,450 (855)
Net Cash Provided by (Used in) Financing Activities 82,684 (6,385) 117,547 (80,805)
         
Net Increase (Decrease) in Cash and Cash Equivalents (7,870) 60,928 (76,192) 50,989
Cash and Cash Equivalents, beginning of period 48,765 18,468 117,087 28,407
Cash and Cash Equivalents, end of period $40,895 $79,396 $40,895 $79,396
 
 
ENERGY XXI (BERMUDA) LIMITED
CONSOLIDATED OPERATIONAL INFORMATION (Unaudited)
 
  Quarter Ended
  Dec. 31, 2012 Sept. 30, 2012 June 30, 2012 Mar. 31, 2012 Dec. 31, 2011
Operating Highlights
           
Operating revenues          
Crude oil sales $280,953 $242,830 $314,639 $315,723 $306,064
Natural gas sales 29,657 17,396 19,657 19,154 21,659
Hedge gain 9,909 10,001 7,650 1,119 12,855
Total revenues 320,519 270,227 341,946 335,996 340,578
Percent of operating revenues from crude oil          
Prior to hedge gain 90% 93% 94% 94% 93%
Including hedge gain 89% 92% 92% 93% 91%
Operating expenses          
Lease operating expense          
Insurance expense 8,810 8,992 6,825 7,138 7,096
Workover and maintenance 20,217 10,113 21,070 15,885 12,805
Direct lease operating expense 56,895 63,376 59,306 55,424 54,233
Total lease operating expense 85,922 82,481 87,201 78,447 74,134
Production taxes 1,166 1,247 2,414 1,499 1,174
Gathering and transportation 6,098 7,991 4,358 2,465 3,395
DD&A 105,856 84,795 106,644 88,448 87,568
General and administrative 19,319 23,888 19,733 25,075 22,147
Other – net 8,621 13,174 5,186 13,257 14,174
Total operating expenses 226,982 213,576 225,536 209,191 202,592
Operating income $93,537 $56,651 $116,410 $126,805 $137,986
Sales volumes per day          
Natural gas (MMcf) 90.9 67.1 92.5 83.7 72.8
Crude oil (MBbls) 29.4 26.1 32.2 31.4 30.6
Total (MBOE) 44.6 37.3 47.6 45.3 42.7
Percent of sales volumes from crude oil 66% 70% 68% 69% 72%
Average sales price          
Natural gas per Mcf $3.55 $2.82 $2.34 $2.52 $3.23
Hedge gain per Mcf 0.60 0.89 0.55 0.54 1.43
Total natural gas per Mcf $4.15 $3.71 $2.89 $3.06 $4.66
Crude oil per Bbl $103.79 $101.03 $107.34 $110.54 $108.80
Hedge gain (loss) per Bbl 1.80 1.87 1.03 (1.05) 1.17
Total crude oil per Bbl $105.59 $102.90 $108.37 $109.49 $109.97
Total hedge gain per BOE $2.42 $2.91 $1.77 $0.27 $3.27
Operating revenues per BOE $78.15 $78.72 $78.90 $81.43 $86.67
Operating expenses per BOE          
Lease operating expense          
Insurance expense 2.15 2.62 1.57 1.73 1.81
Workover and maintenance 4.93 2.95 4.86 3.85 3.26
Direct lease operating expense 13.87 18.46 13.68 13.43 13.80
Total lease operating expense 20.95 24.03 20.11 19.01 18.87
Production taxes .28 0.36 0.56 0.36 0.30
Gathering and transportation 1.49 2.33 1.01 0.60 0.86
DD&A 25.81 24.70 24.61 21.44 22.28
General and administrative 4.71 6.96 4.55 6.08 5.64
Other – net 2.10 3.84 1.20 3.22 3.60
Total operating expenses 55.34 62.22 52.04 50.71 51.55
Operating income per BOE $22.81 $16.50 $26.86 $30.72 $35.12

GLOSSARY

Barrel – unit of measure for oil and petroleum products, equivalent to 42 U.S. gallons.

BOE – barrels of oil equivalent, used to equate natural gas volumes to liquid barrels at a general conversion rate of 6,000 cubic feet of gas per barrel.

BOE/d – barrels of oil equivalent per day.

MMcf/d – million cubic feet of gas per day.

MD – total measured depth of a well.

Net Pay – cumulative hydrocarbon-bearing formations.

NRI, Net Revenue Interest – the percentage of production revenue allocated to the working interest after first deducting proceeds allocated to royalty and overriding interest.

TD – target total depth of a well.

TVD –true vertical depth of a well.

WI, Working Interest – the interest held in lands by virtue of a lease, operating agreement, fee title or otherwise, under which the owner of the interest is vested with the right to explore for, develop, produce and own oil, gas or other minerals and bears the proportional cost of such operations.

Workover / Recompletion – operations on a producing well to restore or increase production. A workover or recompletion may be performed to stimulate the well, remove sand or wax from the wellbore, to mechanically repair the well, or for other reasons.

CONTACT: ENQUIRIES OF THE COMPANY
         
         Energy XXI
         Stewart Lawrence
         Vice President, Investor Relations and
         Communications
         713-351-3006
         slawrence@energyxxi.com
         Greg Smith
         Director, Investor Relations
         713-351-3149
         gsmith@energyxxi.com
         
         Seymour Pierce
         Nominated Adviser: David Porter, Rick Thompson
         Corporate Broking: Richard Redmayne
         Tel: +44 (0) 20 7107 8000
         
         Pelham Bell Pottinger
         James Henderson
         jhenderson@pelhambellpottinger.co.uk
         Mark Antelme
         mantelme@pelhambellpottinger.co.uk
         +44 (0) 20 7861 3232

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