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

Stocks in this article: EXXI

Conference Call Today, May 6, at 9 a.m. CDT, 3 p.m. London Time

Energy XXI will host its fiscal third-quarter conference call today, May 6, at 9 a.m. CDT (3 p.m. London time). The dial-in numbers are 1 (631) 813-4724 (U.S.) and (0) 80 0032 3836 (U.K.), and the confirmation code is 36410686. For complete instructions on how to actively participate in the conference call, or to listen to the live audio webcast or a replay, please refer to www.EnergyXXI.com

Forward-Looking Statements

All statements included in this release relating to future plans, projects, events or conditions and all other statements other than statements of historical fact included in this release are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based upon current expectations and are subject to a number of risks, uncertainties and assumptions, including changes in long-term oil and gas prices or other market conditions affecting the oil and gas industry, reservoir performance, the outcome of commercial negotiations and changes in technical or operating conditions, among others, that could cause actual results, including project plans and related expenditures and resource recoveries, to differ materially from those described in the forward-looking statements. Energy XXI assumes no obligation and expressly disclaims any duty to update the information contained herein except as required by law.

Competent Person Disclosure

The technical information contained in this announcement relating to operations adheres to the standard set by the Society of Petroleum Engineers. Tom O'Donnell, Vice President of Exploitation , a Petroleum Engineer, is the qualified person who has reviewed and approved the technical information contained in this announcement.

About the Company

Energy XXI is an independent oil and natural gas exploration and production company whose growth strategy emphasizes acquisitions, enhanced by its value-added organic drilling program. The company's properties are located in the U.S. Gulf of Mexico waters and the Gulf Coast onshore. Cantor Fitzgerald Europe is Energy XXI's listing broker in the United Kingdom.   To learn more, visit the Energy XXI website at www.EnergyXXI.com .

ENERGY XXI (BERMUDA) LIMITED
RECONCILIATION OF GAAP TO NON-GAAP MEASURES
(In Thousands, except per share information)
(Unaudited)
     
As required under Regulation G of the Securities Exchange Act of 1934, provided below are reconciliations of net income to the following non-GAAP financial measure: EBITDA. The company uses this non-GAAP measure as a key metric for the management of the company and to demonstrate the company's ability to internally fund capital expenditures and service debt
     
  Three Months Ended Nine Months Ended
  March 31, March 31,
  2013 2012 2013 2012
         
Net Income as Reported $40,436 $91,252 $100,028 $254,672
         
Interest expense-net 27,159 26,790 79,914 82,317
Depreciation, depletion and amortization 88,727 88,448 279,378 260,819
Income tax expense 29,688 8,763 65,418 29,885
         
EBITDA $186,010 $215,253 $524,738 $627,693
         
EBITDA Per Share        
Basic $2.34 $2.78 $6.62 $8.17
Diluted $2.13 $2.46 $6.00 $7.20
         
Weighted Average Number of Common Shares Outstanding        
Basic 79,365 77,454 79,280 76,803
Diluted 87,516 87,353 87,471 87,185
         
 
ENERGY XXI (BERMUDA) LIMITED
CONSOLIDATED BALANCE SHEETS
(In Thousands, except share information)
     
  March 31, June 30,
  2013 2012
ASSETS (Unaudited)  
Current Assets    
Cash and cash equivalents $30,229 $117,087
Accounts receivable    
Oil and natural gas sales 138,522 126,107
Joint interest billings 9,260 3,840
Insurance and other 4,773 5,420
Prepaid expenses and other current assets 22,794 63,029
Derivative financial instruments 23,900 32,497
Total Current Assets 229,478 347,980
Property and Equipment    
Oil and natural gas properties - full cost method of accounting, including $539.4 million and $418.8 million of unevaluated properties not being amortized at March 31, 2013 and June 30, 2012, respectively 3,148,239 2,698,213
Other property and equipment 16,114 9,533
Total Property and Equipment, net of accumulated depreciation, depletion, amortization and impairment 3,164,353 2,707,746
Other Assets    
Derivative financial instruments 17,134 45,496
Debt issuance costs, net of accumulated amortization 29,599 27,608
Equity method investments 13,408 2,117
Total Other Assets 60,141 75,221
 Total Assets $3,453,972 $3,130,947
LIABILITIES    
Current Liabilities    
Accounts payable $172,017 $156,959
Accrued liabilities 121,564 118,818
Notes payable 1,080 22,211
Asset retirement obligations 30,130 34,457
Derivative financial instruments 112
Current maturities of long-term debt 23,428 4,284
Total Current Liabilities 348,331 336,729
Long-term debt, less current maturities 1,227,144 1,014,060
Deferred income taxes 139,268 104,280
Asset retirement obligations 283,317 266,958
Derivative financial instruments 561
Other liabilities 9,220 3,080
Total Liabilities 2,007,841 1,725,107
Stockholders' Equity    
Preferred stock, $0.001 par value, 7,500,000 shares authorized at March 31, 2013 and June 30, 2012, respectively    
7.25% Convertible perpetual preferred stock, 8,000 shares issued and outstanding at March 31, 2013 and June 30, 2012, respectively
5.625% Convertible perpetual preferred stock, 813,188 and 814,117 shares issued and outstanding at March  31, 2013 and June 30, 2012, respectively 1 1
Common stock, $0.005 par value, 200,000,000 shares authorized and 79,373,500 and 79,147,340 shares issued and 79,372,837 and 78,837,697 shares outstanding at March 31, 2013 and June 30, 2012, respectively 397 396
Additional paid-in capital 1,510,811 1,501,785
Accumulated deficit (79,199) (153,945)
Accumulated other comprehensive income, net of income tax expense 14,121 57,603
Total Stockholders' Equity 1,446,131 1,405,840
 Total Liabilities and Stockholders' Equity $3,453,972 $3,130,947
 
ENERGY XXI (BERMUDA) LIMITED
CONSOLIDATED STATEMENTS OF INCOME
(In Thousands, except per share information)
(Unaudited)
     
  Three Months Ended March 31, Nine Months Ended March 31,
  2013 2012 2013 2012
         
Revenues        
Oil sales $274,364 $312,714 $807,518 $868,978
Natural gas sales 29,410 23,282 87,002 92,479
Total Revenues 303,774 335,996 894,520 961,457
         
Costs and Expenses        
Lease operating 86,305 78,447 254,708 223,614
Production taxes 1,352 1,499 3,765 4,847
Gathering and transportation 4,411 2,465 18,500 12,013
Depreciation, depletion and amortization 88,727 88,448 279,378 260,819
Accretion of asset retirement obligations 7,649 9,762 23,057 29,253
General and administrative expense 16,092 25,075 59,299 66,543
(Gain) loss on derivative financial instruments (632) 3,495 5,755 (2,506)
Total Costs and Expenses 203,904 209,191 644,462 594,583
         
Operating Income 99,870 126,805 250,058 366,874
         
Other Income (Expense)        
Loss from equity method investees (2,587) (4,698)
Other income - net 523 97 1,425 121
Interest expense (27,682) (26,887) (81,339) (82,438)
Total Other Expense (29,746) (26,790) (84,612) (82,317)
         
Income Before Income Taxes 70,124 100,015 165,446 284,557
         
Income Tax Expense 29,688 8,763 65,418 29,885
Net Income 40,436 91,252 100,028 254,672
Induced Conversion of Preferred Stock 6,058 6,058
Preferred Stock Dividends 2,873 2,739 8,623 10,151
Net Income Available for Common Stockholders $37,563 $82,455 $91,405 $238,463
         
Earnings Per Share        
Basic $0.47 $1.06 $1.15 $3.10
Diluted $0.46 $1.04 $1.14 $2.92
         
Weighted Average Number of Common Shares Outstanding        
Basic 79,365 77,454 79,280 76,803
Diluted 87,516 87,353 87,471 87,185
 
ENERGY XXI (BERMUDA) LIMITED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
(Unaudited)
     
  Three Months Ended March 31, Nine Months Ended March 31,
  2013 2012 2013 2012
         
Cash Flows From Operating Activities        
Net income $40,436 $91,252 $100,028 $254,672
Adjustments to reconcile net income to net cash provided by (used in) operating activities:        
Depreciation, depletion and amortization 88,727 88,448 279,378 260,819
Deferred income tax expense 25,625 8,764 58,439 30,036
Change in derivative financial instruments        
Proceeds from derivative instruments 574 993 735 66,522
 Other – net (5,318) (10,866) (19,336) (36,557)
Accretion of asset retirement obligations 7,649 9,762 23,057 29,253
Loss from equity method investees 2,587 4,698  —
Amortization and write-off of debt issuance costs 1,910 1,886 5,708 5,591
Stock-based compensation 483 478 2,139 10,592
Changes in operating assets and liabilities        
Accounts receivable (1,858) (9,565) (9,254) (27,146)
Prepaid expenses and other current assets 19,541 9,945 40,263 4,879
Settlement of asset retirement obligations (4,761) (4,569) (29,570) (6,563)
Accounts payable and accrued liabilities 34,314 11,670 (4,740) (25,916)
Net Cash Provided by Operating Activities 209,909 198,198 451,545 566,182
         
Cash Flows from Investing Activities        
Acquisitions (112,566) (35) (153,722) (6,212)
Capital expenditures (184,504) (155,744) (563,554) (394,188)
Insurance payments received 6,472
Net contributions to equity investees (503) (16,027)
Proceeds from the sale of properties 203 2,970
Other (409) 1,252 (54) 444
Net Cash Used in Investing Activities (297,982) (154,324) (733,357) (390,514)
         
Cash Flows from Financing Activities        
Proceeds from the issuance of common and preferred stock, net of offering costs 499 191 5,259 9,647
Conversion of preferred stock to common (6,029) (6,029)
Dividends to shareholders – common (5,556) (16,659)
Dividends to shareholders – preferred (2,873) (2,877) (8,623) (10,289)
Proceeds from long-term debt 532,990 185,437 1,142,439 707,761
Payments on long-term debt (447,653) (214,468) (928,914) (818,787)
Other 1,452 (854)
Net Cash Provided by (Used in) Financing Activities 77,407 (37,746) 194,954 (118,551)
         
Net Increase (Decrease) in Cash and Cash Equivalents (10,666) 6,128 (86,858) 57,117
Cash and Cash Equivalents, beginning of period 40,895 79,396 117,087 28,407
Cash and Cash Equivalents, end of period $30,229 $85,524 $30,229 $85,524
 
ENERGY XXI (BERMUDA) LIMITED
CONSOLIDATED OPERATIONAL INFORMATION (In thousands) (Unaudited)
   
  Quarter Ended
  Mar. 31, 2013 Dec. 31, 2012 Sept. 30, 2012 June 30, 2012 Mar. 31, 2012
Operating Highlights
Operating revenues          
Crude oil sales $273,280 $280,953 $242,830 $314,639 $315,723
Natural gas sales 27,070 29,657 17,396 19,657 19,154
Hedge gain 3,424 9,909 10,001 7,650 1,119
Total revenues 303,774 320,519 270,227 341,946 335,996
Percent of operating revenues from crude oil          
Prior to hedge gain 91% 90% 93% 94% 94%
Including hedge gain 90% 89% 92% 92% 93%
Operating expenses          
Lease operating expense          
Insurance expense 7,473 8,810 8,992 6,825 7,138
Workover and maintenance 19,166 20,217 10,113 21,070 15,885
Direct lease operating expense 59,666 56,895 63,376 59,306 55,424
 Total lease operating expense 86,305 85,922 82,481 87,201 78,447
Production taxes 1,352 1,166 1,247 2,414 1,499
Gathering and transportation 4,411 6,098 7,991 4,358 2,465
DD&A 88,727 105,856 84,795 106,644 88,448
General and administrative 16,092 19,319 23,888 19,733 25,075
Other – net 7,017 8,621 13,174 5,186 13,257
Total operating expenses 203,904 226,982 213,576 225,536 209,191
Operating income $99,870 $93,537 $56,651 $116,410 $126,805
Sales volumes per day          
Natural gas (MMcf) 89.4 90.9 67.1 92.5 83.7
Crude oil (MBbls) 28.6 29.4 26.1 32.2 31.4
Total (MBOE) 43.5 44.6 37.3 47.6 45.3
Percent of sales volumes from crude oil 66% 66% 70% 68% 69%
Average sales price          
Natural gas per Mcf $3.37 $3.55 $2.82 $2.34 $2.52
Hedge gain per Mcf 0.29 0.60 0.89 0.55 0.54
Total natural gas per Mcf $3.66 $4.15 $3.71 $2.89 $3.06
Crude oil per Bbl $106.11 $103.79 $101.03 $107.34 $110.54
Hedge gain (loss) per Bbl 0.42 1.80 1.87 1.03 (1.05)
Total crude oil per Bbl $106.53 $105.59 $102.90 $108.37 $109.49
Total hedge gain per BOE $0.87 $2.42 $2.91 $1.77 $0.27
Operating revenues per BOE $77.58 $78.15 $78.72 $78.90 $81.43
Operating expenses per BOE          
Lease operating expense          
Insurance expense 1.91 2.15 2.62 1.57 1.73
Workover and maintenance 4.89 4.93 2.95 4.86 3.85
Direct lease operating expense 15.24 13.87 18.46 13.68 13.43
Total lease operating expense 22.04 20.95 24.03 20.11 19.01
Production taxes 0.35 0.28 0.36 0.56 0.36
Gathering and transportation 1.13 1.49 2.33 1.01 0.60
DD&A 22.66 25.81 24.70 24.61 21.44
General and administrative 4.11 4.71 6.96 4.55 6.08
Other – net 1.79 2.10 3.84 1.20 3.22
Total operating expenses 52.08 55.34 62.22 52.04 50.71
Operating income per BOE $25.50 $22.81 $16.50 $26.86 $30.72

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.

Bopd – barrels of oil 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
         
         Cantor Fitzgerald Europe
         Nominated Adviser: David Porter, Rick Thompson
         Corporate Broking: Richard Redmayne
         Tel: +44 (0) 20 7894 7000
         
         Pelham Bell Pottinger
         James Henderson
         jhenderson@pelhambellpottinger.co.uk
         Mark Antelme
         mantelme@pelhambellpottinger.co.uk
         +44 (0) 20 7861 3232

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