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Energy XXI Provides Fiscal Year-End Reserves Estimates And Operations Update

Stocks in this article: EXXI

Netherland, Sewell & Associates, Inc., independent oil and gas reserves auditors, completed the year-end proved and probable reserves audits and currently are finalizing the possible reserves audit. All of the company's reserves are in the United States Gulf of Mexico or Gulf Coast, with approximately 75 percent being liquids, of which 95 percent is crude oil and condensate. Approximately 61 percent of proved reserves are proved developed.

"The horizontal drilling campaign was a key driver to our reserves growth in fiscal 2013," Energy XXI Chairman and CEO John Schiller said. "Since initiating the horizontal program a year ago, we have been successful in nine of our first 11 attempts. On average, the successful horizontal wells added about 1 MMBOE of incremental proved reserves per location due to higher recoveries of oil-in-place. We have addressed the early challenges associated with the program and the value generated by the overall horizontal program has been outstanding."

Production Update

During the company's fiscal fourth quarter, production reached 50,200 BOE/d, averaging approximately 47,000 BOE/d for the quarter, with oil production averaging nearly 29,000 barrels per day (Bbl/d).

"The drilling program leading into our new fiscal year is delivering excellent results, and we have gained confidence in what to expect moving forward," Schiller said. "Our goal is to increase shareholder value, primarily through reserves and volume growth while spending within operating cash flow."

Operations Update

At West Delta 73 (100% WI/ 83% NRI), the Glacier well was drilled to 10,215 feet measured depth (MD)/ 8,074 feet true vertical depth (TVD), including a 977-foot lateral section into the F-35 sand. Glacier was brought online in June at 1,450 Bbl/d of oil and 500 thousand cubic feet per day (Mcf/d) of natural gas, gross, with flowing tubing pressure of 550 psi. The next horizontal well at West Delta, Big Sky 3, is drilling below 10,110 feet MD/ 8,000 feet TVD, targeting the F-30 sand with a proposed depth of 11,225 feet MD/ 8,000 feet TVD, including a 1,000-foot lateral section.

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