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Energy XXI Reports Audited Fiscal Year-End Results And Provides Operational Update

Stocks in this article: EXXI

Capital Expenditures

The company's capital program for fiscal year 2014, which began July 1, 2013, is estimated at $660 million. Development drilling and recompletions account for $330 million of planned spending, with exploration drilling targeting approximately $126 million, $46 million of which is associated with the ultra-deep joint venture. Facilities spending is estimated at $80 million, which includes approximately $67 million for construction of a new platform at West Delta 73. Seismic costs are expected to total $34 million, primarily related to wide azimuth data acquisition, while abandonment costs are estimated at $31 million. The remainder of the capital budget for fiscal 2014 is allocated to general and administrative and land costs. Capital expenditures for fiscal year 2013 totaled $858 million, including $42 million of abandonment costs and excluding $161 million spent on acquisitions.

 
 
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: Adjusted 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.
 
  Quarter Ended June 30, Year Ended June 30,
  2013 2012 2013 2012
         
Net Income as Reported $62,053 $81,155 $162,081 $335,827
         
Total other expense 28,479 26,494 113,091 108,811
Depreciation, depletion and amortization 96,846 106,644 376,224 367,463
Income tax expense 21,215 8,761 86,633 38,646
         
Adjusted EBITDA $208,593 $223,054 $738,029 $850,747
         
Adjusted EBITDA Per Share        
Basic $2.66 $2.83 $9.33 $11.00
Diluted $2.66 $2.82 $9.32 $10.96
         
Weighted Average Number of Common Shares Outstanding        
Basic 78,409 78,840 79,063 77,310
Diluted 78,477 79,199 79,166 77,614
 
 
ENERGY XXI (BERMUDA) LIMITED
CONSOLIDATED BALANCE SHEETS
(In Thousands, except share information )
 
  June 30,
ASSETS 2013 2012
Current Assets    
Cash and cash equivalents  $— $117,087
Accounts receivable    
Oil and natural gas sales 132,521 126,107
Joint interest billings 9,505 3,840
Insurance and other 6,745 5,420
Prepaid expenses and other current assets 50,738 63,029
Derivative financial instruments 38,389 32,497
Total Current Assets 237,898 347,980
Property and Equipment    
Oil and natural gas properties - full cost method of accounting, including $422.6 million and $418.8 million of unevaluated properties not being amortized at June 30, 2013 and 2012, respectively 3,289,505 2,698,213
Other property and equipment 17,003 9,533
Total Property and Equipment, net of accumulated depreciation, depletion, amortization and impairment 3,306,508 2,707,746
Other Assets    
Derivative financial instruments 21,926 45,496
Equity investments 12,799 2,117
Debt issuance costs, net of accumulated amortization and other assets 32,580 27,608
Total Other Assets 67,305 75,221
 Total Assets $3,611,711 $3,130,947
LIABILITIES    
Current Liabilities    
Accounts payable $219,610 $156,959
Accrued liabilities 105,192 118,818
Notes payable 22,524 22,211
Deferred income taxes 20,517
Asset retirement obligations 29,500 34,457
Derivative financial instruments 40
Current maturities of long-term debt 19,554 4,284
Total Current Liabilities 416,937 336,729
Long-term debt, less current maturities 1,350,491 1,014,060
Deferred income taxes 140,804 104,280
Asset retirement obligations 258,318 266,958
Other liabilities 7,915 3,080
Total Liabilities 2,174,465 1,725,107
Commitments and Contingencies    
Stockholders' Equity    
Preferred stock, $0.001 par value, 7,500,000 shares authorized at June 30, 2013 and 2012, respectively    
7.25% Convertible perpetual preferred stock, 8,000 shares issued and outstanding at June 30, 2013 and 2012, respectively
5.625% Convertible perpetual preferred stock, 813,188 and 814,117 shares issued and outstanding at June 30, 2013 and 2012, respectively 1 1
Common stock, $0.005 par value, 200,000,000 shares authorized and 79,425,473 and 79,147,340 shares issued and 76,485,910 and 78,837,697 shares outstanding at June 30, 2013 and 2012, respectively 397 396
Additional paid-in capital 1,512,311 1,501,785
Accumulated deficit (29,352) (153,945)
Accumulated other comprehensive income, net of income taxes 26,552 57,603
Treasury stock, at cost, 2,938,900 shares at June 30, 2013 (72,663)
Total Stockholders' Equity 1,437,246 1,405,840
Total Liabilities and Stockholders' Equity $3,611,711 $3,130,947
 
 
ENERGY XXI (BERMUDA) LIMITED
CONSOLIDATED STATEMENTS OF INCOME
(In Thousands, except per share information)
 
   Quarter Ended June 30, Year Ended June 30,
  2013 2012 2013 2012
  (Unaudited)    
Revenues        
Crude oil sales $273,464 $317,653 $1,080,982 $1,186,631
Natural gas sales 40,861 24,293 127,863 116,772
Total Revenues 314,325 341,946 1,208,845 1,303,403
         
Costs and Expenses        
Lease operating expense 82,455 87,201 337,163 310,815
Production taxes 1,481 2,414 5,246 7,261
Gathering and transportation 5,668 4,358 24,168 16,371
Depreciation, depletion and amortization 96,846 106,644 376,224 367,463
Accretion of asset retirement obligations 7,828 9,908 30,885 39,161
General and administrative expense 12,299 19,733 71,598 86,276
Loss (gain) on derivative financial instruments (3,999) (4,722) 1,756 (7,228)
Total Costs and Expenses 202,578 225,536 847,040 820,119
         
Operating Income  111,747 116,410 361,805 483,284
         
Other Income (Expense)        
Loss from equity method investees (1,699) (6,397)
Interest income and other 540 (50) 1,965 71
Interest expense (27,320) (26,444) (108,659) (108,882)
Total Other Expense (28,479) (26,494) (113,091) (108,811)
         
Income Before Income Taxes 83,268 89,916 248,714 374,473
         
Income Tax Expense 21,215 8,761 86,633 38,646
         
Net Income 62,053 81,155 162,081 335,827
Induced Conversion of Preferred Stock 10 6,068
Preferred Stock Dividends 2,873 2,877 11,496 13,028
Net Income Available for Common Stockholders $59,180 $78,268 $150,585 $316,731
         
Earnings per Share        
Basic $0.75 $0.99 $1.90 $4.10
Diluted $0.72 $0.93 $1.86 $3.85
         
Weighted Average Number of Common Shares Outstanding        
Basic 78,409 78,840 79,063 77,310
Diluted 86,572 87,278 87,263 87,208
 
 
ENERGY XXI (BERMUDA) LIMITED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
 
  Quarter Ended June 30, Year Ended June 30,
  2013 2012 2013 2012
  (Unaudited)    
Cash Flows From Operating Activities        
Net income $62,053 $81,155 $162,081 $335,827
Adjustments to reconcile net income to net cash provided by (used in) operating activities:        
Depreciation, depletion and amortization 96,846 106,644 376,224 367,463
Deferred income tax expense 15,322 8,760 73,761 38,796
Change in derivative financial instruments        
Proceeds from sale of derivative instruments 25 760 66,522
Other – net (8,180) (15,598) (27,516) (52,155)
Accretion of asset retirement obligations 7,828 9,908 30,885 39,161
Loss from equity method investees 1,699 6,397
Amortization and write-off of debt issuance costs and other 1,190 1,968 6,898 7,559
Stock-based compensation 1,366 1,168 3,505 11,760
Changes in operating assets and liabilities        
Accounts receivable 10,943 22,151 1,690 (4,995)
Prepaid expenses and other current assets (27,764) (20,769) 12,499 (15,890)
Settlement of asset retirement obligations (12,369) (8,427) (41,939) (14,990)
Accounts payable and accrued liabilities 37,644 32,372 32,903 6,456
Net Cash Provided by Operating Activities 186,603 219,332 638,148 785,514
Cash Flows from Investing Activities        
Acquisitions (7,442) (189) (161,164) (6,401)
Capital expenditures (252,551) (176,482) (816,105) (570,670)
Insurance payments received   6,472
Change in equity method investments (666) (2,201) (16,693) (2,201)
Proceeds from the sale of properties   (220) 2,750
Other 13 13 (41) 457
Net Cash Used in Investing Activities (260,646) (179,079) (994,003) (569,593)
Cash Flows from Financing Activities        
Proceeds from the issuance of common and preferred stock, net of offering costs 134 192 7,021 9,839
Conversion of preferred stock to common (11) (6,040)
Repurchase of company common stock (58,666) (58,666)
Dividends to shareholders - common (9,333) (25,992)
Dividends to shareholders - preferred (2,873) (8,393) (11,496) (18,682)
Proceeds from long-term debt 434,112 188,956 1,576,551 896,717
Payments on long-term debt (314,934) (189,513) (1,243,848) (1,008,300)
Debt issuance costs and other (4,626) 79 (4,802) (775)
Net Cash Provided by (Used in) Financing Activities 43,814 (8,690) 238,768 (127,241)
         
Net Increase (Decrease) in Cash and Cash Equivalents (30,229) 31,563 (117,087) 88,680
         
Cash and Cash Equivalents, beginning of period 30,229 85,524 117,087 28,407
         
Cash and Cash Equivalents, end of period $— $117,087 $— $117,087
   
   
  Year Ended June 30, (In Thousands, Except per Unit Amounts)
Operating Highlights 2013 2012 2011 2010 2009
Operating revenues          
Crude oil sales $1,067,686 $1,186,193 $777,869 $383,928 $278,014
Natural gas sales 112,753 88,608 101,815 69,399 113,156
Hedge gain (loss) 28,406 28,602 (20,314) 45,604 42,660
Total revenues 1,208,845 1,303,403 859,370 498,931 433,830
Percent of operating revenues from crude oil          
 Prior to hedge gain (loss)  90% 93% 88% 85% 71%
 Including hedge gain (loss) 89% 91% 84% 78% 68%
Operating expenses          
 Lease operating expense          
Insurance expense 32,737 28,521 27,876 27,603 19,188
Workover and maintenance 65,118 56,413 33,095 19,630 15,930
Direct lease operating expense 239,308 225,881 178,507 95,379 87,032
 Total lease operating expense 337,163 310,815 239,478 142,612 122,150
 Production taxes 5,246 7,261 3,336 4,217 5,450
 Gathering and transportation 24,168 16,371 12,499  —  —
 Depreciation, depletion and amortization 376,224 367,463 293,479 181,640 217,207
 Impairment of oil and gas properties  —  —  —  — 576,996
 General and administrative 71,598 86,276 75,091 49,667 24,756
 Other – net 32,641 31,933 26,564 18,748 4,488
 Total operating expenses 847,040 820,119 650,447 396,884 951,047
Operating income (loss) $361,805 $483,284 $208,923 $102,047 $(517,217)
Sales volumes per day          
Natural gas (MMcf) 88.6 81.5 67.2 42.6 47.9
Crude oil (MBbls) 28.3 30.5 23.4 14.7 11.4
Total (MBOE) 43.1 44.1 34.6 21.8 19.3
Percent of sales volumes from crude oil 66% 69% 68% 67% 59%
Average sales price          
Natural gas per Mcf $3.48 $2.97 $4.15 $4.47 $6.48
Hedge gain per Mcf 0.47 0.94 1.54 2.68 1.60
Total natural gas per Mcf $3.95 $3.91 $5.69 $7.15 $8.08
Crude oil per Bbl $103.48 $106.17 $90.95 $71.73 $67.06
Hedge gain (loss) per Bbl 1.29 0.04 (6.80) 0.75 3.56
Total crude oil per Bbl $104.77 $106.21 $84.15 $72.48 $70.62
Total hedge gain (loss) per BOE $1.81 $1.77 $(1.61) $5.74 $6.04
Operating revenues per BOE $76.95 $80.74 $67.98 $62.83 $61.47
Operating expenses per BOE          
 Lease operating expense          
Insurance expense 2.08 1.77 2.21 3.48 2.72
Workover and maintenance 4.15 3.49 2.62 2.47 2.26
Direct lease operating expense 15.23 13.99 14.12 12.01 12.33
 Total lease operating expense per BOE 21.46 19.25 18.95 17.96 17.31
 Production taxes 0.33 0.45 0.26 0.53 0.77
 Impairment of oil and gas properties  —   —  —  — 81.75
 Gathering and transportation 1.54 1.01 0.98  —  —
Depreciation, depletion and amortization 23.95 22.76 23.22 22.87 30.78
General and administrative 4.56 5.34 5.94 6.25 3.51
Other – net 2.08 1.98 2.10 2.36 0.64
Total operating expenses per BOE 53.92 50.79 51.45 49.97 134.76
Operating income (loss) per BOE $23.03 $29.95 $16.53 $12.86 $(73.29)
 
 
ENERGY XXI (BERMUDA) LIMITED
CONSOLIDATED COSTS INCURRED, CAPITAL EXPENDITURES AND PROVED RESERVES
(Unaudited)
 
  Year Ended June 30,
  2013 2012 2011
  (In Thousands)
Oil and Gas Activities      
Exploration costs $168,512 $183,397 $98,133
Development costs 636,406 383,495 180,191
Total 804,918 566,892 278,324
Administrative and Other 11,187 3,778 2,909
Total capital expenditures 816,105 570,670 281,233
Property acquisitions      
Proved 108,825 6,401 722,551
Unproved 52,339 289,711
Total acquisitions 161,164 6,401 1,012,262
Asset retirement obligations, insurance proceeds and other – net (2,283) (55,399) 205,702
Total costs incurred $974,986 $521,672 $1,499,197
       
  Crude Oil Natural Gas Total
  (MBbls) (MMcf) (MBOE)
Proved reserves at June 30, 2010 47,483 168,783 75,614
Production  (8,553) (24,533) (12,642)
Extensions and discoveries  3,056 39,555 9,649
Revisions of previous estimates  2,155 (43) 2,148
Reclassification of proved undeveloped (2,917) (4,579) (3,681)
Purchases of reserves 37,115 97,591 53,380
Sales of reserves (1,133) (40,458) (7,876)
Proved reserves at June 30, 2011 77,206 236,316 116,592
Production  (11,172) (29,824) (16,143)
Extensions and discoveries  11,444 27,821 16,081
Revisions of previous estimates  9,098 (23,281) 5,217
Reclassification of proved undeveloped (1,783) (2,042) (2,123)
Proved reserves at June 30, 2012 84,793 208,990 119,624
Production  (10,318) (32,354) (15,710)
Extensions and discoveries  40,690 40,714 47,476
Revisions of previous estimates  14,380 7,903 15,697
Reclassification of proved undeveloped (1,123) (1,755) (1,416)
Purchases of reserves 5,225 45,623 12,829
Proved reserves at June 30, 2013 133,647 269,121 178,500
       
Proved developed reserves      
June 30, 2010  36,970 93,610 52,572
June 30, 2011  59,234 134,024 81,572
June 30, 2012  63,308 110,310 81,693
June 30, 2013  80,223 175,623 109,493
       
Proved undeveloped reserves      
June 30, 2010  10,513 75,173 23,042
June 30, 2011  17,972 102,292 35,020
June 30, 2012  21,485 98,680 37,931
June 30, 2013 53,424 93,498 69,007
       

Conference Call Tomorrow, Aug. 21, at 9 a.m. CDT, 3 p.m. London Time

Energy XXI will host its year-end conference call tomorrow, Aug. 21, 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 27812792. 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

Copies of Annual Report

A copy of the company's annual report will be posted to shareholders in due course and a copy will be available on the company's website at 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. Phil Kerig, Director of Corporate Development, a registered 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 .

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