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Energy XXI Reports Fiscal First-Quarter Results

Conference Call Tomorrow, Oct. 30, at 9 a.m. CDT, 3 p.m. London Time

Energy XXI will host its fiscal first-quarter conference call tomorrow, Oct. 30, at 9 a.m. CDT (3 p.m. London time). The dial-in numbers are 1 (631) 813-4724 (U.S.) and (0) 800 028 8438 (U.K.), and the confirmation code is 85886849. 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 .

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.
     
  Three Months Ended September 30,
  2013 2012
     
Net Income Available for Common Stockholders $40,266 $15,384
Preferred stock dividends 2,873 2,876
Net Income 43,139 18,260
     
Total other expense - net  30,956  27,681
Depreciation, depletion and amortization 100,216 84,795
Income tax expense 25,336 10,710
     
Adjusted EBITDA $199,647 $141,446
     
Adjusted EBITDA Per Share    
Basic $2.63 $1.79
Diluted $2.37 $1.78
     
Weighted Average Number of Common Shares Outstanding    
Basic 75,782 79,162
Diluted 84,073 79,337
 
ENERGY XXI (BERMUDA) LIMITED
CONSOLIDATED BALANCE SHEETS
(In Thousands, except share information)
     
  September 30, 2013 June 30, 2013
  (Unaudited)
Current Assets    
Cash and cash equivalents $17,362  $—
Accounts receivable    
Oil and natural gas sales 139,226 132,521
Joint interest billings 10,362 9,505
Insurance and other 7,982 6,745
Prepaid expenses and other current assets 57,004 50,738
Derivative financial instruments 17,202 38,389
Total Current Assets 249,138 237,898
Property and Equipment     
Oil and natural gas properties - full cost method of accounting, including $435.2 million and $422.6 million of unevaluated properties not being amortized at September 30, 2013 and June 30, 2013, respectively 3,399,831 3,289,505
Other property and equipment 17,319 17,003
Total Property and Equipment, net of accumulated depreciation, depletion, amortization and impairment 3,417,150 3,306,508
Other Assets    
Derivative financial instruments 9,667 21,926
Equity investments 27,386 12,799
Debt issuance costs, net of accumulated amortization and other assets 40,243 32,580
Total Other Assets 77,296 67,305
Total Assets $3,743,584 $3,611,711
LIABILITIES    
Current Liabilities    
Accounts payable $180,221 $219,610
Accrued liabilities 86,755 105,192
Notes payable 18,031 22,524
Deferred income taxes 20,517 20,517
Asset retirement obligations 27,702 29,500
Derivative financial instruments 69 40
Current maturities of long-term debt 16,254 19,554
Total Current Liabilities 349,549 416,937
Long-term debt, less current maturities 1,530,129 1,350,491
Deferred income taxes 152,672 140,804
Asset retirement obligations 263,530 258,318
Other liabilities 13,409 7,915
Total Liabilities 2,309,289 2,174,465
Stockholders' Equity    
Preferred stock, $0.001 par value, 7,500,000 shares authorized at September 30, 2013 and June 30, 2013, respectively    
7.25% Convertible perpetual preferred stock, 8,000 shares issued and outstanding at September 30, 2013 and June 30, 2013, respectively
5.625% Convertible perpetual preferred stock, 813,160 and 813,188 shares issued and outstanding at September 30, 2013 and June 30, 2013, respectively 1 1
Common stock, $0.005 par value, 200,000,000 shares authorized and 79,654,099 and 79,425,473 shares issued and 75,800,536 and 76,485,910 shares outstanding at September 30, 2013 and June 30, 2013, respectively 398 397
Additional paid-in capital 1,519,110 1,512,311
Retained earnings (deficit)  1,818 (29,352)
Accumulated other comprehensive income, net of income taxes 6,844 26,552
Treasury stock, at cost, 3,852,900 and 2,938,900 shares at September 30, 2013 and June 30, 2013, respectively (93,876) (72,663)
Total Stockholders' Equity 1,434,295 1,437,246
Total Liabilities and Stockholders' Equity $3,743,584 $3,611,711
 
ENERGY XXI (BERMUDA) LIMITED
CONSOLIDATED STATEMENTS OF INCOME
(In Thousands, except per share information)
(Unaudited)
     
  Three Months September 30,
  2013 2012
Revenues    
Crude oil sales $289,229 $247,330
Natural gas sales 35,363 22,897
Total Revenues 324,592 270,227
     
Costs and Expenses    
Lease operating  85,763 82,481
Production taxes  1,398 1,247
Gathering and transportation 5,345 7,991
Depreciation, depletion and amortization 100,216 84,795
Accretion of asset retirement obligations 7,326 7,652
General and administrative expense 23,672 23,888
Loss on derivative financial instruments 1,441 5,522
Total Costs and Expenses  225,161 213,576
     
Operating Income  99,431 56,651
     
Other Income (Expense)    
Loss from equity method investees (1,793) (1,495)
Other income - net 522 359
Interest expense  (29,685) (26,545)
Total Other Expense  (30,956) (27,681)
     
Income Before Income Taxes  68,475 28,970
     
Income Tax Expense  25,336 10,710
     
Net Income  43,139 18,260
Preferred Stock Dividends 2,873 2,876
Net Income Available for Common Stockholders $40,266 $15,384
     
Earnings per Share    
Basic $0.53 $0.19
Diluted $0.51 $0.19
     
Weighted Average Number of Common Shares Outstanding    
Basic 75,782 79,162
Diluted 84,073 79,337
 
ENERGY XXI (BERMUDA) LIMITED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
(Unaudited)
     
  Three Months September 30,
  2013 2012
     
Cash Flows From Operating Activities    
Net income  $43,139 $18,260
Adjustments to reconcile net income to net cash provided by (used in) operating activities:     
Depreciation, depletion and amortization 100,216 84,795
Deferred income tax expense 22,480 10,789
Change in derivative financial instruments    
Proceeds from derivative instruments 61
Other – net (2,357) (5,347)
Accretion of asset retirement obligations 7,326 7,652
Loss from equity method investees 1,793 1,495
Amortization and write-off of debt issuance costs 1,455 1,891
Stock-based compensation  3,532 456
Changes in operating assets and liabilities    
Accounts receivable (2,131) 10,755
Prepaid expenses and other current assets (6,270) 16,037
Settlement of asset retirement obligations (18,063) (10,136)
Accounts payable and accrued liabilities (43,221) (34,543)
Net Cash Provided by Operating Activities 107,899 102,165
     
Cash Flows from Investing Activities    
Acquisitions (15)
Capital expenditures (198,358) (186,698)
Net contributions to equity investees (16,694) (15,524)
Property deposit (3,500)
Proceeds from the sale of properties 1,748
Other (51) 372
Net Cash Used in Investing Activities (213,370) (205,350)
     
Cash Flows from Financing Activities    
Proceeds from the issuance of common and preferred stock, net of offering costs 3,267 6,319
Repurchase of company common stock (35,210)
Dividends to shareholders – common (9,096) (5,550)
Dividends to shareholders – preferred (2,873) (2,876)
Proceeds from long-term debt 1,040,697 223,812
Payments on long-term debt (865,231) (186,813)
Debt issuance costs (8,720)
Other (1) (29)
Net Cash Provided by Financing Activities 122,833 34,863
     
Net Increase (Decrease) in Cash and Cash Equivalents 17,362 (68,322)
Cash and Cash Equivalents, beginning of period  117,087
Cash and Cash Equivalents, end of period $17,362 $48,765
   
  Quarter Ended
Operating Highlights (Unaudited) Sept. 30, 2013 June 30, 2013 Mar. 31, 2013 Dec. 31, 2012 Sept. 30, 2012
  (In Thousands, Except per Unit Amounts)
Operating revenues          
Crude oil sales $290,965 $270,623 $273,280 $280,953 $242,830
Natural gas sales 32,584 38,630 27,070 29,657 17,396
Hedge gain  1,043 5,072 3,424 9,909 10,001
Total revenues 324,592 314,325 303,774 320,519 270,227
Percent of operating revenues from crude oil          
Prior to hedge gain  90% 88% 91% 90% 93%
Including hedge gain  89% 87% 90% 89% 92%
Operating expenses          
Lease operating expense          
Insurance expense 8,496 7,462 7,473 8,810 8,992
Workover and maintenance 14,586 15,622 19,166 20,217 10,113
Direct lease operating expense 62,681 59,371 59,666 56,895 63,376
Total lease operating expense 85,763 82,455 86,305 85,922 82,481
Production taxes 1,398 1,481 1,352 1,166 1,247
Gathering and transportation 5,345 5,668 4,411 6,098 7,991
DD&A 100,216 96,846 88,727 105,856 84,795
General and administrative  23,672 12,299 16,092 19,319 23,888
Other – net 8,767 3,829 7,017 8,621 13,174
Total operating expenses 225,161 202,578 203,904 226,982 213,576
Operating income  $99,431 $111,747 $99,870 $93,537 $56,651
Sales volumes per day          
Natural gas (MMcf) 100.8 107.4 89.4 90.9 67.1
Crude oil (MBbls) 29.7 28.9 28.6 29.4 26.1
Total (MBOE) 46.6 46.8 43.5 44.6 37.3
Percent of sales volumes from crude oil 64% 62% 66% 66% 70%
Average sales price          
Natural gas per Mcf $3.51 $3.95 $3.37 $3.55 $2.82
Hedge gain per Mcf 0.30 0.23 0.29 0.60 0.89
Total natural gas per Mcf $3.81 $4.18 $3.66 $4.15 $3.71
Crude oil per Bbl $106.31 $102.82 $106.11 $103.79 $101.03
Hedge gain (loss) per Bbl (0.63) 1.08 0.42 1.80 1.87
Total crude oil per Bbl $105.68 $103.90 $106.53 $105.59 $102.90
Total hedge gain per BOE $0.24 $1.19 $0.87 $2.42 $2.91
Operating revenues per BOE $75.78 $73.78 $77.58 $78.15 $78.72
Operating expenses per BOE          
Lease operating expense          
Insurance expense 1.98 1.75 1.91 2.15 2.62
Workover and maintenance 3.41 3.67 4.89 4.93 2.95
Direct lease operating expense 14.63 13.94 15.24 13.87 18.46
Total lease operating expense per BOE 20.02 19.36 22.04 20.95 24.03
Production taxes 0.33 0.35 0.35 0.28 0.36
Gathering and transportation 1.25 1.33 1.13 1.49 2.33
DD&A 23.40 22.73 22.66 25.81 24.70
General and administrative  5.53 2.89 4.11 4.71 6.96
Other – net 2.05 0.90 1.79 2.10 3.84
Total operating expenses per BOE 52.58 47.56 52.08 55.34 62.22
Operating income per BOE $23.20 $26.22 $25.50 $22.81 $16.50

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 , 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 .

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: 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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