NEW YORK (TheStreet) -- Shares of Energy XXI (EXXI) are down 7.16% to $7.76 in afternoon trading today as Brent crude declines.

Brent fell 1.69% to $59.16 at 2:38 p.m. in New York, while West Texas Intermediate was up 1.03% to $50.12 as an industry report showed that U.S. crude stockpiles in a key storage hub rose less than expected last week, the Wall Street Journal reports.

Oversupply, however, seems to be the predominate preoccupation that continues to weigh on the industry.

"Very high inventory levels are perhaps the main micro reason to remain cautious on oil prices," analysts at Bank of America Merrill Lynch said in a report projecting a global inventory build of 180 million barrels by the third quarter of 2015, the Journal noted.

The bank sees the U.S. benchmark ending the second quarter at $41 a barrel, while Brent is expected to fall to $48 a barrel over the same period.

Separately, KLR Group downgraded the company to "hold" today saying the company's debt issuance increases its leverage. It cut its price target for shares to $4 from $6.

The average recommendation of 10 brokers' estimates on the stock is a 2.3, with a 2 rating representing an "outperform" and a 3 a "hold," according to Reuters. The mean price target is $4.65.

Energy XXI Ltd is a Bermuda-based independent oil and natural gas exploration and production company with operations focused in the U.S. Gulf Coast and the Gulf of Mexico.

TheStreet Ratings team rates ENERGY XXI LTD as a Sell with a ratings score of D+. TheStreet Ratings Team has this to say about their recommendation:

"We rate ENERGY XXI LTD (EXXI) a SELL. This is driven by several weaknesses, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its feeble growth in its earnings per share, deteriorating net income, generally high debt management risk, disappointing return on equity and weak operating cash flow."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

• ENERGY XXI LTD has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. Earnings per share have declined over the last two years. We anticipate that this should continue in the coming year. During the past fiscal year, ENERGY XXI LTD reported lower earnings of $0.61 versus $1.84 in the prior year. For the next year, the market is expecting a contraction of 401.6% in earnings (-$1.84 versus $0.61).
• The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Oil, Gas & Consumable Fuels industry. The net income has significantly decreased by 3662.4% when compared to the same quarter one year ago, falling from $10.50 million to -$373.88 million.
• The debt-to-equity ratio is very high at 2.64 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Along with this, the company manages to maintain a quick ratio of 0.49, which clearly demonstrates the inability to cover short-term cash needs.
• Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market, ENERGY XXI LTD's return on equity significantly trails that of both the industry average and the S&P 500.
• Net operating cash flow has significantly decreased to -$42.64 million or 127.72% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
• You can view the full analysis from the report here: EXXI Ratings Report