Energy XXI (Bermuda) Limited (EXXI)
Q3 2011 Earnings Call
April 28, 2011 10:00 am ET
Stewart Lawrence - Vice President of Investor Relations and Communications
David Griffin - Chief Financial Officer
John Schiller - Chairman and Chief Executive Officer
Phil Dodge - Stanford Financial Group
Ronald Mills - Johnson Rice & Company, L.L.C.
Eric Anderson - Analyst
Joseph Bachmann - Howard Weil Incorporated
Dan Chandra - Brevin Howard
Jeffrey Hayden - Rodman & Renshaw, LLC
Duane Grubert - Susquehanna Financial Group, LLLP
Richard Tullis - Capital One Southcoast, Inc.
Michael Bodino - Global Hunter Securities, LLC
Unknown Analyst -
Steven Karpel - Credit Suisse
Andrew Coleman - Madison Williams and Company LLC
Nicholas Pope - Dahlman Rose & Company, LLC
Previous Statements by EXXI
» Energy XXI (Bermuda) Limited's CEO Discusses Q2 2011 Results - Earnings Call Transcript
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Good day, ladies and gentlemen, and welcome to the Energy XXI Third Quarter 2011 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the call over to your host, Stewart Lawrence, Vice President, Investor Relations. You may begin.
Thanks, Stephanie. Welcome to the call today everybody. Presenting today is John Schiller, Chairman and CEO; and West Griffin, our Chief Financial Officer. We will be available along with the other members of the management team and answer your questions at the end of the call.
Before we get started, I need to remind everybody that our remarks today, including answers to your questions, include statements that we believe to be forward-looking statements. These forward-looking statements are subject to risks and uncertainties that could cause actual results to be materially different from those currently anticipated.
Those risks include, among others, matters that we’ve described in our earnings release issued last night and in our public filings. We disclaim any obligation to update these forward-looking statements.
While the company believes these forward-looking statements are reasonable, they are subject to factors such as commodity prices, competition, technology and environmental and regulatory compliance. Our drilling schedules, capital plans and other factors may cause our results to differ materially. I urge you to read our 10-K and our latest 10-Q to become better familiar with these risks and our company. Now I’ll turn the call over to John, and give a big, warm happy birthday to John before I do it.
Thanks, Stewart. Good morning, everyone. Our third quarter demonstrated the benefit of the Exxon Mobil acquisition and our oil focus as we posted record quarter results. Our production volumes rose 63% and EBITDA jumped 78%. We averaged $88.27 a barrel for our oil and $5.51 in Mcf for our gas post-hedge or about $69.46 barrel of oil equivalent. We expect these numbers to improve even further in the future. Volumes have been affected by a number of issues this quarter, mostly out of our control.
We have weather-related issues, pipeline and processing plant outages and our usual interruptions from compressors and other maintenance items. Importantly, though, there's no fundamental operational issue affecting our production, none of our large wells lost volumes or went off line.
In terms of cash flow impact, it didn't hurt that 2/3 of our shut-in production was gas, so we're still able to deliver strong cash flow numbers. We expect to grow volumes once again, once we gain day-to-day operational control of our acquired Exxon properties. Everything we've learned about the progress to date has made us more encouraged about the growth opportunities.
Examples of these include the Alabaster Field, Mississippi Canyon 397 that we returned to production, with a gross cash rate of over 870 barrels of oil a day, 500 Mcf a day or about 960 barrels of oil equivalent net for the company, that successfully reestablished production on a field that have been shut in for 60 days and gives us opportunity to continue to work with some other things we've identified there and push out the P&A [price and availability].
At our Grand Isle 16 field, we've done a sidetrack, an M-13 sidetrack well was recompleted to the Q-40 sand, that well's test is at 589 barrels of oil and 380 Mcf a day, or about 570 net to the company. We've also done another recompletion out there that's now flowing at a bit over 4 million a day net to the company.
Recompletion work is underway at South Pass 89, doing our coiled tubing work there. The rig will be showing up next week. We have at least 5 wells at work on there, and we're talking about 2,500 barrels a day net uplift. So far, none of the work on Exxon properties includes a drill well. This would change after the start of our fiscal year in July. Right now, we continue the rack and stack the opportunities to decide what were going to the fiscal 2012 budget. While I'm on the subject of Exxon, we continue to work day in and day out to give the operators shift for the remaining three fields that we have not taken control of yet. We're pushing that at the highest levels within the BOE. There seems to be some other companies in the same situation, including Apache and Dynamic.
We think we know what the issue is, which has nothing to do with us in particular and some things do with our computer systems, but we're going to keep pushing through for that. What I will say the good news is Exxon has agreed to work with us, so that we are actually now going to start doing some work on those fields that we want to get done even though we have not taken our operatorship of the assets.
Elsewhere in the portfolio, we have rotation wells to talk about. You saw the Pontiff well that McMoran announced with a 5j4 minute a flow rate. I'm happy to tell you that as of 1:00 this morning, that well is on production, with about 15 men a day, and we will continue to ramp it up. We also, as we've previously mentioned, expect to see a decent amount to compensate there along the lines of what we saw in the Peterson well, priced somewhere between 10 and 15 barrels in million. And based on the early stuff this morning, that is what we see in.