"Fiscal 2012 was a record year for production, EBITDA, net income and reserves," Energy XXI Chairman and CEO John Schiller said. "Our successful oil-focused development program drove these results, with the primary goal of generating substantial free cash flow to bolster the balance sheet. Even with this low-risk approach, without the contribution of a single exploration well, we were able to replace nearly 120 percent of production and grow reserves 3 percent. For fiscal 2013, we remain focused on growing oil production through the exploitation and development of our core assets while deploying 15 percent of our capital to exploration in the shallow waters of the Gulf of Mexico."

YEAR-END RESERVES

The company's June 30, 2012 fiscal year-end proved reserves were estimated at 119.6 million barrels of oil equivalent (MMBOE), up 3 percent from the June 30, 2011 fiscal year-end reserves.  Energy XXI added 19.2 MMBOE of proved reserves primarily through discoveries, extensions of existing fields and revisions, while producing 16.1 MMBOE. The all-sources reserves replacement rate was 119 percent.

NSAI provided the year-end reserves estimates. All of the company's proved reserves are in the Gulf of Mexico or U.S. Gulf Coast, 68 percent are proved developed, 71 percent are oil and natural gas liquids, and 29 percent are natural gas. The tables set forth below provide additional information relating to the company's reserves, including cost-incurred data.

The following fiscal year-ended June 30, 2012 estimated proved, probable and possible reserves attributable to the company's net interests in oil and gas properties were prepared by NSAI, in conjunction with in-house reservoir engineers.
  June 30, 201 2
  Oil NGL's Gas Equivalent PV10%
  (MBBL) (MBBL) (MMCF) (MBOE) ($000) 1
Proved Developed Producing 49,444 1,654 68,275 62,477 2,526,175
Proved Developed Non-Producing 10,441 1,769 42,035 19,216 612,630
Proved Undeveloped 19,755 1,730 98,680 37,931 1,158,639
Proved Reserves 79,640 5,153 208,990 119,624 4,297,444
Probables 24,119 1,928 119,641 45,988 1,474,542
Proved + Probables 103,759 7,081 328,631 165,612 5,771,986
Possibles 12,373 1,195 160,840 40,374 876,390
Total Resources 116,132 8,276 489,471 205,986 6,648,376

(1) Before tax, as of June 30, 2012, using prices of $95.67 per barrel of oil and $3.15 per MMBTU of gas, before differentials, based on the SEC-prescribed first-of-the-month average prices for the preceding 12 months.

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