NEW YORK (TheStreet) -- Shares of Energy XXI (EXXI) surged 12.24% to $2.75 in early afternoon trading Tuesday as the energy sector rallied thanks in part to Repsol SA's $8.3 billion acquisition of Talisman Energy (TLM) .
Repsol agreed to pay $8 per share for Calgary-based Talisman, a 60% premium to the average stock price during the past month, Talisman said. The Madrid-based company would also assume $4.7 billion in debt.
Energy XXI touched a 52-week low of $2.38 shortly after the market opened Tuesday, but the energy sector rally pulled the stock higher after the initial dip.
The rally occurred despite the continued plunge in oil prices. WTI Crude fell 2.7% to $54.39 a barrel on Tuesday, the lowest price in five-and-a-half years, according to USA Today.
Separately, 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 a few notable 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 and disappointing return on equity."