Attached files
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| 8-K - 8-K - Energy XXI Ltd | v203664_8k.htm |
| EX-2.1 - EX-2.1 - Energy XXI Ltd | v203664_ex2-1.htm |
Energy
XXI to Acquire Gulf of Mexico Shelf Properties From ExxonMobil
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Includes 66 million barrels of
proved and probable reserves, 61 percent
oil
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Properties produce 20,000
barrels of oil equivalent per day, 53 percent
oil
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Pro forma proved reserves rise
65 percent, production 77
percent
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HOUSTON, Nov.
21, 2010 (GLOBE NEWSWIRE) — Energy XXI (Nasdaq:EXXI) (LSE:EXXI) today
announced it has executed a purchase and sale agreement to acquire certain
shallow-water Gulf of Mexico shelf oil and natural gas interests from affiliates
of ExxonMobil for $1.01 billion.
The
assets are currently producing approximately 20,000 net BOE per day (BOE/d),
about 53 percent of which is oil. Offshore leases included in the purchase total
130,853 net acres.
Reserve
estimates for the acquired properties were prepared on Nov. 16, 2010,
by Netherland, Sewell & Associates, Inc., independent oil and gas
consultants employed by Energy XXI. The properties are estimated to contain
net proved and probable reserves of 66 million barrels of oil equivalent (BOE),
61 percent of which is oil. Proved reserves are estimated at 30.1 million
barrels of oil and 116.1 billion cubic feet of natural gas, or a total of
49.5 million BOE, 68 percent of which are proved developed.
The
properties include nine fields on the Gulf of Mexico shelf, generally located
between Energy XXI's existing core South Timbalier and Main
Pass operations in water depths of 470 feet or less. The six largest
fields account for 89 percent of the net production.
"The
ExxonMobil properties are an extraordinary fit with our existing, oil-focused
core assets, which generate some of the highest margins in the industry," Energy
XXI Chairman and CEO John Schiller said. "With this acquisition, we are
gaining access to production, infrastructure and extensive acreage complemented
by seismic data and field studies. As operator of 94 percent of the assets
being acquired, we would have a portfolio of drilling and recompletion
opportunities that we can pursue while analyzing the potential for higher-impact
exploration prospects."
Pro forma
for the acquisition, Energy XXI would become the third-largest oil producer on
the Gulf of Mexico shelf, with interests in seven of the top 11 oil fields on
the shelf. Estimated proved plus probable reserves would increase 72 percent to
158.1 million BOE from 92.1 million BOE at the company's June 20,
2010 fiscal year end. Production would increase to approximately
46,000 BOE per day, up more than 77 percent from the 25,900 BOE per day average
in the most recent fiscal quarter ended Sept. 30, 2010, with oil
representing 63 percent.
"In
addition to growing our reserves, production volumes and drilling portfolio, we
expect this consolidation of properties within our existing core area to achieve
meaningful cost savings," Executive Vice President of Exploration and Production
Ben Marchive said. "Cash flow from these properties, combined with the excess
cash already being generated by our existing asset base, should put us in a
position to rapidly retire debt while funding accelerated development of the
overall portfolio."
In
conjunction with the signing of the agreement, Energy XXI has added to its crude
oil hedge position to provide downside price protection. Based on 46,000 BOE per
day of pro forma production, 63 percent of which is oil, the company currently
has hedged 70 percent, 61 percent and 12 percent of the crude oil production for
calendar years 2011, 2012 and 2013, respectively.
In
addition to utilizing cash on hand to finance the purchase, Energy XXI has
obtained committed financing to increase its corporate revolver from $350
million currently to $700 million in conjunction with the
acquisition, as well as a $450 million unsecured bridge loan that the
company would anticipate retiring through the future issuance of high-yield
notes. Energy XXI has placed a 10 percent cash deposit into an
interest-bearing account under the terms of the agreement.
The
purchase is subject to preferential rights-to-purchase held by other working
interest owners in the properties, as well as customary closing conditions and
adjustments. The effective date is Dec. 1, 2010, with closing
expected by Dec. 20, 2010.
Conference
Call Scheduled for Tomorrow
Energy
XXI has scheduled a conference call for tomorrow, Monday, Nov. 22, 2010,
at 8 a.m. CST (2 p.m. London time) to discuss the
acquisition. To actively participate on the conference call, please call
1 (631) 813-4724 about 5 minutes before the scheduled start time and
use Confirmation Code 25664677. U.K. callers may dial (0) 80 0051
3806. Those who wish to view the presentation materials, or to participate
in listen-only mode, should access the event through the company's web
site, www.energyxxi.com. A replay of
the call will be archived and available on the web site following the live
call.
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
(including information in the attached Operations Report) adheres to the
standard set by the Society of Petroleum
Engineers. Tom O'Donnell, Vice President of Corporate
Development, a registered Petroleum Engineer, 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 Coastonshore. Seymour Pierce is Energy
XXI's listing broker in the United Kingdom.
ExxonMobil
Gulf of Mexico Shelf Transaction Details
(Unless
specified otherwise, all data are as of Nov. 16, 2010)
(Data
source: Energy XXI and Netherland, Sewell & Associates, Inc.
estimates)
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Purchase
Price
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$
1.01 Billion
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Assumption of abandonment
liabilities(1)
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$
154.6 Million
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Resource
Potential
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Proved
reserves
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49.5
MMBOE
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61%
Oil
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Probables
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16.5
MMBOE
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61%
Oil
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Possibles
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2.1
MMBOE
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49%
Oil
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3P
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68.1
MMBOE
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Future
Development Costs
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Associated
with proved reserves
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$
313.3 Million
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Associated
with probables
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$
68.7 Million
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Associated
with possible
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$
32.2 Million
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Total
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$
414.2 Million
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Asset Details
(Fields)
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Proved
(MMBOE)
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Probables
(MMBOE)
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Possibles
(MMBOE)
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Production
(BOE/d Net)
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South
Timbalier 54
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7 | 2.2 | 1 | 5,316 | ||||||||||||
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West
Delta 30
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12.2 | 1.4 | 0 | 4,100 | ||||||||||||
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West
Delta 73
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14.6 | 11.5 | 0.5 | 2,482 | ||||||||||||
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Grand
Isle 43
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5.5 | 0 | 0 | 2,472 | ||||||||||||
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Grand
Isle 16, 18
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5.2 | 0.9 | 0.1 | 1,831 | ||||||||||||
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South
Pass 89
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2.8 | 0.6 | 0.5 | 1,668 | ||||||||||||
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Other
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2.2 | 0 | 0 | 2,131 | ||||||||||||
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Total
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49.5 | 16.5 | 2.1 | 20,000 | ||||||||||||
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Revenues
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Direct Operating Costs
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Operating Margin
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Operating Details(2)
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$ | 399.1 Million | $ | 99.0 Million | $ | 300.1 Million | ||||||
(1) Reflects discounted asset retirement obligations expected to be booked upon closing.
(2)
Trailing 12-month data for the acquired properties, Oct. 1, 2009 through Sept.
30, 2010, unaudited.
Glossary
Reserves:
Proved Oil and Gas
Reserves — Those quantities of crude oil and gas, which, by
analysis of geoscience and engineering data, can be estimated with reasonable
certainty to be economically producible — from a given date forward, from
known reservoirs, and under existing economic conditions, operating methods and
government regulations — prior to the time at which contracts providing the
right to operate expire, unless evidence indicates that renewal is reasonably
certain, regardless of whether deterministic or probabilistic methods are used
for the estimation. The project to extract the hydrocarbons must have commenced
or the operator must be reasonably certain that it will commence the project
within a reasonable time. This definition has been abbreviated from the
definition of "Proved oil and gas reserves" contained in Rule 4-10(a)(22)
of SEC Regulation S-X.
Proved Developed
Reserves — Reserves are categorized as proved developed if they are
expected to be recovered from existing wells.
Probable Reserves — Those
additional reserves that are less certain to be recovered than proved reserves
but which, together with proved reserves, are as likely as not to be recovered.
This definition has been abbreviated from the applicable definition contained in
Rule 4-10(a)(18) of SEC Regulation S-X.
Possible Reserves — Those
additional reserves that are less certain to be recovered than probable
reserves. This definition has been abbreviated from the applicable definition
contained in Rule 4-10(a)(17) of Regulation S-X.
Contingent Resources —
Those quantities of petroleum estimated, as of a given date, to be potentially
recoverable from known accumulations, but the applied projects are not yet
considered mature enough for commercial development due to one or more
contingencies. Contingent resources may include, for example, projects where
commercial recovery is dependent on technology under development, or where
evaluation of the accumulation is insufficient to clearly assess
commerciality.
Prospective Resources —
Those quantities of petroleum estimated, as of a given date, to be potentially
recoverable from undiscovered accumulations by application of future development
projects. Prospective resources have both an associated chance of discovery and
a chance of development.
Other
terms:
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.
Field — an area
consisting of a single reservoir or multiple reservoirs all grouped on, or
related to, the same individual geological structural feature or stratigraphic
condition. The field name refers to the surface area, although it may refer to
both the surface and the underground productive formations.
MMBOE — million barrels
of oil equivalent.
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CONTACT:
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Energy
XXI
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Stewart
Lawrence, Vice President, Investor Relations and
Communications
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713-351-3006
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slawrence@energyxxi.com
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Pelham
Bell Pottinger
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James
Henderson
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jhenderson@pelhambellpottinger.co.uk
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Mark
Antelme
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mantelme@pelhambellpottinger.co.uk
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+44
(0) 20 7861 3232
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Seymour
Pierce - UK AIM Adviser
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Jonathan
Wright/
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Jeremy
Porter - Corporate Finance
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Richard
Redmayne - Corporate Broking
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+44
(0) 20 7107 8000
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