TIDMEXXI
RNS Number : 6499W
Energy XXI (Bermuda) Limited
02 February 2012
Energy XXI Reports Record Fiscal Second-Quarter Results and
Provides Operations Update
-- Development drilling program delivers early successes
-- Oil represents 72% of production
-- Beat of estimates driven by increased oil production and prices
-- EBITDA of $226 million sets 4(th) consecutive quarterly record
-- Free cash flow cuts net debt, builds cash balance
HOUSTON - Feb., 1, 2012 - Energy XXI (NASDAQ: EXXI) (AIM: EXXI)
today announced results for the fiscal second-quarter ended Dec.
31, 2011, and provided an operational update.
For the 2012 fiscal second quarter, Energy XXI reported earnings
before interest, taxes, depreciation, depletion and amortization
(EBITDA) of $225.6 million, more than double the prior-year's
fiscal second-quarter EBITDA of $97.8 million. Net income
attributable to common shareholders for the 2012 fiscal second
quarter was $93.4 million, or $1.11 per diluted share, on revenues
of $340.6 million and production of 42,700 barrels of oil
equivalent per day (BOE/d).
"Success in developing our asset base delivered record results
for the fourth straight quarter and positioned us to continue
achieving strong results in today's environment," Energy XXI
Chairman and CEO John Schiller said. "Production from the
properties acquired in December 2010 increased more than 20 percent
during the first year, primarily from oil-focused activities. Oil
represented 72 percent of our production in the fiscal second
quarter, up from 70 percent in the prior-year period, while
realized oil prices rose 41 percent to $110 per barrel. As a
result, 93 percent of our revenues for the quarter were derived
from oil. This combination generated significant free cash flow
that helped us reduce our net debt-to-capitalization ratio to 44
percent from 58 percent a year earlier."
Exploration and Development Activity
At Main Pass 72 (100% WI/83.3% NRI), the Onyx well continues to
deliver in excess of 2,200 barrels of oil per day gross as it has
since coming online in June 2011. At Grand Isle 16/18 (100% WI/ 87%
NRI), multiple recompletions and one development well are
delivering gross production rates totaling 5,300 BOE/d. The Sunny
development well was drilled to 8,579 feet total vertical depth
(TVD) targeting updip C-2 sands. The well encountered 225 feet of
net pay in the B and C sands and was dual-completed. Gross
production from the B-4 and C-4 sands is currently averaging 1,400
BOE/d, while the primary target, the C--2 sand was gravel packed
and is available to produce through a future wireline zone change.
The Winters development well was drilled to 16,500 feet TVD,
encountering 166 feet gross and 83 feet net of natural gas pay in
the K-2 sand. The well is expected to be on production within three
weeks at a rate in excess of 20 million cubic feet per day. The
company plans to drill two additional development wells, Costello
and Pi, later this fiscal year.
In the West Delta 73 field (100% WI/ 87% NRI), Magnum, the first
of a four-well development drilling program, was drilled to 8,500
feet TVD, encountering 60 feet of net oil pay in three Pliocene F
sands and first production is expected in March. Following Magnum
is the Miller development well, a proved undeveloped location
targeting F sands in a sparsely drilled area on the west side of
the field with a planned total depth of 8,500 feet TVD.
At South Timbalier 54 (100% WI/ 87% NRI), drilling has commenced
on Camshaft, the first of two planned development wells, targeting
four separate G sands with a planned total depth of 12,000 feet
TVD. Plans are to dual complete this well to optimize oil
production.
Within the shallow-water, ultra-deep Gulf of Mexico shelf
program, the McMoRan-operated partnership is approaching several
important milestones.
Completion activities at the Davy Jones No. 1 discovery well at
South Marsh Island Block 230 are in an advanced stage. The wellbore
has been cleaned out to total depth and drilling mud has been
displaced with completion fluid. Current expectations are to
perforate and flow the well during the March quarter. Installation
of the central processing facility, production platform and sales
pipelines has been completed. First production from the well could
be established shortly after a successful flow test. The company's
investment in the Davy Jones discovery well (15.8% WI/12.3% NRI) as
of Dec. 31, 2011, totaled about $45 million. McMoRan holds a 63.4
percent working interest in Davy Jones.
The Blackbeard East ultra-deep exploration by-pass well has been
drilled to 33,318 feet TVD and the section below 30,800 feet TVD
was recently logged, identifying potential hydrocarbons in the
Sparta carbonate section. The Sparta interval measures 300 feet
thick and appears to be a hydrocarbon-bearing fractured carbonate.
A production liner will be set to total depth and the well will be
temporarily abandoned while development options are evaluated.
Blackbeard East is located in 80 feet of water on South Timbalier
Block 144. The company's investment in Blackbeard East (18%
WI/14.35% NRI) as of Dec. 31, 2011 was about $42 million. McMoRan
holds a 72.0 percent working interest in the well.
The Lafitte exploration well (18% WI/14.6% NRI), located on
Eugene Island Block 223 in 140 feet of water, is drilling below
33,000 feet TVD towards a proposed total depth of 34,000 feet TVD,
targeting Lower Miocene, Oligocene and potentially Wilcox sections
below the salt weld. In January 2012, wireline logs indicated 40
feet of possible hydrocarbon-bearing Frio sands between 31,300 feet
and 31,700 feet TVD. In November 2011, wireline logs indicated 56
net feet of hydrocarbon-bearing sand over a 58 foot gross interval
in the Cris-R section of the Lower Miocene. Recent pressure data
and rotary sidewall cores obtained in the Cris-R sand are being
evaluated. The new Frio and Cris-R sand intervals, combined with
the 115 feet of potential net Miocene pay previously announced,
brings the total possible productive net sands to 211 feet in the
Lafitte well. Current plans are to drill ahead to 34,000 feet TVD
targeting the Sparta section seen about 80 miles away at Blackbeard
East. The company's investment at Lafitte as of Dec. 31, 2011 was
about $31 million. McMoRan holds a 72.0 percent working interest in
Lafitte.
The Blackbeard West #2 ultra-deep exploration well (22.9%
WI/17.5% NRI) commenced drilling on Nov. 25, 2011 and is currently
drilling below 15,450 feet TVD towards a proposed total depth of
26,000 feet TVD. The well, located on Ship Shoal Block 188 within
the Blackbeard West unit, is targeting Miocene aged sands seen
below the salt weld approximately 13 miles east at Blackbeard East.
The company's investment at Blackbeard West #2 totaled $3.3 million
at Dec., 31, 2011. McMoRan holds a 69.4 percent working interest in
Ship Shoal Block 188.
In the partnership's first project to take the ultra-deep
concept onshore, operations commenced Dec. 31, 2011 at the Lineham
Creek exploration prospect. Lineham Creek is located in Cameron
Parish, Louisiana and is targeting Eocene and Paleocene objectives
below the salt weld, with a proposed total depth of 29,000 feet
TVD. Chevron U.S.A Inc., as operator of the well, holds a 50
percent working interest, Energy XXI has a 9 percent working
interest, and McMoRan has a 36.0 percent working interest.
Capital Expenditures
During the 2012 fiscal second quarter, capital expenditures,
including plug-and-abandonment costs, totaled $134.5 million, with
$46.6 million in exploration and $87.9 million in development and
other investments. Total capital expenditures for fiscal 2012
ending June 30, 2012 are expected to be between $450 million and
$500 million.
ENERGY XXI (BERMUDA) LIMITED
RECONCILIATION OF GAAP TO NON-GAAP MEASURES
(In Thousands, except per share information)
(Unaudited)
As required under Regulation G of the Securities Exchange Act of
1934, provided below are reconciliations of net income to the
following non-GAAP financial measure: EBITDA. The company uses this
non-GAAP measure as a key metric for the management of the company
and to demonstrate the company's ability to internally fund capital
expenditures and service debt.
Three Months Ended Six Months Ended
December 31, December 31,
-------------------- ------------------
2011 2010 2011 2010
---------- -------- -------- --------
Net Income as Reported $97,089 $10,934 $163,420 $11,067
Interest expense-net 28,348 21,943 55,527 43,413
Depreciation, depletion and amortization 87,568 62,922 172,371 116,999
Income tax expense 12,549 2,011 21,122 2,030
EBITDA $225,554 $97,810 $412,440 $173,509
========== ======== ======== ========
EBITDA Per Share
Basic $2.95 $1.49 $5.39 $2.98
Diluted $2.59 $1.49 $4.73 $2.97
Weighted Average Number of Common Shares Outstanding
Basic 76,498 65,479 76,481 58,241
Diluted 87,227 65,670 87,138 58,500
ENERGY XXI (BERMUDA) LIMITED
CONSOLIDATED BALANCE SHEETS
(In Thousands, except share information)
December 31, June 30,
2011 2011
------------ ----------
ASSETS (Unaudited)
Current Assets
Cash and cash equivalents $79,396 $28,407
Restricted cash 1,028 -
Accounts receivable
Oil and natural gas sales 141,314 126,194
Joint interest billings 2,814 4,526
Insurance and other 3,661 2,533
Prepaid expenses and other current assets 52,817 47,751
Derivative financial instruments 5,592 22
------------ ----------
Total Current Assets 286,622 209,433
------------ ----------
Property and Equipment
Oil and natural gas properties - full cost method of accounting, including $516.6 million
and $467.3 million of unevaluated properties at December 31, 2011 and June 30, 2011,
respectively 2,608,737 2,545,336
Other property and equipment 9,025 8,201
------------ ----------
Total Property and Equipment 2,617,762 2,553,537
------------ ----------
Other Assets
Derivative financial instruments 9,963 -
Deferred income taxes - 2,411
Debt issuance costs, net of accumulated amortization 30,635 33,479
------------ ----------
Total Other Assets 40,598 35,890
------------ ----------
Total Assets $2,944,982 $2,798,860
============ ==========
LIABILITIES
Current Liabilities
Accounts payable $150,596 $163,741
Accrued liabilities 95,419 111,157
Notes payable 9,196 19,853
Asset retirement obligations 25,379 19,624
Derivative financial instruments 25,352 50,259
Current maturities of long-term debt 2,555 4,054
------------ ----------
Total Current Liabilities 308,497 368,688
Long-term debt, less current maturities 1,029,009 1,109,333
Deferred income taxes 68,722 -
Asset retirement obligations 316,698 303,618
Derivative financial instruments 951 70,524
Other liabilities 6,234 -
------------ ----------
Total Liabilities 1,730,111 1,852,163
------------ ----------
Commitments and Contingencies
Stockholders' Equity
Preferred stock, $0.001 par value, 7,500,000 shares authorized:
7.25 % Convertible perpetual preferred stock, 8,000 shares issued and outstanding at
December
31, 2011 and June 30, 2011, respectively - -
5.625% Convertible perpetual preferred stock, 1,050,000 shares issued and outstanding at
December
31, 2011 and June 30, 2011, respectively 1 1
Common stock, $0.005 par value, 200,000,000 shares authorized and 76,790,281 and
76,203,574
shares issued and 75,533,928 and 76,202,921 shares outstanding at December 31, 2011 and
June
30, 2011, respectively 384 381
Additional paid-in capital 1,499,528 1,479,959
Accumulated deficit (309,152) (465,160)
Accumulated other comprehensive income (loss), net of income taxes 24,110 (68,484)
------------ ----------
Total Stockholders' Equity 1,214,871 946,697
------------ ----------
Total Liabilities and Stockholders' Equity $2,944,982 $2,798,860
============ ==========
ENERGY XXI (BERMUDA) LIMITED
CONSOLIDATED STATEMENTS OF OPERATIONS
(In Thousands, except per share information)
(Unaudited)
Three Months Ended Six Months Ended
December 31, December 31,
-------------------- -------------------
2011 2010 2011 2010
--------- --------- -------- ---------
Revenues
Oil sales $309,347 $146,539 $556,264 $262,369
Natural gas sales 31,231 27,414 69,197 55,584
--------- --------- -------- ---------
Total Revenues 340,578 173,953 625,461 317,953
--------- --------- -------- ---------
Costs and Expenses
Lease operating 74,134 44,446 145,167 88,599
Production taxes 1,174 716 3,348 1,410
Gathering and transportation 3,395 801 9,548 822
Depreciation, depletion and amortization 87,568 62,922 172,371 116,999
Accretion of asset retirement obligations 9,803 6,348 19,491 12,322
General and administrative 22,147 15,786 41,468 34,383
Loss (gain) on derivative financial instruments 4,371 (1,638) (6,001) (2,776)
--------- ---------
Total Costs and Expenses 202,592 129,381 385,392 251,759
--------- --------- -------- ---------
Operating Income 137,986 44,572 240,069 66,194
--------- --------- -------- ---------
Other Income (Expense)
Bridge loan commitment fees - (4,500) - (4,500)
Loss on retirement of debt - (5,184) - (5,184)
Other income 15 151 24 161
Interest expense (28,363) (22,094) (55,551) (43,574)
--------- --------- -------- ---------
Total Other Income (Expense) (28,348) (31,627) (55,527) (53,097)
--------- --------- -------- ---------
Income Before Income Taxes 109,638 12,945 184,542 13,097
Income Tax Expense 12,549 2,011 21,122 2,030
Net Income 97,089 10,934 163,420 11,067
Induced Conversion of Preferred Stock - 19,796 - 19,796
Preferred Stock Dividends 3,706 2,426 7,412 4,420
--------- --------- -------- ---------
Net Income (Loss) Attributable to Common Stockholders $93,383 $(11,288) $156,008 $(13,149)
========= =========
Net Income (Loss) Per Share Attributable to Common Stockholders
Basic $1.22 $(0.17) $2.04 $(0.23)
Diluted $1.11 $(0.17) $1.88 $(0.23)
Weighted Average Number of Common Shares Outstanding
Basic 76,498 65,479 76,481 58,241
Diluted 87,227 65,479 87,138 58,241
ENERGY XXI (BERMUDA) LIMITED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
(Unaudited)
Three Months Ended Six Months Ended
December 31, December 31,
---------------------- ----------------------
2011 2010 2011 2010
--------- ----------- --------- -----------
Cash Flows From Operating Activities
Net income $97,089 $10,934 $163,420 $11,067
Adjustments to reconcile net income to net cash provided by
(used in) operating activities:
Depreciation, depletion and amortization 87,568 62,922 172,371 116,999
Deferred income tax expense 12,547 2,011 21,272 2,030
Change in derivative financial instruments
Proceeds from sale of derivative instruments 15,931 8,522 65,529 42,577
Other - net (6,445) (7,515) (25,691) (16,214)
Accretion of asset retirement obligations 9,803 6,348 19,491 12,322
Amortization of deferred gain on debt and debt discount and
premium - (40,383) - (43,132)
Amortization and write-off of debt issuance costs 1,882 2,492 3,705 4,254
Stock-based compensation 1,189 391 10,114 2,180
Payment of interest in-kind - 2,225 - 2,225
Changes in operating assets and liabilities
Accounts receivable (30,275) (48,371) (17,581) (39,971)
Prepaid expenses and other current assets 4,067 9,883 (5,066) (2,278)
Settlement of asset retirement obligations (1,407) (29,311) (1,994) (34,618)
Accounts payable and accrued liabilities (96) 19,354 (37,586) 20,012
--------- ----------- --------- -----------
Net Cash Provided by (Used in) Operating Activities 191,853 (498) 367,984 77,453
--------- ----------- --------- -----------
Cash Flows from Investing Activities
Acquisitions (6,242) (1,013,003) (6,177) (1,013,011)
Capital expenditures (125,695) (65,090) (238,444) (128,625)
Insurance payments received 5,692 - 6,472 -
Proceeds from the sale of properties 2,767 - 2,767 400
Other (1,062) 115 (808) 83
--------- ----------- --------- -----------
Net Cash Used in Investing Activities (124,540) (1,077,978) (236,190) (1,141,153)
--------- ----------- --------- -----------
Cash Flows from Financing Activities
Proceeds from the issuance of common and preferred stock, net of
offering costs 310 555,773 9,456 560,903
Conversion of preferred stock to common - (11,912) - (11,912)
Dividends to shareholders (3,706) (179) (7,412) (2,173)
Proceeds from long-term debt 285,854 1,113,000 522,324 1,160,000
Payments on long-term debt (288,084) (520,838) (604,318) (586,767)
Payments for debt issuance costs and other (759) (30,260) (855) (30,584)
--------- ----------- --------- -----------
Net Cash Provided by (Used in) Financing Activities (6,385) 1,105,584 (80,805) 1,089,467
--------- ----------- --------- -----------
Net Increase in Cash and Cash Equivalents 60,928 27,108 50,989 25,767
Cash and Cash Equivalents, beginning of period 18,468 12,883 28,407 14,224
Cash and Cash Equivalents, end of period $79,396 $39,991 $79,396 $39,991
========= =========== ========= ===========
ENERGY XXI (BERMUDA) LIMITED
CONSOLIDATED OPERATIONAL INFORMATION (In thousands)
(Unaudited)
Quarter Ended
------------------------------------------------------
Operating Highlights Dec. 31, Sept. 30, June 30, Mar. 31, Dec. 31,
2011 2011 2011 2011 2010
--------- ---------- --------- --------- ---------
Operating revenues
Crude oil sales $306,064 $249,767 $270,252 $233,081 $156,273
Natural gas sales 21,659 28,138 31,875 32,193 18,301
Hedge gain (loss) 12,855 6,978 (19,346) (6,638) (621)
--------- ---------- --------- --------- ---------
Total revenues 340,578 284,883 282,781 258,636 173,953
--------- ---------- --------- --------- ---------
Percent of operating revenues from crude oil
Prior to hedge gain (loss) 93% 90% 89% 88% 90%
Including hedge gain (loss) 91% 87% 85% 84% 84%
Operating expenses
Lease operating expense
Insurance expense 7,096 7,462 8,814 6,543 6,376
Workover and maintenance 12,805 6,653 17,251 4,121 4,105
Direct lease operating expense 54,233 56,918 59,557 54,593 33,965
--------- ---------- --------- --------- ---------
Total lease operating expense 74,134 71,033 85,622 65,257 44,446
Production taxes 1,174 2,174 1,205 721 716
Gathering and transportation 3,395 6,153 6,868 4,809 801
DD&A 87,568 84,803 85,179 91,301 62,922
General and administrative 22,147 19,321 17,553 23,155 15,786
Other - net 14,174 (684) 7,730 9,288 4,710
--------- ---------- --------- --------- ---------
Total operating expenses 202,592 182,800 204,157 194,531 129,381
--------- ---------- --------- --------- ---------
Operating income $137,986 $102,083 $78,624 $64,105 $44,572
========= ========== ========= ========= =========
Sales volumes per day
Natural gas (MMcf) 72.8 77.0 83.0 84.6 53.7
Crude oil (MBbls) 30.6 28.0 28.3 27.3 20.4
Total (MBOE) 42.7 40.8 42.1 41.4 29.4
Percent of sales volumes from crude oil 72% 69% 67% 66% 70%
Average sales price
Natural gas per Mcf $3.23 $3.97 $4.22 $4.23 $3.70
Hedge gain per Mcf 1.43 1.39 1.37 1.28 1.85
--------- ---------- --------- --------- ---------
Total natural gas per Mcf $4.66 $5.36 $5.59 $5.51 $5.55
========= ========== ========= ========= =========
Crude oil per Bbl $108.80 $97.11 $105.12 $94.94 $83.14
Hedge gain (loss) per Bbl 1.17 (1.11) (11.53) (6.67) (5.18)
--------- ---------- --------- --------- ---------
Total crude oil per Bbl $109.97 $96.00 $93.59 $88.27 $77.96
========= ========== ========= ========= =========
Total hedge gain (loss) per BOE $3.27 $1.86 $(5.05) $(1.78) $(0.23)
========= ========== ========= ========= =========
Operating revenues per BOE $86.67 $75.91 $73.85 $69.46 $64.34
--------- ---------- --------- --------- ---------
Operating expenses per BOE
Lease operating expense
Insurance expense 1.81 1.99 2.30 1.76 2.36
Workover and maintenance 3.26 1.77 4.51 1.11 1.52
Direct lease operating expense 13.80 15.17 15.55 14.66 12.56
--------- ---------- --------- --------- ---------
Total lease operating expense 18.87 18.93 22.36 17.53 16.44
Production taxes 0.30 0.58 0.31 0.19 0.26
Gathering and transportation 0.86 1.64 1.79 1.28 0.29
DD&A 22.28 22.60 22.24 24.52 23.27
General and administrative 5.64 5.15 4.58 6.22 5.84
Other - net 3.60 (0.18) 2.01 2.49 1.74
--------- ---------- --------- --------- ---------
Total operating expenses 51.55 48.72 53.29 52.23 47.84
--------- ---------- --------- --------- ---------
Operating income per BOE $35.12 $27.19 $20.56 $17.23 $16.50
========= ========== ========= ========= =========
Conference Call Tomorrow, Feb. 2, at 9 a.m. CDT, 3 p.m. London
Time
Energy XXI will host its fiscal second-quarter conference call
tomorrow, Feb. 2, at 9 a.m. CST (3 p.m. London time). The dial-in
numbers are 1 (631) 813-4724 (U.S.) and (0) 80 0032 3836 (U.K.),
and the confirmation code is 43357511. For complete instructions on
how to actively participate in the conference call, or to listen to
the live audio webcast or a replay, please refer to
www.EnergyXXI.com.
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 adheres to the standard set by the Society
of Petroleum Engineers. Bobby Poirrier Jr., Vice President of
Corporate Development, a 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 Coast onshore. Seymour Pierce is Energy XXI's listing broker
in the United Kingdom. To learn more, visit the Energy XXI website
at www.EnergyXXI.com.
GLOSSARY
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.
MMcf/d - million cubic feet of gas per day.
Net Pay - cumulative hydrocarbon-bearing formations.
NRI, Net Revenue Interest - the percentage of production revenue
allocated to the working interest after first deducting proceeds
allocated to royalty and overriding interest.
TD - target total depth of a well.
WI, Working Interest - the interest held in lands by virtue of a
lease, operating agreement, fee title or otherwise, under which the
owner of the interest is vested with the right to explore for,
develop, produce and own oil, gas or other minerals and bears the
proportional cost of such operations.
Workover / Recompletion - operations on a producing well to
restore or increase production. A workover or recompletion may be
performed to stimulate the well, remove sand or wax from the
wellbore, to mechanically repair the well, or for other
reasons.
Enquiries of the Company
Energy XXI
Stewart Lawrence
Vice President, Investor Relations and Communications
713-351-3006
slawrence@energyxxi.com
Greg Smith
Director, Investor Relations
713-351-3149
gsmith@energyxxi.com
Seymour Pierce
Jonathan Wright - Corporate Finance
Richard Redmayne - Corporate Broking
Tel: +44 (0) 20 7107 8000
Pelham Bell Pottinger
James Henderson
jhenderson@pelhambellpottinger.co.uk
Mark Antelme
mantelme@pelhambellpottinger.co.uk
+44 (0) 20 7861 3232
This information is provided by RNS
The company news service from the London Stock Exchange
END
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