Energy XXI (NASDAQ:EXXI) today announced fiscal year-end reserves.
- 2015 fiscal year-end reserves were estimated at 183.5
MMBOE
- Proved reserves are 75 percent oil
- Proved reserves pre-tax present value is $2.8
billion
- Production and divestitures account for 54 percent of
reserve reductions
- Majority of revisions due to price and reduced capital
spending
"Our proved reserves decreased primarily due to production of 22
million barrels of oil equivalent ("MMBOE") during fiscal year
2015, as well as the divestiture of non-core assets, price-based
adjustments, and our reduced capital expenditures due to the
current low commodity price environment," Energy XXI Chairman,
President and Chief Executive Officer John Schiller said. "Our
Fiscal Year 2015 reserve additions of 17 MMBOE demonstrate our
ability to continue to replace our reserves organically while
upgrading our portfolio by delivering on the divesture of our
higher cost, non-core properties. It is significant that 68 percent
of the proved reserves have already been developed, demonstrating
the high quality and potential of our liquid-rich asset base. When
looking at our reserves, it is important to note that 100 percent
of the total future abandonment costs are booked against proved
developed reserves," Mr. Schiller continued. "The reserves that we
lost to price and reduced forecasted capital expenditures over the
next five years don't simply go away; those hydrocarbons are still
in the ground and as prices recover we expect to once again realize
the value of those barrels."
The company's June 30, 2015 fiscal year-end proved reserves were
estimated at 183.5 MMBOE. The present value of proved reserves
total $2.8 billion. The company has proved and probable reserves
totaling 265.7 MMBOE, with a present value of $4.5 billion.
All of the company's proved reserves are in the Gulf of Mexico
or U.S. Gulf Coast, 68 percent are proved developed, 75 percent are
liquids (of which 95 percent is crude oil and condensate), and 25
percent are natural gas. Year-over-year proved developed reserves,
as a percentage of total proved reserves, increased by seven
percent.
| Summary of Changes in Proved
Reserves |
| (in MMBOE) |
| Balance as of June 30,
2014 |
246.2 |
| Production |
(21.5) |
| Extensions, discoveries,
additions |
17.3 |
| Purchases |
-- |
| Sales of proved reserves |
(12.2) |
| Revisions: |
|
| Pricing |
(19.2) |
| Decreased capital spending |
(6.9) |
| Technical |
(20.2) |
| Total performance
revisions |
(46.3) |
| |
|
| Balance as of June 30,
2015 |
183.5 |
The reserves are reported as of June 30, 2015 and do not include
the reserves, or present value attributed to the M21K, LLP
acquisition which closed August 11, 2015. At the time of
closing, the proved reserves associated with the M21K, LLP assets
were estimated at 13 MMBOE with a present value of $82 million at
strip prices. The company is working with reserve auditors to
complete those estimates. The reserves associated with the
M21K, LLP acquisition have never been included in the company's
reserves.
The following fiscal year-ended June 30, 2015 estimated proved,
probable and possible reserves attributable to the company's net
interests in oil and gas properties were audited by Netherland
Sewell & Associates, Inc. (NSAI), independent oil and gas
reserves consultants.
| |
Oil (MBBL) |
NGL (MBBL) |
Gas (MMCF) |
Equivalent (MBOE) |
PV10% ($000)1, 2 |
| Proved Developed Producing |
74,030 |
3,345 |
112,935 |
96,198 |
1,534,051 |
| |
|
|
|
|
|
| Proved Developed Non-Producing |
14,576 |
2,061 |
75,058 |
29,147 |
416,302 |
| Proved Undeveloped |
40,989 |
2,070 |
90,550 |
58,151 |
884,083 |
| Proved Reserves |
129,596 |
7,476 |
278,543 |
183,496 |
2,834,436 |
| Probable |
60,584 |
2,893 |
112,174 |
82,174 |
1,633,600 |
| Proved+Probable |
190,180 |
10,370 |
390,717 |
265,670 |
4,468,036 |
| Possible |
41,942 |
1,656 |
105,746 |
61,222 |
1,134,066 |
|
Proved+Probable+Possible |
232,122 |
12,026 |
496,463 |
326,892 |
5,602,102 |
| |
|
|
|
|
|
| 1Before tax, as of June 30,
2015, using prices of $73.70/per barrel of oil and $3.03/MCF
($68.17/per barrel of oil West Texas Intermediate benchmark and
$3.39/MMBTU Henry Hub benchmark before differentials & BTU
adjustment), based on the SEC-prescribed first-of-the-month average
prices for the preceding 12 months. |
| |
|
|
|
|
|
| 2We refer to "PV-10" as the
present value of estimated future net revenues of estimated proved
reserves using a discount rate of 10%. Year-end pre-tax discounted
present value may be considered a non-GAAP financial measure as
defined by the SEC. We believe that the presentation of pre-tax
discounted present value is relevant and useful to our investors
because it presents the discounted future net cash flows
attributable to our proved reserves prior to taking into account
future corporate income taxes and our current tax structure. We
further believe investors and creditors use pre-tax discounted
present value as a basis for comparison of the relative size and
value of our reserves as compared with other companies. Energy
XXI's pre-tax discounted present value as of June 30, 2015 may be
reconciled to its standardized measure of discounted future net
cash flows as of June 30, 2015 by reducing Energy XXI's pre-tax
discounted present value by the discounted future income taxes
associated with such reserves. The company is still finalizing the
standardized measure calculation and this reconciliation will be
included in the Company's 2015 Form 10-K. |
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, access to capital and ability
to fund drilling costs and otherwise meet Energy XXI's obligations,
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. In addition, Energy XXI
discloses proved, probable and possible reserves in this press
release, each of which is defined in greater detail in the glossary
below. Estimates of probable and possible reserves which may
potentially be recoverable through additional drilling or recovery
techniques are by nature more uncertain than estimates of proved
reserves and accordingly are subject to substantially greater risk
of not actually being realized by Energy XXI. 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. Lee Williams, Director of Corporate
Reserves, 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 development 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. To learn more, visit the Energy XXI
website at www.EnergyXXI.com.
Glossary
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 more
certain to be recovered than possible reserves. 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.
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.
MBBL – thousand barrels of oil.
MBOE – thousand barrels of oil equivalent.
MMBOE – million barrels of oil equivalent.
MMBTU – million British thermal units.
MMCF – million cubic feet of gas.
PV10 – the estimated present value of the
resource, discounted at a 10 percent annual rate.
CONTACT: ENQUIRIES OF THE COMPANY
Energy XXI
Greg Smith
Vice President, Investor Relations
713-351-3149
gsmith@energyxxi.com
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