HOUSTON, Feb. 4, 2008 (PRIME NEWSWIRE) -- Energy XXI (Bermuda) Limited (Nasdaq:EXXI) (LSE:EXXI) (LSE:EXXS) today announced fiscal second-quarter financial and operating results for the period ended Dec. 31, 2007.
"Higher realized prices for our oil and natural gas production, combined with continued strong operating results, helped the company achieve record-high revenues and EBITDA in this year's fiscal second quarter," Energy XXI Chairman and CEO John Schiller said.
For the 2008 fiscal second quarter, revenues were $153.7 million and earnings before interest, taxes, depreciation, depletion and amortization (EBITDA) totaled $111.9 million, compared with revenues of $79.1 million and EBITDA of $60.4 million in the 2007 fiscal second quarter. Net income was $6.5 million, or $.07 per diluted share, compared with net income of $10.4 million, or $.12 per diluted share, in the 2007 fiscal second quarter.
Net cash provided by operating activities totaled $48.2 million for the 2008 fiscal second quarter, compared with $64.9 million in the 2007 fiscal second quarter. Discretionary cash flow was $88.4 million in the 2008 fiscal second quarter, compared with $53.3 million in the 2007 fiscal second quarter.
For the 2008 fiscal second quarter, sales volumes averaged 26,000 barrels of oil equivalent per day (BOE/d), compared with 15,700 BOE/d in the 2007 fiscal second quarter. The net realized price received for the company's production in the 2008 fiscal second quarter averaged $64.24 per BOE, including a $3.56 per BOE reduction due to hedging, compared with a net realized price of $54.71 per BOE, including a $7.19 per BOE contribution from hedging, in the 2007 fiscal second quarter.
Capital Expenditures
During the 2008 fiscal second quarter, capital expenditures totaled $91.7 million. The fiscal-year 2008 capital budget, excluding acquisitions, is unchanged at approximately $260 million.
2nd Quarter Operational Highlights
During the fiscal second quarter, Energy XXI continued to implement its exploration and development program, details of which are provided in the attached Operations Report.
"Our capital program through the first half of our fiscal year was weighted toward development work, which has resulted in the completion and start-up of several important wells," Energy XXI President and Chief Operating Officer Steve Weyel said. "These achievements were masked during our fiscal second quarter primarily due to down-time associated with a major integrated oil company's pipeline outage. By January, however, our volumes reached record levels in excess of 29,000 BOE/d. We are continuing to work to improve the on-line performance of our facilities in order to maximize daily volumes."
Weyel said exploration is expected to have a more significant impact during the second half of fiscal-year 2008, which ends June 30.
"Several high-potential exploration wells are expected to be drilled before our June year-end," Weyel said. "In addition, development work has begun on recently acquired properties such as the Main Pass 61 fields."
Conference Call Tomorrow at 10 a.m. CST, 4 p.m. London Time
Energy XXI will host its second-quarter conference call tomorrow, Tuesday, Feb. 5, 2008, at 10 a.m. CST (4 p.m. London time). The dial-in number is 1 (913) 312-1393 in the U.S. and 08081 011 402 in the U.K., and the confirmation code is 1490663. 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 (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 primarily located in the U.S. Gulf of Mexico waters and the Gulf Coast onshore. Collins Stewart Europe Limited and Tristone Capital Limited are Energy XXI listing brokers in the United Kingdom. In the United States, BMO Capital Markets, Collins Stewart, Dahlman Rose & Co., Jefferies & Company, Natixis Bleichroeder and Sterne Agee & Leach, Inc. are market makers. To learn more, visit the Energy XXI website at www.energyxxi.com.
The Energy XXI logo is available at http://www.primenewswire.com/newsroom/prs/?pkgid=3587
ENERGY XXI (BERMUDA) LIMITED
CONSOLIDATED BALANCE SHEETS
(In Thousands, except share information)
December 31, June 30,
2007 2007
------------------------
(Unaudited)
ASSETS
Current Assets
Cash and cash equivalents $ 11,500 $ 19,784
Accounts receivable
Oil and natural gas sales 68,565 55,763
Joint interest billings 26,676 14,377
Insurance and other 12,600 958
Prepaid expenses and other current assets 32,987 21,870
Deferred income taxes 12,629 --
Royalty deposits 9,928 2,175
Derivative financial instruments 1,951 17,131
------------------------
Total Current Assets 176,836 132,058
------------------------
Property and Equipment, net of accumulated
depreciation, depletion, and amortization
Oil and natural gas properties - full cost
method of accounting 1,541,694 1,491,685
Other property and equipment 5,410 3,097
------------------------
Total Property and Equipment 1,547,104 1,494,782
------------------------
Other Assets
Debt issuance costs, net of accumulated
amortization 19,087 20,986
Derivative financial instruments -- 616
------------------------
Total Other Assets 19,087 21,602
------------------------
Total Assets $ 1,743,027 $ 1,648,442
========================
LIABILITIES
Current Liabilities
Accounts payable $ 80,133 $ 79,563
Advances from joint interest partners 2,587 2,026
Accrued liabilities 34,268 33,459
Deferred income taxes -- 1,044
Derivative financial instruments 43,390 1,480
Note payable 8,256 --
Current maturities of long-term debt 5,754 5,508
------------------------
Total current liabilities 174,388 123,080
Long-term debt, less current maturities 1,114,442 1,045,511
Deferred income taxes 176 14,788
Asset retirement obligations 66,446 63,364
Derivative financial instruments 42,866 4,573
------------------------
Total Liabilities 1,398,318 1,251,316
------------------------
Commitments and Contingencies (Note 12)
Stockholders' Equity
Preferred stock, $0.01 par value, 2,500,000
shares authorized and no shares issued at
December 31, 2007 and June 30, 2007 -- --
Common stock, $0.001 par value, 400,000,000
shares authorized and 84,511,906 and
84,203,444 issued and outstanding at
December 31, 2007 and June 30, 2007,
respectively 84 84
Additional paid-in capital 363,305 363,206
Retained earnings 39,434 31,072
Accumulated other comprehensive income
(loss), net of tax (58,114) 2,764
------------------------
Total Stockholders' Equity 344,709 397,126
------------------------
Total Liabilities and Stockholders' Equity $ 1,743,027 $ 1,648,442
========================
ENERGY XXI (BERMUDA) LIMITED
CONSOLIDATED STATEMENTS OF INCOME
(In Thousands, except per share information)
(Unaudited)
Three Months Ended Six Months Ended
December 31, December 31,
--------------------------------------
2007 2006 2007 2006
--------------------------------------
Revenues
Oil sales $ 93,322 $ 43,954 $180,895 $ 79,106
Natural gas sales 60,403 35,189 116,438 65,854
--------------------------------------
Total Revenues 153,725 79,143 297,333 144,960
--------------------------------------
Costs and Expenses
Lease operating expense 34,043 12,787 64,736 27,468
Production taxes 1,272 407 3,232 1,218
Depreciation, depletion and
amortization 75,406 31,711 148,659 59,455
Accretion of asset
retirement obligation 1,989 871 3,749 1,742
General and administrative
expense 5,644 5,573 11,415 10,591
Gain on derivative financial
instruments (1,086) (853) (44) (1,558)
--------------------------------------
Total Costs and Expenses 117,268 50,496 231,747 98,916
--------------------------------------
Operating Income 36,457 28,647 65,586 46,044
--------------------------------------
Other Income (Expense)
Interest income 403 866 901 1,292
Interest expense (26,819) (12,148) (53,630) (27,007)
--------------------------------------
Total Other Income (Expense) (26,416) (11,282) (52,729) (25,715)
--------------------------------------
Income Before Income Taxes 10,041 17,365 12,857 20,329
Provision for Income Taxes 3,566 6,957 4,495 7,988
--------------------------------------
Net Income $ 6,475 $ 10,408 $ 8,362 $ 12,341
======================================
Earnings Per Share
Basic $ 0.08 $ 0.12 $ 0.10 $ 0.15
Diluted $ 0.07 $ 0.12 $ 0.09 $ 0.15
Weighted Average Number of
Common Shares Outstanding
Basic 84,141 83,973 84,138 83,817
Diluted 86,506 83,973 90,262 83,817
ENERGY XXI (BERMUDA) LIMITED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
(Unaudited)
Three Months Ended Six Months Ended
December 31, December 31,
------------------------------------------
2007 2006 2007 2006
------------------------------------------
Cash Flows From
Operating Activities
Net income $ 6,475 $ 10,408 $ 8,362 $ 12,341
Adjustments to
reconcile net income
to net cash provided
by (used in) operating
activities:
Deferred income tax
expense 3,566 6,957 4,495 7,988
Change in derivative
financial instruments (486) 3,060 (508) 6,391
Accretion of asset
retirement
obligations 1,989 871 3,749 1,742
Depletion,
depreciation, and
amortization 75,406 31,711 148,659 59,455
Amortization and
write-off of debt
issuance costs 1,454 306 2,574 5,673
Common stock issued to
Directors for
services -- -- 67 --
Changes in operating
assets and
liabilities
Accounts receivable (12,643) 27,158 (33,895) 7,038
Prepaid expenses and
other current assets 875 (15,787) (18,870) (26,167)
Accounts payable and
other liabilities (28,454) 175 10,221 8,059
------------------------------------------
Net Cash Provided by
Operating
Activities 48,182 64,859 124,854 82,520
------------------------------------------
Cash Flows from
Investing Activities
Acquisitions (26,845) (1,304) (30,366) (302,481)
Capital expenditures (91,729) (71,855) (171,218) (120,364)
Proceeds from the sale
of oil and natural gas
properties -- -- -- 1,400
Insurance payments -- (4,581) -- --
Other (35) (1,780) (33) 760
------------------------------------------
Net Cash Used
in Investing
Activities (118,609) (79,520) (201,617) (420,685)
------------------------------------------
Cash Flows from
Financing Activities
Proceeds from the
issuance of common
stock -- (7,326) 32 13,059
Proceeds from long-term
debt 163,135 30,000 183,135 299,000
Payments on long-term
debt (91,135) -- (111,135) (14,625)
Payments on put
financing (1,385) (4,186) (2,875) (5,019)
Debt issuance costs (675) (13) (675) (4,754)
Other (13) (630) (3) (630)
------------------------------------------
Net Cash Provided by
Financing
Activities 69,927 17,845 68,479 287,031
------------------------------------------
Net Increase (Decrease)
in Cash and Cash
Equivalents (500) 3,184 (8,284) (51,134)
Cash and Cash
Equivalents, beginning
of period 12,000 8,071 19,784 62,389
------------------------------------------
Cash and Cash
Equivalents, end of
period $ 11,500 $ 11,255 $ 11,500 $ 11,255
==========================================
ENERGY XXI (BERMUDA) LIMITED
CONSOLIDATED OPERATING RESULTS
(In Thousands, except per unit amounts)(Unaudited)
Twelve
Quarter Ended Months
---------------------------------------------- Ended
Dec. 31, March 31, June 30, Sept. 30, Dec. 31, Dec. 31,
2006 2007 2007 2007 2007 2007
------- ------- -------- -------- -------- --------
Operating
Revenues $79,143 $77,608 $118,716 $143,608 $153,725 $493,657
------- ------- -------- -------- -------- --------
Operating
Expenses
Lease
operating
expense
Insurance
expense 2,653 4,866 2,489 4,832 4,812 16,999
Workover
expense (495) 1,910 5,532 5,720 4,489 17,651
Other lease
operating
expense 10,629 9,575 17,145 20,141 24,742 71,603
------- ------- -------- -------- -------- --------
Total lease
operating
expense 12,787 16,351 25,166 30,693 34,043 106,253
Production
taxes 407 1,691 686 1,960 1,272 5,609
DD&A 31,711 28,600 57,873 73,253 75,406 235,132
General and
administra-
tive 5,573 5,733 10,183 5,771 5,644 27,331
Other - net 18 (675) 1,545 2,802 903 4,575
------- ------- -------- -------- -------- --------
Total operating
expenses 50,496 51,700 95,453 114,479 117,268 378,900
------- ------- -------- -------- -------- --------
Operating
Income $28,647 $25,908 $ 23,263 $ 29,129 $ 36,457 $114,757
======= ======= ======== ======== ======== ========
Sales Volumes
per Day
Natural gas
(MMcf) 52.1 42.1 60.0 83.5 78.1 66.1
Crude oil
(MBbls) 7.0 7.5 10.9 12.3 13.0 10.9
Total
(MBOE) 15.7 14.5 20.9 26.2 26.0 21.9
Average Sales
Price
Natural gas
per Mcf $ 6.67 $ 7.77 $ 7.78 $ 5.83 $ 7.48 $ 6.47
Hedge gain
per Mcf 0.67 1.43 0.80 1.46 0.93 1.05
------- ------- -------- -------- -------- --------
Total natural
gas per Mcf $ 7.34 $ 9.20 $ 8.58 $ 7.29 $ 8.41 $ 7.52
======= ======= ======== ======== ======== ========
Crude oil
per Bbl $ 56.77 $ 56.24 $ 67.46 $ 79.19 $ 90.71 $ 73.31
Hedge gain
(loss) per
Bbl 11.14 7.36 5.21 (1.52) (12.68) (1.64)
------- ------- -------- -------- -------- --------
Total crude
oil per Bbl $ 67.91 $ 63.60 $ 72.67 $ 77.67 $ 78.03 $ 71.67
======= ======= ======== ======== ======== ========
Hedge gain
(loss) per
BOE $ 7.19 $ 7.95 $ 5.03 $ 3.94 $ (3.56) 2.45
======= ======= ======== ======== ======== ========
Operating
Revenues per
BOE $ 54.71 $ 59.54 $ 62.53 $ 59.63 $ 64.24 $ 61.68
------- ------- -------- -------- -------- --------
Operating
Expenses per
BOE
Lease operating
expense
Insurance
expense 1.83 3.73 1.31 2.00 2.01 2.12
Workover
expense (0.34) 1.47 2.91 2.38 1.88 2.21
Other lease
operating
expense 7.35 7.34 9.03 8.36 10.34 8.95
------- ------- -------- -------- -------- --------
Total lease
operating
expense 8.84 12.54 13.25 12.74 14.23 13.28
Production
taxes 0.28 1.30 0.36 0.81 0.53 0.70
DD&A 21.92 21.94 30.48 30.42 31.51 29.38
General and
administrative 3.85 4.40 5.37 2.40 2.36 3.41
Other - net 0.02 (0.52) 0.82 1.16 0.38 0.57
------- ------- -------- -------- -------- --------
Total
operating
expenses 34.91 39.66 50.28 47.53 49.01 47.34
------- ------- -------- -------- -------- --------
Operating
Income per
BOE $ 19.80 $ 19.88 $ 12.25 12.10 $ 15.23 $ 14.34
======= ======= ======== ======== ======== ========
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 measures: EBITDA and discretionary cash
flow. The company uses these non-GAAP measures as key metrics for the
management of the company and to demonstrate the company's ability to
internally fund capital expenditures and service debt. The non-GAAP
measures are useful in comparisons of oil and gas exploration and
production companies as they exclude non-operating fluctuations in
assets and liabilities.
Three Months Ended Six Months Ended
December 31, December 31,
-----------------------------------------
2007 2006 2007 2006
-----------------------------------------
Net Income as Reported $ 6,475 $ 10,408 $ 8,362 $ 12,341
Total other (income)
expense 26,416 11,282 52,729 25,715
Depreciation, depletion
and amortization 75,406 31,711 148,659 59,455
Provision for income taxes 3,566 6,957 4,495 7,988
-----------------------------------------
EBITDA $111,863 $ 60,358 $214,245 $105,499
=========================================
EBITDA Per Share
Basic $ 1.33 $ 0.72 $ 2.55 $ 1.26
Diluted $ 1.29 $ 0.72 $ 2.37 $ 1.26
Weighted Average Number of
Common Shares Outstanding
Basic 84,141 83,973 84,138 83,817
Diluted 86,506 83,973 90,262 83,817
---------------------------------------------------------------------
Net Income as Reported $ 6,475 $ 10,408 $ 8,362 $ 12,341
Deferred income tax expense 3,566 6,957 4,495 7,988
Change in derivative
financial instruments (486) 3,060 (508) 6,391
Accretion of asset
retirement obligations 1,989 871 3,749 1,742
Depletion, depreciation,
and amortization 75,406 31,711 148,659 59,455
Amortization and write-off
of debt issuance costs 1,454 306 2,574 5,673
Common stock issued to
Directors for services -- -- 67 --
-----------------------------------------
Discretionary Cash Flow $ 88,404 $ 53,313 $167,398 $ 93,590
=========================================
ENERGY XXI (BERMUDA) LIMITED
SUMMARY OF HEDGE POSITIONS AS OF FEBRUARY 4, 2008
Natural Gas (000 MMBTU)
------------------------------------------------------------
Average
--------------------
Qtr Instrument Volume Sub Floor Cap
--- ---------- ------ --- ----- ---
Q308 Swaps 4,370 8.44 8.44
3-Way Collars 1,500 5.70 7.45 10.10
Collars 1,002 8.00 10.52
Puts 140 8.00
Put Spreads 1,540 6.00 8.00
Q408 Swaps 2,730 8.64 8.64
3-Way Collars 1,420 5.68 7.42 10.10
Collars 848 7.98 10.49
Puts 120 8.00
Put Spreads 1,390 6.00 8.00
Q109 Swaps 1,480 8.78 8.78
3-Way Collars 1,340 5.66 7.38 10.11
Collars 744 7.97 10.46
Puts 120 8.00
Put Spreads 1,280 6.00 8.00
Q209 Swaps 1,820 8.77 8.77
3-Way Collars 1,250 5.63 7.34 10.12
Collars 685 7.97 10.43
Puts 110 8.00
Put Spreads 1,170 6.00 8.00
Q309 Swaps 1,920 8.62 8.62
3-Way Collars 1,040 6.00 8.09 9.97
Collars 302 7.72 9.96
Q409 Swaps 1,720 8.46 8.46
3-Way Collars 930 6.00 8.10 9.96
Collars 289 7.73 9.91
Q110 Swaps 1,530 8.46 8.46
3-Way Collars 820 6.00 8.11 9.96
Collars 137 8.00 8.85
Q210 Swaps 1,390 8.46 8.46
3-Way Collars 740 6.00 8.12 9.95
Collars 137 8.00 8.85
Q310 Swaps 1,700 8.12 8.12
3-Way Collars 180 6.00 8.50 9.80
Q410 Swaps 1,500 8.12 8.12
3-Way Collars 180 6.00 8.50 9.80
Q111 Swaps 1,380 8.12 8.12
3-Way Collars 180 6.00 8.50 9.80
Q211 Swaps 1,280 8.12 8.12
3-Way Collars 180 6.00 8.50 9.80
Crude Oil (000 BBL)
-------------------------------------------------------------
Average
----------------------
Qtr Instrument Volume Sub Floor Cap
--- ---------- ------ --- ----- ---
Q308 Swaps 670 76.41 76.41
3-Way Collars 240 54.25 67.30 78.49
Collars 162 64.79 76.56
Puts 33 60.00
Q408 Swaps 564 75.96 75.96
3-Way Collars 208 54.13 67.19 78.50
Collars 189 65.46 76.36
Puts 30 60.00
Q109 Swaps 364 70.38 70.38
3-Way Collars 205 54.12 67.44 78.99
Collars 55 60.00 78.00
Puts 27 60.00
Q209 Swaps 320 70.37 70.37
3-Way Collars 184 54.02 67.40 79.09
Collars 51 60.00 78.00
Puts 26 60.00
Q309 Swaps 325 70.85 70.85
3-Way Collars 170 53.94 67.24 78.94
Q409 Swaps 303 70.86 70.86
3-Way Collars 137 53.69 67.37 79.66
Q110 Swaps 277 70.97 70.97
3-Way Collars 111 53.38 67.52 80.49
Q210 Swaps 257 71.01 71.01
3-Way Collars 87 52.93 67.70 81.64
Q310 Swaps 238 70.86 70.86
Collars 132 75.00 102.00
3-Way Collars 68 52.35 67.35 82.05
Q410 Swaps 215 70.89 70.89
Collars 122 75.00 102.00
3-Way Collars 60 52.00 67.00 82.04
Q111 Swaps 193 70.93 70.93
Collars 110 75.00 102.00
3-Way Collars 52 51.54 66.54 82.03
Q211 Swaps 171 70.96 70.96
Collars 102 75.00 102.00
3-Way Collars 45 50.95 65.95 82.02
Includes production for January 2008 and later; Quarters based on
June 30 fiscal year-end
All prices are weight-averaged by contract volume
---------------------------------------------------------------------
EXXI Fiscal 2nd Quarter 2008 Drilling Results
---------------------------------------------------------------------
Exploration Development Total
---------------------------------------------------------------------
Gross Net Gross Net Gross Net
---------------------------------------------------------------------
Operated
---------------------------------------------------------------------
Oil 0 0 1 1 1 1
---------------------------------------------------------------------
Gas 0 0 0 0 0 0
---------------------------------------------------------------------
Dry 0 0 0 0 0 0
---------------------------------------------------------------------
Non-Operated
---------------------------------------------------------------------
Oil 0 0 0 0 0 0
---------------------------------------------------------------------
Gas 1 0.25 1 0.1625 2 0.4125
---------------------------------------------------------------------
Dry 5 1.625 0 0 5 1.625
---------------------------------------------------------------------
Total 6 1.875 2 1.1625 8 3.0375
---------------------------------------------------------------------
---------------------------------------------------------------------
Exploration Development Total
---------------------------------------------------------------------
Success Rates 17% 13% 100% 100% 38% 47%
---------------------------------------------------------------------
---------------------------------------------------------------------
Exploration Development Total
---------------------------------------------------------------------
Onshore 6 1 7
---------------------------------------------------------------------
Offshore 0 1 1
---------------------------------------------------------------------
Total 6 2 8
---------------------------------------------------------------------
Gulf Of Mexico Shelf Highlights
South Timbalier 21 (100% WI) South Timbalier 21 net production averaged 7,109 BOE/d during the fiscal second quarter. One drilling rig remained active throughout the quarter, while a second rig was added in October to accelerate the completion of the Beaujolais discovery well and two well workovers in response to higher oil prices. This rig activity, while successfully increasing deliverability from the field to more than 9,000 BOE/d (net), resulted in production interruptions during the quarter as facilities were temporarily shut-in.
The Beaujolais well, which finished drilling on 9/16/07, was dual completed in the D-15 and D-18 sands and placed on production in late December. The well recently tested at 1,250 BOE/d (net).
The Pinot development well reached TD of 12,036' on 11/10/07. The well encountered 40' of net oil pay in the D-10, D-5, D-4 and S-4 sands. It was dual completed in late December in the D-5 and D-10 sands and recently tested at 775 BOE/d (net).
The Sangria development well reached TD of 14,112' and encountered 8' of pay in the D-7 sand. Completion activities are in progress, with production expected to begin in late February at an initial anticipated rate of about 700 BOE/d (net).
Acquired Pogo Properties
The Gulf of Mexico shelf properties acquired in June 2007 from Pogo Producing Company averaged 9,723 BOE/d (net) during the fiscal second quarter, a 25% increase relative to the preceding quarter. Almost $10 million of reimbursable spending on Minerals Management Service (MMS) compliance work in just five months helped volumes hit a two-year high, with no drilling or workovers. The properties were also formally released from MMS probation.
Following facility upgrades, including replacement of separation and compression units, gas lift optimization and acid stimulations on four D-69/D-70 sand wells are planned for South Pass 49.
The Ensco 82 rig will arrive at Main Pass 61-B early February to begin a recompletion on B-1 and a new-drill on B-6. A second rig is expected to be added in June for Main Pass 61-A&C.
South Louisiana Onshore Highlights
Golden Meadow
* LL&E #232 (25% WI), Lafourche Parish - spud 9/22/07 and reached a
TD of 14,000' on 10/12/07; encountered more than 100' gross pay
in the main objective; completed and tested in January at 82 BOPD
and 2.2 MMcf/d (gross).
South Lake Verret
* Jeanerett Lumber & Shingle 34-1 (100% WI), St. Martin Parish -
previously encountered zones of interest were completed and
evaluated; deemed non-economic for production.
Eugene Island
* SL 17695 #1 (35% WI) (Comus Prospect), Iberia Parish - spud
12/22/07 with a proposed TD of 13,800'; currently drilling at
12,920'.
Cote de Mer
* McIlhenny #1 (35% WI) (Cote de Mer Prospect), Vermillion Parish -
control operations completed in January; Coastal rig 21 expected
onsite mid-February to sidetrack at approximately 14,000' and
resume drilling toward proposed TD of 21,932'.
Rabbit Island
* 'J' Prospect, SL 340 #7 (39% WI), Iberia / St. Mary Parish - spud
11/30/07 with a proposed TD of 16,600'; currently drilling at
11,425'.
Bourg, South Field
* Logan Babin #1 ST-1 (16.25% WI), Terrebonne Parish - spud
10/01/07, TD'd at 13,500' on 10/18/07; on production in December;
recently tested at 510 BOE/d (gross).
West Cote Blanche Bay
* SL 340 #1 (25% WI), St. Mary Parish - spud 1/15/08 with a
proposed TD of 15,000'; currently drilling at 13,545'.
* SL 340 #2, #3 & #4 (25% WI); St. Mary Parish - all three wells
spud and were drilled to TD of 2,100' in late December, testing
three oil amplitudes in the same stratigraphic section; two sands
were wet and the third was a non-commercial accumulation.
Drilling these low-cost shallow wells ($695,000 net total)
preserved the lease (12,000 acres) and earned Energy XXI an
interest in the deep oil play targeted by the SL 340 #1 well.
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.
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.
FTP - flowing tubing pressure.
MBOE - thousand barrels of oil equivalent.
MMBOE - million barrels of oil equivalent.
MD - measured depth.
Net Pay - cumulative hydrocarbon-bearing formations.
Spud - to begin drilling a well.
TD - target total depth of a well.
TD'd - to finish drilling a well.
TVD - total vertical depth.
Workover - operations on a producing well to restore or increase production. A workover may be performed to stimulate the well, remove sand or wax from the wellbore, to mechanically repair the well, or for other reasons.