* Full-Year Volumes Rise 62 Percent to 26,200 BOE/D * Revenues and EBITDA Climb to New Record Highs * Exploration Efforts Target Future Growth * Hurricane Gustav Inspections Reveal Limited Damage
HOUSTON, Sept. 9, 2008 (GLOBE NEWSWIRE) -- Energy XXI (Bermuda) Limited (Nasdaq:EXXI) (LSE:EXXI) (LSE:EXXS) today announced fiscal fourth-quarter and full-year financial and operating results for the period ended June 30, 2008, and provided an operational update, including storm impacts.
For the company's fiscal year ended June 30, 2008, Energy XXI reported net cash provided by operating activities totaled $387.6 million while earnings before interest, taxes, depreciation, depletion and amortization (EBITDA) was $451.0 million, compared with $275.4 million and $241.1 million, respectively, in fiscal 2007. Fiscal 2008 net income was $26.9 million, or $0.30 per diluted share, on revenues of $643.2 million and production of 26,200 BOE/d, compared with net income of $24.1 million, or $0.29 per diluted share, on revenues of $341.3 million and production of 16,200 BOE/d in fiscal 2007.
For the 2008 fiscal fourth quarter, revenues were $178.8 million and EBITDA totaled $119.2 million, compared with 2007 fiscal fourth-quarter revenues of $118.7 million and EBITDA of $81.1 million. Discretionary cash flow was $99.2 million in the 2008 fiscal fourth quarter, compared with $65.3 million in the 2007 fiscal fourth quarter. Fourth-quarter 2008 net cash provided by operating activities totaled $150.2 million, as volumes averaged 26,400 barrels of oil equivalent per day (BOE/d). In the 2007 fiscal fourth quarter, net cash provided by operating activities was $116.6 million and volumes averaged 20,900 BOE/d.
The net realized price received for the company's production in the 2008 fiscal fourth quarter averaged $74.49 per BOE, including a $24.46 per BOE reduction due to hedging, compared with a net realized price of $62.53 per BOE, including a $5.03 per BOE gain from hedging, in the 2007 fiscal fourth quarter.
Fiscal 2008 fourth-quarter net income was $8.2 million, or $0.08 per diluted share, which included a non-cash loss of $2.3 million ($3.4 million pre-tax), or $0.02 per diluted share, for mark-to-market charges on open oil and gas derivative contracts. In the 2007 fiscal fourth quarter, net income was $2.2 million, or $0.02 per diluted share.
"Our operations continued to set new records in the quarter, as we closed our 2008 fiscal year on a strong note," Energy XXI Chairman and CEO John Schiller said. "Our core producing properties have delivered solid results, while high-potential exploration prospects position Energy XXI to significantly increase reserves and production moving forward. In addition, we started the new fiscal year in a strong financial position following the June 20 completion of the warrant tender."
In June, Energy XXI completed its previously announced warrant tender offer, generating cash proceeds of approximately $237 million. Following its June 30 year-end, the company utilized a portion of the cash to purchase a total of $67.5 million total face amount of its June 2013 bonds for $58.8 million.
EXPLORATION DRILLING UPDATE
The Cote de Mer prospect, which commenced drilling in Vermillion Parish, Louisiana in February 2007, has been drilled to a true vertical depth (TVD) of 20,548 feet on its way to the proposed TVD of 21,000 feet. Energy XXI holds a 33 percent working interest (WI) and a 24 percent net revenue interest (NRI). Nexen Inc. (NYSE:NXY) operates the well with a 35 percent WI and 25 percent NRI. Private partners have the remaining interests.
"Preliminary indications at Cote de Mer are very encouraging," Energy XXI President and Chief Operating Officer Steve Weyel said. "We believe we are in the primary gas objective. Logging operations, which were delayed by Hurricane Gustav and the approaching Hurricane Ike, will give us an idea of what we've encountered and then we plan to drill ahead. Once we have obtained a log over the objective interval we will update the market with a full drilling update."
Other high-potential wells in progress include the Kaplan and Blackbeard West prospects. The Kaplan prospect, being drilled with the Green & Broussard #1ST well in Vermillion Parish, Louisiana, (100 percent WI, 65 percent NRI), began drilling on March 28, 2008 and is currently preparing to sidetrack at 14,774 feet TVD as a result of problems encountered with the liner top, drilling toward a proposed 18,500 feet TVD. The Blackbeard West prospect (20 percent WI, 16 percent NRI), being drilled with the South Timbalier Block 168 No. 1 exploratory well in 70 feet of water offshore Louisiana, was reentered on March 18, 2008, and has been drilled below 32,550 feet to evaluate potentially significant targets. The well is permitted to 35,000 feet. Previous logs indicated that the well has encountered potential hydrocarbon bearing zones. Details regarding any sands, zones and hydrocarbons encountered, generally required to be reported under the London Stock Exchange's AIM regulations, are withheld due to certain contractual restrictions. Energy XXI's investment in the South Timbalier Block 168 No. 1 well totaled approximately $19 million at Sept. 9, 2008.
CAPITAL EXPENDITURES
During the 2008 fiscal fourth quarter ended June 30, capital expenditures totaled $96.1 million, bringing full-year capital expenditures to $330.1 million (excluding acquisitions), which included $114.6 million for exploration, $205.7 million for development activity and $9.8 million for other spending. Additionally, the company spent approximately $40 million on producing property acquisitions. The company drilled 18 exploration wells and 10 development wells for a success rate of 33 percent and 80 percent, respectively. Energy XXI has budgeted capital expenditures for fiscal year 2009 at $380 million excluding acquisitions, with about $184 million for exploration, $194 million for development activity, and $2 million for other spending.
YEAR-END RESERVES
Proved reserves at June 30, 2008 totaled 51.5 million BOE, compared with 55.6 million BOE booked at June 30, 2007. During fiscal year 2008, Energy XXI added 3.8 million BOE of proved reserves through discoveries and extensions of existing fields and 1.7 million BOE through acquisitions, while producing 9.6 million BOE.
"From our foundation three years ago, Energy XXI has relied upon acquisitions to add reserves, augmented by a strong development program," Schiller said. "Without a significant acquisition in our 2008 fiscal year, our proved reserves declined modestly. Looking ahead, with the exploration program just now beginning to mature, the high-potential wells in our current drilling program could make this a watershed year for Energy XXI, offering organic reserve growth in addition to the core acquisition strategy."
FISCAL 2008 SUMMARY
"Energy XXI entered the new fiscal year in the best position in our three-year history, based on the many accomplishments of fiscal 2008," Schiller said. "The development program delivered strong production volumes and cash flows, the exploration program is looking very encouraging, and our capital structure is greatly improved following the warrant tender in June, which added nearly $240 million of cash to the balance sheet while essentially eliminating the warrant overhang. We are optimistic about the opportunities we are pursuing in fiscal 2009, tempered only by the impact of hurricanes on our operating results."
HURRICANE GUSTAV OPERATIONAL UPDATE
Inspections to date have revealed limited damage to company facilities from Hurricane Gustav, although additional sub-sea assessments and systems tests are needed before the full extent of damage will be known. Widespread electrical power outages and extensive road and waterway closures in south Louisiana have restricted access to shore bases and critical third-party services, delaying the resumption of operations.
Damage assessments to date indicate that the company's total clean-up and repair costs will be capped at its $7.5 million insurance deductible. There have been no reported injuries to personnel. Lost-time rig expenses are estimated to total $4 million net to the company to date. Energy XXI does not purchase business interruption insurance.
As of today, Sept. 9, the company's production has ramped up to about 10,000 barrels of oil equivalent per day, or approximately 38 percent of pre-storm levels. Restoration efforts are expected to continue until Wednesday, Sept. 10, when Energy XXI anticipates shutting in production and evacuating personnel ahead of Hurricane Ike, which is forecast to enter the Gulf of Mexico. Due to the effects of Hurricane Gustav and the expected shut-down ahead of Hurricane Ike, Energy XXI estimates that September production will average less than 10,000 BOE/d. Production shut-ins could continue beyond September, depending on the return to service of third-party pipelines, including any further storm-related delays in repairing the systems.
Timeline * Aug. 26 - The barge rig on the Cote de Mer prospect suspended efforts to acquire logs on the well and began preparing to move to safe harbor in advance of Hurricane Gustav; * Aug. 29 - Energy XXI began shutting in virtually all of its oil and natural gas production and evacuating facilities and the seven remaining drilling rigs under contract; * Aug. 30 - All remaining employees and contractors were safely evacuated by mid day; * Sept. 1 - Hurricane Gustav passed directly over the company's South Pass 49 and South Timbalier 21 fields and made landfall just west of Port Fourchon, Louisiana, which serves as a critical industry shore base; * Sept. 2 - An airplane flyover found no apparent major damage to the company's key offshore facilities, although observations from such high-speed flyovers are limited; * Sept. 4 - Some essential personnel began returning to offshore facilities to conduct inspections and begin restoring production as company and third-party downstream operations safely allowed; inspections of the Rabbit Island field facilities revealed no significant damage, but production is delayed due to the unavailability of third-party pipeline facilities; with no significant rig damage, rigs drilling the company's Kaplan, Ensminger and Belle Isle prospects and a South Timbalier 21 development well safely staffed up and resumed operations, while personnel began returning to the rig drilling the Blackbeard West prospect; * Sept. 5 - Additional crews arrived at the company's key properties offshore Louisiana to further assess damage and to begin restoring production as company and third-party downstream operations safely allowed; all contracted rigs except the barge rig for the Cote de Mer well were staffed and in operation; * Sept. 6 - A small tripod structure at South Timbalier 21, which had been contributing a combined 300 BOE/d net to the company's production, was confirmed to be significantly damaged; all key Main Pass, South Pass, East Cameron and Eugene Island facilities were determined safe to place back into operations once take-away pipeline and processing services were available; * Sept. 7 to Current - Damage assessment and repairs, testing and operational restoration efforts continued.
Key Field Status
All of the company's key fields are expected to be restored to production once third-party take-away pipelines are placed back in service, although some may flow at constrained levels for an extended period while portions of the pipeline systems remain under repair. The current status of key fields follows.
Eastern Gulf Fields
* Main Pass 61 - The A/B/C platforms were placed back online as of
Sept. 7;
* Main Pass 72/73 - The field was placed back online as of Sept. 7;
* South Pass 49 - All top side facilities are ready to flow; there is
an apparent leak in the third-party-operated oil sales line and
water damage at a related third-party facility at South Pass 24.
Central Gulf Fields
* South Timbalier 21:
-- The ST-56/126 structure is under water; divers are on location
assessing damage;
-- The ST-21 D&H platform's 6-inch departing gas sales line and
14-inch low-pressure gas loop line are damaged; divers are
performing damage assessments;
-- All other damage appears minor; crews are beginning repairs of
hand rails, grating and control panels; all in-field flow lines
and pipelines are being tested for leaks; five lift boats are
under contract and on location to assess and begin repairing
damage;
-- The Gulf South take-away pipeline that handles most of the
natural gas production from South Timbalier 21 sustained damage
at Timbalier Island and is expected to be off-line for an
extended period.
* East Cameron 334/335, South Marsh Island 128, Eugene Island 330 --
These fields were returned to partial production Sept. 8 following
restart of the third-party take-away pipeline; apparent leaks on
two other third-party gas sales lines are restricting full
production volumes.
Onshore/Gulf Coast Fields
* Rabbit Island - The field facilities incurred no significant damage;
production began ramping back up Sept. 9;
* Lake Salvador - No significant damage was incurred; production
began ramping back up Sept. 4;
* Laphroaig - No significant damage was incurred; full production
returned Sept. 5.
CONFERENCE CALL TOMORROW AT 9 A.M. CDT, 3 P.M. LONDON TIME
Energy XXI will host its year-end conference call tomorrow, Wednesday, Sept. 10, 2008, at 9 a.m. CDT (3 p.m. London time). The dial-in number is 1 (913) 312-0969 in the United States and 08000 517 166 in the United Kingdom, and the confirmation code is 8468299. For complete instructions on how to actively participate in the conference call, or to listen to the live audio webcast or a replay, visit 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 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. To learn more, visit the Energy XXI website at www.energyxxi.com.
The Energy XXI logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=3587
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.
Quarter Ended Year Ended
June 30, June 30,
----------------------------------------
2008 2007 2008 2007
----------------------------------------
Net Income as Reported $8,220 $2,208 $26,869 $24,130
Total other (income)
expense 23,418 20,366 101,857 58,420
Depreciation, depletion
and amortization 83,462 57,873 307,389 145,928
Provision for income
taxes 4,127 689 14,874 12,665
----------------------------------------
EBITDA $119,227 $81,136 $450,989 $241,143
========================================
EBITDA Per Share
Basic $1.31 $0.96 $5.26 $2.87
Diluted $1.16 $0.92 $5.00 $2.87
Weighted Average Number
of Common Shares
Outstanding
Basic 90,777 84,158 85,809 83,959
Diluted 103,045 88,621 90,271 83,959
------------------------------------------------------------------
Net Income as Reported $8,220 $2,208 $26,869 $24,130
Deferred income tax
expense 4,127 1,554 14,874 13,530
Change in derivative
financial instruments 275 1,254 1,086 11,759
Accretion of asset
retirement obligations 2,516 1,372 8,176 3,991
Depreciation, depletion
and amortization 83,462 57,873 307,389 145,928
Amortization and write
-off of debt issuance
costs 585 1,047 4,273 7,045
Common stock issued to
Directors for services -- -- 67 --
----------------------------------------
Discretionary Cash Flow $99,185 $65,308 $362,734 $206,383
========================================
ENERGY XXI (BERMUDA) LIMITED
CONSOLIDATED BALANCE SHEETS
(In Thousands, except share information)
(Unaudited)
June 30,
----------------------
ASSETS 2008 2007
----------------------
Current Assets
Cash and cash equivalents $168,962 $19,784
Accounts receivable
Oil and natural gas sales 116,678 55,763
Joint interest billings 21,322 14,377
Insurance and other 4,896 958
Prepaid expenses and other current assets 14,662 21,870
Royalty deposit 4,548 2,175
Deferred income taxes 88,198 --
Derivative financial instruments 2,179 17,131
----------------------
Total Current Assets 421,445 132,058
----------------------
Property and Equipment, net of accumulated
depreciation, depletion, and amortization
Oil and natural gas properties - full cost
method of accounting 1,561,276 1,491,685
Other property and equipment 10,020 3,097
----------------------
Total Property and Equipment 1,571,296 1,494,782
----------------------
Other Assets
Derivative financial instruments 3,747 616
Deferred income taxes 36,055 --
Debt issuance costs, net of accumulated
amortization 17,388 20,986
----------------------
Total Other Assets 57,190 21,602
----------------------
Total Assets $2,049,931 $1,648,442
======================
LIABILITIES
Current Liabilities
Accounts payable $106,751 $79,563
Advances from joint interest partners 7,487 2,026
Accrued liabilities 91,382 33,459
Deferred income taxes -- 1,044
Derivative financial instruments 245,626 1,480
Current maturities of long-term debt 7,250 5,508
----------------------
Total Current Liabilities 458,496 123,080
Long-term debt, less current maturities 944,972 1,045,511
Deferred income taxes -- 14,788
Asset retirement obligations 81,097 63,364
Derivative financial instruments 190,781 4,573
----------------------
Total Liabilities 1,675,346 1,251,316
----------------------
Stockholders' Equity
Preferred stock, $0.01 par value,
2,500,000 shares authorized and no shares
issued at June 30, 2008 and 2007 -- --
Common stock, $0.001 par value,
400,000,000 shares authorized and
145,299,675 and 84,203,444 shares issued
and 144,937,119 and 84,203,444 shares
outstanding at June 30, 2008 and 2007,
respectively 145 84
Additional paid-in capital 601,509 363,206
Retained earnings 57,941 31,072
Accumulated other comprehensive income
(loss), net of income tax expense
(benefit) (285,010) 2,764
----------------------
Total Stockholders' Equity 374,585 397,126
----------------------
Total Liabilities and Stockholders'
Equity $2,049,931 $1,648,442
======================
ENERGY XXI (BERMUDA) LIMITED
CONSOLIDATED STATEMENTS OF INCOME
(In Thousands, except per share information)
(Unaudited)
Quarter Ended Year Ended
June 30, June 30,
-----------------------------------------
2008 2007 2008 2007
-----------------------------------------
Revenues
Crude oil sales $111,657 $71,867 $396,179 $193,749
Natural gas sales 67,105 46,849 247,053 147,535
-----------------------------------------
Total Revenues 178,762 118,716 643,232 341,284
-----------------------------------------
Costs and Expenses
Lease operating expense 39,781 25,166 142,859 68,985
Production taxes 3,699 686 8,686 3,595
Depreciation, depletion
and amortization 83,462 57,873 307,389 145,928
Accretion of asset
retirement obligation 2,516 1,372 8,176 3,991
General and
administrative expense 10,123 10,183 26,450 26,507
Loss (gain) on
derivative financial
instruments 3,416 173 6,072 (2,937)
-----------------------------------------
Total Costs and
Expenses 142,997 95,453 499,632 246,069
-----------------------------------------
Operating Income 35,765 23,263 143,600 95,215
-----------------------------------------
Other Income (Expense)
Interest income 154 311 1,403 1,910
Interest expense (23,572) (20,677) (103,260) (60,330)
-----------------------------------------
Total Other Income
(Expense) (23,418) (20,366) (101,857) (58,420)
-----------------------------------------
Income Before Income
Taxes 12,347 2,897 41,743 36,795
Provision for Income
Taxes 4,127 689 14,874 12,665
-----------------------------------------
Net Income $8,220 $2,208 $26,869 $24,130
=========================================
Earnings per Share
Basic $0.09 $0.03 $0.31 $0.29
Diluted $0.08 $0.02 $0.30 $0.29
Weighted Average Number
of Common Shares
Outstanding
Basic 90,777 84,158 85,809 83,959
Diluted 103,045 88,621 90,271 83,959
ENERGY XXI (BERMUDA) LIMITED
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
(In Thousands)
(Unaudited)
Accumulated
Other
Common Stock Additional Comprehensive Total
------------- Paid-in Retained Income Stockholders'
Shares Value Capital Earnings (Loss) Equity
------------------------------------------------------
Inception,
July 25,
2005 -- $-- $-- $-- $-- $--
Common stock
issued 62,500 63 277,676 277,739
Warrants
exercised 18,145 18 72,562 72,580
Comprehensive
income:
Net income 6,942 6,942
Unrealized
loss on
derivative
financial
instruments,
net of
income tax
benefit (4,552) (4,552)
------
Total
comprehensive
income 2,390
------------------------------------------------------
Balance,
June 30,
2006 80,645 81 350,238 6,942 (4,552) 352,709
Common stock
issued 3,558 3 14,037 14,040
Warrants
repurchased (1,069) (1,069)
Comprehensive
income:
Net income 24,130 24,130
Unrealized
gain on
derivative
financial
instruments,
net of
income tax
expense 7,316 7,316
-----
Total
comprehensive
income 31,446
------------------------------------------------------
Balance,
June 30,
2007 84,203 84 363,206 31,072 2,764 397,126
Common stock
issued 16 568 568
Restricted
shares issued 293
Warrants
exercised 259 1,292 1,292
Warrant
exchange 60,529 61 236,463 236,524
Warrants
repurchased (20) (20)
Comprehensive
income (loss):
Net income 26,869 26,869
Unrealized
loss on
derivative
financial
instruments,
net of
income tax
benefit (287,774) (287,774)
---------
Total
comprehensive
loss (260,905)
------------------------------------------------------
Balance,
June 30,
2008 145,300 $145 $601,509 $57,941 $(285,010) $374,585
======================================================
ENERGY XXI (BERMUDA) LIMITED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
(Unaudited)
Quarter Ended Year Ended
June 30, June 30,
--------------------------------------------
2008 2007 2008 2007
--------------------------------------------
Cash Flows From
Operating
Activities
Net income $8,220 $2,208 $26,869 $24,130
Adjustments to reconcile
net income to net cash
provided by (used in)
operating activities:
Deferred income tax
expense 4,127 1,554 14,874 13,530
Change in derivative
financial instruments 275 1,254 1,086 11,759
Accretion of asset
retirement
obligations 2,516 1,372 8,176 3,991
Depletion,
depreciation, and
amortization 83,462 57,873 307,389 145,928
Amortization and
write-off of debt
issuance costs-net 585 1,047 4,273 7,045
Common stock issued
for Directors'
compensation -- -- 67 --
Changes in operating
assets and
liabilities
Accounts receivable (18,199) (19,349) (66,341) 16,458
Prepaid expenses and
other current assets 3,029 26,831 4,835 (12,670)
Accounts payable and
other liabilities 66,202 43,841 86,324 65,226
--------------------------------------------
Net Cash Provided
by Operating
Activities 150,217 116,631 387,552 275,397
--------------------------------------------
Cash Flows from Investing
Activities
Acquisitions (1,081) (415,137) (40,016) (717,618)
Capital expenditures (96,076) (180,876) (330,078) (431,827)
Proceeds from the sale
of oil and natural gas
properties -- -- -- 1,400
Other (161) (778) (296) 555
--------------------------------------------
Net Cash Used in
Investing
Activities (97,318) (596,791) (370,390) (1,147,490)
--------------------------------------------
Cash Flows from Financing
Activities
Proceeds from the
issuance of common
stock 469 873 501 14,040
Proceeds from long-term
debt 106,000 835,444 310,135 1,199,444
Proceeds from exchange
of warrants 237,796 -- 237,796 --
Payments on long-term
debt (230,000) (325,155) (410,159) (349,780)
Payments on put
financing (1,280) (1,764) (5,574) (8,794)
Debt issuance costs -- (19,599) (675) (24,353)
Other 12 (32) (8) (1,069)
--------------------------------------------
Net Cash Provided
by Financing
Activities 112,997 489,767 132,016 829,488
--------------------------------------------
Net Increase (Decrease)
in Cash and Cash
Equivalents 165,896 9,607 149,178 (42,605)
Cash and Cash
Equivalents, beginning
of year/period 3,066 10,177 19,784 62,389
--------------------------------------------
Cash and Cash
Equivalents, end of
year/period $168,962 $19,784 $168,962 $19,784
============================================
ENERGY XXI (BERMUDA) LIMITED
CONSOLIDATED OPERATING RESULTS
(In Thousands, except per unit amounts)
(Unaudited)
Period
from
Inception
July 25,
2005
Year Ended June 30, Through
------------------- June 30,
2008 2007 2006
------------------------------------
Operating revenues
Crude oil sales $484,552 $177,783 $29,751
Natural gas sales 237,628 131,065 15,934
Hedge gain (loss) (78,948) 32,436 1,427
------------------------------------
Total revenues 643,232 341,284 47,112
------------------------------------
Percent of operating
revenues from crude
oil
Prior to hedge gain
(loss) 67.1% 57.6% 67.3%
Including hedge gain
(loss) 61.6% 56.8% 62.0%
Operating expenses
Lease operating expense
Insurance expense 18,218 12,670 144
Workover and
maintenance 22,397 8,269 166
Direct lease operating
expense 102,244 48,046 9,592
------------------------------------
Total lease operating
expense 142,859 68,985 9,902
Production taxes 8,686 3,595 84
Depreciation, depletion
and amortization 307,389 145,928 20,357
General and
administrative 26,450 26,507 4,361
Other - net 14,248 1,054 806
------------------------------------
Total operating
expenses 499,632 246,069 35,510
------------------------------------
Operating income $143,600 $95,215 $11,602
====================================
Sales volumes per day
Natural gas (MMcf) 75.7 50.3 27.9
Crude oil (MBbls) 13.5 7.8 5.1
Total (MBOE) 26.2 16.2 9.7
Percent of sales volumes
from crude oil 51.8% 48.2% 52.1%
Average sales price
Natural gas per Mcf $8.57 $7.13 $6.48
Hedge gain (loss) per
Mcf 0.34 0.90 0.86
------------------------------------
Total natural gas per
Mcf $8.91 $8.03 $7.34
====================================
Crude oil per Bbl $97.72 $62.33 $66.64
Hedge gain (loss) per
Bbl (17.82) 5.60 (1.56)
------------------------------------
Total crude oil per
Bbl $79.90 $67.93 $65.08
====================================
Total hedge gain
(loss) per BOE $(8.24) $5.48 $1.67
====================================
Operating revenues per
BOE $67.16 $57.71 $55.02
------------------------------------
Operating expenses per
BOE
Lease operating expense
Insurance expense 1.90 2.14 0.17
Workover and
maintenance 2.34 1.40 0.19
Direct lease operating
expense 10.68 8.12 11.20
------------------------------------
Total lease operating
expense 14.92 11.66 11.56
Production taxes 0.91 0.61 0.10
Depreciation,
depletion and
amortization 32.09 24.68 23.78
General and
administrative 2.76 4.48 5.09
Other - net 1.49 0.18 0.94
------------------------------------
Total operating
expenses 52.17 41.61 41.47
------------------------------------
Operating income per BOE $14.99 $16.10 $13.55
====================================
ENERGY XXI (BERMUDA) LIMITED
CONSOLIDATED OPERATING RESULTS
(In Thousands, except per unit amounts)
(Unaudited)
Quarter Ended
-------------------------------------------------
June 30, Mar. 31, Dec. 31, Sept. 30, June 30,
2008 2008 2007 2007 2007
-------------------------------------------------
Operating revenues
Crude oil sales $160,118 $126,660 $108,487 $89,287 $66,716
Natural gas sales 77,356 61,675 53,759 44,838 42,453
Hedge gain (loss) (58,712) (21,198) (8,521) 9,483 9,547
-------------------------------------------------
Total revenues 178,762 167,137 153,725 143,608 118,716
-------------------------------------------------
Percent of operating
revenues from crude
oil
Prior to hedge gain
(loss) 67.4% 67.3% 66.9% 66.6% 61.1%
Including hedge
gain (loss) 62.5% 62.0% 60.7% 61.0% 60.5%
Operating expenses
Lease operating
expense
Insurance expense 3,932 4,642 4,812 4,832 2,489
Workover and
maintenance 6,741 5,447 4,489 5,720 5,532
Direct lease
operating expense 29,108 28,253 24,742 20,141 17,145
-------------------------------------------------
Total lease
operating expense 39,781 38,342 34,043 30,693 25,166
Production taxes 3,699 1,755 1,272 1,960 686
Depreciation,
depletion and
amortization 83,462 75,268 75,406 73,253 57,873
General and
administrative 10,123 4,912 5,644 5,771 10,183
Other - net 5,932 4,611 903 2,802 1,545
-------------------------------------------------
Total operating
expenses 142,997 124,888 117,268 114,479 95,453
-------------------------------------------------
Operating income $35,765 $42,249 $36,457 $29,129 $23,263
=================================================
Sales volumes per day
Natural gas (MMcf) 67.9 73.3 78.1 83.5 60.0
Crude oil (MBbls) 15.1 13.9 13.0 12.3 10.9
Total (MBOE) 26.4 26.1 26.0 26.2 20.9
Percent of sales
volumes from crude
oil 57.2% 53.3% 50.0% 46.9% 52.2%
Average sales price
Natural gas per Mcf $12.52 $9.25 $7.48 $5.83 $7.78
Hedge gain (loss)
per Mcf (1.66) 0.28 0.93 1.46 0.80
-------------------------------------------------
Total natural gas
per Mcf $10.86 $9.53 $8.41 $7.29 $8.58
=================================================
Crude oil per Bbl $116.90 $100.10 $90.71 $79.19 $67.46
Hedge gain (loss)
per Bbl (35.38) (18.20) (12.68) (1.52) 5.21
-------------------------------------------------
Total crude oil
per Bbl $81.52 $81.90 $78.03 $77.67 $72.67
=================================================
Total hedge gain
(loss) per BOE $(24.46) $(8.92) $(3.56) $3.94 $5.03
=================================================
Operating revenues
per BOE $74.49 $70.33 $64.24 $59.63 $62.53
-------------------------------------------------
Operating expenses
per BOE
Lease operating
expense
Insurance expense 1.64 1.95 2.01 2.00 1.31
Workover and
maintenance 2.81 2.29 1.88 2.38 2.91
Direct lease
operating expense 12.13 11.89 10.34 8.36 9.03
-------------------------------------------------
Total lease
operating expense 16.58 16.13 14.23 12.74 13.25
Production taxes 1.54 0.74 0.53 0.81 0.36
Depreciation,
depletion and
amortization 34.78 31.67 31.51 30.42 30.48
General and
administrative 4.22 2.07 2.36 2.40 5.37
Other - net 2.47 1.94 0.38 1.16 0.82
-------------------------------------------------
Total operating
expenses 59.59 52.55 49.01 47.53 50.28
-------------------------------------------------
Operating income per
BOE $14.90 $17.78 $15.23 $12.10 $12.25
=================================================
ENERGY XXI (BERMUDA) LIMITED
CONSOLIDATED COSTS INCURRED, CAPITAL EXPENDITURES AND PROVED RESERVES
(In Thousands)
(Unaudited)
Period from
Inception
Year Ended June 30, July 25, 2005
------------------- Through
2008 2007 June 30, 2006
--------------------------------------
Oil and Gas Activities
Property acquisition
Proved $51,898 $632,707 $393,087
Unproved 1,892 134,340 50,840
Exploration costs 114,639 67,140 --
Development costs 205,681 362,219 18,002
--------------------------------------
Costs incurred for oil and
gas activities 374,110 1,196,406 461,929
Administrative and Other 9,758 2,468 1,701
--------------------------------------
Total costs incurred 383,868 1,198,874 463,630
Less acquisitions (40,016) (717,618) (448,374)
Less asset retirement
obligations and other - net (13,774) (49,429) 4,447
--------------------------------------
Capital expenditures $330,078 $431,827 $19,703
======================================
Crude Oil Natural Gas Total
(MBbls) (MMcf) (MBOE)
--------------------------------------
Proved reserves at inception
July 25, 2005 -- -- --
Production (446) (2,459) (856)
Revisions of previous
estimates 106 436 179
Purchases of minerals in
place 14,160 66,674 25,272
--------------------------------------
Proved reserves at June 30,
2006 13,820 64,651 24,595
Production (2,852) (18,369) (5,914)
Extensions and discoveries 4,726 37,235 10,932
Revisions of previous
estimates (523) (16,233) (3,229)
Sales of reserves (224) (991) (389)
Purchases of minerals in place 15,393 85,539 29,650
--------------------------------------
Proved reserves at June 30,
2007 30,340 151,832 55,645
Production (4,959) (27,716) (9,578)
Extensions and discoveries 2,520 7,410 3,755
Revisions of previous estimates 1,909 (11,033) 70
Sales of reserves (21) (141) (45)
Purchases of minerals in place 176 8,846 1,651
--------------------------------------
Proved reserves at June 30,
2008 29,965 129,198 51,498
======================================
Proved developed reserves
June 30, 2006 8,922 42,246 15,963
June 30, 2007 20,978 96,751 37,103
June 30, 2008 19,793 77,991 32,792
ENERGY XXI (BERMUDA) LIMITED
SUMMARY OF HEDGE POSITIONS AS OF SEPTEMBER 9, 2008
Natural Gas (000 MMBTU)
-------------------------------------------------------------
Average
-----------------------
Qtr Instrument Volume Sub Floor Cap
--- ---------- ------ --- ----- ---
Q109 Swaps 2,460 8.90 8.90
3 Way Collars 740 5.79 7.69 10.04
Collars 744 7.97 10.46
Puts 120 8.00
Put Spreads 1,880 5.84 7.68
Q209 Swaps 1,580 8.82 8.82
3 Way Collars 950 5.67 7.45 10.09
Collars 685 7.97 10.43
Puts 110 8.00
Put Spreads 1,780 6.00 7.91
Q309 Swaps 2,080 8.46 8.46
3 Way Collars 1,040 6.00 8.09 9.97
Collars 302 7.72 9.96
Put Spreads 900 6.50 8.50
Q409 Swaps 1,830 8.46 8.46
3 Way Collars 930 6.00 8.10 9.96
Collars 289 7.73 9.91
Put Spreads 910 6.50 8.50
Q110 Swaps 1,770 8.47 8.47
3 Way Collars 820 6.00 8.11 9.96
Collars 137 8.00 8.85
Put Spreads 920 6.50 8.50
Q210 Swaps 1,580 8.47 8.47
3 Way Collars 740 6.00 8.12 9.95
Collars 137 8.00 8.85
Put Spreads 920 6.50 8.50
Q310 Swaps 1,700 8.12 8.12
3 Way Collars 490 6.00 8.18 9.93
Q410 Swaps 1,500 8.12 8.12
3 Way Collars 460 6.00 8.20 9.92
Q111 Swaps 1,380 8.12 8.12
3 Way Collars 440 6.00 8.20 9.92
Q211 Swaps 1,280 8.12 8.12
3 Way Collars 420 6.00 8.21 9.91
Crude Oil (000 BBL)
-------------------------------------------------------------
Average
-----------------------
Qtr Instrument Volume Sub Floor Cap
--- ---------- ------ --- ----- ---
Q109 Swaps 541 82.60 82.60
3 Way Collars 205 54.12 67.44 78.99
Collars 55 60.00 78.00
Puts 27 60.00
Put Spreads 183 85.00 110.00
Q209 Swaps 472 78.88 78.88
3 Way Collars 184 54.02 67.40 79.09
Collars 162 70.28 96.67
Puts 26 60.00
Put Spreads 276 85.00 110.00
Q309 Swaps 325 70.85 70.85
3 Way Collars 170 53.94 67.24 78.94
Collars 233 76.74 107.25
Put Spreads 270 85.00 110.00
Q409 Swaps 303 70.86 70.86
3 Way Collars 137 53.69 67.37 79.66
Collars 220 76.67 107.17
Put Spreads 273 85.00 110.00
Q110 Swaps 277 70.97 70.97
3 Way Collars 111 53.38 67.52 80.49
Collars 211 76.58 107.07
Put Spreads 276 85.00 110.00
Q210 Swaps 257 71.01 71.01
3 Way Collars 87 52.93 67.70 81.64
Collars 201 76.51 106.99
Put Spreads 276 85.00 110.00
Q310 Swaps 238 70.86 70.86
3 Way Collars 68 52.35 67.35 82.05
Collars 190 76.53 104.76
Q410 Swaps 215 70.89 70.89
3 Way Collars 60 52.00 67.00 82.04
Collars 174 76.49 104.68
Q111 Swaps 193 70.93 70.93
3 Way Collars 52 51.54 66.54 82.03
Collars 156 76.48 104.66
Q211 Swaps 171 70.96 70.96
3 Way Collars 45 50.95 65.95 82.02
Collars 146 76.50 104.69
Includes production for July 2008 and later; Quarters based on
June 30 fiscal year-end
All prices are weight-averaged by contract volume
Operations Report
--------------------------------------------------------------
EXXI Fiscal 4th Quarter Drilling Report
Exploration Development Total
Gross Net Gross Net Gross Net
Operated
Oil 0 0 1 0.50 1 0.50
Gas 0 0 0 0 0 0
Dry 2 0.78 0 0 2 0.78
Non-Operated
Oil 0 0 0 0 0 0
Gas 1 0.18 2 0.72 3 0.90
Dry 1 0.50 0 0 1 0.50
===============================================
Total 4 1.45 3 1.22 7 2.68
Exploration Development Total
Success Rates 25% 12% 100% 100% 57% 52%
Exploration Development Total
Onshore 1 2 3
Offshore 3 1 4
===============================================
Total 4 3 7
--------------------------------------------------------------
--------------------------------------------------------------
EXXI Fiscal Year 2008 Drilling Report
Exploration Development Total
Gross Net Gross Net Gross Net
Operated
Oil 0 0 5 4.50 5 4.50
Gas 0 0 0 0 0 0
Dry 3 1.78 2 2 5 3.78
Non-Operated
Oil 0 0 0 0 0 0
Gas 6 2.03 3 0.89 9 2.91
Dry 9 3.26 0 0 9 3.26
===============================================
Total 18 7.06 10 7.39 28 14.45
Exploration Development Total
Success Rates 33% 29% 80% 73% 50% 51%
Exploration Development Total
Onshore 15 5 20
Offshore 3 5 8
===============================================
Total 18 10 28
--------------------------------------------------------------
GULF OF MEXICO SHELF HIGHLIGHTS
South Timbalier 21
During the 2008 fiscal fourth quarter, South Timbalier 21 (100 percent WI) net production averaged 7,800 BOE/d, down from the fiscal third quarter's 8,500 BOE/d net rate due to natural declines following completion of the field's fiscal 2008 drilling program.
For the full 2008 fiscal year, South Timbalier net production averaged 7,900 BOE/d, compared with the 2007 fiscal year average of 9,100 BOE/d. The fiscal 2008 capital program included approximately $80 million for three development wells, two workovers and facilities spending, down from about $200 million invested the previous year. The company expects to spend approximately $60 million in fiscal 2009 for two development wells, one exploration well, two workovers and two facility projects.
Main Pass 61/72, East Cameron 334/335, South Pass 49
Fiscal fourth-quarter net production from properties acquired from Pogo in June 2007 averaged 10,700 BOE/d, an approximate 11 percent increase over the fiscal third quarter's average of 9,600 BOE/d. Since being acquired, these properties have increased net production approximately 35 percent. Among highlights for the fiscal fourth quarter:
* The MP 61 B-6 (50 percent WI) development well was drilled to a 7,931 foot TVD, logging 122 net feet of oil pay in the J-6 sand and coming online May 8 at a gross rate of 2,567 BOE/d; * The MP 72 MP147 #1 (50 percent WI) well was drilled to 8,160 foot TVD and sidetracked to MP 73 #7 ST1, where the well was drilled to a 6,906 foot TVD, ultimately logging 30 net feet of oil pay in the BA-2 sand. The well has been completed and is scheduled to come online through a subsea tie-back in the fourth quarter of fiscal year 2009.
In fiscal year 2009, the company expects to accelerate development of the Main Pass 61/72, East Cameron 334/335 and South Pass 49 properties:
* MP 61/72 (50 percent WI) - $40 million is budgeted for five development wells and 11 recompletion projects; * EC 334/335 (52 percent WI) - $32 million is budgeted for two exploration wells, two development wells and four recompletion projects; * SP 49 (22 percent WI) - $14 million is budgeted for three development wells and four facility projects.
SOUTH LOUISIANA ONSHORE HIGHLIGHTS
Lake Salvador
To date, the company has spent approximately $47 million in Lake Salvador (50 percent WI) and achieved an overall success rate of 75 percent, including 70 percent on 10 exploration wells and 100 percent on two development wells. In fiscal year 2008, net production averaged 1,724 BOE/d, an approximate 47 percent increase over the previous year's net production of 1,170 BOE/d. In fiscal year 2009, the company has budgeted approximately $5 million to drill two shallow exploration wells in the Lake Salvador area.
Bayou Carlin
The C. M. Peterson Jr. #1 (31% WI) (Laphroaig Discovery) in St. Mary Parish, which commenced production Aug. 15, 2007, is continuing to flow more than 40 MMcf/d and 700 BOPD gross with nearly 10,000 psig FTP more than a year after start-up. With no water production to date, gross production of nearly 2 million BOE of proved reserves since start-up has been replaced through performance revisions that moved probables into the proved category.
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.