HOUSTON, May 5, 2009 (GLOBE NEWSWIRE) -- Energy XXI (Bermuda) Limited (Nasdaq:EXXI) (LSE:EXXI) today announced fiscal third-quarter results for the period ended March 31, 2009. Net cash provided by operating activities was $86.2 million and impairment-adjusted earnings before interest, taxes, depreciation, depletion and amortization (EBITDA) was $65.8 million, compared with $112.5 million and $117.5 million, respectively, in the 2008 fiscal third quarter.
"Energy XXI grew production 8 percent over the December quarter without the anticipated resumption of hurricane-affected volumes," Energy XXI Chairman and CEO John Schiller said. "While industry conditions weakened further since year-end, leading to a non-cash write-down of the carrying value of our reserves, operating results have been solid. Development activity added cost-effective volumes, while our exploration program delivered a discovery at the Cote de Mer prospect and continues to offer large reserve growth potential. Meanwhile, we have retained financial liquidity, with more than $90 million of cash and hedge-protected cash flow that supports our goal of further reducing bank debt during our 2010 fiscal year, which begins July 1, 2009."
Inclusive of a $117.9 million ceiling test impairment ($.82 per share), the company reported a 2009 fiscal third-quarter net loss of $120.6 million, or $.84 per share, on revenues of $106.1 million and production of 20,700 barrels of oil equivalent (BOE) per day. In the 2008 fiscal third quarter, the company had net income of $10.3 million, or $.12 per diluted share, on revenues of $167.1 million and production of 26,100 BOE per day. The net realized price received for the company's production in the 2009 fiscal third quarter averaged $57.04 per BOE, compared with $70.33 per BOE in the 2008 fiscal third quarter.
CAPITAL EXPENDITURES
During the 2009 fiscal third quarter, capital expenditures totaled $60.5 million, with $27.3 million in exploration and $33.1 million in development. Excluding abandonment costs and hurricane-related spending, the company expects capital expenditures to remain within the previously announced range, at about $260 million for fiscal 2009.
PRODUCTION UPDATE
Energy XXI production volumes continue to be curtailed by damage inflicted by Hurricanes Gustav and Ike. In addition to a 2,000 BOE per day long-term reduction due to the loss of facilities serving two non-operated fields, approximately 2,000 BOE per day remains off-line awaiting repair or replacement of third-party-operated pipelines, which currently is projected to be complete in September. The company's current net production is approximately 18,000 BOE per day.
EXPLORATION AND DEVELOPMENT ACTIVITY
As previously announced, the E.A. McIlhenny #1 well on the Cote de Mer prospect in Vermilion Parish, Louisiana, was drilled to 22,300 feet, discovering gross proved natural gas reserves of 88.8 billion cubic feet equivalent. The well has since been completed in the Cris-A 4C sand and flowed at a stabilized, constrained rate of 15.0 million cubic feet per day of natural gas through a 12/64ths inch choke with a flowing tubing pressure of 14,500 psi. Depending on the pace of permitting for a take-away pipeline lateral, the well is expected to be placed on production within four to six months. Energy XXI holds a 33 percent working interest (WI) and a 24 percent net revenue interest (NRI) in the discovery.
The Ammazzo deep gas exploratory prospect (16 percent WI, 13 percent NRI) is drilling ahead below 23,000 feet towards a proposed total depth of 24,500 feet. The Ammazzo prospect is located in 25 feet of water offshore Louisiana, approximately 15 miles south of the Flatrock and JB Mountain discoveries.
At the South Timbalier Block 168 No. 1 exploratory well, targeting the Blackbeard West prospect (20 percent WI, 16 percent NRI) in 70 feet of water offshore Louisiana, Energy XXI and its partners are proceeding with plans to conduct a production test of four potential hydrocarbon-bearing zones. Additional drilling opportunities on the flanks of the structure and on other acreage in the ultra-deep trend are being reviewed.
At the company's 100 percent owned South Timbalier 21 field, the Gouda well was sidetracked to 12,730 feet, logging 90 net feet of oil and gas pay sands updip of the original wellbore. Completion operations are underway, and the well is expected to be on production during the current quarter.
Further detail on the exploration and development program is provided in the attached Operations Report.
CONFERENCE CALL TOMORROW AT 10 A.M. EDT, 3 P.M. LONDON TIME
Energy XXI will host its third-quarter conference call tomorrow, Wednesday, May 6, 2009, at 10 a.m. EDT (3 p.m. London time). The dial-in numbers are 1 (913) 312-1237 (U.S.) and 08000 517 166 (U.K.), and the confirmation code is 8430955. 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 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.
Three Months Ended Nine Months Ended March 31, March 31, ---------------------------------------- 2009 2008 2009 2008 ---------------------------------------- Net Income (Loss) as Reported $(120,618) $10,287 $(554,472) $18,649 Total other (income) expense 17,663 25,710 57,698 78,439 Impairment of oil and gas properties 117,887 -- 576,996 -- Depreciation, depletion and amortization 50,052 75,268 177,463 223,927 Income tax expense (benefit) 841 6,252 (47,204) 10,747 ---------------------------------------- EBITDA $65,825 $117,517 $210,481 $331,762 ======================================== EBITDA Per Share Basic $0.46 $1.40 $1.46 $3.94 Diluted $0.46 $1.40 $1.46 $3.89 Weighted Average Number of Common Shares Outstanding Basic 144,331 84,141 144,430 84,139 Diluted 144,331 84,141 144,430 85,259 --------------------------------------------------------------------- Net Income (Loss) as Reported $(120,618) $10,287 $(554,472) $18,649 Deferred income tax expense (benefit) 840 6,252 (47,921) 10,747 Change in derivative financial instruments 69,077 1,319 59,215 811 Accretion of asset retirement obligations 4,723 1,911 9,617 5,660 Impairment of oil and gas properties 117,887 -- 576,996 -- Depletion, depreciation, and amortization 50,052 75,268 177,463 223,927 Amortization of debt discount and debt issuance costs - net (1,053) 1,114 (519) 3,688 Common stock issued to Directors for services and common stock option expense 607 -- 1,472 67 ---------------------------------------- Discretionary Cash Flow $121,515 $96,151 $221,851 $263,549 ======================================== ENERGY XXI (BERMUDA) LIMITED CONSOLIDATED BALANCE SHEETS (In Thousands, except share information) March 31, June 30, 2009 2008 ---------------------- ASSETS (Unaudited) Current Assets Cash and cash equivalents $75,369 $168,962 Accounts receivable Oil and natural gas sales 34,312 116,678 Joint interest billings 40,817 21,322 Insurance and other 29,402 4,896 Prepaid expenses and other current assets 29,864 14,662 Royalty deposit 1,803 4,548 Deferred income taxes -- 88,198 Derivative financial instruments 65,138 2,179 ---------------------- Total Current Assets 276,705 421,445 ---------------------- Property and equipment, net of accumulated depreciation, depletion, amortization and impairment Oil and natural gas properties - full cost method of accounting 1,118,323 1,561,276 Other property and equipment 8,845 10,020 ---------------------- Total Property and Equipment - net 1,127,168 1,571,296 ---------------------- Derivative financial instruments 12,479 3,747 ---------------------- Deferred income taxes -- 36,055 ---------------------- Debt issuance costs, net of accumulated amortization 14,130 17,388 ---------------------- Total Assets $1,430,482 $2,049,931 ====================== LIABILITIES Current Liabilities Accounts payable $72,286 $106,751 Note payable 3,167 -- Accrued liabilities 52,491 82,152 Asset retirement obligations 68,656 16,717 Derivative financial instruments 7,506 245,626 Current maturities of long-term debt 5,926 7,250 ---------------------- Total Current Liabilities 210,032 458,496 Long-term debt, less current maturities 879,204 944,972 Deferred income taxes 24,394 -- Asset retirement obligations 97,469 81,097 Derivative financial instruments 2,480 190,781 Other 31,336 -- ---------------------- Total Liabilities 1,244,915 1,675,346 ---------------------- Stockholders' Equity Preferred stock, $0.01 par value, 2,500,000 shares authorized and no shares issued at March 31, 2009 and June 30, 2008 -- -- Common stock, $0.001 par value, 400,000,000 shares authorized and 146,139,929 and 145,299,675 shares issued and 145,317,686 and 144,937,119 shares outstanding at March 31, 2009 and June 30, 2008, respectively 146 145 Additional paid-in capital 604,088 601,509 Retained earnings (deficit) (498,710) 57,941 Accumulated other comprehensive income (loss), net of income taxes 80,043 (285,010) ---------------------- Total Stockholders' Equity 185,567 374,585 ---------------------- Total Liabilities and Stockholders' Equity $1,430,482 $2,049,931 ====================== ENERGY XXI (BERMUDA) LIMITED CONSOLIDATED STATEMENTS OF OPERATIONS (In Thousands, except per share information) (Unaudited) Three Months Ended Nine Months Ended March 31, March 31, ---------------------------------------- 2009 2008 2009 2008 ---------------------------------------- Revenues Oil sales $72,503 $103,627 $221,233 $284,522 Natural gas sales 33,633 63,510 111,499 179,948 ---------------------------------------- Total Revenues 106,136 167,137 332,732 464,470 ---------------------------------------- Costs and Expenses Lease operating expense 24,964 38,342 97,526 103,078 Production taxes 1,587 1,755 5,501 4,987 Impairment of oil and gas properties 117,887 -- 576,996 -- Depreciation, depletion and amortization 50,052 75,268 177,463 223,927 Accretion of asset retirement obligations 4,723 1,911 9,617 5,660 General and administrative expense 6,117 4,912 18,588 16,327 Loss (gain) on derivative financial instruments 2,920 2,700 (8,981) 2,656 ---------------------------------------- Total Costs and Expenses 208,250 124,888 876,710 356,635 ---------------------------------------- Operating Income (Loss) (102,114) 42,249 (543,978) 107,835 ---------------------------------------- Other Income (Expense) Interest income 2,016 348 5,454 1,249 Interest expense (19,679) (26,058) (63,152) (79,688) ---------------------------------------- Total Other Income (Expense) (17,663) (25,710) (57,698) (78,439) ---------------------------------------- Income (Loss) Before Income Taxes (119,777) 16,539 (601,676) 29,396 Income Tax Expense (Benefit) 841 6,252 (47,204) 10,747 ---------------------------------------- Net Income (Loss) $(120,618) $10,287 $(554,472) $18,649 ======================================== Earnings (Loss) Per Share Basic $(0.84) $0.12 $(3.84) $0.22 Diluted $(0.84) $0.12 $(3.84) $0.22 Weighted Average Number of Common Shares Outstanding Basic 144,331 84,141 144,430 84,139 Diluted 144,331 84,141 144,430 85,259 ENERGY XXI (BERMUDA) LIMITED CONSOLIDATED STATEMENTS OF CASH FLOWS (In Thousands) (Unaudited) Three Months Ended Nine Months Ended March 31, March 31, ---------------------------------------- 2009 2008 2009 2008 ---------------------------------------- Cash Flows From Operating Activities Net income (loss) $(120,618) $10,287 $(554,472) $18,649 Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Deferred income tax expense (benefit) 840 6,252 (47,921) 10,747 Change in derivative financial instruments Proceeds from sale of derivative instruments 66,480 -- 66,480 -- Other 2,597 1,319 (7,265) 811 Accretion of asset retirement obligations 4,723 1,911 9,617 5,660 Depreciation, depletion, and amortization 50,052 75,268 177,463 223,927 Impairment of oil and gas properties 117,887 -- 576,996 -- Amortization of debt discount and debt issuance costs - net (1,053) 1,114 (519) 3,688 Common stock issued to Directors for services and common stock option expense 607 -- 1,472 67 Changes in operating assets and liabilities Accounts receivable (9,099) (14,247) 44,509 (48,142) Prepaid expenses and other current assets 2,519 20,676 (10,187) 1,806 Accounts payable and other liabilities (28,703) 9,901 (60,957) 20,122 ---------------------------------------- Net Cash Provided by Operating Activities 86,232 112,481 195,216 237,335 ---------------------------------------- Cash Flows from Investing Activities Acquisitions -- (8,569) -- (38,935) Capital expenditures (60,502) (62,784) (254,870) (234,002) Other 3,183 (102) 2,928 (135) ---------------------------------------- Net Cash Used in Investing Activities (57,319) (71,455) (251,942) (273,072) ---------------------------------------- Cash Flows from Financing Activities Proceeds from the issuance of common stock -- -- -- 32 Dividends to shareholders (726) -- (2,179) -- Proceeds from long-term debt 20,804 21,000 270,794 204,135 Payments on long-term debt (61,029) (70,443) (213,432) (184,453) Purchase of bonds 468 -- (90,887) -- Other (295) (17) (1,163) (695) ---------------------------------------- Net Cash Provided by (Used in) Financing Activities (40,778) (49,460) (36,867) 19,019 ---------------------------------------- Net Decrease in Cash and Cash Equivalents (11,865) (8,434) (93,593) (16,718) Cash and Cash Equivalents, beginning of period 87,234 11,500 168,962 19,784 Cash and Cash Equivalents, ---------------------------------------- end of period $75,369 $3,066 $75,369 $3,066 ======================================== ENERGY XXI (BERMUDA) LIMITED CONSOLIDATED OPERATIONAL INFORMATION (Unaudited) Quarter Ended -------------------------------------------------- Mar. 31, Dec. 31, Sept. 30, June 30, Mar. 31, 2009 2008 2008 2008 2008 -------------------------------------------------- (In thousands except for unit amounts). Operating revenues Crude oil sales $46,492 $53,388 $119,214 $160,118 $126,660 Natural gas sales 20,435 33,111 44,442 77,356 61,675 Hedge gain (loss) 39,209 20,353 (43,912) (58,712) (21,198) -------------------------------------------------- Total revenues 106,136 106,852 119,744 178,762 167,137 -------------------------------------------------- Percent of operating revenues from crude oil Prior to hedge gain (loss) 69.5% 61.7% 72.8% 67.4% 67.3% Including hedge gain (loss) 68.3% 62.4% 68.5% 62.5% 62.0% Operating expenses Lease operating expense Insurance expense 4,980 4,934 4,918 3,932 4,642 Workover and maintenance 341 7,094 3,873 6,741 5,447 Direct lease operating expense 19,643 25,536 26,207 29,108 28,253 -------------------------------------------------- Total lease operating expense 24,964 37,564 34,998 39,781 38,342 Production taxes 1,587 1,878 2,036 3,699 1,755 Impairment of oil and gas properties 117,887 459,109 -- -- -- Depreciation, depletion and amortization 50,052 65,002 62,409 83,462 75,268 General and administrative 6,117 6,236 6,235 10,123 4,912 Other - net 7,643 (7,604) 597 5,932 4,611 -------------------------------------------------- Total operating expenses 208,250 562,185 106,275 142,997 124,888 -------------------------------------------------- Operating income (loss) $(102,114) $(455,333) $13,469 $35,765 $42,249 ================================================== Sales volumes per day Natural gas (MMcf) 49.2 54.4 46.8 67.9 73.3 Crude oil (MBbls) 12.5 10.1 11.0 15.1 13.9 Total (MBOE) 20.7 19.2 18.8 26.4 26.1 Percent of sales volumes from crude oil 60.4% 52.6% 58.5% 57.2% 53.3% Average sales price Natural gas per Mcf $4.62 $6.62 $10.33 $12.52 $9.25 Hedge gain (loss) per Mcf 2.98 1.41 (1.57) (1.66) 0.28 -------------------------------------------------- Total natural gas per Mcf $7.60 $8.03 $8.76 $10.86 $9.53 ================================================== Crude oil per Bbl $41.40 $57.38 $117.75 $116.90 $100.10 Hedge gain (loss) per Bbl 23.16 14.27 (36.70) (35.38) (18.20) -------------------------------------------------- Total crude oil per Bbl $64.56 $71.65 $81.05 $81.52 $81.90 ================================================== Total hedge gain (loss) per BOE $21.07 $11.54 $(25.39) $(24.46) $(8.92) ================================================== Operating revenues per BOE $57.04 $60.57 $69.23 $74.49 $70.33 -------------------------------------------------- Operating expenses per BOE Lease operating expense Insurance expense 2.68 2.79 2.84 1.64 1.95 Workover and maintenance 0.18 4.02 2.24 2.81 2.29 Direct lease operating expense 10.56 14.48 15.15 12.13 11.89 -------------------------------------------------- Total lease operating expense 13.42 21.29 20.23 16.58 16.13 Production taxes 0.85 1.06 1.18 1.54 0.74 Impairment of oil and gas properties 63.35 260.26 -- -- -- Depreciation, depletion and amortization 26.90 36.85 36.08 34.78 31.67 General and administrative 3.29 3.54 3.60 4.22 2.07 Other - net 4.11 (4.31) 0.35 2.47 1.94 -------------------------------------------------- Total operating expenses 111.92 318.69 61.44 59.59 52.55 -------------------------------------------------- Operating income (loss) per BOE $(54.88) $(258.12) $7.79 $14.90 $17.78 ================================================== FY 2009 3rd Quarter Operations Report ------------------------------------------------------- EXXI Fiscal 3rd Quarter 2009 Drilling Results ------------------------------------------------------- Exploration Development Total ------------------------------------------------------- Gross Net Gross Net Gross Net ------------------------------------------------------- Operated ------------------------------------------------------- Oil 0 0 0 0 0 0 ------------------------------------------------------- Gas 1 0.35 0 0 1 0.35 ------------------------------------------------------- Injector 0 0 1 0.50 1 0.50 ------------------------------------------------------- Dry 0 0 1 0.95 1 0.95 ------------------------------------------------------- Non-Operated ------------------------------------------------------- Oil 0 0 0 0 0 0 ------------------------------------------------------- Gas 0 0 0 0 0 0 ------------------------------------------------------- Dry 0 0 0 0 0 0 - - - - - - Total 1 0.35 2 1.45 3 1.80 ------------------------------------------------------- ------------------------------------------------------- Exploration Development Total ------------------------------------------------------- Success Rate (Net) 100% 50% 67% ------------------------------------------------------- ------------------------------------------------------- Exploration Development Total ------------------------------------------------------- Onshore 1 1 2 ------------------------------------------------------- Offshore 0 1 1 - - - ------------------------------------------------------- Total 1 2 3 -------------------------------------------------------
CENTRAL GULF HIGHLIGHTS
South Timbalier 21 (100% WI/83.33% NRI)
During the fiscal third quarter, South Timbalier 21 net production averaged 7,516 BOE/d, up from fiscal second-quarter volume of 4,939 BOE/d. The marked increase in production resulted from the development well and three recompletions highlighted last quarter, as well as the return of all hurricane impacted volumes within the field.
EASTERN GULF HIGHLIGHTS
The Eastern Gulf properties averaged 6,148 BOE/d in the fiscal third quarter, above the fiscal second-quarter volumes of 5,721 BOE/d due to the start-up of a water injection well in the Main Pass 61 field.
ONSHORE/GULF COAST HIGHLIGHTS
During the fiscal third quarter, Onshore/Gulf Coast net production averaged 4,202 BOE/d, down from fiscal second-quarter volume of 6,003 BOE/d. The Rabbit Island natural gas field was shut-in for most of the third quarter due to the replacement of a third-party pipeline.
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.
MD - measured depth.
MBOE - thousand barrels of oil equivalent.
MMBOE - million barrels of oil equivalent.
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.
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.