-
Acquisition, capital raises and debt exchange strengthen operations and financial position
-
Davy Jones discovery portends reserves and production growth
HOUSTON, Feb. 1, 2010 (GLOBE NEWSWIRE) -- Energy XXI (Bermuda) Limited (Nasdaq:EXXI) (LSE:EXXI) today announced fiscal second-quarter results for the period ended Dec. 31, 2009 and provided an operational update.
For the 2010 fiscal second quarter, Energy XXI reported earnings before interest, taxes, depreciation, depletion and amortization (EBITDA) of $66.3 million, compared with $68.8 million in the 2009 fiscal second quarter. Net income for the 2010 fiscal second quarter was $16.4 million ($0.46 per share – diluted) on revenues of $124.5 million and production of 20,900 barrels of oil equivalent per day (BOE/d), with an average of 35.8 million shares (diluted) outstanding for the period, adjusted for the recently effected reverse split. These results reflect a partial contribution from the company's Dec. 22, 2009 acquisition of certain Gulf of Mexico interests. The results also include a $17.8 million after-tax ($26.7 million pre-tax) non-cash gain due to the retirement of bonds previously repurchased at a discount to face value. In the 2009 fiscal second quarter, the company had a net loss of $429.2 million, or $14.88 per share (reverse-split-adjusted), on revenues of $106.9 million and production of 19,200 BOE/d. The 2009 fiscal second-quarter loss included a $415.5 million after-tax ceiling test impairment ($459.1 million pre-tax).
"The past four months have been the most momentous period in the company's history," Energy XXI Chairman and CEO John Schiller said. "In November, we completed a bond exchange offer that reduced the face amount of our debt by $69 million, completed a private placement of new bonds and common shares to further strengthen the balance sheet, and announced a major acquisition that increased our proved reserves and daily production more than 40 percent. We closed the acquisition in just 30 days, following an equity road show in December that raised a total of $276 million after expenses. Those accomplishments were followed in January by the Davy Jones discovery, which has the potential to be a very significant discovery for Energy XXI. Between the expanded producing-property portfolio and the success of our ultra-deep-shelf exploration program, we expect to increase future capital programs while still targeting further debt reduction with free cash flow. We look to the future with continued excitement."
Production Update
Production volumes in January 2010 averaged approximately 23,000 BOE/d, positively affected by the December acquisition of Gulf of Mexico interests, partially offset by temporary shut-ins caused by a number of factors, including third-party-pipeline outages and dredging operations conducted by the U.S. Corps of Engineers. Current production approximates 26,000 BOE/d, with the capacity to produce 27,500 BOE/d. Following restoration of hurricane-affected properties, expected within a month, production capacity is expected to exceed 30,000 BOE/d.
Ultra-Deep Shelf Update
Energy XXI is funding 14.1 percent of the exploratory costs to earn a 15.8 percent working interest and 12.6 percent net revenue interest at the ultra-deep Davy Jones prospect at South Marsh Island Block 230 on the Gulf of Mexico shelf, offshore Louisiana. This McMoRan-operated well, which is in 20 feet of water, has been declared a major discovery with a combined 200 net feet of hydrocarbon-bearing pay sands. After being drilled to 28,603 feet, logging and coring operations were completed and drilling has resumed, toward a proposed total depth of 29,000 feet.
Capital Expenditures
During the first half of fiscal 2010, capital expenditures totaled $64.7 million, excluding acquisition costs, with $13.6 million in exploration and $51.1 million in development and other investments.
Forward-Looking Statements
All statements included in this release relating to future plans, projects, events or conditions and all other statements other than statements of historical fact included in this release are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based upon current expectations and are subject to a number of risks, uncertainties and assumptions, including changes in long-term oil and gas prices or other market conditions affecting the oil and gas industry, reservoir performance, the outcome of commercial negotiations and changes in technical or operating conditions, among others, that could cause actual results, including project plans and related expenditures and resource recoveries, to differ materially from those described in the forward-looking statements. Energy XXI assumes no obligation and expressly disclaims any duty to update the information contained herein except as required by law.
Competent Person Disclosure
The technical information contained in this announcement relating to operations adheres to the standard set by the Society of Petroleum Engineers. 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 Macquarie Capital (Europe) 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 |
Six Months Ended |
|
|
December 31, |
December 31, |
|
|
2009 |
2008 |
2009 |
2008 |
|
|
|
|
|
|
|
Net Income (Loss) as Reported |
$16,446 |
$(429,203) |
$4,146 |
$(433,854) |
|
|
|
|
|
|
|
Total other (income) expense |
(3,313) |
19,064 |
15,663 |
40,035 |
|
Impairment of oil and gas properties |
— |
459,109 |
— |
459,109 |
|
Depreciation, depletion and amortization |
44,972 |
65,002 |
80,323 |
127,411 |
|
Income tax expense (benefit) |
8,206 |
(45,194) |
17,453 |
(48,045) |
|
|
|
|
|
|
|
EBITDA |
$66,311 |
$68,778 |
$117,585 |
$144,656 |
|
|
|
|
|
|
|
EBITDA Per Share (1) |
|
|
|
|
|
Basic |
$1.96 |
$2.39 |
$3.74 |
$5.01 |
|
Diluted |
$1.85 |
$2.39 |
$3.60 |
$5.01 |
|
|
|
|
|
|
|
Weighted Average Number of Common Shares Outstanding (1) |
|
|
|
|
|
Basic |
33,788 |
28,835 |
31,470 |
28,896 |
|
Diluted |
35,815 |
28,835 |
32,627 |
28,896 |
(1) Data adjusted for the Jan. 28, 2010 1-for-5 reverse stock split
ENERGY XXI (BERMUDA) LIMITED
CONSOLIDATED BALANCE SHEETS
(In Thousands, except share information)
|
|
December 31, |
June 30, |
|
|
2009 |
2009 |
|
ASSETS |
(Unaudited) |
|
|
Current Assets |
|
|
|
Cash and cash equivalents |
$23,270 |
$88,925 |
|
Accounts receivable |
|
|
|
Oil and natural gas sales |
68,924 |
40,087 |
|
Joint interest billings |
7,353 |
17,624 |
|
Insurance and other |
14,069 |
2,562 |
|
Prepaid expenses and other current assets |
37,611 |
16,318 |
|
Royalty deposit |
1,638 |
1,746 |
|
Derivative financial instruments |
24,567 |
31,404 |
|
Total Current Assets |
177,432 |
198,666 |
|
Property and equipment, net of accumulated depreciation, depletion, amortization and impairment |
|
|
|
Oil and natural gas properties - full cost method of accounting |
1,365,977 |
1,102,596 |
|
Other property and equipment |
8,259 |
9,149 |
|
Total Property and Equipment – net |
1,374,236 |
1,111,745 |
|
Other Assets |
|
|
|
Derivative financial instruments |
6,435 |
3,838 |
|
Restricted cash |
2,160 |
— |
|
Debt issuance costs, net of accumulated amortization |
12,251 |
14,413 |
|
Total Other Assets |
20,846 |
18,251 |
|
Total Assets |
$1,572,514 |
$1,328,662 |
|
LIABILITIES |
|
|
|
Current Liabilities |
|
|
|
Accounts payable |
$74,219 |
$81,025 |
|
Note payable |
6,549 |
— |
|
Accrued liabilities |
43,671 |
36,180 |
|
Asset retirement obligations |
85,733 |
66,244 |
|
Derivative financial instruments |
19,551 |
15,732 |
|
Current maturities of long-term debt |
3,865 |
4,107 |
|
Total Current Liabilities |
233,588 |
203,288 |
|
Long-term debt, less current maturities, face value of $766,367,000 and $858,720,000 at December 31, 2009 and June 30, 2009, respectively |
815,664 |
858,720 |
|
Deferred income taxes |
32,189 |
26,889 |
|
Asset retirement obligations |
86,935 |
77,955 |
|
Derivative financial instruments |
507 |
4,818 |
|
Other |
— |
29,492 |
|
Total Liabilities |
1,168,883 |
1,201,162 |
|
Commitments and Contingencies |
|
|
|
Stockholders' Equity |
|
|
|
Preferred stock, $0.01 par value, 2,500,000 shares authorized and 1,100,000 shares and no shares issued and outstanding at December 31, 2009 and June 30, 2009, respectively |
11 |
— |
|
Common stock, $0.005 par value, 200,000,000 shares authorized and 50,819,323 and 29,283,051 shares issued and 50,804,389 and 29,150,116 shares outstanding at December 31, 2009 and June 30, 2009, respectively |
253 |
146 |
|
Additional paid-in capital |
899,494 |
604,724 |
|
Accumulated deficit |
(512,053) |
(515,867) |
|
Accumulated other comprehensive income, net of income taxes |
15,926 |
38,497 |
|
Total Stockholders' Equity |
403,631 |
127,500 |
|
Total Liabilities and Stockholders' Equity |
$1,572,514 |
$1,328,662 |
ENERGY XXI (BERMUDA) LIMITED
CONSOLIDATED STATEMENTS OF OPERATIONS
(In Thousands, except per share information)
(Unaudited)
|
|
Three Months Ended |
Six Months Ended |
|
|
December 31, |
December 31, |
|
|
2009 |
2008 |
2009 |
2008 |
|
|
|
|
|
|
|
Revenues |
|
|
|
|
|
Oil sales |
$98,050 |
$66,668 |
$164,343 |
$148,730 |
|
Natural gas sales |
26,456 |
40,184 |
45,070 |
77,866 |
|
Total Revenues |
124,506 |
106,852 |
209,413 |
226,596 |
|
|
|
|
|
|
|
Costs and Expenses |
|
|
|
|
|
Lease operating expense |
35,050 |
37,564 |
60,475 |
72,562 |
|
Production taxes |
1,007 |
1,878 |
2,282 |
3,914 |
|
Impairment of oil and gas properties |
— |
459,109 |
— |
459,109 |
|
Depreciation, depletion and amortization |
44,972 |
65,002 |
80,323 |
127,411 |
|
Accretion of asset retirement obligations |
6,160 |
2,433 |
11,306 |
4,894 |
|
General and administrative expense |
14,022 |
6,236 |
22,088 |
12,471 |
|
Loss (gain) on derivative financial instruments |
1,956 |
(10,037) |
(4,323) |
(11,901) |
|
Total Costs and Expenses |
103,167 |
562,185 |
172,151 |
668,460 |
|
|
|
|
|
|
|
Operating Income (Loss) |
21,339 |
(455,333) |
37,262 |
(441,864) |
|
|
|
|
|
|
|
Other Income (Expense) |
|
|
|
|
|
Other income |
27,658 |
2,104 |
29,644 |
3,438 |
|
Interest expense |
(24,345) |
(21,168) |
(45,307) |
(43,473) |
|
Total Other Income (Expense) |
3,313 |
(19,064) |
(15,663) |
(40,035) |
|
|
|
|
|
|
|
Income (Loss) Before Income Taxes |
24,652 |
(474,397) |
21,599 |
(481,899) |
|
|
|
|
|
|
|
Income Tax Expense (Benefit) |
8,206 |
(45,194) |
17,453 |
(48,045) |
|
|
|
|
|
|
|
Net Income (Loss) |
16,446 |
(429,203) |
4,146 |
(433,854) |
|
Preferred Stock Dividends |
332 |
— |
332 |
— |
|
Net Income (Loss) Available for Common Stockholders |
$16,114 |
$(429,203) |
$3,814 |
$(433,854) |
|
|
|
|
|
|
|
Earnings (Loss) Per Share (1) |
|
|
|
|
|
Basic |
$0.48 |
$(14.88) |
$0.12 |
$(15.01) |
|
Diluted |
$0.46 |
$(14.88) |
$0.13 |
$(15.01) |
|
|
|
|
|
|
|
Weighted Average Number of Common Shares Outstanding (1) |
|
|
|
|
|
Basic |
33,788 |
28,835 |
31,470 |
28,896 |
|
Diluted |
35,815 |
28,835 |
32,467 |
28,896 |
(1) Data adjusted for the Jan. 28, 2010 1-for-5 reverse stock split
ENERGY XXI (BERMUDA) LIMITED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
(Unaudited)
|
|
Three Months Ended |
Six Months Ended |
|
|
December 31, |
December 31, |
|
|
2009 |
2008 |
2009 |
2008 |
|
|
|
|
|
|
|
Cash Flows From Operating Activities |
|
|
|
|
|
Net income (loss) |
$16,446 |
$(429,203) |
$4,146 |
$(433,854) |
|
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: |
|
|
|
|
|
Deferred income tax expense (benefit) |
8,206 |
(45,910) |
17,453 |
(48,761) |
|
Change in derivative financial instruments |
(4,759) |
(8,520) |
(17,115) |
(9,862) |
|
Accretion of asset retirement obligations |
6,160 |
2,433 |
11,306 |
4,894 |
|
Depreciation, depletion, and amortization |
44,972 |
65,002 |
80,323 |
127,411 |
|
Impairment of oil and gas properties |
— |
459,109 |
— |
459,109 |
|
Amortization of deferred gain on debt |
(29,024) |
(1,148) |
(30,867) |
(1,466) |
|
Amortization and write-off of debt issuance costs |
3,341 |
988 |
4,459 |
2,000 |
|
Stock-based compensation |
839 |
602 |
1,742 |
865 |
|
Changes in operating assets and liabilities |
|
|
|
|
|
Accounts receivable |
(53,661) |
(460) |
(38,385) |
53,608 |
|
Prepaid expenses and other current assets |
(14,489) |
14,028 |
(21,185) |
(12,706) |
|
Asset retirement obligations |
(32,615) |
(7,004) |
(42,449) |
(13,484) |
|
Accounts payable and other liabilities |
(10,389) |
(25,472) |
(7,149) |
(32,254) |
|
Net Cash Provided by (Used in) Operating Activities |
(64,973) |
24,445 |
(37,721) |
95,500 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Flows from Investing Activities |
|
|
|
|
|
Acquisitions |
(274,518) |
— |
(274,518) |
— |
|
Capital expenditures |
(37,670) |
(94,761) |
(47,811) |
(180,884) |
|
Insurance payments received |
45,199 |
— |
53,178 |
— |
|
Restricted cash |
(1,634) |
— |
(2,160) |
— |
|
Other |
46 |
(255) |
134 |
(255) |
|
Net Cash Used in Investing Activities |
(268,577) |
(95,016) |
(271,177) |
(181,139) |
|
|
|
|
|
|
|
Cash Flows from Financing Activities |
|
|
|
|
|
Proceeds from the issuance of common and preferred stock, net of offering costs |
294,527 |
— |
294,527 |
— |
|
Dividends to shareholders |
— |
(1,453) |
— |
(1,453) |
|
Proceeds from long-term debt |
75,837 |
105,239 |
75,837 |
249,990 |
|
Payments on long-term debt |
(118,782) |
(2,320) |
(123,443) |
(152,403) |
|
Purchase of bonds |
— |
(32,563) |
— |
(91,355) |
|
Other |
(2,063) |
(401) |
(3,678) |
(868) |
|
Net Cash Provided by Financing Activities |
249,519 |
68,502 |
243,243 |
3,911 |
|
|
|
|
|
|
|
Net Decrease in Cash and Cash Equivalents |
(84,031) |
(2,069) |
(65,655) |
(81,728) |
|
|
|
|
|
|
|
Cash and Cash Equivalents, beginning of period |
107,301 |
89,303 |
88,925 |
168,962 |
|
|
|
|
|
|
|
Cash and Cash Equivalents, end of period |
$23,270 |
$87,234 |
$23,270 |
$87,234 |
ENERGY XXI (BERMUDA) LIMITED
CONSOLIDATED OPERATIONAL INFORMATION (In thousands) (Unaudited)
|
|
Dec. 31,
2009 |
Sept. 30,
2009 |
June 30,
2009 |
Mar. 31,
2009 |
Dec. 31,
2008 |
|
|
|
Operating revenues |
|
|
|
|
|
|
Crude oil sales |
$93,974 |
$58,114 |
$58,920 |
$46,492 |
$53,388 |
|
Natural gas sales |
16,812 |
9,770 |
15,168 |
20,435 |
33,111 |
|
Hedge gain (loss) |
13,720 |
17,023 |
27,010 |
39,209 |
20,353 |
|
Total revenues |
124,506 |
84,907 |
101,098 |
106,136 |
106,852 |
|
Percent of operating revenues from crude oil |
|
|
|
|
|
|
Prior to hedge gain (loss) |
84.8% |
85.6% |
79.5% |
69.5% |
61.7% |
|
Including hedge gain (loss) |
78.8 |
78.1% |
70.8% |
68.3% |
62.4% |
|
Operating expenses |
|
|
|
|
|
|
Lease operating expense |
|
|
|
|
|
|
Insurance expense |
7,827 |
5,954 |
4,356 |
4,980 |
4,934 |
|
Workover and maintenance |
2,678 |
3,231 |
4,622 |
341 |
7,094 |
|
Direct lease operating expense |
24,545 |
16,240 |
15,646 |
19,643 |
25,536 |
|
Total lease operating expense |
35,050 |
25,425 |
24,624 |
24,964 |
37,564 |
|
Production taxes |
1,007 |
1,275 |
(51) |
1,587 |
1,878 |
|
Impairment of oil and gas properties |
— |
— |
— |
117,887 |
459,109 |
|
Depreciation, depletion and amortization |
44,972 |
35,351 |
39,744 |
50,052 |
65,002 |
|
General and administrative |
14,022 |
8,066 |
6,168 |
6,117 |
6,236 |
|
Other – net |
8,116 |
(1,133) |
3,852 |
7,643 |
(7,604) |
|
Total operating expenses |
103,167 |
68,984 |
74,337 |
208,250 |
562,185 |
|
Operating income (loss) |
$21,339 |
$15,923 |
$26,761 |
$(102,114) |
$(455,333) |
|
Sales volumes per day |
|
|
|
|
|
|
Natural gas (MMcf) |
40.7 |
33.2 |
41.1 |
49.2 |
54.4 |
|
Crude oil (MBbls) |
14.2 |
10.0 |
11.9 |
12.5 |
10.1 |
|
Total (MBOE) |
20.9 |
15.5 |
18.7 |
20.7 |
19.2 |
|
Percent of sales volumes from crude oil |
67.6% |
64.5% |
63.6% |
60.4% |
52.7% |
|
Average sales price |
|
|
|
|
|
|
Natural gas per Mcf |
$4.49 |
$3.20 |
$4.06 |
$4.62 |
$6.62 |
|
Hedge gain per Mcf |
2.58 |
2.90 |
3.85 |
2.98 |
1.41 |
|
Total natural gas per Mcf |
$7.07 |
$6.10 |
$7.91 |
$7.60 |
$8.03 |
|
Crude oil per Bbl |
$72.17 |
$63.44 |
$54.56 |
$41.40 |
$57.38 |
|
Hedge gain per Bbl |
3.13 |
8.93 |
11.68 |
23.16 |
14.27 |
|
Total crude oil per Bbl |
$75.30 |
$72.37 |
$66.24 |
$64.56 |
$71.65 |
|
Total hedge gain per BOE |
$7.12 |
$11.95 |
$15.86 |
$21.07 |
$11.54 |
|
Operating revenues per BOE |
$64.65 |
$59.59 |
$59.36 |
$57.04 |
$60.57 |
|
Operating expenses per BOE |
|
|
|
|
|
|
Lease operating expense |
|
|
|
|
|
|
Insurance expense |
4.06 |
4.18 |
2.56 |
2.68 |
2.79 |
|
Workover and maintenance |
1.39 |
2.27 |
2.71 |
0.18 |
4.02 |
|
Direct lease operating expense |
12.74 |
11.40 |
9.19 |
10.56 |
14.48 |
|
Total lease operating expense |
18.19 |
17.85 |
14.46 |
13.42 |
21.29 |
|
Production taxes |
0.52 |
0.89 |
(0.03) |
0.85 |
1.06 |
|
Impairment of oil and gas properties |
— |
— |
— |
63.35 |
260.26 |
|
Depreciation, depletion and amortization |
23.35 |
24.81 |
23.34 |
26.90 |
36.85 |
|
General and administrative |
7.28 |
5.66 |
3.62 |
3.29 |
3.54 |
|
Other – net |
4.22 |
(0.80) |
2.27 |
4.11 |
(4.31) |
|
Total operating expenses |
53.56 |
48.41 |
43.66 |
111.92 |
318.69 |
|
Operating income (loss) per BOE |
$11.09 |
$11.18 |
$15.70 |
$(54.88) |
$(258.12) |
GLOSSARY
Barrel – unit of measure for oil and petroleum products, equivalent to 42 U.S. gallons.
Bcfe – billion cubic feet equivalent, used to equate liquid barrels to natural gas volumes at a general conversion rate of 6,000 cubic feet of gas per barrel.
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.
MBOE – thousand barrels of oil equivalent.
MMBOE – million barrels of oil equivalent.
MD – measured depth.
Net Pay – cumulative hydrocarbon-bearing formations.
Net Revenue Interest – the percentage of production revenue allocated to the working interest after first deducting proceeds allocated to royalty and overriding interest.
Spud – to begin drilling a well.
TD – target total depth of a well.
TD'd – to finish drilling a well.
TVD – total vertical depth.
Working Interest – the interest held in lands by virtue of a lease, operating agreement, fee title or otherwise, under which the owner of the interest is vested with the right to explore for, develop, produce and own oil, gas or other minerals and bears the proportional cost of such operations.
Workover / Recompletion – operations on a producing well to restore or increase production. A workover or recompletion may be performed to stimulate the well, remove sand or wax from the wellbore, to mechanically repair the well, or for other reasons. CONTACT: Energy XXI (Bermuda) Limited
Stewart Lawrence, Vice President, Investor Relations
and Communications
+1 713-351-3006
slawrence@energyxxi.com
Collins Stewart Europe Limited
Nominated Adviser and Joint UK Broker
Piers Coombs
pcoombs@collinsstewart.com
Stewart Wallace
+44 207 523 8350
Pelham Bell Pottinger
James Henderson
+44 207 743 6673
jhenderson@pelhambellpottinger.co.uk
Mark Antelme
+44 203 178 6242
mantelme@pelhambellpottinger.co.uk
|
| Symbol: |
EXXI |
| Last Trade: |
20.42
(09/08/2010 ET)
|
| Change: |
-0.44
(-2.10%)
|
| Day's Range: |
20.16 -
21.35 |
| Open: |
21.00 |
| Previous Close: |
20.86 |
| TSO: |
50,631,000 |
| Market Cap: |
1.03B |
| Day's Volume: |
816,946 |
|
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