Energy XXI Provides Operations Update, Announces Exploration Joint Venture
*First horizontal oil well successful, on production at 3,000 BOE/d
*Don Tomas well triples pre-drill estimates
*Exploration joint venture targets high-potential oil prospects
*Current production approximates 45,000 BOE/d
HOUSTON, Oct. 1, 2012 (GLOBE NEWSWIRE) -- Energy XXI (Nasdaq:EXXI) (LSE:EXXI)
today provided an operations update and announced an asset purchase and
exploration joint venture.
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At West Delta 73 (WI 100%/ NRI 83%) the company's first horizontal well, Big
Sky 2, was drilled to 8,000 feet true vertical depth (TVD)/10,765 feet
measured depth (MD), including a 1,000 foot lateral in the F-30 oil sand. The
well was placed on production at 3,000 barrels of oil per day (BOE/d) gross.
Based on the historical results of nine horizontal wells drilled in this field
in the late 1990s, the estimated ultimate recovery from Big Sky 2 should
exceed 1 million barrels of oil. Weimer, the company's second horizontal well
at West Delta, is currently drilling at a depth of 8,234 feet TVD/9,320 feet
MD and is targeting the F-45 oil sand. Weimer will be drilled to 8,300 feet
TVD/10,200 feet MD with production online during October.
"Our first horizontal well, Big Sky 2, had the highest oil rate ever produced
in the West Delta 73 field since its discovery in 1962," EnergyXXI Executive
Vice President Ben Marchive said. "Continued success with the horizontal
program can be transformational for Energy XXI, increasing ultimate recovery
per well and continuing to improve the already attractive economics of our
In the Main Pass complex, the company successfully drilled the Don Tomas well
(WI 100%/ NRI 78%) targeting the BA-4AA sand. Don Tomas was drilled to 8,292
feet TVD/ 8,550 feet MD, encountering 195 net feet of pay within the targeted
BA-4AA sand, and placed on production in mid-August at 4,500 (BOE/d) gross.
Additional development wells are scheduled at Main Pass, with as many as five
additional wells in the program this fiscal year.
At Grand Isle 16 (WI 100%/ NRI 87%), the Pi development well was drilled to
9,572 feet TVD/ 11,482 feet MD and is currently producing 1,200 BOE/d. Pay was
seen in the primary targets, C1 through C-7 sands, and additional pay was seen
in the BF-1 through B-4 sands. The company currently is drilling Cake, a
horizontal development well targeting the BF-2 sand updip of a past producer.
The well is drilling at 6,898 feet TVD/7,808 feet MD.
Purchase and Exploration Joint Venture
The company has executed a purchase and sale agreement to acquire certain
shallow-water Gulf of Mexico interests from Exxon Mobil Corporation. The
agreement covers 5,000 gross acres on Vermilion Block 164, currently producing
approximately 1,100 BOE/d net. The asset has produced approximately 44 million
BOE since its discovery in 1957.
Energy XXI and ExxonMobil also have entered into a joint venture agreement to
explore for oil and gas on nine contiguous blocks adjacent to Vermilion Block
164 in shallow waters on the Gulf of Mexico shelf. Energy XXI will operate the
joint venture, and drilling of the initial prospect, called Pendragon, is
expected to commence by the end of the year. The company's total capital
commitment is estimated at $75 million, assuming successful completions of two
earning wells. EnergyXXI plans to adjust its drilling schedule, postponing
two large natural gas exploration prospects, Golden Bear and Wombat, to drill
the two oil-focused joint venture wells.
"This joint venture provides Energy XXI the opportunity to drill best-in-class
exploration projects with a world-class partner," EnergyXXI Chairman and CEO
John Schiller said. "Acquiring existing production in an oil producing
reservoir, along with the additional opportunities identified by our teams,
makes this agreement even more significant."
Production for the fiscal first quarter was impacted by downtime associated
with Hurricane Isaac, as well as pipeline repairs. While the company sustained
no significant physical storm damage, production was shut-in for an extended
period. Combined with repairs to operated and third-party pipelines, these
shut-ins are expected to result in production of approximately 37,000 BOE/d
for the current quarter, with more than 70 percent being liquids. Current
production is averaging 45,000BOE/d, 71 percent oil, with current capacity of
"Even with the storm and pipeline outages during the fiscal first quarter, and
the deferral of two high-rate gas wells to accommodate the joint venture oil
exploration, we still expect to grow the average annual production rate this
year more than 25 percent while generating significant free cash flow,"
Schiller said. "Notably, the oil portion of our production could grow by more
than 30 percent, with the potential for upward production and reserves
additions in the future if we are successful with our high-impact
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 orother market conditions affecting the oil and gas industry,
reservoir performance, the outcome of commercialnegotiationsand 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.
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. Seymour Pierce is
Energy XXI's listing broker in the United Kingdom. To learn more, visit the
EnergyXXI website at www.EnergyXXI.com.
The Energy XXI logo is available at
Barrel – unit of measure for oil and petroleum products, equivalent to 42 U.S.
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.
MMcf/d – million cubic feet of gas per day.
Net Pay – cumulative hydrocarbon-bearing formations.
NRI, Net Revenue Interest – the percentage of production revenue allocated to
the working interest after first deducting proceeds allocated to royalty and
WI, 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
Vice President, Investor Relations and Communications
Director, Investor Relations
Nominated Adviser: Jonathan Wright
Corporate Broking: Richard Redmayne
Tel: +44 (0) 20 7107 8000
Pelham Bell Pottinger
+44 (0) 20 7861 3232
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