Energy XXI Joins Apache to Explore Gulf of Mexico

Energy XXI Bermuda Ltd., the energy producer that specializes in the U.S. Gulf of Mexico, agreed with Apache Corp. to explore for oil and natural gas off the coast of Louisiana.

Energy XXI will have a 25 percent working interest in parts of 135 offshore exploration blocks and 21 non-producing leases, Stewart Lawrence, a spokesman for the Hamilton, Bermuda-based company said in an interview today. The company didn’t pay anything upfront. Lawrence estimated that Energy XXI’s cost will come to $25 million for seismic testing and $10 million to $15 million apiece for three wells.

Energy XXI has leases in the area, which is in shallow water southeast of New Orleans, according to a presentation on the company’s website.

As part of the agreement, the companies will conduct seismic tests across 633,000 acres (256,000 hectares) in the Gulf, including Energy XXI’s existing leases, Lawrence said.

“This joint venture exemplifies our interest in exploring salt structures where new seismic data, remapping and remodeling could uncover significant hidden hydrocarbons,” Energy XXI Chairman and Chief Executive Officer John Schiller said in a statement.

Apache, based in Houston, plans to sell $2 billion worth of assets, and may sell some of its property in the deepwater Gulf of Mexico.

John Roper, a spokesman for Apache, didn’t immediately respond to a voice message seeking comment.

(Energy XXI corrects in second paragraph of story published yesterday that its working interest is in only a portion of the acreage, not in all 135 blocks.)
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