EXXI Buys Gulf of Mexico Interests

OGJ Newsletter (12/23/2009)
"Energy XXI (Bermuda) Ltd. completed acquisition of oil and gas interests on the U.S. shelf of the Gulf of Mexico from MitEnergy Upstream LLC, a subsidiary of Mitsui & Co. Ltd. in Tokyo.

The transaction involved mirror-image non-operated interests in the same group of properties Energy XXI purchased from Pogo Producing Co. in June 2007 (OGJ Online, Nov. 25, 2009). The properties include 22 core fields producing 8,000 net b/d of oil equivalent, 77% of which is oil and 80% of which is already operated by Energy XXI. Pending repair of third-party pipelines damaged by hurricanes in 2008, net production from the acquired interests is expected to reach 10,000 boe/d, raising the company's total production to 30,000 boe/d.

The acquisition was funded through common and preferred equity offerings that closed last week, raising $268.7 million after underwriting discounts and commissions were deducted. Actual funding requirements at closing totaled $259 million, including downward adjustments of $24 million to the purchase price to reflect revenues generated since the effective date of July 1. Energy XXI also assumed abandonment liabilities amounting to $47 million.

Resources are estimated at 22.9 million boe proved, 4.2 million boe probable, and 4.5 million boe possible, calculated on prices of $60/bbl for oil and $5/Mcf of gas. Future development costs are estimated at $77.1 million for proved reserves, $16 million for probable, and $21.9 million for possible."

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