First-quarter production volumes average 58,600 BOE/d
FY15 capital program reduced to $670-$690 million range
On target to achieve full-year cost savings on acquisition
HOUSTON, Nov. 5, 2014 (GLOBE NEWSWIRE) -- Energy XXI (Nasdaq:EXXI) (AIM:EXXI) today announced fiscal first-quarter 2015 results and provided an operations update on activities in the Gulf of Mexico.
Highlights
- Generated first-quarter adjusted EBITDA of $230.7 million
- Current production averaging 60,000 BOE/d
- Reaffirmed full-year guidance ranges
- Currently completing the Toro well after logging 170 net feet of oil pay
"During the first quarter with a front-loaded capital budget, we completed nine wells, with nine additional wells to come online in the current quarter," Energy XXI Ltd Chairman, President and Chief Executive Officer John D. Schiller said. "As we enter the second half of our fiscal year we are focused on capital preservation, reducing downtime and lowering expenses while maintaining production and generating free cash flow. Asset rationalization and free cash flow will be used for debt reduction."
Fiscal 2015 First-Quarter Results
For the 2015 fiscal first quarter, adjusted earnings before non-recurring charges and interest, taxes, depreciation, depletion and amortization (adjusted EBITDA) was $230.7 million (a non-GAAP measure reconciled below), compared with $205.2 million in the 2014 fiscal first quarter. The company reported a net loss available for common stockholders in the 2015 fiscal first quarter of $9.3 million, or $0.10 loss per diluted share, on revenues of $403.2 million, compared with fiscal 2014 first-quarter net income available for common stockholders of $40.3 million, or $0.51 income per diluted share, on revenues of $324.6 million.
Production for the 2015 fiscal first quarter averaged 58,600 net barrels of oil equivalent per day (BOE/d), with 41,600 barrels per day (Bbl/d) liquids, compared with 46,600 net BOE/d, 29,800 Bbl/d liquids in the 2014 fiscal first quarter. Current production approximates 60,000 BOE/d. The company currently has 75 percent of oil hedged through calendar 2014, and has 60 percent of oil hedged in calendar 2015.
Operations Update
Our core acreage position has led to multiple wells coming online in the first quarter. Three horizontal wells were brought online at West Delta 73 (100% WI/83% NRI), four at the West Delta 30 field (100% WI/ 87% NRI), one at Main Pass (100% WI/ 83% NRI), and one at Ship Shoal (100% WI/ 83% NRI). The nine wells provided uplift of approximately 1,250 net BOE/d to the first-quarter average. These wells are expected to add approximately 3,000 net BOE/d to the fiscal second-quarter average. In the second quarter, the company plans to bring nine additional wells online, providing approximate uplift of 2,100 net BOE/d to the second-quarter average production.
At the Main Pass 61 field, the Toro well reached total depth of 8,070 feet TVD/ 10,835 MD; logging 170 net feet measured depth (MD) feet of oil pay in the J-6 sand, and is expected to be online within the next 30 days. The company expects to be operating two rigs by calendar year-end. In addition, the company will have a workover rig at South Pass 78 to execute a four to six well workover program.
Multiple capital projects are underway designed to alleviate back pressure, water handling capacity, and compression upgrades in the West Delta, Main Pass and South Pass areas. These planned facilities upgrades are expected to cost approximately $15 million and be completed in the company's fiscal third quarter. These programs are designed to help optimize oil and gas production from our core fields with total potential incremental production from existing wells expected to exceed 2,500 BOE/d.
Inboard Lower Tertiary Cretaceous Trend
In the non-operated joint venture with Freeport McMoRan Oil and Gas in the Inboard Lower Tertiary/Cretaceous trend, the Highlander discovery (Lomond) is currently being completed and testing is anticipated in the calendar fourth quarter of 2014. Energy XXI has a 20 percent working interest in the Lomond well.
Capital Expenditures
During the 2015 fiscal first quarter, capital expenditures totaled $280.0 million, with $25.4 million in exploration and $254.6 million in development and other costs. Currently, the company is estimating the total fiscal 2015 capital program to range from $670 million to $690 million ($450 million annualized run rate), down from a previously announced $815 million.
Guidance
Second-quarter and full-year guidance is provided below.
| Volume Projections | FY 2015 | 2Q FY15 |
| Net Production (per day) | ||
| Oil, including NGLs (Bbls) | 42,000 – 46,000 | 41,000 – 45,000 |
| BOE | 59,000 – 64,000 | 58,000 – 63,000 |
| % Oil, including NGLs (using midpoint of guidance) | 71% | 71% |
| FY15 Cost Projections ($MM) |
1Q Actuals |
2Q proj. |
| LOE | 142.6 | 125-135 |
| G&A | 26.4 | 21-24 |
| Gathering & Transport | 9.2 | 8-10 |
| DD&A | 29.93/BOE | 29.50-31.50/BOE |
| Quarter Ended | |||||
| Operating Highlights |
Sept. 30, 2014 |
June 30, 2014 |
Mar. 31, 2014 |
Dec. 31, 2013 |
Sept. 30, 2013 |
| (In Thousands, Except per Unit Amounts) | |||||
| Operating revenues | |||||
| Crude oil sales | $370,155 | $294,974 | $254,641 | $263,626 | $290,965 |
| Natural gas sales | 34,561 | 34,508 | 37,562 | 31,138 | 32,584 |
| Hedge gain (loss) | (1,485) | (5,348) | (7,020) | 2,052 | 1,043 |
| Total revenues | 403,231 | 324,134 | 285,183 | 296,816 | 324,592 |
| Percent of operating revenues from crude oil | |||||
| Prior to hedge gain (loss) | 91% | 90% | 87% | 89% | 90% |
| Including hedge gain (loss) | 91% | 89% | 88% | 88% | 89% |
| Operating expenses | |||||
| Lease operating expense | |||||
| Insurance expense | 11,022 | 8,357 | 6,410 | 7,920 | 8,496 |
| Workover and maintenance | 29,416 | 14,408 | 17,797 | 19,690 | 14,586 |
| Direct lease operating expense | 102,147 | 79,806 | 59,417 | 66,179 | 62,681 |
| Total lease operating expense | 142,585 | 102,571 | 83,624 | 93,789 | 85,763 |
| Production taxes | 3,093 | 1,750 | 1,090 | 1,189 | 1,398 |
| Gathering and transportation | 9,188 | 6,509 | 5,700 | 5,978 | 5,345 |
| DD&A | 161,266 | 119,691 | 99,899 | 103,513 | 100,216 |
| General and administrative | 26,424 | 30,824 | 24,208 | 17,698 | 23,672 |
| Other – net | 9,536 | 8,112 | 5,861 | 13,147 | 8,767 |
| Total operating expenses | 352,092 | 269,457 | 220,382 | 235,314 | 225,161 |
| Operating income | $51,139 | $54,677 | $64,801 | $61,502 | $99,431 |
| Sales volumes per day | |||||
| Natural gas (MMcf) | 100.7 | 84.8 | 83.7 | 89.3 | 100.8 |
| Crude oil (MBbls) | 41.8 | 32.0 | 28.4 | 30.2 | 29.7 |
| Total (MBOE) | 58.6 | 46.1 | 42.3 | 45.1 | 46.6 |
| Percent of sales volumes from crude oil | 71% | 69% | 67% | 67% | 64% |
| Average sales price | |||||
| Natural gas per Mcf | $3.73 | $4.47 | $4.98 | $3.79 | $3.51 |
| Hedge gain (loss) per Mcf | 0.02 | (0.02) | (0.31) | 0.42 | 0.30 |
| Total natural gas per Mcf | $3.75 | $4.45 | $4.67 | $4.21 | $3.81 |
| Crude oil per Bbl | $96.28 | $101.45 | $99.71 | $94.85 | $106.31 |
| Hedge gain (loss) per Bbl | (0.43) | (1.78) | (1.83) | (0.50) | (0.63) |
| Total crude oil per Bbl | $95.85 | $99.67 | $97.88 | $94.35 | $105.68 |
| Total hedge gain (loss) per BOE | $(0.28) | $(1.28) | $(1.84) | $0.49 | $0.24 |
| Operating revenues per BOE | $74.84 | $77.28 | $74.85 | $71.54 | $75.78 |
| Operating expenses per BOE | |||||
| Lease operating expense | |||||
| Insurance expense | 2.05 | 1.99 | 1.68 | 1.91 | 1.98 |
| Workover and maintenance | 5.46 | 3.44 | 4.67 | 4.75 | 3.41 |
| Direct lease operating expense | 18.96 | 19.03 | 15.59 | 15.95 | 14.63 |
| Total lease operating expense per BOE | 26.47 | 24.46 | 21.94 | 22.61 | 20.02 |
| Production taxes | 0.57 | 0.42 | 0.29 | 0.29 | 0.33 |
| Gathering and transportation | 1.71 | 1.55 | 1.50 | 1.44 | 1.25 |
| DD&A | 29.93 | 28.54 | 26.22 | 24.95 | 23.40 |
| General and administrative | 4.90 | 7.35 | 6.35 | 4.27 | 5.53 |
| Other – net | 1.77 | 1.93 | 1.54 | 3.17 | 2.05 |
| Total operating expenses per BOE | 65.35 | 64.25 | 57.84 | 56.73 | 52.58 |
| Operating income per BOE | $9.49 | $13.03 | $17.01 | $14.81 | $23.20 |
| ENERGY XXI LTD | ||
| CONSOLIDATED STATEMENTS OF OPERATIONS | ||
| (In Thousands, except per share information) | ||
| (Unaudited) | ||
|
Three Months Ended September 30, |
||
| 2014 | 2013 | |
| Revenues | ||
| Crude oil sales | $368,501 | $289,229 |
| Natural gas sales | 34,730 | 35,363 |
| Total Revenues | 403,231 | 324,592 |
| Costs and Expenses | ||
| Lease operating | 142,585 | 85,763 |
| Production taxes | 3,093 | 1,398 |
| Gathering and transportation | 9,188 | 5,345 |
| Depreciation, depletion and amortization | 161,266 | 100,216 |
| Accretion of asset retirement obligations | 12,819 | 7,326 |
| General and administrative expense | 26,424 | 23,672 |
| (Gain) loss on derivative financial instruments | (3,283) | 1,441 |
| Total Costs and Expenses | 352,092 | 225,161 |
| Operating Income | 51,139 | 99,431 |
| Other Income (Expense) | ||
| Income (loss) from equity method investees | 881 | (1,793) |
| Other income - net | 951 | 522 |
| Interest expense | (66,263) | (29,685) |
| Total Other Expense | (64,431) | (30,956) |
| Income (Loss) Before Income Taxes | (13,292) | 68,475 |
| Income Tax Expense (Benefit) | (6,889) | 25,336 |
| Net Income (Loss) | (6,403) | 43,139 |
| Preferred Stock Dividends | 2,872 | 2,873 |
| Net Income (Loss) Available for Common Stockholders | $(9,275) | $40,266 |
| Earnings (Loss) per Share | ||
| Basic | $(0.10) | $0.53 |
| Diluted | $(0.10) | $0.51 |
| Weighted Average Number of Common Shares Outstanding | ||
| Basic | 93,833 | 75,782 |
| Diluted | 93,833 | 84,073 |
ENERGY XXI LTD
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 measure: Adjusted EBITDA. The company uses this non-GAAP measure as a key metric for the management of the company and to demonstrate the company's ability to internally fund capital expenditures and service debt.
|
Three Months Ended September 30, |
||
| 2014 | 2013 | |
| Net Income (Loss) as Reported | $(6,403) | $43,139 |
| Interest expense - net | 65,312 | 29,163 |
| Depreciation, depletion and amortization | 161,266 | 100,216 |
| Income tax expense (benefit) | (6,889) | 25,336 |
| EBITDA | 213,286 | 197,854 |
| Adjustments to EBITDA | ||
| Accretion of asset retirement obligation | 12,819 | 7,326 |
| Non-recurring charges | 4,635 | -- |
| Adjusted EBITDA | $230,740 | $205,180 |
| Adjusted EBITDA Per Share | ||
| Basic | $2.46 | $2.71 |
| Diluted | $2.46 | $2.70 |
| Weighted Average Number of Common Shares Outstanding | ||
| Basic | 93,833 | 75,782 |
| Diluted | 93,833 | 75,858 |
| ENERGY XXI LTD | ||
| CONSOLIDATED BALANCE SHEETS | ||
| (In Thousands, except share information) | ||
| September 30, | June 30, | |
| 2014 | 2014 | |
| (Unaudited) | ||
| Current Assets | ||
| Cash and cash equivalents | $119,500 | $145,806 |
| Accounts receivable | ||
| Oil and natural gas sales | 145,821 | 167,075 |
| Joint interest billings | 14,426 | 12,898 |
| Insurance and other | 5,615 | 5,438 |
| Prepaid expenses and other current assets | 64,631 | 72,530 |
| Deferred income taxes | 24,587 | 52,587 |
| Derivative financial instruments | 23,815 | 1,425 |
| Total Current Assets | 398,395 | 457,759 |
| Property and Equipment | ||
| Oil and natural gas properties - full cost method of accounting, including $1,167.6 million and $1,165.7 million of unevaluated properties not being amortized at September 30, 2014 and June 30, 2014, respectively | 6,637,292 | 6,524,602 |
| Other property and equipment | 23,400 | 19,760 |
| Total Property and Equipment, net of accumulated depreciation, depletion, amortization and impairment | 6,660,692 | 6,544,362 |
| Other Assets | ||
| Goodwill | 329,293 | 329,293 |
| Derivative financial instruments | 6,713 | 3,035 |
| Equity investments | 40,320 | 40,643 |
| Restricted Cash | 325 | 6,350 |
| Other assets and debt issuance costs, net of accumulated amortization | 60,845 | 57,394 |
| Total Other Assets | 437,496 | 436,715 |
| Total Assets | $7,496,583 | $7,438,836 |
| LIABILITIES | ||
| Current Liabilities | ||
| Accounts payable | $472,108 | $417,776 |
| Accrued liabilities | 115,509 | 133,526 |
| Notes payable | 19,368 | 21,967 |
| Asset retirement obligations | 79,614 | 79,649 |
| Derivative financial instruments | 1,446 | 31,957 |
| Current maturities of long-term debt | 15,612 | 15,020 |
| Total Current Liabilities | 703,657 | 699,895 |
| Long-term debt, less current maturities | 3,800,417 | 3,744,624 |
| Deferred income taxes | 685,121 | 701,038 |
| Asset retirement obligations | 482,339 | 480,185 |
| Derivative financial instruments | — | 4,306 |
| Other liabilities | 8,009 | 10,958 |
| Total Liabilities | 5,679,543 | 5,641,006 |
| Stockholders' Equity | ||
|
Preferred stock, $0.001 par value, 7,500,000 shares authorized at September 30, 2014 and June 30, 2014, 7.25% Convertible perpetual preferred stock, 8.000 shares issued and outstanding at September 30, 2014 and June 30, 2014 5.625% Convertible perpetual preferred stock, 812,760 shares issued and outstanding at September 30, 2014 and June 30, 2014 |
1 | 1 |
| Common stock, $0.005 par value, 200,000,000 shares authorized and 93,867,405 and 93,719,570 shares issued and outstanding at September 30, 2014 and June 30, 2014, respectively | 469 | 468 |
| Additional paid-in capital | 1,841,457 | 1,837,462 |
| Accumulated deficit | (40,165) | (19,626) |
| Accumulated other comprehensive income (loss), net of income taxes | 15,278 | (20,475) |
| Total Stockholders' Equity | 1,817,040 | 1,797,830 |
| Total Liabilities and Stockholders' Equity | $7,496,583 | $7,438,836 |
| ENERGY XXI LTD | ||
| CONSOLIDATED STATEMENTS OF CASH FLOWS | ||
| (In Thousands) | ||
| (Unaudited) | ||
|
Three Months Ended September 30, |
||
| 2014 | 2013 | |
| Cash Flows From Operating Activities | ||
| Net income (loss) | $(6,403) | $43,139 |
| Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | ||
| Depreciation, depletion and amortization | 161,266 | 100,216 |
| Deferred income tax expense (benefit) | (7,169) | 22,480 |
| Change in derivative financial instruments | ||
| Proceeds from derivative instruments | 3,364 | — |
| Other – net | (5,938) | (2,357) |
| Accretion of asset retirement obligations | 12,819 | 7,326 |
| Loss (income) from equity method investees | (881) | 1,793 |
| Amortization and write-off of debt issuance costs and other | 5,277 | 1,455 |
| Stock-based compensation | 1,779 | 3,532 |
| Changes in operating assets and liabilities | ||
| Accounts receivable | 23,313 | (2,131) |
| Prepaid expenses and other current assets | 7,661 | (6,270) |
| Settlement of asset retirement obligations | (14,907) | (18,063) |
| Accounts payable and accrued liabilities | 23,769 | (43,221) |
| Net Cash Provided by Operating Activities | 203,950 | 107,899 |
| Cash Flows from Investing Activities | ||
| Acquisitions | (287) | (15) |
| Capital expenditures | (280,010) | (198,358) |
| Change in equity method investments | 1,282 | (16,694) |
| Proceeds from the sale of properties | 6,947 | 1,748 |
| Other | (80) | (51) |
| Net Cash Used in Investing Activities | (272,148) | (213,370) |
| Cash Flows from Financing Activities | ||
| Proceeds from the issuance of common and preferred stock, net of offering costs | 2,217 | 3,267 |
| Repurchase of company common stock | — | (35,210) |
| Dividends to shareholders – common | (11,264) | (9,096) |
| Dividends to shareholders – preferred | (2,872) | (2,873) |
| Proceeds from long-term debt | 510,120 | 1,040,697 |
| Payments on long-term debt | (454,042) | (865,231) |
| Debt issuance costs | (2,250) | (8,720) |
| Other | (17) | (1) |
| Net Cash Provided by Financing Activities | 41,892 | 122,833 |
| Net Increase (Decrease) in Cash and Cash Equivalents | (26,306) | 17,362 |
| Cash and Cash Equivalents, beginning of period | 145,806 | — |
| Cash and Cash Equivalents, end of period | $119,500 | $17,362 |
Fiscal 2015 First Quarter Conference Call
Energy XXI will host its fiscal first-quarter conference call tomorrow, Nov. 6, at 9 a.m. CST (3 p.m. London time). The dial-in numbers are 1 (631) 813-4724 (U.S.) and (0) 800 028 8438 (U.K.) and the confirmation code is 21254329. 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, our ability to integrate acquisitions, 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. Cantor Fitzgerald Europe is Energy XXI's listing broker in the United Kingdom. To learn more, visit the Energy XXI website at www.EnergyXXI.com.
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.
Bbl/d – barrels per day of oil or condensate
Mcf/d – thousand cubic feet of gas per day.
NRI, Net Revenue Interest – the percentage of production revenue allocated to the working interest after first deducting proceeds allocated to royalty and overriding interest.
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.
