Energy XXI Provides Operations Update and Announces Fiscal 2016 Capital Budget

HOUSTON, Aug. 13, 2015 (GLOBE NEWSWIRE) -- Energy XXI (Nasdaq:EXXI) today provided an operations update and announced capital budget estimates for fiscal 2016.

Fiscal 2016 Outlook Highlights:

• Full year production guidance is 54,000 to 59,000 BOE/d net, as compared to 58,900 BOE/d net for fiscal 2015
• Targeting full fiscal year capital expenditures of $130 to $150 million
• Acquisition of M21K assets will add 5,500 BOE/d net to current production with primary fields located in our core asset areas
• Recompletions across core acreage expected to drive fiscal 2016 uplift with over 25 projects identified
• Lease operating costs per barrel down 30 percent from fiscal first-quarter 2015
• Current liquidity as of July 31, 2015, was $875 million, of which $750 million was cash

"We have demonstrated very strong execution capabilities and are positioned well for fiscal 2016. In this challenging commodity price environment, I'm very proud of our team's ability to maintain capital discipline and reduce per barrel lease operating costs by 30 percent. More importantly we have accomplished this while keeping production stable. We continue to target low-cost recompletions, seeing ongoing positive results from our program at South Pass 78, and our development drilling program at West Delta 73 also continues to yield excellent results. We will remain focused on reducing operating expenses and maintaining capital discipline to preserve liquidity," said Chairman, President and Chief Executive Officer John Schiller.

Fiscal 2016 capital expenditures are allocated as follows:

The capital budget, targeting low-risk oil opportunities, is predicated on a $50 oil price deck. The company will consider expanding its development drilling as commodity prices rebound. In the second half of fiscal year ended June 30, 2015, development and recompletion capital totaled approximately $50 million and production remained relatively stable. Production in fiscal 2015 averaged 58,900 BOE/d net, and fiscal 2016 volumes are projected between 54,000 and 59,000 BOE/d net.

Operations Update

At South Pass 78 (100% WI/ 83% NRI), the company's recompletion program continues to deliver positive results, including lower overall costs compared to pre-drill estimates. To date, nine recompletions have been brought online, and one additional recompletion is underway. Production from the field reached 5,450 BOE/d net, up from 2,100 BOE/d net when the program began earlier this calendar year. In fiscal 2016, the company has identified over 25 projects across its core fields to be completed.

The company recently completed a horizontal development well at West Delta 73 (100% WI/ 83% NRI), targeting the F-35 sand with a 200 foot lateral. The well delivered initial production of 600 BOE/d net. The company is drilling the final development well at West Delta 73 under the current fiscal 2016 capital plan. This core property is now producing approximately 6,500 BOE/d net and will remain a focus of the company's program going forward.

The company has reduced general and administrative costs (G&A) through efficiencies and headcount reductions. Additionally, the company has further reduced field level operating costs, bringing lease operating costs per barrel down by 30 percent from fiscal first-quarter 2015 to date. Energy XXI's cost to produce a barrel of oil equivalent on a cash flow basis approximates $52/ BOE, including:

Acquisition of Gulf Properties from M21K, LLC

On August 11, 2015 Energy XXI acquired full ownership of the assets held under the M21K subsidiary, in which it owned a 20 percent equity interest. The principal partner, for whom Energy XXI operated the assets, sold the assets to Energy XXI for $25 million cash. The assets are currently producing approximately 5,500 BOE/d net, 45 percent of which are liquids, offsetting the liquids sold with the previously announced East Bay divestiture on June 30, 2015. Total proved reserves are estimated at 13 million BOE with a present value of $82 million at current strip prices, discounted at 10 percent. Several recompletions have already been identified to be addressed in fiscal 2016.  

Production Guidance

Guidance for the fiscal first quarter and fiscal year end are included in the chart below. Guidance is adjusted to account for acquisition and divestiture volumes.

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 development 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. To learn more, visit the Energy XXI website at www.EnergyXXI.com.