Company Re-Affirms Quarterly Production Guidance
Successful Development Program Adds Uplift Oil Volumes
Fiscal 2015 Capital Program Reduced
Initial ST 26 Dumpflood Well Injecting 11,000 bwpd
HOUSTON, Sept. 29, 2014 (GLOBE NEWSWIRE) -- Energy XXI (Nasdaq:EXXI) (AIM:EXXI) today provided an operations update, including production, recent drilling results, and adjustments to capital budget.
Highlights
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Fiscal first quarter production expected at mid-point of guidance
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West Delta horizontal program continues to deliver with three new wells brought online
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Main Pass rig line extended, expecting to add Toro well
- Fiscal 2015 capital expenditures reduced to range of $785 - $840 million from $875 million
Production Update
During the company's fiscal first quarter, oil production is averaging approximately 41,700 barrels of oil per day (Bbl/d). The quarter's volumes were impacted by third party pipeline downtime which accounted for approximately 1,950 barrels of oil equivalent per day (BOE/d).
"We expect to reach the mid-point of production guidance despite third-party pipeline outages that were out of our control," Chairman, President and Chief Executive Officer John Schiller stated. "We are properly risking our production forecast and plan for the unexpected, while still delivering on our targets. We expect a majority of our third-party downtime to be back online within the next 30 days."
Operations Update
At the West Delta 73 field (100% WI/ 83% NRI), three successful horizontal wells have been brought online with combined uplift of approximately 2,000 barrels of oil per day (Bbl/d) gross. These horizontal wells are being produced at restricted rates in order to control water production and increase ultimate recoveries per well. "These most recent three wells demonstrate the continued success of our horizontal program," Mr. Schiller said. "Combined, these wells confirm the consistent and repeatable nature of our horizontal program." Also, the company is completing the first dumpflood in the history of the field in the F-35 sand. The West Delta 73 team expects the dumpflood technology to provide a long-term, cost-effective solution to the field's reservoir pressure maintenance needs, and optimize performance of current and future horizontal wells in the field as demonstrated in nearby Gulf of Mexico Shelf fields such as Bay Marchand.
In the West Delta 30 field (100% WI/87.5% NRI), the company has successfully completed three wells which have provided total uplift of 1,420 Bbl/d gross. One additional well has reached total depth and production from this well is expected to be online in October. The company has completed the first phase of development drilling in the field and has released the rig.
In the Main Pass 61 field (100% WI/ 78% NRI), following the successful Punch well brought online in June and currently producing 900 Bbl/d gross, the company executed a successful dual completion and one recompletion adding uplift of 570 Bbl/d gross. One additional development well has reached total depth, is currently being completed, and is expected to be online in the next few weeks. Once that well is complete, the rig will begin drilling the Toro well, an addition to the rig line due to the successful development program underway in the field.
At Ship Shoal 208 (100% WI/ 87.5% NRI), the company completed one development well this fiscal year, which provided initial uplift of 210 Bbl/d gross, and is a successful completion around a salt dome structure. Two additional wells have been drilled and are currently being completed after reaching total depth in mid-September. Following these two completions, two additional development wells will be drilled at Ship Shoal 208, and a new six-slot platform will be installed for future development opportunities.
We have initiated injection into the O RD reservoir in South Timbalier 26 (100% WI/ 83.3% NRI) and production logging indicates that injection rates from the aquifer are in excess of 11,000 bwpd. The average reservoir pressure in this block is approximately 900 psi, and we have two updip completions that will benefit from the downdip water injection.
Capital Expenditures and Liquidity
The company's capital expenditures for fiscal year 2015, which began July 1, 2014, are being adjusted to a range of $785 million and $840 million, with $815 million as the expected case. The higher end of the range is primarily reliant on a successful test of the Lomond North well in the Highlander area. Development drilling, completions, and recompletions continue to account for $449 million of the reduced target as compared to $475 million in the original budget. Reduction in capital expenditures came from deferring additional West Delta 30 drilling, reduced non-essential facilities spending, and a reduction in general and administrative costs. The company is currently operating seven rigs on the Gulf of Mexico shelf and has secured rigs and services at prices and quality that support our economic thresholds.
"We are actively managing our capital spending in order to give the company every opportunity to pay down debt in the second half of this fiscal year," Schiller said. "Over eighty percent of our program is designed to raise total daily oil production. We are actively managing our capital program, factoring in drilling and completion results and realized prices. Our primary goal is to optimize oil production and generate free cash flow to pay down debt. Additionally, even with the drilling deferrals, we believe that full year guidance ranges provided earlier this year are still achievable."
The company reported net debt of $3.61 billion as of June 30, 2014. Currently, the company has available liquidity of approximately $675 million, of which $550 million is available under its revolving credit facility and approximately $120 million in cash at the Bermuda level. Chief Financial Officer West Griffin stated, "We have plenty of liquidity and have crude oil and natural gas hedges in place to give us the financial flexibility to complete our capital program. As we move through the fiscal year, we are looking at additional ways to reduce debt including asset sales, monetization of a portion of our ultra-deep drilling and completion program, and continued management of our capital investment."
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.