Energy XXI announced it has completed the previously announced purchase of certain shallow-water Gulf of Mexico shelf oil and natural gas interests from ExxonMobil and its affiliates.
The acquisition nearly doubles the company’s reserves and production profile, adding approximately 20,000 net barrels of oil equivalent (BOE) per day of production, about 53 percent of which is oil, and an estimated 66 million BOE of net proved and probable reserves, 61 percent of which is oil. Offshore leases included in the purchase total 130,853 net acres.
“The acquired properties fit our existing assets well, adding nine fields right in the heart of our producing properties,” Energy XXI Chairman and CEO John Schiller said. “In addition to oil-weighted reserves and production, supported by an extensive pipeline system, this acquisition includes acreage, seismic data and field studies that will help us develop a portfolio of attractive drilling and recompletion opportunities.”
Pro forma for the acquisition, estimated proved plus probable reserves increase 72 percent to 158.1 million BOE from 92.1 million BOE at the company’s June 30, 2010 fiscal year end. Production increases to approximately 46,000 BOE per day, up more than 77 percent from the 25,900 BOE per day average in the most recent fiscal quarter ended Sept. 30, 2010 .
The transaction was funded through a combination of cash on hand, borrowings against the company’s $700 million corporate revolver, as amended, and proceeds from the previously disclosed private placement by the company’s operating subsidiary, Energy XXI Gulf Coast, Inc. , of $750 million of 9.25% senior unsecured notes due 2017, which closed on Friday. Actual funding requirements at closing totaled $1.01 billion , including the 10 percent deposit that had been placed in escrow. The purchase remains subject to post-closing adjustments to reflect actual operating results since the effective date of Dec. 1, 2010 .
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Source:Reson, December 19, 2010;