TIDMEXXI
RNS Number : 6588N
Energy XXI (Bermuda) Limited
01 October 2012
Energy XXI Provides Operations Update,
Announces Exploration Joint Venture
-- First horizontal oil well successful, on production at 3,000 BOE/d
-- Don Tomas well triples pre-drill estimates
-- Exploration joint venture targets high-potential oil prospects
-- Current production approximates 45,000 BOE/d
HOUSTON - Oct. 1, 2012 - Energy XXI (NASDAQ: EXXI) (AIM: EXXI)
today provided an operations update and announced an asset purchase
and exploration joint venture.
At West Delta 73 (WI 100%/ NRI 83%) the company's first
horizontal well, Big Sky 2, was drilled to 8,000 feet true vertical
depth (TVD)/10,765 feet measured depth (MD), including a 1,000 foot
lateral in the F-30 oil sand. The well was placed on production at
3,000 barrels of oil per day (BOE/d) gross. Based on the historical
results of nine horizontal wells drilled in this field in the late
1990s, the estimated ultimate recovery from Big Sky 2 should exceed
1 million barrels of oil. Weimer, the company's second horizontal
well at West Delta, is currently drilling at a depth of 8,234 feet
TVD/9,320 feet MD and is targeting the F-45 oil sand. Weimer will
be drilled to 8,300 feet TVD/10,200 feet MD with production online
during October.
"Our first horizontal well, Big Sky 2, had the highest oil rate
ever produced in the West Delta 73 field since its discovery in
1962," Energy XXI Executive Vice President Ben Marchive said.
"Continued success with the horizontal program can be
transformational for Energy XXI, increasing ultimate recovery per
well and continuing to improve the already attractive economics of
our drilling program."
In the Main Pass complex, the company successfully drilled the
Don Tomas well (WI 100%/ NRI 78%) targeting the BA-4AA sand. Don
Tomas was drilled to 8,292 feet TVD/ 8,550 feet MD, encountering
195 net feet of pay within the targeted BA-4AA sand, and placed on
production in mid-August at 4,500 (BOE/d) gross. Additional
development wells are scheduled at Main Pass, with as many as five
additional wells in the program this fiscal year.
At Grand Isle 16 (WI 100%/ NRI 87%), the Pi development well was
drilled to 9,572 feet TVD/ 11,482 feet MD and is currently
producing 1,200 BOE/d. Pay was seen in the primary targets, C1
through C-7 sands, and additional pay was seen in the BF-1 through
B-4 sands. The company currently is drilling Cake, a horizontal
development well targeting the BF-2 sand updip of a past producer.
The well is drilling at 6,898 feet TVD/7,808 feet MD.
Purchase and Exploration Joint Venture
The company has executed a purchase and sale agreement to
acquire certain shallow-water Gulf of Mexico interests from Exxon
Mobil Corporation. The agreement covers 5,000 gross acres on
Vermilion Block 164, currently producing approximately 1,100 BOE/d
net. The asset has produced approximately 44 million BOE since its
discovery in 1957.
Energy XXI and ExxonMobil also have entered into a joint venture
agreement to explore for oil and gas on nine contiguous blocks
adjacent to Vermilion Block 164 in shallow waters on the Gulf of
Mexico shelf. Energy XXI will operate the joint venture, and
drilling of the initial prospect, called Pendragon, is expected to
commence by the end of the year. The company's total capital
commitment is estimated at $75 million, assuming successful
completions of two earning wells. Energy XXI plans to adjust its
drilling schedule, postponing two large natural gas exploration
prospects, Golden Bear and Wombat, to drill the two oil-focused
joint venture wells.
"This joint venture provides Energy XXI the opportunity to drill
best-in-class exploration projects with a world-class partner,"
Energy XXI Chairman and CEO John Schiller said. "Acquiring existing
production in an oil producing reservoir, along with the additional
opportunities identified by our teams, makes this agreement even
more significant."
Production Update
Production for the fiscal first quarter was impacted by downtime
associated with Hurricane Isaac, as well as pipeline repairs. While
the company sustained no significant physical storm damage,
production was shut-in for an extended period. Combined with
repairs to operated and third-party pipelines, these shut-ins are
expected to result in production of approximately 37,000 BOE/d for
the current quarter, with more than 70 percent being liquids.
Current production is averaging 45,000 BOE/d, 71 percent oil, with
current capacity of 50,000 BOE/d.
"Even with the storm and pipeline outages during the fiscal
first quarter, and the deferral of two high-rate gas wells to
accommodate the joint venture oil exploration, we still expect to
grow the average annual production rate this year more than 25
percent while generating significant free cash flow," Schiller
said. "Notably, the oil portion of our production could grow by
more than 30 percent, with the potential for upward production and
reserves additions in the future if we are successful with our
high-impact exploration."
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, 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. Seymour Pierce 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.
MMcf/d - million cubic feet of gas per day.
Net Pay - cumulative hydrocarbon-bearing formations.
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.
Workover / Recompletion - operations on a producing well to
restore or increase production. A workover or recompletion may be
performed to stimulate the well, remove sand or wax from the
wellbore, to mechanically repair the well, or for other
reasons.
Enquiries of the Company
Energy XXI
Stewart Lawrence
Vice President, Investor Relations and Communications
713-351-3006
slawrence@energyxxi.com
Greg Smith
Director, Investor Relations
713-351-3149
gsmith@energyxxi.com
Seymour Pierce
Nominated Adviser: Jonathan Wright
Corporate Broking: Richard Redmayne
Tel: +44 (0) 20 7107 8000
Pelham Bell Pottinger
James Henderson
jhenderson@pelhambellpottinger.co.uk
Mark Antelme
mantelme@pelhambellpottinger.co.uk
+44 (0) 20 7861 3232
This information is provided by RNS
The company news service from the London Stock Exchange
END
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