HOUSTON, July 1, 2015 (GLOBE NEWSWIRE) -- Energy XXI (Nasdaq:EXXI) today announced it has closed on the sale of the East Bay Field for $21 million to a private buyer. In addition, Energy XXI will retain a 5% overriding royalty interest on these assets for a period not to exceed 5 years from the closing date, and Energy XXI will also retain 50 percent of the deep rights associated with the East Bay Field.
The East Bay Field produced approximately 2,050 barrels of oil per day (Bbl/d) net on average for fiscal 2015, with net reserves associated with the East Bay Field estimated at approximately 9.4 million barrels of oil equivalent, 94 percent liquids, as of June 30, 2015. The buyer will assume plugging and abandonment liability.
"The sale of East Bay allows the company to focus on activities in fields with higher profitability, while significantly reducing our plugging and abandonment liability in the Gulf of Mexico," Chairman, President and Chief Executive Officer John Schiller said. "We continue to evaluate additional opportunities to sell non-core assets in the Gulf of Mexico."
Additionally, the company closed on the divestiture of the Grand Isle Gathering System. Total cash proceeds received were $245 million. As previously announced, the company will continue to operate the system on behalf of the buyer, CorEnergy Infrastructure Trust, Inc.
"It is important to have these two transactions complete. We remain focused on delivering excellent operational results and continue our work to improve the balance sheet," Mr. Schiller said.
During the company's fiscal fourth-quarter, production averaged approximately 59,000 barrels of oil equivalent per day (BOE/d) net, with oil production averaging 41,600 Bbl/d net.
During fiscal 2015, the company reduced downtime in the field to approximately seven percent, down from over nine percent at the beginning of the fiscal year. The reduced downtime and a successful recompletion program allowed the company to arrest base declines and maintain production relatively flat since January 1, 2015 despite lower capital spending. The company is currently finalizing the capital budget for fiscal 2016, and will continue to focus capital expenditures on low-risk development drilling.
The company is currently operating two rigs; one workover rig at South Pass and one rig drilling development wells at West Delta 73. To date, eight wells have been completed in the South Pass 78 field workover program, bringing production in the field to over 5,100 BOE/d net as compared to 2,500 BOE/d net when the program began earlier this calendar year. The company expects to drill up to 14 development wells in fiscal 2016, which begins July 1st, with seven of the 14 wells being drilled at West Delta 73.
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. To learn more, visit the Energy XXI website at www.EnergyXXI.com.