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Energy XXI Reports Audited Fiscal Year-End Results and Provides Operational Update

Energy XXI Logo (EPR)
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  • 3P reserves estimated at 310 MMBOE; $10.9 billion in PV-10
  • Drilling program continues to deliver with Big Sky 3, Monte Carlo 2 wells
  • Fiscal 2014 capital program targets volume growth and free cash flow

HOUSTON, Aug. 20, 2013 (GLOBE NEWSWIRE) -- Energy XXI (Nasdaq:EXXI) (LSE:EXXI) today announced fiscal fourth-quarter and full-year financial and operating results for the period ended June 30, 2013, and provided an operational update.



For the 2013 fiscal fourth quarter, adjusted earnings before interest and other, taxes, depreciation, depletion and amortization (adjusted EBITDA) was $208.6 million on revenues of $314.3 million, as volumes averaged 46,800 barrels of oil equivalent per day (BOE/d), 62 percent of which was oil. These results compare with 2012 fiscal fourth-quarter adjusted EBITDA of $223.1 million on revenues of $341.9 million and volumes of 47,600 BOE/d. Net income available for common shareholders in the 2013 fiscal fourth quarter totaled $59.2 million, or $0.72 per diluted share, compared with fiscal 2012 fourth-quarter net income available for common shareholders of $78.3 million, or $0.93 per diluted share.

For the full fiscal year ended June 30, 2013, adjusted EBITDA was $738.0 million, compared with $850.7 million generated in fiscal 2012. Fiscal 2013 net income available for common shareholders was $150.6 million, or $1.86 per diluted share, on revenues of $1.2 billion and production of 43,100 BOE/d. These results compare with net income available for common shareholders for fiscal 2012 of $316.7 million, or $3.85 per diluted share, on revenues of $1.3 billion and production of 44,100 BOE/d.

"Fiscal 2013 was a good year in terms of better defining our portfolio's opportunity set, including the upside of horizontal drilling, which contributed to the previously announced 50 percent growth in proved reserves," Energy XXI Chairman and CEO John Schiller said. "We continue to see excellent results from our oil-focused drilling program. Our fiscal 2014 capital program is designed to generate free cash flow while increasing production. If full-year production averages the current rate of about 47,000 BOE/d, volumes will increase 10 percent year over year."

Year-end Reserves

The company's June 30, 2013 fiscal year-end proved reserves were estimated at 179 million barrels of oil equivalent (MMBOE), up approximately 50 percent from the June 30, 2012 fiscal year-end reserves. Energy XXI added 62 MMBOE of proved reserves through discoveries, extensions of existing fields and performance revisions, in addition to 13 MMBOE through acquisitions, while producing 15.7 MMBOE. The all-sources reserves replacement rate was 475 percent.

Netherland Sewell & Associates, Inc. (NSAI), independent oil and gas reserves consultants, audited the year-end reserves estimates. All of the company's proved reserves are in the Gulf of Mexico or U.S. Gulf Coast, 61 percent are proved developed, 75 percent are liquids (of which 95 percent is crude oil and condensate), and 25 percent are natural gas. The tables set forth below provide additional information relating to the company's reserves, including cost-incurred data.

The following fiscal year-ended June 30, 2013 estimated proved, probable and possible reserves attributable to the company's net interests in oil and gas properties were prepared by in-house reservoir engineers and audited by NSAI.

June 30, 2013
Oil NGL Gas Equivalent PV10%
(MBBL) (MBBL) (MMCF) (MBOE) ($000)1
Proved Developed Producing 66,883 3,161 125,982 91,041 3,094,852
Proved Developed
Non-Producing
9,247 931 49,642 18,452 459,140
Proved Undeveloped 51,409 2,015 93,498 69,007 2,595,644
Proved Reserves 127,539 6,107 269,122 178,500 6,149,636
Probable 38,686 2,119 76,611 53,573 2,237,557
Proved+Probable 166,225 8,226 345,733 232,073 8,387,193
Possible 61,380 2,132 87,667 78,123 2,559,864
Proved+Probable+Possible 227,605 10,358 433,400 310,196 10,947,057
1Before tax, as of June 30, 2013, using prices of $108.24/per barrel of oil and $3.63/MCF ($91.60/per barrel of oil and $3.44/MMBTU base before differentials & BTU), based on the SEC-prescribed first-of-the-month average prices for the preceding 12 months

Exploration and Development Activity

At the West Delta 73 field (100% WI / 83% NRI), the Big Sky 3 well was drilled to 11,600 feet MD/ 7,995 feet TVD and currently is being brought online with a 1,283-foot lateral in the F-30 sand. Big Sky 3 represents the fifth consecutive successful completion from this horizontal program. The next horizontal well, Hulk, currently is being drilled to a total depth of 12,200 feet MD/ 9,300 feet TVD, targeting the H-35 sand.

The Java well at Main Pass 61 (WI 100% / 78% NRI) was drilled to 9,676 feet MD/ 7,148 feet TVD and brought online in late July 2013 producing 1,400 Bbl/d of oil and 1,600 Mcf/d of natural gas, gross, with flowing tubing pressure of 400 psi from the J-6 sand. The Monte Carlo 2 well, spud in late July 2013, was drilled to 8,521 feet MD/ 7,129 feet TVD, encountering 43 feet of net pay in the J-6 sand. The well has been successfully completed and currently is being brought online.

In the company's shallow-water salt dome exploration play, the Heron well (25% WI/ 17.8% NRI), located on Main Pass Block 295 and operated by Apache, has been drilled to 13,170 feet MD/ 13,160 feet TVD. A liner has been set and the well will resume drilling toward multiple primary target sands trapped against a salt dome with a proposed depth of 20,000 feet TVD. As announced, the well previously encountered 76 feet of net oil pay in two sands, as identified with wireline logging equipment.

The Merlin well (50% WI/ 41% NRI), located on Vermilion Block 178, was spud in mid-June and currently is drilling below 14,115 feet MD/ 12,165 feet TVD. Energy XXI is the operator at Merlin, which is targeting multiple oil and gas sands trapped against a salt dome, with a proposed depth of 19,750 feet MD/ 15,700 feet TVD.

Within the ultra-deep exploration program with Freeport-McMoRan, the Lomond North prospect (18% WI/ 13% NRI) in the Highlander area, located primarily in St. Martin Parish, Louisiana, is drilling below 25,100 feet toward a proposed total depth of 30,000 feet. The well is targeting Eocene, Paleocene and Cretaceous objectives below the salt weld. The Lineham Creek exploration prospect (9% WI/ 6.75 NRI), located onshore in Cameron Parish, Louisiana, is acquiring cores in the sidetrack wellbore below 23,000 feet, toward a target depth of 30,500 feet.

Capital Expenditures

The company's capital program for fiscal year 2014, which began July 1, 2013, is estimated at $660 million. Development drilling and recompletions account for $330 million of planned spending, with exploration drilling targeting approximately $126 million, $46 million of which is associated with the ultra-deep joint venture. Facilities spending is estimated at $80 million, which includes approximately $67 million for construction of a new platform at West Delta 73. Seismic costs are expected to total $34 million, primarily related to wide azimuth data acquisition, while abandonment costs are estimated at $31 million. The remainder of the capital budget for fiscal 2014 is allocated to general and administrative and land costs. Capital expenditures for fiscal year 2013 totaled $858 million, including $42 million of abandonment costs and excluding $161 million spent on acquisitions.

ENERGY XXI (BERMUDA) LIMITED
RECONCILIATION OF GAAP TO NON-GAAP MEASURES
(In Thousands, except per share information)
(Unaudited)
As required under Regulation G of the Securities Exchange Act of 1934, provided below are reconciliations of net income to the following non-GAAP financial measure: Adjusted EBITDA. The company uses this non-GAAP measure as a key metric for the management of the company and to demonstrate the company's ability to internally fund capital expenditures and service debt.
Quarter Ended June 30, Year Ended June 30,
2013 2012 2013 2012
Net Income as Reported $62,053 $81,155 $162,081 $335,827
Total other expense 28,479 26,494 113,091 108,811
Depreciation, depletion and amortization 96,846 106,644 376,224 367,463
Income tax expense 21,215 8,761 86,633 38,646
Adjusted EBITDA $208,593 $223,054 $738,029 $850,747
Adjusted EBITDA Per Share
Basic $2.66 $2.83 $9.33 $11.00
Diluted $2.66 $2.82 $9.32 $10.96
Weighted Average Number of Common Shares Outstanding
Basic 78,409 78,840 79,063 77,310
Diluted 78,477 79,199 79,166 77,614
ENERGY XXI (BERMUDA) LIMITED
CONSOLIDATED BALANCE SHEETS
(In Thousands, except share information)
June 30,
ASSETS 2013 2012
Current Assets
Cash and cash equivalents $— $117,087
Accounts receivable
Oil and natural gas sales 132,521 126,107
Joint interest billings 9,505 3,840
Insurance and other 6,745 5,420
Prepaid expenses and other current assets 50,738 63,029
Derivative financial instruments 38,389 32,497
Total Current Assets 237,898 347,980
Property and Equipment
Oil and natural gas properties - full cost method of accounting, including $422.6 million and $418.8 million of unevaluated properties not being amortized at June 30, 2013 and 2012, respectively 3,289,505 2,698,213
Other property and equipment 17,003 9,533
Total Property and Equipment, net of accumulated depreciation, depletion, amortization and impairment 3,306,508 2,707,746
Other Assets
Derivative financial instruments 21,926 45,496
Equity investments 12,799 2,117
Debt issuance costs, net of accumulated amortization and other assets 32,580 27,608
Total Other Assets 67,305 75,221
Total Assets $3,611,711 $3,130,947
LIABILITIES
Current Liabilities
Accounts payable $219,610 $156,959
Accrued liabilities 105,192 118,818
Notes payable 22,524 22,211
Deferred income taxes 20,517
Asset retirement obligations 29,500 34,457
Derivative financial instruments 40
Current maturities of long-term debt 19,554 4,284
Total Current Liabilities 416,937 336,729
Long-term debt, less current maturities 1,350,491 1,014,060
Deferred income taxes 140,804 104,280
Asset retirement obligations 258,318 266,958
Other liabilities 7,915 3,080
Total Liabilities 2,174,465 1,725,107
Commitments and Contingencies
Stockholders' Equity
Preferred stock, $0.001 par value, 7,500,000 shares authorized at June 30, 2013 and 2012, respectively
7.25% Convertible perpetual preferred stock, 8,000 shares issued and outstanding at June 30, 2013 and 2012, respectively
5.625% Convertible perpetual preferred stock, 813,188 and 814,117 shares issued and outstanding at June 30, 2013 and 2012, respectively 1 1
Common stock, $0.005 par value, 200,000,000 shares authorized and 79,425,473 and 79,147,340 shares issued and 76,485,910 and 78,837,697 shares outstanding at June 30, 2013 and 2012, respectively 397 396
Additional paid-in capital 1,512,311 1,501,785
Accumulated deficit (29,352) (153,945)
Accumulated other comprehensive income, net of income taxes 26,552 57,603
Treasury stock, at cost, 2,938,900 shares at June 30, 2013 (72,663)
Total Stockholders' Equity 1,437,246 1,405,840
Total Liabilities and Stockholders' Equity $3,611,711 $3,130,947
ENERGY XXI (BERMUDA) LIMITED
CONSOLIDATED STATEMENTS OF INCOME
(In Thousands, except per share information)
Quarter Ended June 30, Year Ended June 30,
2013 2012 2013 2012
(Unaudited)
Revenues
Crude oil sales $273,464 $317,653 $1,080,982 $1,186,631
Natural gas sales 40,861 24,293 127,863 116,772
Total Revenues 314,325 341,946 1,208,845 1,303,403
Costs and Expenses
Lease operating expense 82,455 87,201 337,163 310,815
Production taxes 1,481 2,414 5,246 7,261
Gathering and transportation 5,668 4,358 24,168 16,371
Depreciation, depletion and amortization 96,846 106,644 376,224 367,463
Accretion of asset retirement obligations 7,828 9,908 30,885 39,161
General and administrative expense 12,299 19,733 71,598 86,276
Loss (gain) on derivative financial instruments (3,999) (4,722) 1,756 (7,228)
Total Costs and Expenses 202,578 225,536 847,040 820,119
Operating Income 111,747 116,410 361,805 483,284
Other Income (Expense)
Loss from equity method investees (1,699) (6,397)
Interest income and other 540 (50) 1,965 71
Interest expense (27,320) (26,444) (108,659) (108,882)
Total Other Expense (28,479) (26,494) (113,091) (108,811)
Income Before Income Taxes 83,268 89,916 248,714 374,473
Income Tax Expense 21,215 8,761 86,633 38,646
Net Income 62,053 81,155 162,081 335,827
Induced Conversion of Preferred Stock 10 6,068
Preferred Stock Dividends 2,873 2,877 11,496 13,028
Net Income Available for Common Stockholders $59,180 $78,268 $150,585 $316,731
Earnings per Share
Basic $0.75 $0.99 $1.90 $4.10
Diluted $0.72 $0.93 $1.86 $3.85
Weighted Average Number of Common Shares Outstanding
Basic 78,409 78,840 79,063 77,310
Diluted 86,572 87,278 87,263 87,208
ENERGY XXI (BERMUDA) LIMITED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
Quarter Ended June 30, Year Ended June 30,
2013 2012 2013 2012
(Unaudited)
Cash Flows From Operating Activities
Net income $62,053 $81,155 $162,081 $335,827
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation, depletion and amortization 96,846 106,644 376,224 367,463
Deferred income tax expense 15,322 8,760 73,761 38,796
Change in derivative financial instruments
Proceeds from sale of derivative instruments 25 760 66,522
Other – net (8,180) (15,598) (27,516) (52,155)
Accretion of asset retirement obligations 7,828 9,908 30,885 39,161
Loss from equity method investees 1,699 6,397
Amortization and write-off of debt issuance costs and other 1,190 1,968 6,898 7,559
Stock-based compensation 1,366 1,168 3,505 11,760
Changes in operating assets and liabilities
Accounts receivable 10,943 22,151 1,690 (4,995)
Prepaid expenses and other current assets (27,764) (20,769) 12,499 (15,890)
Settlement of asset retirement obligations (12,369) (8,427) (41,939) (14,990)
Accounts payable and accrued liabilities 37,644 32,372 32,903 6,456
Net Cash Provided by Operating Activities 186,603 219,332 638,148 785,514
Cash Flows from Investing Activities
Acquisitions (7,442) (189) (161,164) (6,401)
Capital expenditures (252,551) (176,482) (816,105) (570,670)
Insurance payments received 6,472
Change in equity method investments (666) (2,201) (16,693) (2,201)
Proceeds from the sale of properties (220) 2,750
Other 13 13 (41) 457
Net Cash Used in Investing Activities (260,646) (179,079) (994,003) (569,593)
Cash Flows from Financing Activities
Proceeds from the issuance of common and preferred stock, net of offering costs 134 192 7,021 9,839
Conversion of preferred stock to common (11) (6,040)
Repurchase of company common stock (58,666) (58,666)
Dividends to shareholders - common (9,333) (25,992)
Dividends to shareholders - preferred (2,873) (8,393) (11,496) (18,682)
Proceeds from long-term debt 434,112 188,956 1,576,551 896,717
Payments on long-term debt (314,934) (189,513) (1,243,848) (1,008,300)
Debt issuance costs and other (4,626) 79 (4,802) (775)
Net Cash Provided by (Used in) Financing Activities 43,814 (8,690) 238,768 (127,241)
Net Increase (Decrease) in Cash and Cash Equivalents (30,229) 31,563 (117,087) 88,680
Cash and Cash Equivalents, beginning of period 30,229 85,524 117,087 28,407
Cash and Cash Equivalents, end of period $— $117,087 $— $117,087
Year Ended June 30, (In Thousands, Except per Unit Amounts)
Operating Highlights 2013 2012 2011 2010 2009
Operating revenues
Crude oil sales $1,067,686 $1,186,193 $777,869 $383,928 $278,014
Natural gas sales 112,753 88,608 101,815 69,399 113,156
Hedge gain (loss) 28,406 28,602 (20,314) 45,604 42,660
Total revenues 1,208,845 1,303,403 859,370 498,931 433,830
Percent of operating revenues from crude oil
Prior to hedge gain (loss) 90% 93% 88% 85% 71%
Including hedge gain (loss) 89% 91% 84% 78% 68%
Operating expenses
Lease operating expense
Insurance expense 32,737 28,521 27,876 27,603 19,188
Workover and maintenance 65,118 56,413 33,095 19,630 15,930
Direct lease operating expense 239,308 225,881 178,507 95,379 87,032
Total lease operating expense 337,163 310,815 239,478 142,612 122,150
Production taxes 5,246 7,261 3,336 4,217 5,450
Gathering and transportation 24,168 16,371 12,499
Depreciation, depletion and amortization 376,224 367,463 293,479 181,640 217,207
Impairment of oil and gas properties 576,996
General and administrative 71,598 86,276 75,091 49,667 24,756
Other – net 32,641 31,933 26,564 18,748 4,488
Total operating expenses 847,040 820,119 650,447 396,884 951,047
Operating income (loss) $361,805 $483,284 $208,923 $102,047 $(517,217)
Sales volumes per day
Natural gas (MMcf) 88.6 81.5 67.2 42.6 47.9
Crude oil (MBbls) 28.3 30.5 23.4 14.7 11.4
Total (MBOE) 43.1 44.1 34.6 21.8 19.3
Percent of sales volumes from crude oil 66% 69% 68% 67% 59%
Average sales price
Natural gas per Mcf $3.48 $2.97 $4.15 $4.47 $6.48
Hedge gain per Mcf 0.47 0.94 1.54 2.68 1.60
Total natural gas per Mcf $3.95 $3.91 $5.69 $7.15 $8.08
Crude oil per Bbl $103.48 $106.17 $90.95 $71.73 $67.06
Hedge gain (loss) per Bbl 1.29 0.04 (6.80) 0.75 3.56
Total crude oil per Bbl $104.77 $106.21 $84.15 $72.48 $70.62
Total hedge gain (loss) per BOE $1.81 $1.77 $(1.61) $5.74 $6.04
Operating revenues per BOE $76.95 $80.74 $67.98 $62.83 $61.47
Operating expenses per BOE
Lease operating expense
Insurance expense 2.08 1.77 2.21 3.48 2.72
Workover and maintenance 4.15 3.49 2.62 2.47 2.26
Direct lease operating expense 15.23 13.99 14.12 12.01 12.33
Total lease operating expense per BOE 21.46 19.25 18.95 17.96 17.31
Production taxes 0.33 0.45 0.26 0.53 0.77
Impairment of oil and gas properties 81.75
Gathering and transportation 1.54 1.01 0.98
Depreciation, depletion and amortization 23.95 22.76 23.22 22.87 30.78
General and administrative 4.56 5.34 5.94 6.25 3.51
Other – net 2.08 1.98 2.10 2.36 0.64
Total operating expenses per BOE 53.92 50.79 51.45 49.97 134.76
Operating income (loss) per BOE $23.03 $29.95 $16.53 $12.86 $(73.29)
ENERGY XXI (BERMUDA) LIMITED
CONSOLIDATED COSTS INCURRED, CAPITAL EXPENDITURES AND PROVED RESERVES
(Unaudited)
Year Ended June 30,
2013 2012 2011
(In Thousands)
Oil and Gas Activities
Exploration costs $168,512 $183,397 $98,133
Development costs 636,406 383,495 180,191
Total 804,918 566,892 278,324
Administrative and Other 11,187 3,778 2,909
Total capital expenditures 816,105 570,670 281,233
Property acquisitions
Proved 108,825 6,401 722,551
Unproved 52,339 289,711
Total acquisitions 161,164 6,401 1,012,262
Asset retirement obligations, insurance proceeds and other – net (2,283) (55,399) 205,702
Total costs incurred $974,986 $521,672 $1,499,197
Crude Oil Natural Gas Total
(MBbls) (MMcf) (MBOE)
Proved reserves at June 30, 2010 47,483 168,783 75,614
Production (8,553) (24,533) (12,642)
Extensions and discoveries 3,056 39,555 9,649
Revisions of previous estimates 2,155 (43) 2,148
Reclassification of proved undeveloped (2,917) (4,579) (3,681)
Purchases of reserves 37,115 97,591 53,380
Sales of reserves (1,133) (40,458) (7,876)
Proved reserves at June 30, 2011 77,206 236,316 116,592
Production (11,172) (29,824) (16,143)
Extensions and discoveries 11,444 27,821 16,081
Revisions of previous estimates 9,098 (23,281) 5,217
Reclassification of proved undeveloped (1,783) (2,042) (2,123)
Proved reserves at June 30, 2012 84,793 208,990 119,624
Production (10,318) (32,354) (15,710)
Extensions and discoveries 40,690 40,714 47,476
Revisions of previous estimates 14,380 7,903 15,697
Reclassification of proved undeveloped (1,123) (1,755) (1,416)
Purchases of reserves 5,225 45,623 12,829
Proved reserves at June 30, 2013 133,647 269,121 178,500
Proved developed reserves
June 30, 2010 36,970 93,610 52,572
June 30, 2011 59,234 134,024 81,572
June 30, 2012 63,308 110,310 81,693
June 30, 2013 80,223 175,623 109,493
Proved undeveloped reserves
June 30, 2010 10,513 75,173 23,042
June 30, 2011 17,972 102,292 35,020
June 30, 2012 21,485 98,680 37,931
June 30, 2013 53,424 93,498 69,007

Conference Call Tomorrow, Aug. 21, at 9 a.m. CDT, 3 p.m. London Time

Energy XXI will host its year-end conference call tomorrow, Aug. 21, at 9 a.m. CDT (3 p.m. London time). The dial-in numbers are 1 (631) 813-4724 (U.S.) and (0) 80 0032 3836 (U.K.), and the confirmation code is 27812792. For complete instructions on how to actively participate in the conference call, or to listen to the live audio webcast or a replay, please refer to www.EnergyXXI.com.

Copies of Annual Report

A copy of the company's annual report will be posted to shareholders in due course and a copy will be available on the company's website at www.EnergyXXI.com.

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.

Competent Person Disclosure

The technical information contained in this announcement relating to operations adheres to the standard set by the Society of Petroleum Engineers. Phil Kerig, Director of Corporate Development, a registered Petroleum Engineer, is the qualified person who has reviewed and approved the technical information contained in this announcement.

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

Reserves:

Proved Oil and Gas Reserves -- Those quantities of crude oil and gas, which, by analysis of geoscience and engineering data, can be estimated with reasonable certainty to be economically producible -- from a given date forward, from known reservoirs, and under existing economic conditions, operating methods and government regulations -- prior to the time at which contracts providing the right to operate expire, unless evidence indicates that renewal is reasonably certain, regardless of whether deterministic or probabilistic methods are used for the estimation. The project to extract the hydrocarbons must have commenced or the operator must be reasonably certain that it will commence the project within a reasonable time. This definition has been abbreviated from the definition of "Proved oil and gas reserves" contained in Rule 4-10(a)(22) of SEC Regulation S-X.

Proved Developed Reserves -- Reserves are categorized as proved developed if they are expected to be recovered from existing wells.

Probable Reserves -- Those additional reserves that are less certain to be recovered than proved reserves but more certain to be recovered than possible reserves. This definition has been abbreviated from the applicable definition contained in Rule 4-10(a)(18) of SEC Regulation S-X.

Possible Reserves -- Those additional reserves that are less certain to be recovered than probable reserves. This definition has been abbreviated from the applicable definition contained in Rule 4-10(a)(17) of Regulation S-X.

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.

Field – an area consisting of a single reservoir or multiple reservoirs all grouped on, or related to, the same individual geological structural feature or stratigraphic condition. The field name refers to the surface area, although it may refer to both the surface and the underground productive formations.

MBBL – thousand barrels of oil.

MBOE – thousand barrels of oil equivalent.

CF – thousand cubic feet of gas.

MMBOE – million barrels of oil equivalent.

MMBTU – million British thermal units.

MMCF – million cubic feet of gas.

PV10 – the estimated present value of the resource, discounted at a 10 percent annual rate.

CONTACT: 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 Cantor Fitzgerald Europe Nominated Adviser: David Porter, Rick Thompson Corporate Broking: Richard Redmayne Tel: +44 (0) 20 7894 000 Pelham Bell Pottinger James Henderson jhenderson@pelhambellpottinger.co.uk Mark Antelme mantelme@pelhambellpottinger.co.uk +44 (0) 20 7861 3232

Source:Energy XXI