Energy XXI Ltd (NASDAQ:EXXI) announced financial and operating results for the three months ended September 30, 2015 (fiscal 2016 first quarter), and provided an operations update. Highlights include:
- Production continues to be stable
- 1Q 2016 net oil production averaged 42,200 barrels per day
- 1Q 2016 total net production averaged 58,900 barrels equivalent per day
- Lease Operating Expenses (LOE) decreased 34% year over year
- $94 million in 1Q 2016, decreased from $142 million in 1Q 2015
- Over $890 million in face-value debt retired in 2015 to-date
- Annualized interest savings of approximately $65 million, ~$3.00 per barrel of oil equivalent (BOE)
- Total liquidity of $510 million
“We continue to execute successfully on multiple objectives,” Energy XXI President and Chief Executive Officer John Schiller said. “Our operations team continues to deliver stable production, while reducing our LOE costs, and improving our efficiency in the Gulf of Mexico. Production for the fiscal 2016 first quarter totaled 5.42 million barrels of oil equivalent (MMBOE), compared to 5.38 MMBOE in the same period last year. LOE for fiscal 2016 first quarter were $94 million compared to $142 million in the fiscal 2015 first quarter. The 34 percent year over year decrease was driven by a combination of synergies gained from the EPL acquisition, operational efficiencies, and lower service costs in the field as a result of the commodity price erosion,”Mr. Schiller continued. “Our finance team continues to reduce debt while managing our liquidity. We have retired over $890 million in face value of our bonds through open-market purchases and continue to look for opportunities to reduce our leverage and minimize annual interest payments.”
For the fiscal 2016 first quarter, adjusted EBITDA was $89.0 million (a non-GAAP measure reconciled below), on revenue of $257.8 million, as total net production volumes averaged 58,900 barrels of oil equivalent per day (BOE/d), 72 percent of which was oil. These results compare with fiscal 2015 first quarter adjusted EBITDA of $231.5 million on revenue of $461.4 million and volumes of 58,600 BOE/d, 71 percent oil. Net loss attributable to common shareholders in the 2016 fiscal first quarter totaled ($576.2) million, or ($6.08) per diluted share, compared with fiscal 2015 first quarter net income attributable to common shareholders of $24.3 million, or $0.24 per diluted share. Net loss attributable to common shareholders in the 2016 fiscal first qurter includes a non-cash impairment charge on its oil and gas assets of $904.7 million, or ($9.54) per diluted share, due to sustained lower commodity prices and a gain on early extinguishment of debt of $458.3 million, or $4.83 per diluted share, resulting from our bond repurchases. Excluding these two items and other non-cash items, the company’s fiscal 2016 first quarter adjusted net loss attributable to common shareholders was($155.8) million, or ($1.64) per diluted share, compared with adjusted net loss attributable to common shareholders in fiscal 2015 first quarter of ($31.8) million, or ($0.34) per diluted share.
(Adjusted EBITDA and Adjusted Net Income (Loss) is a non-GAAP financial measure and is defined and reconciled to the most directly comparable GAAP measure under “Non-GAAP Financial Measures” in the tables below)
Production for the 2016 fiscal first quarter averaged 58,900 BOE/d, of which 42,200 was oil. Current production for the fiscal second quarter to date is approximately 54,500 BOE/d, as a result of third-party pipeline downtime during the quarter. With a majority of the downtime back online, production for the month of November has averaged 56,515 BOE/d.
The West Delta 73 (100% WI/ 83% NRI) rig demobilization has been completed and the field has returned to full production, averaging over 5,900 BOE/d net. Operations were shut-in temporarily to remove the rig in October, which had an impact on average production for the fiscal second quarter of 775 BOE/d.
The company began the recompletion of the Landers well in South Louisiana (74% WI/ 55% NRI). The Landers well has produced 48 billion cubic feet of gas since coming online in 2011. This large gas unit has multiple stacked pay zones. The company is currently recompleting to the MA7 sand, and expects it to come online this December at a rate of 20-24 Mmcf/d, approximately 15-17 Mmcf/d net to Energy XXI.
The Highlander well (18% WI/ 13% NRI) in South Louisiana, operated by Freeport McMoRan, has been remediated and returned to production as ofSeptember 29, 2015, at 25 Mmcf/d. The well was taken offline in July 2015 to begin remediation and to expand an amine unit to allow for higher production rates. The operator expects that the new amine unit will be commissioned and operational this December and is expected to allow the well to produce over 45 Mmcf/d, 8 Mmcf/d net to Energy XXI.
The company reaffirms 2016 full year production ranges as detailed below.
|Volume Projections||FY 2016|
|Net Production (per day)|
|Oil, including NGLs (Bbls)||35,000 – 40,000|
|BOE||54,000 – 59,000|
|Oil, including NGLs
(using midpoint of guidance)
Capital Expenditures and Liquidity
For fiscal 2016 full year, the company is targeting a range of $130 – $150 million in capital expenditures. Fiscal 2016 first quarter ended September 30, 2015, capital expenditures totaled approximately $55 million excluding acquisitions, of which approximately $33 million was spent on development of our core properties, and $22 million on other assets, mostly attributable to plugging and abandonment costs.
As of October 31, 2015, the company had total liquidity of $510 million. The company has been opportunistic in repurchasing bonds, and to date has retired over $890 million in face value of bonds with annualized cash interest expense savings of more than $65 million. We continue to analyze a variety of transactions designed to reduce our leverage. (Original Source)
Shares of Energy XXI closed last Friday at $1.96. EXXI has a 1-year high of $7.73 and a 1-year low of $0.90. The stock’s 50-day moving average is $1.70 and its 200-day moving average is $2.36.
On the ratings front, KeyBanc analyst David Deckelbaum maintained a Buy rating on EXXI, with a price target of $3.50, in a report issued on July 14. The current price target implies an upside of 78.6% from current levels. According to TipRanks.com, Deckelbaum has a total average return of -30.7%, a 21.4% success rate, and is ranked #3794 out of 3829 analysts.
Energy XXI Ltd is an oil and gas exploration and production company. The Company’s properties are located in the United States Gulf of Mexico waters and the Gulf Coast onshore.