Energy XXI anticipates that the acquisition nearly doubles its reserves and production profile, adding about 20,000 net barrels of oil equivalent (boe) per day of production, about 53% of which is oil, and an estimated 66 million boe of net proved and probable reserves, 61% of which is oil.
Offshore leases included in the purchase total approximately 130,853 net acres.
Pro forma for the acquisition, estimated proved plus probable reserves increase 72% to 158.1 million boe from 92.1 million boe at the company’s 30 June 2010 fiscal year end.
Energy XXI anticipates that production increases to approximately 46,000boe per day, up more than 77% from the 25,900boe per day average in the most recent fiscal quarter ended 30 September 2010.
Energy XXI Chairman and CEO John Schiller said that the acquired properties fit the company’s existing assets well, adding nine fields right in the heart of producing properties.
"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," Schiller said.
The transaction was funded through a combination of cash on hand, borrowings against the company’s $700m corporate revolver, as amended, and proceeds from the previously disclosed private placement by the company’s operating subsidiary, Energy XXI Gulf Coast, of $750m of 9.25% senior unsecured notes due 2017.
Actual funding requirements at closing totaled $1.01bn, including the 10% deposit that had been placed in escrow.
