Energy XXI has pulled back sharply with the rest of the market but their outlook looks very strong.
EXXI has a fiscal year that just ended 6-30-11
For fiscal year ending 6-30-12 First Call shows the following forecasts.
Keep in mind that this stock is now trading at $25.50/share
Forecasts
EPS = $2.54
CFPS = $8.95
They sell all of their production into the Gulf Coast market so they get a significant premium for all of their liquids. Fiscal first quarter earnings (for 9-30-2011) should be near 60 cents per share with close to $2 CFPS. The stock is trading at very attractive multiples.
EXXI hosted our luncheon in June. I like their upside but I'm a bit concerned with their concentration risk. Their GOM properties are right in the middle of "Hurricane Alley". Once we get past hurricane season, this one looks very good to me.
Watch List Alert: EXXI
Watch List Alert: EXXI
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: Watch List Alert: EXXI
Dan,
Are the 2012 projections free of any possible contribution from EXXI's interest in MMR's ultradeep wells?
Thanks.
Are the 2012 projections free of any possible contribution from EXXI's interest in MMR's ultradeep wells?
Thanks.
Re: Watch List Alert: EXXI
Yes, I have production from the ultra-deep program (Davy Jones) coming on in December, 2011. This agrees with comments made by the company at the R&R conference a few weeks ago. I will be posting an updated forecast for EXXI late today. - Dan
From their August 10 press release:
Within the shallow-water, ultra-deep Gulf of Mexico shelf program, the McMoRan-operated partnership (in which Energy XXI has various interests) continued during the quarter to drill the Blackbeard East and Lafitte exploratory wells and the offset appraisal well at the Davy Jones discovery.
The Davy Jones offset appraisal well (Davy Jones No. 2), located in 20 feet of water on South Marsh Island Block 234, two and a half miles southwest of the Davy Jones No. 1 discovery well, was drilled to a total depth of 30,546 feet. As previously reported, log results above 27,300 feet confirmed 120 net feet of hydrocarbon-bearing Wilcox sands, indicating continuity across the major structural features of the Davy Jones discovery.
In June 2011, results from wireline logs of the Cretaceous section below 27,300 feet indicated that the Davy Jones No. 2 well encountered 192 net feet of potential hydrocarbons in the Tuscaloosa and Lower Cretaceous carbonate sections. Flow testing will be required to confirm the potential hydrocarbons and flow rates. A production liner has been set to 30,511 feet and the well has been temporarily suspended while the partnership evaluates development options and prepares to flow test the well by June 2012. Updip locations in a subsequent well to the north are being considered to evaluate the Tuscaloosa sands and Lower Cretaceous carbonates higher on the Davy Jones structure.
As reported in January 2010, logs identified 200 net feet of pay in multiple Wilcox sands in the Davy Jones No. 1 well on South Marsh Island Block 230. In March 2010, a production liner was set and the well was temporarily abandoned to prepare for completion and flow test, which remain on schedule for late 2011.
Davy Jones involves a large ultra-deep structure encompassing four OCS lease blocks (20,000 acres). Energy XXI has a 15.8 percent working interest and 12.6 percent net revenue interest in Davy Jones. As of June 30, 2011 the company's investment in both wells at Davy Jones has totaled about $62 million.
The Blackbeard East ultra-deep exploration well, located in 80 feet of water on South Timbalier Block 144, was drilled to 32,559 feet before encountering mechanical issues. In July 2011, McMoRan commenced operations to drill a by-pass of the well at approximately 30,700 feet to evaluate targets in the Eocene. The well is permitted to 34,000 feet. Based on interpretations of drilling data obtained prior to the mechanical issue, the well appears to have encountered Sparta sands above the target Wilcox section. Sparta sands are productive onshore in south Louisiana. Wireline logs will be required to evaluate this interval.
As reported in January 2011, wireline logs indicated that Blackbeard East encountered hydrocarbon-bearing sands in the Oligocene (Frio) with good porosity below 30,000 feet. Down-dip drilling opportunities on the flanks of the structure are being considered to evaluate this section further. The Frio sand section below 30,000 feet is in addition to the 178 net feet of hydrocarbons in the Miocene sands above 25,000 feet announced in December 2010. Pressure and temperature data below the salt weld between 19,500 feet and 24,600 feet indicate that a completion at these depths could utilize conventional equipment and technologies. Energy XXI has an 18 percent working interest and 14.35 percent net revenue interest in Blackbeard East. The company's investment in Blackbeard East as of June 30, 2011 was about $34 million.
The Lafitte exploration well commenced drilling on Oct. 3, 2010 towards a proposed total depth of 29,950 feet, targeting Miocene and possibly Oligocene (Frio) objectives below the salt weld. A liner has been run below the salt to 22,982 feet and the well is currently drilling below 25,600 feet. Lafitte is located on Eugene Island Block 223 in 140 feet of water. Energy XXI has an 18 percent working interest and a 14.6 percent net revenue interest in Lafitte.The company's investment at Lafitte as of June 30, 2011 was about $18 million.
Information gained from the Blackbeard East and Lafitte wells is expected to assist in developing plans for future operations at Blackbeard West. As previously reported, the Blackbeard West ultra-deep exploratory well on South Timbalier Block 168 was drilled to 32,997 feet in 2008. Logs indicated four potential hydrocarbon-bearing zones that require further evaluation. The well was temporarily abandoned while the partnership evaluates whether to drill deeper within the same wellbore, drill an offset location or complete the well to test the existing zones.
A new location within the Blackbeard West unit on Ship Shoal Block 188 has been identified to evaluate the Miocene age sands seen in Blackbeard East above 25,000 feet. Drilling of this ultra-deep well, with a proposed total depth of 26,000 feet, is expected to commence by the end of calendar 2011. The Ship Shoal Block 188 location is approximately four miles west of the Blackbeard West #1 well. Energy XXI has a 20 percent working interest and a 16 percent net revenue interest in the Blackbeard West unit.
Netherland, Sewell & Associates, Inc. (NSAI), independent oil and gas reserve engineers, estimated the Davy Jones, Blackbeard East and Blackbeard West structures hold as much as 1.2 billion BOE (162 million BOE net to the company) of combined contingent and prospective resources based on data obtained to-date. Additional data or flow tests will be required before the contingent resources can be moved to the proved, probable or possible reserves categories, and future drilling activity could add significantly to field sizes.
From their August 10 press release:
Within the shallow-water, ultra-deep Gulf of Mexico shelf program, the McMoRan-operated partnership (in which Energy XXI has various interests) continued during the quarter to drill the Blackbeard East and Lafitte exploratory wells and the offset appraisal well at the Davy Jones discovery.
The Davy Jones offset appraisal well (Davy Jones No. 2), located in 20 feet of water on South Marsh Island Block 234, two and a half miles southwest of the Davy Jones No. 1 discovery well, was drilled to a total depth of 30,546 feet. As previously reported, log results above 27,300 feet confirmed 120 net feet of hydrocarbon-bearing Wilcox sands, indicating continuity across the major structural features of the Davy Jones discovery.
In June 2011, results from wireline logs of the Cretaceous section below 27,300 feet indicated that the Davy Jones No. 2 well encountered 192 net feet of potential hydrocarbons in the Tuscaloosa and Lower Cretaceous carbonate sections. Flow testing will be required to confirm the potential hydrocarbons and flow rates. A production liner has been set to 30,511 feet and the well has been temporarily suspended while the partnership evaluates development options and prepares to flow test the well by June 2012. Updip locations in a subsequent well to the north are being considered to evaluate the Tuscaloosa sands and Lower Cretaceous carbonates higher on the Davy Jones structure.
As reported in January 2010, logs identified 200 net feet of pay in multiple Wilcox sands in the Davy Jones No. 1 well on South Marsh Island Block 230. In March 2010, a production liner was set and the well was temporarily abandoned to prepare for completion and flow test, which remain on schedule for late 2011.
Davy Jones involves a large ultra-deep structure encompassing four OCS lease blocks (20,000 acres). Energy XXI has a 15.8 percent working interest and 12.6 percent net revenue interest in Davy Jones. As of June 30, 2011 the company's investment in both wells at Davy Jones has totaled about $62 million.
The Blackbeard East ultra-deep exploration well, located in 80 feet of water on South Timbalier Block 144, was drilled to 32,559 feet before encountering mechanical issues. In July 2011, McMoRan commenced operations to drill a by-pass of the well at approximately 30,700 feet to evaluate targets in the Eocene. The well is permitted to 34,000 feet. Based on interpretations of drilling data obtained prior to the mechanical issue, the well appears to have encountered Sparta sands above the target Wilcox section. Sparta sands are productive onshore in south Louisiana. Wireline logs will be required to evaluate this interval.
As reported in January 2011, wireline logs indicated that Blackbeard East encountered hydrocarbon-bearing sands in the Oligocene (Frio) with good porosity below 30,000 feet. Down-dip drilling opportunities on the flanks of the structure are being considered to evaluate this section further. The Frio sand section below 30,000 feet is in addition to the 178 net feet of hydrocarbons in the Miocene sands above 25,000 feet announced in December 2010. Pressure and temperature data below the salt weld between 19,500 feet and 24,600 feet indicate that a completion at these depths could utilize conventional equipment and technologies. Energy XXI has an 18 percent working interest and 14.35 percent net revenue interest in Blackbeard East. The company's investment in Blackbeard East as of June 30, 2011 was about $34 million.
The Lafitte exploration well commenced drilling on Oct. 3, 2010 towards a proposed total depth of 29,950 feet, targeting Miocene and possibly Oligocene (Frio) objectives below the salt weld. A liner has been run below the salt to 22,982 feet and the well is currently drilling below 25,600 feet. Lafitte is located on Eugene Island Block 223 in 140 feet of water. Energy XXI has an 18 percent working interest and a 14.6 percent net revenue interest in Lafitte.The company's investment at Lafitte as of June 30, 2011 was about $18 million.
Information gained from the Blackbeard East and Lafitte wells is expected to assist in developing plans for future operations at Blackbeard West. As previously reported, the Blackbeard West ultra-deep exploratory well on South Timbalier Block 168 was drilled to 32,997 feet in 2008. Logs indicated four potential hydrocarbon-bearing zones that require further evaluation. The well was temporarily abandoned while the partnership evaluates whether to drill deeper within the same wellbore, drill an offset location or complete the well to test the existing zones.
A new location within the Blackbeard West unit on Ship Shoal Block 188 has been identified to evaluate the Miocene age sands seen in Blackbeard East above 25,000 feet. Drilling of this ultra-deep well, with a proposed total depth of 26,000 feet, is expected to commence by the end of calendar 2011. The Ship Shoal Block 188 location is approximately four miles west of the Blackbeard West #1 well. Energy XXI has a 20 percent working interest and a 16 percent net revenue interest in the Blackbeard West unit.
Netherland, Sewell & Associates, Inc. (NSAI), independent oil and gas reserve engineers, estimated the Davy Jones, Blackbeard East and Blackbeard West structures hold as much as 1.2 billion BOE (162 million BOE net to the company) of combined contingent and prospective resources based on data obtained to-date. Additional data or flow tests will be required before the contingent resources can be moved to the proved, probable or possible reserves categories, and future drilling activity could add significantly to field sizes.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group