An updated company profile and forecast model for Sweet 16 Growth Portfolio member Energy XXI (EXXI) has been posted to the website under the Sweet 16 Tab. Just click on the EXXI logo.
At the bottom of the forecast model you can find our adjusted Fair Value estimate for the stock.
Energy XXI
Energy XXI
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: Energy XXI
Credit Suisse on EXXI
Focus on low-cost gas names shifts to Energy XXI (EXXI): We have preferred
Marcellus names e.g. RRC as the low-cost gas providers in the US in 2011. We
recently raised our NAV-based target price on RRC to $81 per share on higher
reserve recoveries in RRC's North-East Pennsylvania (PA) project area (RRC
increased EURs to 6.5 Bcfe from 6.0 Bcfe). This follows the recent increase in EURs
in for the South-west PA project area where our estimates increased to 5.7 Bcfe from
5.0 Bcfe. However, RRC should not be immune to weakness in the front end of the
gas curve. Currently, we shift attention to EXXI. Although predominantly an oil
producer today (60% oil), EXXI is participating in tests of Deep Shelf Gas that could
unlock even lower cost gas reserves than the Marcellus.
EXXI (Outperform, TP $40) – Ultra-deep Shelf gas catalysts: All the equipment
required to complete the Davy Jones deep shelf gas well has been constructed and
the perforation (well test) is expected by mid-December. Expectations are for the well
to flow 50-75 mmcf/d. EXXI also expects to be at total depth on Blackbeard East soon
which could correlate to the Davy Jones well 90 miles away. This could confirm the
concept that these are blanket sands across the shelf and likely prospective across
multiple structures that exposes EXXI to more than 10 tcf of net gas potential (more
than 1.5 billion barrels of oil equivalent) with a potential upside NAV over $50/sh.
Focus on low-cost gas names shifts to Energy XXI (EXXI): We have preferred
Marcellus names e.g. RRC as the low-cost gas providers in the US in 2011. We
recently raised our NAV-based target price on RRC to $81 per share on higher
reserve recoveries in RRC's North-East Pennsylvania (PA) project area (RRC
increased EURs to 6.5 Bcfe from 6.0 Bcfe). This follows the recent increase in EURs
in for the South-west PA project area where our estimates increased to 5.7 Bcfe from
5.0 Bcfe. However, RRC should not be immune to weakness in the front end of the
gas curve. Currently, we shift attention to EXXI. Although predominantly an oil
producer today (60% oil), EXXI is participating in tests of Deep Shelf Gas that could
unlock even lower cost gas reserves than the Marcellus.
EXXI (Outperform, TP $40) – Ultra-deep Shelf gas catalysts: All the equipment
required to complete the Davy Jones deep shelf gas well has been constructed and
the perforation (well test) is expected by mid-December. Expectations are for the well
to flow 50-75 mmcf/d. EXXI also expects to be at total depth on Blackbeard East soon
which could correlate to the Davy Jones well 90 miles away. This could confirm the
concept that these are blanket sands across the shelf and likely prospective across
multiple structures that exposes EXXI to more than 10 tcf of net gas potential (more
than 1.5 billion barrels of oil equivalent) with a potential upside NAV over $50/sh.
Re: Energy XXI
We are working on a company profile and forecast for MMR, operator of Davy Jones. I should finish it next week.
Those of you interested in the Marcellus should take a look at CRZO. They should be ramping up their Marcellus production next year. They also have growth coming in the Eagle Ford and Niobrara.
Those of you interested in the Marcellus should take a look at CRZO. They should be ramping up their Marcellus production next year. They also have growth coming in the Eagle Ford and Niobrara.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group