Energy XXI Q2 Results

[dan_s]

EPS came in below my forecast model. Total capacity of 52,000 boepd at the end of the quarter is good. I will have an updated forecast model late on Thursday. I want to listen to the conference call tomorrow morning. - Dan

HOUSTON, Jan. 30, 2013 (GLOBE NEWSWIRE) -- Energy XXI (EXXI) (EXXI.L) today announced fiscal second-quarter results and provided an operations update on activities in the Gulf of Mexico.

For the 2013 fiscal second quarter, Energy XXI reported earnings before interest, taxes, depreciation, depletion and amortization (EBITDA) of $198.8 million, compared with $225.6 million in the 2012 fiscal second quarter. Net income available for common stockholders for the 2013 fiscal second quarter was $38.5 million, or $0.47 per diluted share, on revenues of $321 million, compared with fiscal 2012 second-quarter net income available for common stockholders of $93.4 million, or $1.11 per diluted share, on revenue of $341 million.

Production for the 2013 fiscal second quarter averaged 44,600 barrels of oil equivalent per day (BOE/d), compared with 42,700 BOE/d in the 2012 fiscal second quarter, and compared with 37,300 BOE/d in the 2013 fiscal first quarter, which was impacted by Hurricane Isaac. Oil volumes for the 2013 fiscal second quarter averaged 29,400 barrels per day (Bbl/d). Current production approximates 47,000 BOE/d, with another 5,000 BOE/d temporarily offline due to various downtime issues, bringing total capacity to approximately 52,000 BOE/d.

"Good operating margins driven by our oil-focused development program have established a solid base going into the second half of our fiscal year," Energy XXI Chairman and CEO John Schiller said. "We continue the horizontal drilling program, complemented by key exploration projects, focused on growing reserves and production simultaneously."

[dan_s]

Conference Call Tomorrow, Jan. 31, at 9 a.m. CST, 3 p.m. London Time

Energy XXI will host its fiscal second-quarter conference call tomorrow, Jan. 31, at 9 a.m. CST (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 89426190. 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.

[dan_s]

An updated Net Income & Cash Flow Forecast model for Energy XXI (EXXI) has been posted under the Sweet 16 Tab.

The company is now expecting an exit rate of 40,000 BOPD by June 30 (their fiscal year-end). I was hoping for around 45,000 BOPD. You can find my adjusted Fair Value Estimate at the bottom of the forecast model.

Keep in mind that my forecast model has nothing in it for the Ultra-Deep Shelf program.

[bearcatbob]

Lots of operational SNAFUs last quarter. From such bottoms can be formed.

Bob

[dan_s]

If you listen to the CC you will hear that a lot of the operational delays were 3rd party related with some continuing problems a result of hurricane Isaac. No doubt, investors need to factor in some "hurricane risk" for EXXI.

Fiscal year-end (6/30/2013) production s/b 55,000 to 57,000 boepd with 65% to 70% oil. That compares to 44,600 boepd for the 2nd quarter.

I have lowered my Fair Value Estimate for the stock, but EXXI is still trading at a deep discount to break-up value IMO. Hopefully, the "Davy Jones Black Cloud" drifts away. The company has more than enough liquidity to fund their capital program.

[setliff]

exxi is challenging support at 30.50ish. there was support at 32 and i was prepared to hold if 32 held--i sold when 32 failed.

30.50 looks like solid support--if it breaks that it is katy bar the door! volume is humongous--already highest since 2010.

[bearcatbob]

I liked the one where they cut the drill string accidentally and lost the well.

[dan_s]

I can tell you about some really stupid things that were done at Hess. For example, as USE&P division controller I had to approve all invoices over $100,000. Once I got an invoice to replace an $800,000 rental tool. When I looked into it I found out that our guys dropped it into the ocean when they were transferring it from the supply boat to the rig ("oops"). They were drilling in over 1,600 ft. of water, so no chance of divers going down to retrieve it. Stuff happens offshore!

I was a bit disappointed in Energy XXI's results but nothing to deserve this selloff. Production is ramping up into year end and they will be getting at least $5/bbl more for their oil in this quarter.

On the cc they weren't very bullish about growth beyond this fiscal year, so that may be dragging down the share price.

The positive I got from the CC is that those horizontal wells are adding 1.0 to 1.5 MMBoe of proven reserves per well and they have a bunch left to drill. They are growing production and proven reserves while living within cash flow. That is a very good thing for an E&P company.