Dan,
Any thoughts on EXXI's purchase of EPL? Thanks.
EXXI
Re: EXXI
This is what EXXI is good at. They did a lot with the Exxon properties. The market always sells off the acquiring company when they pay a premium for a target.
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Energy XXI (Bermuda) Ltd. (EXXI) agreed to acquire EPL Oil & Gas Inc. (EPL) for $1.5 billion to become the largest publicly traded independent producer on the Gulf of Mexico shelf.
The purchase price of $39 a share for EPL stockholders represents a 34 percent premium over the company’s closing price yesterday, according to a statement today. The transaction will be 65 percent cash and 35 percent Energy XXI common shares.
Energy XXI, with its main office in Houston, has doubled production in three years through acquisitions and the use of horizontal drilling to boost oil recovery. The combined entity, termed independent because it won’t have refineries, will pump 65,000 barrels of oil equivalent a day, of which 70 percent will be crude.
“From day one, they’ve been acquire and exploit within their wheelhouse in the Gulf of Mexico shelf,” Chad Mabry, a Houston-based analyst for MLV & Co. who rates Energy XXI shares a buy and doesn’t own any, said today in a telephone interview. “This makes them the largest public operator on the shelf.”
Energy XXI Chief Executive Officer John Schiller is betting he can boost proved reserves, Mabry said, given the offer price is more than the $33 a share he says EPL is worth.
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Energy XXI (Bermuda) Ltd. (EXXI) agreed to acquire EPL Oil & Gas Inc. (EPL) for $1.5 billion to become the largest publicly traded independent producer on the Gulf of Mexico shelf.
The purchase price of $39 a share for EPL stockholders represents a 34 percent premium over the company’s closing price yesterday, according to a statement today. The transaction will be 65 percent cash and 35 percent Energy XXI common shares.
Energy XXI, with its main office in Houston, has doubled production in three years through acquisitions and the use of horizontal drilling to boost oil recovery. The combined entity, termed independent because it won’t have refineries, will pump 65,000 barrels of oil equivalent a day, of which 70 percent will be crude.
“From day one, they’ve been acquire and exploit within their wheelhouse in the Gulf of Mexico shelf,” Chad Mabry, a Houston-based analyst for MLV & Co. who rates Energy XXI shares a buy and doesn’t own any, said today in a telephone interview. “This makes them the largest public operator on the shelf.”
Energy XXI Chief Executive Officer John Schiller is betting he can boost proved reserves, Mabry said, given the offer price is more than the $33 a share he says EPL is worth.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: EXXI
Tudor, Pickering, Holt & Co. wrote in a note earlier today that the deal's implied metrics are $110,000 per barrel of oil equivalent per day, $29.45 per barrel of oil equivalent for proved reserves and 5 times this year's enterprise value to Ebitda.
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bearcatbob
Re: EXXI
IMO this move by EXXI puts off any recovery in price for a substantial period of time. While Schiller may be building a company - he is losing shareholders a lot of money. If this is the strategy he wants to pursue he should simply tell people not to expect any near term price appreciation as he is going to be busy doing deals - IMO what he prefers. IMO he is the king of the deal and the dunce of the drill bit. He has cost a lot of people a lot of money. Just what will the next deal be?
I wonder how much time and corporate money on the Malaysian deal he was so proud of in his quarterly call.
I personally see the man as destructive of my portfolio value.
Bob
I wonder how much time and corporate money on the Malaysian deal he was so proud of in his quarterly call.
I personally see the man as destructive of my portfolio value.
Bob