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 September 14, 2015 - 6:12 PM EDT
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Energy XXI Provides Fiscal Year-End Reserves Update

HOUSTON, Sept. 14, 2015 (GLOBE NEWSWIRE) -- Energy XXI (NASDAQ:EXXI) today announced fiscal year-end reserves.

  • 2015 fiscal year-end reserves were estimated at 183.5 MMBOE
  • Proved reserves are 75 percent oil
  • Proved reserves pre-tax present value is $2.8 billion
  • Production and divestitures account for 54 percent of reserve reductions
  • Majority of revisions due to price and reduced capital spending

"Our proved reserves decreased primarily due to production of 22 million barrels of oil equivalent ("MMBOE") during fiscal year 2015, as well as the divestiture of non-core assets, price-based adjustments, and our reduced capital expenditures due to the current low commodity price environment," Energy XXI Chairman, President and Chief Executive Officer John Schiller said. "Our Fiscal Year 2015 reserve additions of 17 MMBOE demonstrate our ability to continue to replace our reserves organically while upgrading our portfolio by delivering on the divesture of our higher cost, non-core properties. It is significant that 68 percent of the proved reserves have already been developed, demonstrating the high quality and potential of our liquid-rich asset base. When looking at our reserves, it is important to note that 100 percent of the total future abandonment costs are booked against proved developed reserves," Mr. Schiller continued. "The reserves that we lost to price and reduced forecasted capital expenditures over the next five years don't simply go away; those hydrocarbons are still in the ground and as prices recover we expect to once again realize the value of those barrels."

The company's June 30, 2015 fiscal year-end proved reserves were estimated at 183.5 MMBOE. The present value of proved reserves total $2.8 billion. The company has proved and probable reserves totaling 265.7 MMBOE, with a present value of $4.5 billion.

All of the company's proved reserves are in the Gulf of Mexico or U.S. Gulf Coast, 68 percent are proved developed, 75 percent are liquids (of which 95 percent is crude oil and condensate), and 25 percent are natural gas. Year-over-year proved developed reserves, as a percentage of total proved reserves, increased by seven percent.

Summary of Changes in Proved Reserves
(in MMBOE)
Balance as of June 30, 2014 246.2
Production (21.5)
Extensions, discoveries, additions 17.3
Purchases --
Sales of proved reserves (12.2)
Revisions:  
Pricing (19.2)
Decreased capital spending (6.9)
Technical  (20.2)
Total performance revisions (46.3)
   
Balance as of June 30, 2015 183.5

The reserves are reported as of June 30, 2015 and do not include the reserves, or present value attributed to the M21K, LLP acquisition which closed August 11, 2015. At the time of closing, the proved reserves associated with the M21K, LLP assets were estimated at 13 MMBOE with a present value of $82 million at strip prices. The company is working with reserve auditors to complete those estimates. The reserves associated with the M21K, LLP acquisition have never been included in the company's reserves.

The following fiscal year-ended June 30, 2015 estimated proved, probable and possible reserves attributable to the company's net interests in oil and gas properties were audited by Netherland Sewell & Associates, Inc. (NSAI), independent oil and gas reserves consultants.

  Oil 
(MBBL)
NGL
(MBBL)
Gas
(MMCF)
Equivalent
(MBOE)
PV10%
($000)1, 2
Proved Developed Producing 74,030 3,345 112,935 96,198 1,534,051
           
Proved Developed Non-Producing 14,576 2,061 75,058 29,147 416,302
Proved Undeveloped  40,989 2,070 90,550 58,151 884,083
Proved Reserves 129,596 7,476 278,543 183,496 2,834,436
Probable 60,584 2,893 112,174 82,174 1,633,600
Proved+Probable 190,180 10,370 390,717 265,670 4,468,036
Possible 41,942 1,656 105,746 61,222 1,134,066
Proved+Probable+Possible 232,122 12,026 496,463 326,892 5,602,102
           
1Before tax, as of June 30, 2015, using prices of $73.70/per barrel of oil and $3.03/MCF ($68.17/per barrel of oil West Texas Intermediate benchmark and $3.39/MMBTU Henry Hub benchmark before differentials & BTU adjustment), based on the SEC-prescribed first-of-the-month average prices for the preceding 12 months.
           
2We refer to "PV-10" as the present value of estimated future net revenues of estimated proved reserves using a discount rate of 10%. Year-end pre-tax discounted present value may be considered a non-GAAP financial measure as defined by the SEC. We believe that the presentation of pre-tax discounted present value is relevant and useful to our investors because it presents the discounted future net cash flows attributable to our proved reserves prior to taking into account future corporate income taxes and our current tax structure. We further believe investors and creditors use pre-tax discounted present value as a basis for comparison of the relative size and value of our reserves as compared with other companies. Energy XXI's pre-tax discounted present value as of June 30, 2015 may be reconciled to its standardized measure of discounted future net cash flows as of June 30, 2015 by reducing Energy XXI's pre-tax discounted present value by the discounted future income taxes associated with such reserves. The company is still finalizing the standardized measure calculation and this reconciliation will be included in the Company's 2015 Form 10-K. 

Forward-Looking Statements

All statements included in this release relating to future plans, projects, events or conditions and all other statements other than statements of historical fact included in this release are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based upon current expectations and are subject to a number of risks, uncertainties and assumptions, including changes in long-term oil and gas prices or other market conditions affecting the oil and gas industry, access to capital and ability to fund drilling costs and otherwise meet Energy XXI's obligations, reservoir performance, the outcome of commercial negotiations and changes in technical or operating conditions, among others, that could cause actual results, including project plans and related expenditures and resource recoveries, to differ materially from those described in the forward-looking statements. In addition, Energy XXI discloses proved, probable and possible reserves in this press release, each of which is defined in greater detail in the glossary below. Estimates of probable and possible reserves which may potentially be recoverable through additional drilling or recovery techniques are by nature more uncertain than estimates of proved reserves and accordingly are subject to substantially greater risk of not actually being realized by Energy XXI.  Energy XXI assumes no obligation and expressly disclaims any duty to update the information contained herein except as required by law.

Competent Person Disclosure

The technical information contained in this announcement relating to operations adheres to the standard set by the Society of Petroleum Engineers. Lee Williams, Director of Corporate Reserves, is the qualified person who has reviewed and approved the technical information contained in this announcement.

About the Company

Energy XXI is an independent oil and natural gas development and production company whose growth strategy emphasizes acquisitions, enhanced by its value-added organic drilling program. The company's properties are located in the U.S. Gulf of Mexico waters and the Gulf Coast onshore. To learn more, visit the Energy XXI website at www.EnergyXXI.com.

Glossary

Proved Oil and Gas Reserves -- Those quantities of crude oil and gas, which, by analysis of geoscience and engineering data, can be estimated with reasonable certainty to be economically producible -- from a given date forward, from known reservoirs, and under existing economic conditions, operating methods and government regulations -- prior to the time at which contracts providing the right to operate expire, unless evidence indicates that renewal is reasonably certain, regardless of whether deterministic or probabilistic methods are used for the estimation. The project to extract the hydrocarbons must have commenced or the operator must be reasonably certain that it will commence the project within a reasonable time. This definition has been abbreviated from the definition of "Proved oil and gas reserves" contained in Rule 4-10(a)(22) of SEC Regulation S-X.

Proved Developed Reserves -- Reserves are categorized as proved developed if they are expected to be recovered from existing wells.

Probable Reserves -- Those additional reserves that are less certain to be recovered than proved reserves but more certain to be recovered than possible reserves. This definition has been abbreviated from the applicable definition contained in Rule 4-10(a)(18) of SEC Regulation S-X.

Possible Reserves -- Those additional reserves that are less certain to be recovered than probable reserves. This definition has been abbreviated from the applicable definition contained in Rule 4-10(a)(17) of Regulation S-X.

Barrel – unit of measure for oil and petroleum products, equivalent to 42 U.S. gallons.

BOE – barrels of oil equivalent, used to equate natural gas volumes to liquid barrels at a general conversion rate of 6,000 cubic feet of gas per barrel.

BOE/d – barrels of oil equivalent per day.

MBBL – thousand barrels of oil.

MBOE – thousand barrels of oil equivalent.

MMBOE – million barrels of oil equivalent.

MMBTU – million British thermal units.

MMCF – million cubic feet of gas.

PV10 – the estimated present value of the resource, discounted at a 10 percent annual rate.

CONTACT: ENQUIRIES OF THE COMPANY
         
         Energy XXI
         Greg Smith
         Vice President, Investor Relations
         713-351-3149
         gsmith@energyxxi.com

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Source: GlobeNewswire (September 14, 2015 - 6:12 PM EDT)

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