Why Energy XXI Ltd. agreed to buy nine Exxon Mobil oil and gas fields in Gulf of Mexico for $1.01 billion?
Energy XXI Ltd.(EXXI), Oil and gas exploration company, has agreed to buy nine shallow-water Gulf of Mexico shelf oil and natural gas properties from Exxon Mobil Corp. (XOM) affiliates for $1.01 billion. With the all-cash transaction, Energy XXI’s production will jump by 77 percent, making the company the third-largest oil producer on the Gulf’s continental shelf.
The acquisition nearly doubles the size of Exxi (current production 26,000 boepd) and will make the Houston-based company the third-biggest oil producer in the shallow depths of the Gulf’s continental shelf, trailing Apache Corporation (APA) and Chevron Corporation (CVX).
Energy XXI is an independent oil and natural gas exploration 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. Seymour Pierce is Energy XXI’s listing broker in the United Kingdom.
The properties include nine fields off the coasts of Louisiana and Alabama, which sit between existing operating areas for Energy XXI called the Main Pass and South Timbalier.
The fields will add 20,000 barrels of oil equivalent per day to Energy XXI’s production, bringing it to 46,000 barrels of oil equivalent per day, the company said. The proven and probable reserves are 66 million barrels of oil equivalent.
By comparison, Houston’s Apache, the largest producer on the Gulf Shelf, expects to produce about 120,000 barrels of oil equivalent per day in the region in December, following its recent acquisition of Mariner Energy.
After the April 20 blowout at BP’s Macondo well in mile-deep waters off Louisiana, regulators launched a six-month ban on deep-water drilling and issued tougher rules that have slowed the pace of new shallow-water wells.
“The ExxonMobil properties are an extraordinary fit with our existing, oil-focused core assets, which generate some of the highest margins in the industry,” Energy XXI Chairman and CEO John Schiller said. “With this acquisition, we are gaining access to production, infrastructure and extensive acreage complemented by seismic data and field studies. As operator of 94 percent of the assets being acquired, we would have a portfolio of drilling and recompletion opportunities that we can pursue while analyzing the potential for higher-impact exploration prospects.”