The merger, once closed, will make Energy XXI the largest public independent on the Gulf of Mexico shelf with production of about 65,000 boe/d, 70% of which will be oil.
EPL owns working interests in 37 producing fields, mainly concentrated within nine core producing areas. An estimated 91% of proved reserves, 88% of production, and 91% of revenues are associated with the Ship Shoal, East Bay, South Timbalier, South Pass 78 and 49, West Delta, Main Pass, Eugene Island, and South Marsh complexes.
In January, EPL said it expected to spend $360 million on oil-dominated, lower-risk development activities in 2014, focusing on the exploitation of the shallow sections within the Ship Shoal, West Delta, South Timbalier, and Main Pass core field areas (OGJ Online, Jan. 6, 2014). EPL operates 90% of its properties, by reserves, similar to Energy XXI’s 94%.
Energy XXI’s West Delta production averaged 46,600 boe/d in last year’s fiscal first quarter ended Sept. 30, including 29,700 b/d of oil (OGJ Online, Oct. 23, 2013).
The properties being sold are estimated to contain net proved and probable reserves of 106.3 million boe, 71% of which is oil. Proved reserves are estimated at 54.9 million bbl of oil and 139.2 bcf of natural gas, or a total of 78.1 million boe, 70% of which are proved developed. Offshore leases total 273,713 net acres. EPL at yearend 2013 reported total assets of $1.86 billion, with net income for the year totaling $85.3 million.
“Upon completion, the combined company will own and operate 10 oil fields on the shelf with cumulative production exceeding 80 million bbl of oil each, with ample opportunity to grow organically by increasing recovery from those known reservoirs as well as by exploring around and below the producing horizons,” said Ben Marchive, Energy XXI executive vice-president, E&P.
“In addition,” Marchive added, “we will be able to apply horizontal drilling and other exploitation expertise across the expanded portfolio, while leveraging advanced seismic data to explore subsalt and deeper horizons across the region.”
John Schiller, Energy XXI chairman and chief executive officer, will remain in that position for the combined entity, and the headquarters will remain in Houston.