Earlier today Energy XXI Gulf Coast (ticker: EXXI) reported financial and operational results for the fourth quarter and full year 2017.
In addition, the company announced that it will change its Nasdaq ticker symbol on March 21, 2018, from EXXI to EGC.
Highlights from Q4 2017
- Produced an average of approximately 27,600 barrels of oil equivalent (“BOE”) per day (77% oil) during Q4
- Benefited from strong oil price realizations during the fourth quarter of $59.27 per barrel, approximately 7% higher than the WTI average price of $55.40 per barrel for Q4.
- Reported a net loss of $215.1 million for Q4 2017
- Capital expenditures for 2018 are expected to be in the range of $145 to $175 million.
- In 2018, EGC plans to drill six new wells in West Delta and South Timbalier, including three development wells, one injection well, and two exploitation locations.
- The first development well of the 2018 drilling program, the West Delta 73 C-27 McCloud, plans to be spud in March.
- Year-end 2017 proved reserves totaled 88.2 MMBOE.
Financial update
EGC reported total revenues for the Q4 2017 of $93.8 million. In the fourth quarter, EGC produced and sold approximately 27,600 net BOE per day, which consists of 21,300 barrels of oil per day at an average realized price of $59.27 per barrel, 600 barrels of NGLs per day at an average realized price of $33.32 per barrel, and 34.5 MMCF per day at an average realized price of $2.97 per MCF.
The company reported a Q4 loss of $215.1 million which includes a non-cash ceiling test impairment charge of $145.1 million and a loss on financial derivatives of $33.3 million.
Adjusted EBITDA for Q4 and 2017 full year totaled $10.8 million and $110.5 million, respectively.
On December 31, 2017, EGC had approximately $74 million in borrowings and $202.6 million in letters of credit issued under its credit agreement. Liquidity totaled approximately $164.2 million, which consists of cash and cash equivalents totaling $151.7 million and $12.5 million in borrowing capacity available under certain conditions.
Hedging
EGC currently has fixed price swap contracts benchmarked to NYMEX-WTI to hedge a total of 8,000 BOPD of production for full year 2018 with an average fixed price swap of $50.68. EGC has fixed price swap contracts benchmarked to LLS-Argus for 2,000 BOPD with an average fixed price of $55.45 for the period of January – June 2018, and 2,500 BOPD fixed price swap contracts benchmarked to ICE-Brent for January to June 2018 with an average fixed price of $56.59. The company does not have any hedges in place on natural gas production.
Proved reserves
Total SEC proved reserves as of December 31, 2017 totaled 88.2 MMBOE, of which 84% were oil, 2% were NGLs and 14% were natural gas. All of the EGC’s proved reserves are on the Gulf of Mexico Shelf or U.S. Gulf Coast, and 75% are classified as proved developed reserves.
On March 31, 2017, EGC’s proved reserves totaled 109.4 MMBOE. The primary non-commodity price factors contributing to the decline in reserves from March 31 to December 31, 2017 include actual production during the period, increased costs due to the modification of fixed versus variable LOE, reserve write-downs, and revisions of previous estimates.
Operational update and 2018 CAPEX
CAPEX for 2018 are expected to be in the range of $145 to $175 million, of which EGC will approximately spend $65 to $75 million on drilling new wells and recompletes, $10 to $15 million in planned facilities improvements, and $50 to $60 million in anticipated plugging and abandonment expenditures.
The West Delta 73 C-27 McCloud, a development well location which will be drilled to an expected total vertical depth of 8,400 feet, is expected to be spud in March, 2018. EGC has 100% working interest in this well and initial production is anticipated during the second quarter of 2018. For 2018, EGC plans to drill a total of six wells, which includes three development wells, an injection well, and two exploitation wells planned for the second half of 2018 that could add proved reserves if successful.
