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Energy XXI plunges as losses widen in the fourth quarter

Energy XXI decided to go it alone after considering consolidation opportunities
Gulf Coast offshore rig
"We also plan to explore potential divestitures of non-core assets," EGC's boss said

Energy XXI Gulf Coast Inc (NASDAQ:EXXI) was one of the worst performers on Friday after it saw losses widen in the fourth quarter of 2017.

The company incurred a net loss of US$215.1mln, which included a non-cash ceiling test impairment charge of US$145.1mln and a loss on financial derivatives of US$44.3mln.

In the same period of 2016, the company had made a loss of US$31.6mln.

Revenue in the final three months of 2017 eased to US$93.84mln from US$115.70mln the year before.

The energy firm produced an average of roughly 27,600 barrels of oil equivalent (BOE) per day in the final quarter of 2017, which was within the company's guidance range.

The company, which is planning capital expenditure of between US$145mln and US$175mln this year, said it plans to start drilling the first well of its 2018 drilling programme in March.

The West Delta 73 C-27 McCloud, a development well, will be drilled to an expected total vertical depth of 8,400 feet.

"2017 was an extremely busy and transitional year for us. As previously announced, after concluding a process to explore potential consolidation transactions, we moved ahead with a stand-alone strategy that includes a 2018 capital budget that should better position EGC for success in 2018 and beyond. We have begun the immediate implementation of that plan with the pending drilling of our first well at West Delta 73," said Douglas Brooks, Energy XXI's chief executive officer and president.

“We are encouraged by higher oil prices and the significant positive impact they should have on our cash flow and our ability to grow our business again. We anticipate that every dollar increase in oil prices would increase our cash flow by US$7 to US$9 million that can be deployed in our drilling program, which in 2018 is intended to arrest our production decline. We are excited to have two exploitation wells later in this year's plan that could have a meaningful impact on our reserves and production if successful,” he added.

Shares in Energy XXI were down 23% at US$4.185 towards the end of trading on Friday.

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