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By Tanya Rutledge
Special to the Houston Chronicle
Energy XXI had a big year in 2010, and it showed in 2011.
In December 2010, the company closed on its largest acquisition to date: $1 billion in shallow-water Gulf of Mexico oil and natural gas interests from Exxon Mobil Corp.
The deal doubled the independent oil and gas company’s reserves and production profile, adding 20,000 net barrels of oil equivalent per day to production.
That acquisition put Energy XXI in prime position for booming growth in 2011, when earnings per share shot up more than 1,000 percent. Revenue also skyrocketed, jumping 92 percent to $1.2 billion.
Those numbers helped Energy XXI land the No. 8 spot on the Chronicle 100 list of top public companies, up from No. 14 last year.
John D. Schiller Jr., chairman and CEO of Energy XXI, said all the pieces fell into place in 2011, thanks to strong oil prices and the company’s calculated mix of 70 percent oil assets and 30 percent gas assets.
“We had 70 to 72 percent oil assets in any given quarter last year, and that was very much by design,” he said. “Natural gas prices weren’t horrible by any means, but oil was definitely our focus.”
Schiller said that the Exxon Mobil deal, by far, had the biggest effect on the company’s financial picture in 2011.
“That was definitely a big part of it,” he said. “And this year, we are really hitting our stride.”
Schiller pointed out that Energy XXI shored up its balance sheet during 2010 to prepare to make a run for the Exxon Mobil assets, taking on $550 million in equity in October 2010 and reducing its debt-to-capital ratio from 65 percent to 13 percent.
“We knew that we would need to have more than the best bid to get the deal – we had to have a better balance sheet, too,” he said.
And with four other acquisitions ranging in size from $215 million to $400 million since Energy XXI’s founding in 2005, Exxon Mobil was the icing on the cake.
After the deal, Energy XXI continued to boost its balance sheet, paying off $400 million in debt last year.
Energy XXI, which employs 200 people directly – about 145 in its Houston headquarters – plus 500 offshore contractors, has implemented an “acquire and exploit” strategy to build a portfolio largely focused in and around the Gulf of Mexico, where it operates or has an interest in seven of the 11 largest oil fields.
Rutledge is a freelance reporter.