Energy & Mining

Energy XXI Gulf Coast Inc. (NASDAQ:EXXI) Drops on Wider Net Loss

Energy XXI Gulf Coast Inc. (NASDAQ:EXXI)

Energy XXI Gulf Coast Inc. (NASDAQ:EXXI)

Shares of Energy XXI Gulf Coast Inc. (NASDAQ:EXXI) fell 34.3% after the oil and natural gas exploration and production company reported disappointing third quarter financial results. A net loss of (-$31.6) million or (-$0.95) loss per share, attributed to lower production and losses on derivative financial instruments, did not go well with investors.

Energy XXI Gulf Coast Inc. (NASDAQ:EXXI)

EXXI Stock Performance

Tuesday’s sell-off resulted in Energy XXI Gulf Coast Inc. (NASDAQ:EXXI) recording a new 52-week low of $5.32 a share as the stock’s downturn shows no signs of slowing down. The stock has underperformed the overall industry for the better part of the year even as the energy sector shows signs of recovery. For the full year, the stock is down by more than 80% as it continues to trade in a strong downtrend.

Energy XXI Gulf Coast Inc. (NASDAQ:EXXI) underperformance has already caught the attention of analysts. According to data compiled by Zacks Investment Research, analysts are forecasting earnings increase of 0% this year, over last year. Next year earnings on the other hand should increase 21.1%

Total revenues for the third quarter totaled $117 million inclusive of a $12.5 million loss on derivative financial instruments. Second quarter revenues totaled $143.7 million. Total LOE in the quarter was $77.8 million per BOE, made up of $64.3 million in lease operating expense. According to the Chief Executive Officer, Douglas E. Brooks, reduction of LOE and G&A costs resulted in a 45% improvement in adjusted EBITDA quarter over quarter.

Commodity Hedging

The natural gas exploration and development company entered into fixed price swap contracts benchmarked to NYMEX-WTI to hedge 8,000 BOPD of production for the full year. The swap contracts are priced at $50.68. The company also has fixed price swap contracts benchmarked to LLS-Argus for 2,000 BOPD with an average fixed price of $55.45 for the January to June 2018 period.

Energy XXI Gulf Coast Inc. (NASDAQ:EXXI) is currently working with its financial advisors on it’s long-term strategic plan focused on the Gulf of Mexico consolidation

“Since no executable combination has resulted from these discussions, we are now focused on our stand-alone options, which include a drilling program beginning in early 2018. This activity in 2018 and beyond may be funded internally through existing liquidity, the benefit of higher oil prices, and continued progress on reducing costs,” said Mr. Douglas E. Brooks.

I have no positions in any of the stocks mentioned, and have no plans to initiate any positions within the next 72 hours. All information, including any data, is provided without any guarantees of accuracy.

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About the author: James Marion is a University of Houston student studying Business with a concentration in Finance. James has interned with several investment professionals and hopes to pursue a career as a professional stock analyst after graduation.

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James Marion is a University of Houston student studying Business with a concentration in Finance. James has interned with several investment professionals and hopes to pursue a career as a professional stock analyst after graduation.

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