Energy XXI Gulf Coast Inc. announced June 18 that it would be acquired by an affiliate of privately-held Cox Oil LLC that values the U.S. Gulf Coast oil producer at approximately $322 million.
Energy XXI said its board of directors unanimously approved the proposed deal in which Cox will acquire all outstanding shares of the company's common stock for $9.10 per fully diluted share through a cash transaction. The deal represents a 21% premium to Energy XXI's June 15 closing price.
Energy XXI president and CEO Douglas Brooks said the deal represents a lower-risk alternative to the strategic disposition of noncore assets and related asset retirement obligations to Orinoco Natural Resources LLC that the company had announced May 10 that it was pursuing, and that Energy XXI had ceased discussions surrounding that deal with Orinoco.
"This option would have involved multiple parties and numerous complexities to shed only a portion of our [abandonment and decommissioning] liabilities as a first step. We would then be required to complete a second-step capital raise that would have funded the expanded drilling program," Brooks said.
"We believe consolidation is critical for the shallow-water Gulf of Mexico, in order to reduce cost and achieve economies of scale," Brooks said, adding that the deal would enable Cox to increase its production from 35,000 barrels of oil equivalent per day to 61,000 boe/d.
Intrepid Partners LLC is serving as a financial adviser to Energy XXI, while Sidley Austin LLP is acting as a legal adviser in connection with the transaction. For Cox, Houlihan Lokey Inc. is serving as a financial adviser while Locke Lord LLP is acting as legal adviser.