by Collin Eaton
Energy XXI expands Gulf presence with $1.5B acquisition
HOUSTON – Energy XXI’s $1.5 billion deal to buy another offshore oil and gas producer is notable in the energy industry, as corporate acquisitions have given way to a slew of asset transactions in recent years.
But Energy XXI Chairman and CEO John Schiller said in an interview with FuelFix Wednesday that it’s a chance to capitalize on synergies that oil producers don’t typically get when offshore leases simply trade hands.
His company, for example, is more focused on optimizing oil production rates in the Gulf, while the company selling itself, Houston-based EPL Oil & Gas, is stronger in geosciences activities such as using seismic equipment, he said.
“We’ve been saying we’ll keep buying assets, but in this case, the companies do exactly the same thing in the same areas,” Schiller said.
Both an improved understanding of geosciences and Energy XXI’s 12 production engineers will have a hand in boosting the output of their existing oil fields, he said.
“In this business, it’s all about pressure drops,” he said, adding that EPL has only one production engineer. “You have to maximize that – we’ve always been focused on it.”
Together, the companies — worth a combined $6 billion in enterprise value — will spend about $1.1 billion in capital expenditures this year, largely geared to expand operations in the Gulf, he said.
It will be an all-hands-0n-deck effort: Schiller said the company’s Houston headquarters would grow from about 200 to 300 employees after the deal.
“People are really hard to get right now, so I don’t see a lot of reduction in Houston,” he said.