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Energy XXI trading up 2% after asset purchase, joint venture with Exxon

Earlier this morning, Energy XXI (EXXI) announced that it has executed a purchase and sale agreement to acquire certain shallow-water Gulf of Mexico interests from Exxon Mobil Corporation (XOM). The agreement covers 5,000 gross acres on Vermilion Block 164, currently producing approximately 1,100 BOE/d net. Energy XXI and ExxonMobil have also entered into a joint venture agreement to explore for oil and gas on nine contiguous blocks adjacent to Vermilion Block 164 in shallow waters on the Gulf of Mexico shelf. Energy XXI will operate the joint venture, and drilling of the initial prospect, called Pendragon, is expected to commence by the end of the year. The company's total capital commitment is estimated at $75M, assuming successful completions of two earning wells. Energy XXI also gave an operations update, with executive VP Ben Marchive saying, "Our first horizontal well, Big Sky 2, had the highest oil rate ever produced in the West Delta 73 field since its discovery in 1962. Continued success with the horizontal program can be transformational for Energy XXI, increasing ultimate recovery per well and continuing to improve the already attractive economics of our drilling program." Energy XXI is trading up 83c, or 2.37%, to $35.79 in early-afternoon trading.