Cox Oil Offshore LLC agreed to acquire Energy XXI Gulf Coast Inc. in a deal that is set to more than double the private Dallas-based operator’s production in the Gulf of Mexico, Energy XXI said in a recent statement.
As part of a definitive agreement, a Cox Oil affiliate will purchase all of the outstanding shares of Houston-based Energy XXI’s common stock for USD $9.10 per share. The roughly $322 million cash transaction represents a 21% premium to Energy XXI’s closing share price on June 15.
As a result of the new agreement, Energy XXI will terminate the partnership with Orinoco Natural Resources LLC announced May 10. The deal, which included the sale of Energy XXI’s non-core asset portfolio in the Gulf of Mexico, was estimated to be worth more than $125 million by BMO Capital Markets analysts.
Energy XXI emerged from Chapter 11 bankruptcy in late 2016. Since then, the company retained Morgan Stanley & Co. LLC in March 2017 to assist with an evaluation and implementation of a strategic plan.
The company also tapped industry veterans Douglas E. Brooks and Gary Hanna within the past year to lead the company—Brooks as CEO and president and Hanna as board chairman.
“We have sought to protect and maximize shareholder value and have searched for the best way to address EGC’s asset retirement obligations, liquidity challenges and need for financing to invest for future growth,” Brooks said in a statement. “We have determined that the best available course of action is a transaction that provides stockholders with a certain cash premium and less execution risk.”
Brooks added that Energy XXI has also been a “proponent of consolidation in the Gulf of Mexico for some time.”
