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Private Equity with a Public Ticker John D. Schiller, Jr. Chairman and CEO IPAA Private Capital Conference Houston, TX -

Private Equity with a Public Ticker John D. Schiller, Jr. Chairman and CEO IPAA Private Capital Conference Houston, TX - January 18 th , 2007. Energy XXI is a new company…. Formed July 25, 2005 October 2005 - Successfully completed a $300 million IPO on the London AIM Market

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Private Equity with a Public Ticker John D. Schiller, Jr. Chairman and CEO IPAA Private Capital Conference Houston, TX -

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  1. Private Equity with a Public Ticker John D. Schiller, Jr. Chairman and CEO IPAA Private Capital Conference Houston, TX - January 18th, 2007

  2. Energy XXI is a new company… • Formed July 25, 2005 • October 2005 - Successfully completed a $300 million IPO on the London AIM Market • February 2006 - Agreed to acquire Marlin Energy Offshore, LLC for $421 MM • March 31, 2006 - Shareholders approved the “reverse merger”; Closed Marlin acquisition April 4, 2006 • June 2006 - Agreed to acquire South Louisiana properties for $308 million • July 2006 - Raised $85.6 million through exercise of warrants and closed South Louisiana acquisition July 28, 2006 • December 2006- Form 10 filing with SEC effective December 29, 2006

  3. …delivering rapid growth Enterprise Value / 2P PV10 (1) • PV10 value is based on current market prices and 2P reserves are as of 7/1/06

  4. …at attractive cost parameters Transaction Value / Proved Reserves(1) Transaction Value / Daily Production(1) • Per John S. Herold

  5. …with experienced management John SchillerChairman and CEO 25 yearsexperience • Worldwide VP of E&P - Devon Energy & Ocean Energy • Management Positions - Burlington Resources • Started career with Superior Oil in Lafayette, Louisiana Steve WeyelPresident & COO 30 yearsexperience • President & COO InterGen N.A., a Shell Bechtel JV • Executive VP Integrated Energy – NGC / Dynegy • 20 years in international oil service sector – RTC & Baker West GriffinChief Financial Officer 22 yearsexperience • Chief Financial Officer - Alon USA • Chief Financial Officer of InterGen North America • Started career with Bankers Trust, UBS Ben MarchiveSenior VP- Operations 28 yearsexperience • VP - Production North America - Ocean Energy • Manager - Kerr-McGee Corporation • Started career with Superior Oil in Lafayette, Louisiana Steve NelsonVP Drilling & Operations 23 yearsexperience • Manager of Drilling & Operations - Devon Energy • Production Manager - Ocean Energy • Gulf of Mexico Operations - Kerr-McGee Granger AndersonVP Land 25 yearsexperience • Chief Landman of GOM - Kerr-McGee • Manager - Westport Resources and Burlington Resources • Started career with Hunt Oil Energy XXI Executive Team 150+ yearsexperience • Senior Management Experience • Highly Successful Growth Companies • Long Successful Track Records through Multiple Cycles

  6. …exploiting high quality assets. Lake Salvador JDA Manila Village Field Rabbit Island Field Lake Boudreaux Field South Timbalier 21 Field Energy XXI Operations Profile Production: 16,000 BOEPD Reserves: 2P of 49.1 MMBOE PV10: $1,351 MM 136 drilling opportunities and 125 recompletions identified 200,000 net acres

  7. Bermuda based corporation Listed on the London AIM Market Shares trade as EGY Warrants trade as EGYW Fiscal year ended June 30, 2006 Filed “Form 10” for U.S. registration Filed October 30th, 2006 Effective December 29th, 2006 Dual listing in U.K. & U.S. Company Information

  8. How did we get here?

  9. Identified angel money July 2004 John/Steve put together business plan June 2004 - December 2004 West Griffin, CFO, joined January 2005 Decided on SPAC as preferred capital raise in April 2005 Completed $300 MM IPO October 2005 Timing Required

  10. Funding Options Considered • Private Equity • Raise own Private Equity Fund • Public Market

  11. Special Purpose Acquisition Corporation (SPAC) • Essentially a blind trust • Management team reputation is key • Typical structure • Sale a unit for $6 • Unit consists of 1 Share and 2 Warrants exercisable at $5 for four years • 95% of money held in trust • Shares and Warrants trade separately • Management gets 20% IPO shares (7.7% fully diluted)

  12. Shareholder Rights • Shareholders vote to approve the initial acquisition • Shareholders have right to put stock back to company for $5.65/share if they don’t like deal • Ensure management does deal in the middle of the fairway

  13. Why a SPAC? • Pros • One time raise with additional equity from Warrants • Public money • Smaller shareholder base • Cons • Warrant Dilution • Must complete transaction in 12 to 18 months • Investor share restrictions (liquidity)

  14. London Alternative Investment Market (AIM) • Less Regulations • NOMADS • Lawyers • Preferred European money (30% IPO) • Able to move proxy forward quickly • Closed initial transaction in 45 days • U.K. markets value true 2P reserves

  15. Raising the money Toronto Glasgow Edinburgh St Paul Montreal Portland Chicago London Boston Seattle Denver San Francisco New York Paris Philadelphia Houston Dallas • Perseverance • 6 week road show

  16. Raising the Money $42.42 Blended Strip (50% oil/50% gas) $8.18 Acquisition Cost of U.S. Reserves Source: J.S. Herold, Bloomberg Note: Forward strip is at year-end for annual data and end of July for year-to-date data; strip is two-year strip at that time • Acquisitions trade at a significant discount to strip price • Hedging markets provide opportunities to secure high operating margins • Favorable environment for asset acquisitions The margin opportunity for acquisition of reserves has improved with increased oil and gas prices • Perseverance • Arbitrage

  17. Raising the Money Asset Acquirers have been substantially rewarded by the market Source: Randall & Dewey with respect to selection of Acquirers vs. Other Large Caps • Perseverance • Arbitrage • What success will be

  18. The Results

  19. Capitalization • 83.9 MM Shares outstanding • $420 MM market capitalization • 78.6 MM Warrants outstanding • $70.7 MM market value • $393 MM potential equity • $325 MM 2nd Lien • $127 MM Revolver (as of 1Q ’07) Energy XXI intends to refinance 2nd Lien with high yield

  20. Balance Sheet ($M) June 30, 2006 Sept 30,2006 Cash 62 8 Net Working Capital (excluding cash) 74 73 Debt 209 450 Stockholder’s Equity 353 405 Total Capitalization (based upon net debt) 500 847 Net Debt/Total Capitalization 29% 52% Net Debt/Proved Reserve ($/BOE) $5.98 $11.79

  21. Quarterly Results ($M) June 30, 2006 Sept 30, 2006 • Operating Income 13,319 17,397 • Net Income 5,534 1,933 • Operating Cash Flow (EBITDA) 33,636 (1) 45,141 (1) • Net Debt/EBITDA (2) 1.09x 2.52x • EBITDA/Interest (3) 5.23x 4.61x • Operating Income plus Depreciation, Depletion and Amortization • Annualized quarterly EBITDA • Interest excludes one-time write-off of up-front fees

  22. Right vehicle at the right time Eurospac preferred Management team with wall street exposure essential Fast & Furious Year 5 people with $278 MM cash 59 people, 16 mboed, 200 M acres, 5 operated rigs Management & employees incentivized to increase shareholder value Collectively own 15% of outstanding shares SPAC Thoughts

  23. Disclaimer

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