Thursday, July 16, 2015

More On $EXXI

  • ~$110 million of EBITDA in Q1; ~$85 million of interest expense.
  • "Capex" was $63 million. So, negative FCF. (Unclear how much of that was maintenance capex. Obviously, the more is for maintenance, the less cash the business is actually producing.)
  • Not much insider ownership. Mount Kellett is the biggest name, and this is one of their mistakes.
  • This a situation where it would be rational for the CEO to do dilutive exchanges to reduce cash burn and keep his job longer. He made $9.4 million in 2013 and $14.5 million last year according to Morningstar.


jHurt said...

Buying EPL marked the top! Amazing timing. Amazingly bad

CP said...

Great point. Reminds me of how the worst / most bullish / delusional coal industry managements consolidated that industry.

'In two decades covering the mining industry, these were some of the most regrettable transactions we had ever seen.

The mergers resulted in a funny kind of adverse selection where the most bullish managements with the worst historical sense and facility at market timing ended up controlling capital allocation for the whole industry

CP said...

March 12, 2014

Energy XXI (Nasdaq:EXXI) (LSE:EXXI) and EPL Oil & Gas, Inc. (NYSE:EPL) today announced the signing of a definitive merger agreement pursuant to which Energy XXI will acquire all of EPL's outstanding shares for total consideration of $2.3 billion, including the assumption of debt. As a result of the merger, Energy XXI will become the largest public independent producer on the Gulf of Mexico shelf, with production of approximately 65,000 barrels of oil equivalent (BOE) per day, 70 percent oil, including a reduction related to the pending divestiture of non-operated interests in the Eugene Island 330 and South Marsh Island 128 fields. Upon completion of the merger, Energy XXI expects to have an enterprise value of approximately $6 billion.

Aggregate consideration to EPL shareholders is expected to consist of approximately $1 billion in cash and approximately 23.4 million common shares of Energy XXI