November 22, 2010 / 12:56 AM / in 7 years

Energy XXI buying Exxon Gulf of Mexico fields for $1.01 billion

NEW YORK (Reuters) - Oil and gas exploration company Energy XXI (EXXI.O) agreed to buy nine Exxon Mobil (XOM.N) oil and gas fields in the shallow waters of the Gulf of Mexico for $1.01 billion, increasing the company’s reserves and production by more than 70 percent.

The fields are located on the Gulf’s continental shelf, where it is cheaper and easier to drill than in the deepwater.

The purchase would make Energy XXI the third-largest oil producer on the shelf, the company said on Sunday.

The fields hold an estimated 66 million barrels of proved and probable reserves of oil and gas, 61 percent of which is oil, Energy XXI said. They produce about 20,000 barrels of oil equivalent a day, 53 percent of which is oil.

The company said the acquisition would increase its proved and probable reserves 72 percent. Its production would rise more than 77 percent.

Exxon announced that it was selling the assets, which represent less than 15 percent of the oil major’s total output from the Gulf, last month. It said then that the assets would likely be of more value to others.

The deal is subject to preferential rights-to-purchase held by companies with working interests in the properties, the company said. It expects the deal to close December 1.

Energy XXI said to help pay for the deal it has obtained committed financing to increase its corporate revolver from $350 million currently to $700 million, as well as a $450 million unsecured bridge loan.

    It plans to retire the bridge loan through by issuing high-yield notes some time in the future.

    It also said it placed a ten-percent cash deposit for the deal into an interest-bearing account.

    Shares of Energy XXI closed at $25.34 on Friday.

    Exxon confirmed on Sunday that it was considering the sale of 100 gas stations in Scotland, but declined comment on a report it is mulling the sale of $2 billion of North Sea assets.

    Reporting by Michael Erman, Editing by Gary Crosse and Lincoln Feast

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