Energy XXI Reports Fiscal First-Quarter Results and Provides Operations Update

• Production capacity approximates 52,000 BOE/d, 70% oil
• Second horizontal at West Delta delivers initial production of 1,800 BOE/d
• First well in Vermilion joint venture to spud this month
• Davy Jones discovery well nearing completion

HOUSTON � Nov. 7, 2012 � Energy XXI (NASDAQ: EXXI) (AIM: EXXI) today announced fiscal first-quarter results and provided an operations update on activities in the Gulf of Mexico.

For the 2013 fiscal first quarter, Energy XXI reported earnings before interest, taxes, depreciation, depletion and amortization (EBITDA) of $140.0 million, compared with $186.9 million in the 2012 fiscal first quarter.  Net income attributable to common stockholders for the 2013 fiscal first quarter was $15.4 million, or $0.19 per diluted share, on revenues of $270 million, compared with fiscal 2012 first quarter net income attributable to common stockholders of $62.6 million, or $0.76 per diluted share, on revenue of $285 million.

Production for the fiscal first quarter averaged 37,300 barrels of oil equivalent per day (BOE/d), with 70 percent being oil.  Current production approximates 46,000 BOE/d, with another 6,000 BOE/d temporarily offline, including 2,300 BOE/d due to pipeline and water handling facility repairs at the West Delta 30 field that are expected to be completed within 10 days.

�Oil dominates our production mix, which is expected to continue because it is the primary focus of our capital program,� Energy XXI Chairman and CEO John Schiller said.  �We have recovered from the hurricane and resumed ramping production through our horizontal development drilling program.  We have two new horizontal wells on production and another 13 on the drilling schedule, representing a concerted effort to increase the ultimate recovery of the oil in place in our large fields.�

Exploration and Development Activity

At West Delta 73 (WI 100%/ NRI 83%), the Weimer well, Energy XXI�s second horizontal well in the field, was drilled to 8,312 feet true vertical depth (TVD)/9,800 feet measured depth (MD), including a 175 foot horizontal section in the F-45 oil sand.  Weimer was placed on production at 1,800 BOE/d, gross.  Big Sky 2, the company�s first horizontal well, was placed on production from the F-30 sand in September at nearly 3,000 Bbl/d and averaged approximately 2,000 Bbl/d in the first month of production.  Based on the historical results of nine horizontal wells drilled in this field in the late 1990s, the estimated ultimate recovery from Big Sky 2 and Weimer should exceed 1 million barrels of oil each, compared with average recoveries of about 350,000 barrels of oil from vertical wells in the field.  A third horizontal well at West Delta 73, Hyden, has begun drilling to a proposed 8,750 feet TVD/ 11,800 feet MD targeting the G-20 sand. 

The Cake development well at Grand Isle 16/18 (100% WI/ 86% NRI) was drilled to 7,208 feet TVD/8,080 feet MD, updip of a past producer.  Cake was dual completed as a high-angle well in the BF-1 and BF-2 sands and placed on production in late October at 800 BOE/d gross from the BF-1 sand.  The larger BF-2 sand will be brought online after additional facilities work, with production from the well expected to reach 2,500 BOE/d within the next two weeks.  The next development well at Grand Isle, DrO, is proposed as a horizontal drilled to 6,945 feet TVD/ 7,750 feet MD targeting the BF-2 sand with an expected uplift of 3,800 BOE/d gross. 

At the South Pass 49 field, a workover is underway on the A-7 well (57% WI/ 47% NRI).  Since April 2012, the well had been producing 2 million cubic feet per day (MMcf/d) of natural gas plus 60 BBl/d of condensate from the D-65 sand, which had never previously been produced in the field.  The well is being worked over to install a gravel pack for sand control across the lower portion of the D-65 reservoir, to separately test the upper portion of the D-65 not previously perforated, and to gather more data about the reservoir and to increase production rates. 

Within the recently formed Vermilion joint venture area, Energy XXI is preparing to spud Pendragon, the first of two exploration wells required to earn a 50 percent working interest in the joint venture.  Pendragon is targeting multiple sands on the south side of a salt dome, with a proposed total depth of 16,500 feet TVD/ 20,400 feet MD.

Within the shallow-water ultra-deep exploration program with McMoRan, the Davy Jones discovery well is proceeding toward first production and the company is participating in the Blackbeard West #2, Lomond North and Lineham Creek wells.

The Davy Jones discovery well, the first shallow-water, ultra-deep sub-salt completion on the Gulf of Mexico shelf, is being completed.  The wellbore was cleaned out to enable testing of all 165 feet of perforated sands in the Wilcox and the final steps of installing the wellhead are underway.  Once these steps are complete, flow testing is expected to commence.  Energy XXI holds a 15.8 percent working interest (12.6 percent net revenue interest) in the Davy Jones discovery well.  Total net investment in Davy Jones #1 through Sept. 30, 2012 was approximately $87.6 million.

Completion and testing of the Davy Jones offset appraisal well (Davy Jones #2) is expected to commence following review of results from the Davy Jones discovery well.  

At Blackbeard West #2 on Ship Shoal Block 188, has been drilled to 24,500 feet.  McMoRan has applied for a permit to deepen the well to 25,500 feet.  Recent logs indicate the presence of potential low-resistivity pay zones and wireline logs have indicated Middle Miocene sands with 24 percent porosity.  The presence of sands with high porosity indicates that sands can retain excellent characteristics in a high-pressure environment below the salt weld.  Energy XXI holds a 22.9 percent working interest and a 17.5 percent net revenue interest in Ship Shoal Block 188.  Total net investment in Blackbeard West No. 2 approximated $21.8 million at Sept. 30, 2012.

The Lineham Creek exploration prospect, located onshore in Cameron Parish, Louisiana, approximately 55 miles northwest of Davy Jones, is drilling below the salt weld at 24,450 feet. The well is targeting Eocene and Paleocene objectives below the salt weld with a proposed total depth of 29,000 feet. Chevron U.S.A. Inc., as operator of the well, holds a 50 percent working interest.  Energy XXI holds a 9 percent working interest and a 6.75 percent in the well.  Total net investment in Lineham Creek was approximately $10.8 million at Sept. 30, 2012.

Drilling has commenced in the Highlander project area on the Lomond North ultra-deep prospect, located in St. Martin Parish, Louisiana.  The well is drilling below 8,850 feet toward a proposed total depth of 30,000 feet and is targeting Eocene, Paleocene and Cretaceous objectives below the salt weld.  McMoRan has identified multiple exploratory prospects in the Highlander area, where it controls rights to approximately 80,000 gross acres in Iberia, St. Martin, Assumption and Iberville Parishes. Lomond North is approximately 65 miles north of Davy Jones.  Energy XXI holds an 18 percent working interest in Lomond North, where its total net investment approximated $1.4 million at Sept. 30, 2012.

Capital Expenditures

          During the 2013 fiscal first quarter, capital expenditures, including plug-and-abandonment costs, totaled $194 million, with $31 million in exploration and $163 million in development and other investments.

Conference Call Today, Nov. 7, at 9 a.m. CST, 3 p.m. London Time

Energy XXI will host its fiscal first-quarter conference call today, Nov. 7, at 9 a.m. CST (3 p.m. London time). The dial-in numbers are 1 (631) 813-4724 (U.S.) and (0) 80 0051 3806 (U.K.), and the confirmation code is 47026680.   For complete instructions on how to actively participate in the conference call, or to listen to the live audio webcast or a replay, please refer to www.EnergyXXI.com. 

Forward-Looking Statements

All statements included in this release relating to future plans, projects, events or conditions and all other statements other than statements of historical fact included in this release are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based upon current expectations and are subject to a number of risks, uncertainties and assumptions, including changes in long-term oil and gas prices or other market conditions affecting the oil and gas industry, reservoir performance, the outcome of commercial negotiations and changes in technical or operating conditions, among others, that could cause actual results, including project plans and related expenditures and resource recoveries, to differ materially from those described in the forward-looking statements. Energy XXI assumes no obligation and expressly disclaims any duty to update the information contained herein except as required by law.

Competent Person Disclosure

The technical information contained in this announcement relating to operations adheres to the standard set by the Society of Petroleum Engineers. Bobby Poirrier Jr., Vice President of Corporate Development, a Petroleum Engineer, is the qualified person who has reviewed and approved the technical information contained in this announcement.

About the Company

Energy XXI is an independent oil and natural gas exploration and production company whose growth strategy emphasizes acquisitions, enhanced by its value-added organic drilling program. The company�s properties are located in the U.S. Gulf of Mexico waters and the Gulf Coast onshore.  Seymour Pierce is Energy XXI�s listing broker in the United Kingdom.  To learn more, visit the Energy XXI website at www.EnergyXXI.com.