Offshore staff

HOUSTON --Energy XXI (Bermuda) Ltd. has entered into an agreement with Pogo Producing Co. to purchase Pogo's Gulf of Mexico shelf properties for $419.5 million in cash.

The transaction includes 28 fields currently producing 7,400 net boe/d, with net proved reserves of 20 MMboe. Leases included cover 282,000 gross acres, or 91,600 net acres (1,141 sq km gross, 371 sq km net).

"The Pogo properties are an excellent addition to our existing asset base," says John Schiller, Energy XXI chairman and CEO.

"These properties largely overlap our current offshore holdings from both a geographic and geologic standpoint, which offers significant operating synergies. This transaction will boost our recent production run rate by more than 40% and our proved reserve base by about 50%.

"Given current oil and gas prices, we consider this an attractive investment based solely on the proved properties, and we expect the deal to be immediately accretive to cash flow.

"We also see upside potential as more than 1,500 boe/d of net production is restored at hurricane-affected facilities and as we drill the inventory of identified development and exploration locations."

The transaction is expected to close by June 1, subject to customary closing conditions and adjustments.

4/24/2007