Energy XXI (EXXI:US) is looking to buy offshore assets in Southeast Asia that have similar geology to the U.S. Gulf of Mexico, where it operates five of the biggest shallow-water oil fields.
The company has a team evaluating prospects, including in offshore Malaysia, and hopes to make a purchase in the next 12 to 18 months, Chairman and Chief Executive Officer John Schiller said in an interview at the Bloomberg Link Oil & Gas Conference in Houston today.
“When we look around the world, places like Southeast Asia, the geology’s very similar, the sand’s very similar,” Schiller said. Major oil companies that operate in the Gulf of Mexico have previously ventured into Southeast Asia, he said.
Energy XXI, which has its principal office in Houston, has sought to grow through acquisitions and the use of horizontal drilling to help boost recovery of oil. The company has more than 400,000 net acres in the U.S. Gulf and Louisiana, with average production equivalent to about 47,000 barrels of oil a day in the quarter that ended June 30.
The company is also seeking to sell some interests in the Gulf of Mexico where it doesn’t control operations and may trade some stakes, Schiller said.
Energy XXI has partnerships with such companies as Chevron Corp. (CVX:US), Exxon Mobil Corp. (XOM:US), Apache Corp. (APA:US) and Freeport-McMoRan Copper & Gold Inc. (FCX:US) as it explores around salt domes and in ultra-deep formations in the Gulf’s shallow waters and onshore.
That includes being part of the Davy Jones project with Freeport-McMoRan in the Gulf that’s targeting deep natural gas deposits. Attempts to conduct a successful flow test at Davy Jones No. 1 were inconclusive after months of efforts.
The first Davy Jones well may be “tough” to develop as it’s too deep and the pipeline is too narrow to flow gas, Schiller said. A second Davy Jones well is scheduled to be completed starting in December and has a “high probability” of producing. Other ultra-deep Gulf Coast prospects are “promising,” he said.
Energy XXI operates five of the top 15 largest Gulf shelf oil fields, according to a company slide presentation this month.
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