Energy XXI spuds first development well of this year, cuts workforce
U.S.-based oil and gas company Energy XXI Gulf Coast has spud its first development well of 2017 at the West Delta 30 field, in the Gulf of Mexico.
Aside from the well spud announcement, the company also said on Wednesday it recently implemented additional workforce reductions to lower its overhead costs and better align its staffing with its current expected operational plans.
Total headcount was reduced by approximately 18% which will result in severance and separation expenses of approximately $2.5 million in the second quarter of this year. The company said it will realize a total of approximately $8 million to $8.5 million of annualized general and administrative and lease operating expense savings from this reduction.
The first well in the company’s 2017 development program, the West Delta 30 L-14 ST2 High Tide well, was spud on June 7. It will be drilled to a total vertical depth of 8,500 feet.
Energy XXI has a 100% working interest in this well and initial production is anticipated in the third quarter of 2017. The company’s current development plan is focused on the West Delta area where two to four wells are planned for 2017, with over 40 identified future development drilling locations spread across the company’s asset base.
Douglas E. Brooks, Energy XXI Gulf Coast Chief Executive Officer and President, stated, “We will continue to evaluate drilling and recomplete projects and pursue those that are value adding.
“The reductions in force are difficult but we are in a challenging commodity price environment and we must better align and manage our costs through this time to better position EGC and allow us to be more competitive in the long-term.”
The West Delta 30 field includes the West Delta 27, 28, 29 and 30 blocks and, according to Energy XXI, it is the third largest oil field on the Gulf of Mexico shelf, having produced in excess of 749 million boe since first production. The field, is located 21 miles offshore of Grand Isle, Louisiana in approximately 45 feet of water.