Why EXXI Is the Worst-Performing Upstream Stock Year-to-Date



Energy XXI Gulf Coast’s year-to-date performance

On December 1, 2017, Energy XXI Gulf Coast (EXXI) led the list of the worst-performing stocks in 2017 from the oil and gas production—or upstream—sector in the US. EXXI fell sharply from its January 9, 2017, close of $30.25 to $5.13 on December 1—a sizeable decrease of ~83.0%.

EXXI stock began trading on the NASDAQ on January 9, 2017. Since that date, it has widely underperformed crude oil (USO), natural gas (UNG), and the SPDR S&P 500 ETF (SPY) for rest of 2017.

From January 9, 2017, to December 1, 2017, crude oil has risen ~12.0% whereas natural gas has fallen ~1.0% during the same period. In comparison, the SPDR S&P 500 ETF (SPY) has risen ~18.0% since EXXI started trading on the NASDAQ.

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Energy XXI Gulf Coast’s revenues and earnings

In 3Q17, Energy XXI Gulf Coast (EXXI) reported much lower revenues than in 2Q17 and 3Q16. In 3Q17, EXXI reported revenues of ~$117.0 million—substantially lower than its revenues of ~$144.0 million in 2Q17 and ~$143.0 million in 3Q16.

EXXI’s operating cash flows saw a strong decline of ~19.0% to ~$16.0 million in 3Q17 from ~$20.0 million in 3Q16.

In November 2017, EXXI announced that no executable plan had emerged from its discussions with financial advisors. EXXI could consider a standalone option in which it would begin drilling in early 2018 using its internal liquidity. It may also need to access capital markets. The standalone option did not sit well with the market.

EXXI stock fell ~41.0% in November. On September 30, 2017, EXXI had cash and cash equivalents of ~$173.0 million when compared with cash and cash equivalents of ~$165.0 million at the end of 2016.

Next, we’ll compare the year-to-date returns from Bonanza Creek Energy (BCEI) with the broader market and energy commodities. We’ll also analyze its fundamental metrics.


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