Energy XXI Gulf Coast Inc., whose predecessor company spent billions to establish a foothold in the U.S. offshore only to collapse into scandal and bankruptcy, on Monday agreed to be acquired by Cox Oil Offshore LLC for $322 million.

Cox, formed in 2004 and headquartered in Dallas, said the takeover would nearly double its Gulf of Mexico (GOM) production.

“The combined entities represent the continuation of our past practices to generate economies of scale through the consolidation of assets without wavering on our commitment to safe and responsible production in the Gulf of Mexico,” said founder Brad E. Cox, who chairs the privately held producer.

The company agreed to purchase all of the outstanding shares of Energy XXI for $9.10/share, a 21% premium to the closing share price on Friday ($7.49).

Energy XXI filed for Chapter 11 protection in 2016 and emerged late last year.  Predecessor Energy XXI Ltd. had been one of the high flyers in the GOM and the largest producer on the Outer Continental Shelf (OCS) for a time, operating 10 of the largest oilfields. It grew through acquisitions, most notably a controversial $6 billion buyout of EPL Oil & Gas Inc. in 2014, just as oil prices began to crater. The company had, for a time, an estimated 750,000-plus acres of leasehold and more than 16,000 square miles of 3-D seismic data.

However, the oil price slump and a scandal in 2015 involving founder and CEO John Schiller helped to sink the company. In 2015 Schiller was stripped of his title following an internal investigation that found he had borrowed from vendors and obtained a personal loan from an acquaintance who later was appointed to the board.

Energy XXI appointed Douglas Brooks as CEO last year. Gary Hanna, coincidentally former CEO of EPL, took over as board chairman in April. It also retained Morgan Stanley & Co. LLC to assist in evaluating the company and help with strategic planning.

“We have sought to protect and maximize shareholder value and have searched for the best way to address...asset retirement obligations, liquidity challenges and need for financing to invest for future growth,” Brooks said. “We have determined that the best available course of action is a transaction that provides stockholders with a certain cash premium and less execution risk.”

Brooks said Energy XXI had been a “proponent of consolidation in the Gulf of Mexico for some time.” In May the producer agreed to partner with Houston-based Orinoco Natural Resources LLC and sell its noncore asset portfolio estimated to be worth around $125 million. With the Cox takeover, the Orinoco deal has been scuttled.

With Energy XXI’s assets, Cox expects to increase production to more than 61,000 boe/d from 35,000 boe/d.

Cox has assets that include more than 200 operated producing wells in 25-plus fields in the GOM. Operations stretch from Texas to Florida, with structures ranging from the shallow waters offshore Louisiana to 400 feet of water on the OCS.

According to the company, it became one of the largest OCS operations in 2016 when it acquired GOM assets from Chevron Corp. Last year the private company purchased more OCS assets from Freeport-McMoRan Oil & Gas.
Closing is set for 3Q2018. No financial contingency is needed to complete the transaction, according to Cox.

Energy XXI was represented by Intrepid Partners LLC through Gibson, Dunn & Crutcher LLP as  financial adviser and by Sidley Austin LLP as legal adviser. Cox was represented by Houlihan Lokey Inc. as financial adviser and by Locke Lord LLP as legal adviser.