Based on the aggregated intelligence of 170,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, oil and gas explorer Energy XXI (Nasdaq: EXXI) has earned a coveted five-star ranking.

With that in mind, let's take a closer look at Energy XXI's business and see what CAPS investors are saying about the stock right now.

Energy XXI facts

Headquarters (Founded) Hamilton, Bermuda (2005)
Market Cap $1.76 billion
Industry Oil and gas exploration and production
Trailing-12-Month Revenue $558 million
Management CEO John Schiller, Jr. (since 2005)
CFO David Griffin (since 2005)
Return on Equity (Average, Past 3 Years) (3.2%)
Cash/Debt $12.88 million / $765.93 million
Competitors Denbury Resources (NYSE: DNR)

Sources: Capital IQ (a division of Standard & Poor's) and Motley Fool CAPS.

On CAPS, 94% of the 147 members who have rated Energy XXI believe the stock will outperform the S&P 500 going forward. These bulls include hammertongs and All-Star Geofiz, who is ranked in the top 5% of our community.

Just last week, hammertongs brought Energy XXI's recent buy to our community's attention: "Just purchased gas and oil fields from Exxon (NYSE: XOM). This increases their reserves and product by 70% and I don't think the price of gas and oil will be going down in the long term no matter how many Volts hit the road."

In fact, Energy XXI's $1 billion acquisition will make it the third-biggest oil producer in the Gulf of Mexico's shallow waters behind Apache (NYSE: APA) and Chevron (NYSE: CVX). And with the stock trading at a price-to-cash flow (7.7) discount to rival Denbury (8.6), as well as partner McMoRan Exploration (NYSE: MMR) (8.9), Energy XXI seems like an offshore opportunity worth diving into.

CAPS All-Star Geofiz elaborates on the bull case:

In my opinion, [Energy XXI] is the better way to play the ultradeep shelf than through [McMoRan]. Reserves, while apparently very large, are quite a long way off due to technological challenges (specifically, wellheads and completions) and to extremely low gas prices, which will extend at least through 2011 and most likely well into 2012. [Energy XXI] has high quality liquids production to take up the slack in the meantime. They may operate at a small loss due to capital requirements, but the payoff will be very large in the longer term.

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