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What: Shares of Energy XXI (NASDAQ:EXXI) were booming today, gaining as much 16% after adding to its proven oil reserves.
So what: Last night, the Bermuda-based explorer said its proven oil reserves had jumped nearly 50%, to 179 million barrels of oil equivalent (mmboe). Including probable reserves, the company is now sitting on 232 mmboe with a present value of $8.4 billion. CEO John Schiller credited the horizontal-drilling program that the company began a year ago for the growth in reserves, noting Energy XXI has found oil in nine of its first 11 horizontal-drilling attempts.
Now what: Given the initial success of the company's horizontal-drilling program, we could soon see additional increases in proven reserves. Energy XXI still looks appealing, as the stock is affordably priced with a P/E of 13.5, even after today's bounce. The recent unrest in Egypt has sent oil prices above $100, once again, and over the long-term, oil is likely to continue to move higher. I'm confident enough in Energy XXI that I'm giving it an outperform rating on my CAPS page. You can do the same, or keep track of the stock by adding it to your Watchlist here.
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