Energy XXIagreed to acquire EPL Oil & Gas Inc. for $1.5 billion to become the largest publicly traded independent producer on the Gulf of Mexico shelf.

The purchase price of $39 a share for EPL stockholders represents a 34 percent premium over the company’s closing price yesterday, according to a statement today. The transaction will be 65 percent cash and 35 percentEnergy XXIcommon shares.

Energy XXI, with its main office in Houston, has sought to grow through acquisitions and the use of horizontal drilling to help boost oil recovery. The combined entity, termed independent because it won’t have refineries, will pump 65,000 barrels of oil equivalent a day, of which 70 percent will be crude.

“Energy XXIwill be the only publicly traded pure play on the Gulf of Mexico shelf, with the highest concentration of large, mature oilfields ever owned by a single shelf operator,” Chief Executive Officer John Schiller said in the statement.

EPL, also based in Houston, is focused on state and federal waters off Louisiana in the Gulf of Mexico. It owns working interests in 37 producing fields, mainly concentrated within nine core production areas.

The total consideration to EPL shareholders is expected to consist of about $1 billion in cash and about 23.4 million common shares ofEnergy XXI. Schiller will remain CEO and chairman of the combined company.

Upon completion,Energy XXIexpects to have an enterprise value of about $6 billion. The total value of the deal including debt is $2.3 billion.

Citigroup Inc. and Credit Suisse Group AG advisedEnergy XXI. Vinson & Elkins LLP was legal adviser. Barclays Plc advised EPL and Sidley Austin LLP gave legal advice.


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