S&P rates Energy XXI notes B

Standard & Poor's said it assigned a B senior unsecured rating and 3 recovery rating to Energy XXI Gulf Coast Inc.'s proposed $250 million of senior notes due 2019.

The ratings indicate 50% to 70% recovery in the event of a default.

The proceeds will be used to repurchase its outstanding $229 million of 10% senior notes due 2013. Energy XXI Gulf Coast is a subsidiary of Energy XXI (Bermuda) Ltd.

The ratings reflect its modest reserve size, a focus on the challenging Gulf of Mexico region that requires high reinvestment to maintain production and reserve levels, an elevated cost structure and uncertainty about potential delays in permitting processes in the Gulf of Mexico, S&P said.

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