EXXI – Underappreciated Core Assets and Substantial Growth Prospects

Energy XXI (TKR: EXXI) is an attractively valued shallow water operator that is trading at a substantial discount to its asset value. The stock is currently trading at $20.75 per share. We think the stock is worth $34 per share, which represents a total return of 65%. As we head into the second half of 2014 and 2015, we think the company will be able to generate the production growth to convert this asset value into cash generation.