Energy XXI Ltd (NASDAQ:EXXI) Is Oversold and In the Red

[[tagnumber 0]][[tagnumber 1]]The stock of Energy XXI Ltd (Nasdaq:EXXI) has not been doing well recently. At $2.49 per share, EXXI‘s current market value is exactly 90 per cent away from its 52–week high of $24.06. Does the stock have the potential to rebound, though?[[tagnumber 2]] [[tagnumber 0]]An oil and gas–related company, Energy XXI has not been immune to the adverse effects of the dramatic plunge in oil and gas prices which plagued the markets for months on end earlier this year. Not surprisingly, this has reflected the company‘s Q1 results for 2015 with revenue only barely going past $260 million, which is substantially lower than either of the three preceding quarters on record.[[tagnumber 2]] [[tagnumber 0]][[tagnumber 6]]In an effort to cope with diminishing cash flows, EXXI‘s management has recently been busy selling assets to third parties. On June 22, the company announced the completion of a sales and purchase agreement for its Grand Isle Gathering System (or GIGS in short), a gathering and transportation pipeline in the Gulf of Mexico, to a third party, expecting to rake in $245 million and increase current liquidity to $1 billion. An underlying lease agreement was also signed, whereby the company will actually continue to collect all the proceeds from the transportation of third–party oil production. Thus, EXXI has effectively given up ownership rights against a fresh capital injection, which is expected to strengthen the company‘s cash reserves for the forthcoming months or so.[[tagnumber 2]] [[tagnumber 0]]Another disposition of assets occurred yesterday, too, after EXXI announced the sale of its East Bay Field, a 2,000–barrel–per–day oil site with estimated net reserves exceeding 9 MMBOE , for a total of $21 million, retaining both a 5% overriding royalty interest and a 50% stake in the field‘s deep rights. Additional non–core assets have also been planed for sale subsequently.[[tagnumber 2]] [[tagnumber 0]]While the aforementioned transactions will certainly improve Energy XXI‘s balance sheet, they have failed to buck the negative trend on the charts. Since June 22, EXXI shares have lost an additional 20% in value and the prospect of a new 52–week low is as daunting as it gets. In this respect, bringing the line of three consecutive quarters in the red to an end could regain investors‘ confidence in the stock. After all, until a year ago, EXXI had actually been making money.[[tagnumber 2]] [[tagnumber 0]]Given the stock‘s oversold status at the moment, a minor rebound seems likely. To ensure a greater breakthrough, however, EXXI‘s managers will need to come up with much greater figures when the new 10–Q covering the period ended June 30, 2015, sees the light of day.[[tagnumber 2]]