Out Fox The $treet

Energy XXI Ltd ( NASDAQ: EXXI     ) provides a prime example of how the market doesn't like a company in transition or involved in a high-premium merger. Even with the backdrop of a strong market for energy exploration and production stocks, Energy XXI trades at multi-year lows. The upcoming merger with EPL Oil & Gas ( NYSE: EPL     ) provides the opportunity to exploit several large offshore fields while taking advantage of the seismic capabilities of that company. Read full article here . Disclosure: No positions mentioned. Please read this disclaimer page for more details.

A couple of weeks ago, Energy XXI ( NASDAQ: EXXI     ) bought EPL Oil & Gas ( NYSE: EPL     ) in an accretive deal that initially sent the stock down. The stock has recovered to pre-announcement levels, but the deal suggests a more premium pricing for the stock is due, instead of scraping along the bottom near three-year lows. Energy XXI is a leading oil and natural gas production firm on the Gulf of Mexico shelf. The company has a history of growing via acquiring and exploiting the assets for increased production and reserves. The oil-heavy producer continues to expand reserves and significantly repurchase shares below net asset value, or NAV. Read the full article here . Disclosure: No positions mentioned. Please review the disclaimer page for more details. 

McMoRan Exploration Co. (MMR) shares plunged on Monday after the company reported more mechanical issues with the hopefully prolific Davey Jones No. 1 well. Investors had expected results from this well over a year ago, but problems continue to frustrate all involved in this historic drilling effort. The company is attempting to lead the world in ultra-deep drilling in shallow waters off the Gulf of Mexico. It has numerous exploratory and development wells in the sub-25,000-feet zones. Investors interested in the stock should heed warnings from the CEO, Jim Bob Moffett, who was quoted in a recent Bloomberg article as saying: "People call us pioneers. Well, that's great, I guess, (though) some people say pioneers end up with arrows in their back." The huge expense to drill the Davey Jones and the shrinking liquidity levels have naturally made investors concerned about a potentially predatory financing to complete the ultra-deep drilling program. The concern was large eno...