Moody's Cuts Energy XXI's (EXXI) Probability of Default Rating to D-PD

Moody's Investors Service (Moody's) downgraded Energy XXI Gulf Coast, Inc.'s (NASDAQ: EXXI) Probability of Default Rating (PDR) to D-PD from Caa3-PD, Corporate Family Rating (CFR) to Ca from Caa3 and the second lien senior secured notes to Caa3 from Caa1. EXXI's senior unsecured notes and its wholly-owned subsidiary, EPL Oil & Gas, Inc.'s (EPL) senior unsecured notes were affirmed at Ca.

These actions follow EXXI's ultimate parent, Energy XXI Ltd's announcement that it along with EXXI, EPL and certain other subsidiaries filed voluntary petitions in the United States Bankruptcy Court for the Southern District of Texas, Houston Division, seeking relief under the provisions of Chapter 11 of the United States Bankruptcy Code to pursue a prearranged Chapter 11 plan of reorganization.

Issuer: Energy XXI Gulf Coast, Inc.

Downgrades:

.... Probability of Default Rating, Downgraded to D-PD from Caa3-PD

.... Corporate Family Rating, Downgraded to Ca from Caa3

....Senior Secured Regular Bond/Debentures, Downgraded to Caa3 (LGD 4) from Caa1 (LGD 2)

Affirmations:

.... Speculative Grade Liquidity Rating, Affirmed SGL-4

....Senior Unsecured Regular Bond/Debentures, Affirmed Ca (LGD 5)

Outlook Actions:

..Issuer: Energy XXI Gulf Coast, Inc.

....Outlook, Remains Negative

..Issuer: EPL Oil & Gas, Inc.

Affirmations:

....Senior Unsecured Regular Bond/Debentures, Affirmed Ca (LGD 5)

Outlook Actions:

..Issuer: EPL Oil & Gas, Inc.

....Outlook, Remains Negative

RATINGS RATIONALE

The downgrade of EXXI's PDR to D-PD is a result of the bankruptcy filing. The downgrade of EXXI's CFR to Ca and EXXI's $1.45 billion second lien senior secured senior notes due 2020 to Caa3 as well as the affirmation of EXXI's senior notes and EPL's senior notes at Ca reflect Moody's view of the potential overall family recovery to be 30%-40%.

Shortly following this rating action, Moody's will withdraw all ratings for the company consistent with Moody's practice for companies operating under the purview of the bankruptcy courts wherein information flow typically becomes much more limited. (Please refer to the Moody's Investors Service's Policy for Withdrawal of Credit Ratings, available on its website, www.moodys.com)

The principal methodology used in these ratings was Global Independent Exploration and Production Industry published in December 2011. Please see the Ratings Methodologies page on www.moodys.com for a copy of this methodology.

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