Dahlman Rose Has Buy Rating On ENERGY XXI (EXXI)

Dahlman Rose & Co. has a Buy rating and a $38 price target on shares of ENERGY XXI

. In a note to clients, Dahlman Rose writes, "Near term production disappoints, however improved commodity assumptions support valuation EXXI reported 1Q11 production of 41.4 MBOEPD, compared to guidance of 43-46. Weather related factors and a slow transition of operatorship of its acquired GOM properties were likely reasons for the production miss. EXXI did not provide a breakdown of the commodities, but it appears the production weakness came mostly from the gas side. The blended commodity price of $69/BOE was ahead of our expectations due to strong gulf coast oil prices and a better oil mix than we had modeled. Also, the reported EBITDA of $155MM was surprisingly low given the $259MM of revenue reported; operating costs were likely higher than modeled, coupled with one-time charges related to the acquisition." Shares of EXXI closed at $33.54 yesterday.