Exhibit
10.38

    

     

    Execution
Copy

     

    FIFTH
AMENDMENT TO AMENDED AND RESTATED

    FIRST
LIEN CREDIT AGREEMENT

     

    This
FIFTH AMENDMENT TO AMENDED AND RESTATED FIRST LIEN CREDIT AGREEMENT (“Amendments”), dated
as of December 11, 2009, is by and among Energy XXI Gulf Coast, Inc., a Delaware
corporation (the “Borrower”), the
lenders party to the First Lien Credit Agreement described below (the “Lenders”), and The
Royal Bank of Scotland plc, as administrative agent for the Lenders (in such
capacity, the “Administrative
Agent”), and the other parties in the capacities herein
identified.

     

    RECITALS

     

    WHEREAS,
the Borrower, the Lenders, the Administrative Agent and certain other Persons
are parties to the Amended and Restated First Lien Credit Agreement, dated as of
June 8, 2007, as modified by the Consent Regarding Amended and Restated First
Lien Credit Agreement dated as of July 27, 2007, as amended by that certain
First Amendment to Amended and Restated First Lien Credit Agreement dated
effective as of November 19, 2007, as amended by that certain Waiver, Consent
and Second Amendment to Amended and Restated First Lien Credit Agreement dated
effective as of December 1, 2008, as amended by the Third Amendment to Amended
and Restated First Lien Credit Agreement dated as of April 6, 2009, as modified
by the Waiver and Consent to Amended and Restated First Lien Credit Agreement
dated as of June 30, 2009 and as amended and modified by the Waiver, Consent and
Fourth Amendment to Amended and Restated First Lien Credit Agreement dated as of
September 11, 2009 (as so modified, and as amended, supplemented, amended and
restated or otherwise modified from time to time, the “First Lien Credit
Agreement”); and

     

    WHEREAS,
the Borrower has requested that the Administrative Agent, the Issuer, and the
Lenders amend the First Lien Credit Agreement in certain respects as set forth
herein.

     

    NOW
Therefore, in consideration of the premises and the mutual covenants,
representations and warranties contained herein, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto hereby agree as follows:

     

    AGREEMENT

     

    Section
1.             Definitions.
Capitalized terms used herein but not defined herein shall have the meanings as
given them in the First Lien Credit Agreement, unless the context otherwise
requires.

     

    Section
2.             Amendments to First Lien
Credit Agreement. The First Lien Credit Agreement is hereby amended as
follows:

     

    (a)           Section 2.2. The
first sentence of Section 2.2 of the First Lien Credit Agreement is hereby
amended and restated in its entirety as follows:

     

    “Unless
previously terminated, the Loan Commitments shall terminate on the Loan
Commitment Termination Date and on such date the Loan Commitment Amount shall be
zero and the Letter of Credit Commitment shall terminate on the Letter of Credit
Commitment Termination Date and on such date the Letter of Credit Commitment
Amount shall be zero.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    (b)           Section 2.6. Section
2.6 of the First Lien Credit Agreement is hereby amended and restated in its
entirety as follows:

     

    “SECTION
2.6.             Issuance Procedures and
Provisions. By delivering to the Administrative Agent an Issuance Request
on or before noon, New York time, on a Business Day, the Borrower may from time
to time irrevocably request on not less than three nor more than ten Business
Days’ notice, in the case of an initial issuance of a Letter of Credit and not
less than three Business Days’ prior notice, in the case of a request for the
extension of the Stated Expiry Date of a standby Letter of Credit (in each case,
unless a shorter notice period is agreed to by the Issuer, in its sole
discretion), that an Issuer issue, or extend the Stated Expiry Date of, a Letter
of Credit in such form as may be requested by the Borrower and approved by such
Issuer, solely for the purposes described in Section 7.1.7; provided that no
extension shall (i) cause a Letter of Credit to expire on a date that is later
than the Letter of Credit Commitment Termination Date or (ii) (unless otherwise
agreed to by the Issuer in its sole discretion) be for a period in excess of one
year. Each Letter of Credit shall by its terms be stated to expire on a date
(its “Stated Expiry
Date”) no later than the earlier to occur of (a) the Letter of Credit
Commitment Termination Date or (b) (unless otherwise agreed to by an Issuer, in
its sole discretion), one year from the date of its issuance; provided, however,
that a Letter of Credit may, upon the request of the Borrower and subject to the
agreement of the Issuer to the terms thereof, include a provision whereby unless
the Issuer shall notify the beneficiary to the contrary such Letter of Credit
may be renewed automatically for additional consecutive periods of 12 months or
less (but in no event beyond the Letter of Credit Commitment Termination Date).
Each Issuer will make available to the beneficiary thereof the original of the
Letter of Credit that it issues.”

     

    (c)          The
Disclosure Schedule to the First Lien Credit Agreement is hereby amended by
deleting Item 6.19(a) thereof in its entirety and replacing it in its entirety
with Item 6.19(a) to the Disclosure Schedule attached hereto as Annex
I.

     

    Section
3.             Conditions to
Effectiveness. This Amendment shall be deemed effective (subject to the
conditions herein contained) as of the date (the “Effective Date”) upon
the Administrative Agent’s receipt of counterparts hereof duly executed by the
Borrower, the Administrative Agent, the Issuers and the Required
Lenders.

     

    Section
4.             Redetermination of Borrowing
Base. The Borrower and the Lenders hereby agree that effective as of the
Effective Date, the Borrowing Base shall be equal to $199,000,000 until such
time as the Borrowing Base is redetermined or otherwise adjusted pursuant to the
terms of the First Lien Credit Agreement. The Borrower and the Lenders hereby
agree that this determination of the Borrowing Base shall be deemed to be the
determination as required under Section 2.8.2 of the
First Lien Credit Agreement in regards to the Reserve Report dated June 30,
2009.


    
      
         


      

      
        2

        
          

        

      

      
         


      

    

     

    Section
5.             Representations and
Warranties.  The Borrower hereby represents and warrants that
after giving effect hereto:

     

    (a)           the
representations and warranties of the Obligors contained in the Loan Documents
(other than Section 6.17 of the First Lien Credit Agreement solely with respect
to the Lehman Hedging Agreement (as defined in the Second Amendment)) are true
and correct in all material respects, other than those representations and
warranties that expressly relate solely to a specific earlier date, which shall
remain correct in all material respects as of such earlier date;

     

    (b)           the
execution, delivery and performance by the Borrower and each other Obligor of
this Amendment and the other Loan Documents have been duly authorized by all
necessary corporate or other action required on their part and this Amendment,
along with the First Lien Credit Agreement and other Loan Documents, constitutes
the legal, valid and binding obligation of each Obligor a party thereto
enforceable against them in accordance with its terms, except as its
enforceability may be affected by the effect of bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in effect
relating to or affecting the rights or remedies of creditors
generally;

     

    (c)           neither
the execution, delivery and performance of this Amendment by the Borrower and
each other Obligor, the performance by them of the First Lien Credit Agreement
nor the consummation of the transactions contemplated hereby does or shall
contravene, result in a breach of, or violate (i) any provision of any Obligor’s
certificate or articles of incorporation or bylaws or other similar documents,
or agreements, (ii) any law or regulation, or any order or decree of any court
or government instrumentality, or (iii) any indenture, mortgage, deed of trust,
lease, agreement or other instrument to which any Obligor or any of its
Subsidiaries is a party or by which any Obligor or any of its Subsidiaries or
any of their property is bound, except in any such case to the extent such
conflict or breach has been waived by a written waiver document, a copy of which
has been delivered to Administrative Agent on or before the date
hereof;

     

    (d)           no
Material Adverse Effect has occurred since June 30, 2009; and

     

    (e)           no
Default or Event of Default or Borrowing Base Deficiency has occurred and is
continuing.

     

    Section
6.             Loan Document:
Ratification.

     

    (a)           This
Amendment is a Loan Document.

     

    (b)           The
Borrower and each other Obligor hereby ratifies, approves and confirms in every
respect all the terms, provisions, conditions and obligations of the First Lien
Credit Agreement and each of the other Loan Documents (other than the Lehman
Hedging Agreement (as defined in the Second Amendment)), including without
limitation all Mortgages, Security Agreements, Guaranties, Control Agreements
and other Security Documents, to which it is a party.


    
      
         


      

      
        3

        
          

        

      

      
         


      

    

     

    Section
7.             Costs And Expenses.
As provided in Section 10.3 of the First Lien Credit Agreement, the Borrower
agrees to reimburse Administrative Agent for all fees, costs, and expenses,
including the reasonable fees, costs, and expenses of counsel or other advisors
for advice, assistance, or other representation, in connection with this
Amendment and any other agreements, documents, instruments, releases,
terminations or other collateral instruments delivered by the Administrative
Agent in connection with this Amendment.

     

    Section
8.             GOVERNING LAW. THIS
AMENDMENT SHALL BE DEEMED A CONTRACT AND INSTRUMENT MADE UNDER THE LAWS OF THE
STATE OF NEW YORK AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH AND
GOVERNED BY THE LAWS OF THE STATE OF NEW YORK AND THE LAWS OF THE UNITED STATES
OF AMERICA, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW.

     

    Section
9.             Severability. Any
provision of this Amendment that is prohibited or unenforceable in any
jurisdiction shall, as to such provision and such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions of this Amendment or affecting the validity or
enforceability of such provision in any other jurisdiction.

     

    Section
10.           Counterparts. This
Amendment may be executed in any number of counterparts, all of which taken
together shall constitute one and the same instrument, and any party hereto may
execute this Amendment by signing one or more counterparts. Any signature hereto
delivered by a party by facsimile or electronic transmission shall be deemed to
be an original signature hereto.

     

    Section
11.           No Waiver. The
express waivers set forth herein are limited to the extent expressly provided in
this Amendment and, except as expressly set forth in this Agreement, the
execution, delivery and effectiveness of this Amendment shall not operate as a
waiver of any default of the Borrower or any other Obligor or any right, power
or remedy of the Administrative Agent or the other Secured Parties under any of
the Loan Documents, nor constitute a waiver of (or consent to departure from)
any terms, provisions, covenants, warranties or agreements of any of the Loan
Documents. The parties hereto reserve the right to exercise any rights and
remedies available to them in connection with any present or future defaults
with respect to the First Lien Credit Agreement or any other provision of any
Loan Document.

     

    Section
12.           Successors and
Assigns.  This Amendment shall be binding upon the Borrower and
its successors and permitted assigns and shall inure, together with all rights
and remedies of each Secured Party hereunder, to the benefit of each Secured
Party and the respective successors, transferees and assigns.

     

    Section
13.           Entire
Agreement. THIS AMENDMENT, THE FIRST LIEN CREDIT AGREEMENT AND THE OTHER
LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT OF THE PARTIES WITH RESPECT TO THE
SUBJECT MATTER HEREOF AND MAY
NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES.

     

    THERE
ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.

     

    [Signature
Pages Follow]


    
      
         


      

      
        4

        
          

        

      

      
         


      

    

     

    In
Witness Whereof, the parties hereto have caused this Amendment to be duly
executed and delivered by their respective duly authorized officers as of the
date first written above.

    


    
      
        
          
            	 
      	
                    BORROWER:

                  
	 
      	 
      
	 
      	
                    ENERGY
      XXI GULF COAST, INC.

                  
	 	 
	 
      	
                    By:

                  	
                    /s/ Ben Marchive

                  
	 
      	Name: 
      	
                    Ben
      Marchive

                  
	 
      	Title:
      	
                    President

                  


          

        

      

    


    
      
         


      

      
        Annex
I

        
          

        

      

      
         


      

    

    


    
      
        
          
            	
                    ADMINISTRATIVE AGENT,
      ISSUERS AND LENDERS:

                  
	 
      
	
                    THE
      ROYAL BANK OF SCOTLAND plc, as

                    Administrative
      Agent, Issuer and Lender

                  
	 
      
	
                    By:

                  	
                    /s/ Mark Lumpkin

                  
	
                    Name:  

                  	
                    Mark
      Lumpkin

                  
	
                    Title:

                  	
                    Vice
      President

                  


          

        

      

    


    
      
         


      

      
        2

        
          

        

      

      
         


      

    

    


    
      
        
          
            	
                    BNP
      PARIBAS, as Issuer and Lender

                  
	 
      
	
                    By:

                  	
                    /s/ Douglas R. Liftman

                  
	
                    Name:  

                  	
                    Douglas
      R. Liftman

                  
	
                    Title:

                  	
                    Managing
      Director

                  
	 
      	 
      
	
                    By:

                  	
                    /s/
      GREG SMOTHERS

                  
	
                    Name:  

                  	
                    GREG
      SMOTHERS

                  
	
                    Title:

                  	
                    DIRECTOR

                  


          

        

      

    


    
      
         


      

      
        3

        
          

        

      

      
         


      

    

    


    
      
        
          	
                  BMO
      CAPITAL MARKETS FINANCING, INC., as Lender

                
	 
      
	
                  By:

                	
                       

                
	
                  Name:  

                	 
      
	
                  Title:

                	 
      


        

      

    


    
      
         


      

      
        4

        
          

        

      

      
         


      

    

    


    
      
        
          	
                  COMPASS
      BANK (as successor in interest to Guaranty Bank, FSB), as
      Lender

                
	 
      
	
                  By:

                	
                       

                
	
                  Name:  

                	 
      
	
                  Title:

                	 
      


        

      

    


    
      
         


      

      
        5

        
          

        

      

      
         


      

    

    


    
      
        
          	
                  AMEGY
      BANK NATIONAL ASSOCIATION, as Lender

                
	 
      
	
                  By:

                	
                  /s/ Reid Springmeyer

                
	
                  Name:  

                	
                  Reid
      Springmeyer

                
	
                  Title:

                	
                  Assistant
      Vice President

                


        

      

    


    
      
         


      

      
        6

        
          

        

      

      
         


      

    

    


    
      
        
          	
                  THE
      BANK OF NOVA SCOTIA, as Lender

                
	 
      
	
                  By:

                	
                  /s/ David G. Mills

                
	
                  Name:  

                	
                  David
      G. Mills

                
	
                  Title:

                	
                  Managing
      Director

                


        

      

    


    
      
         


      

      
        7

        
          

        

      

      
         


      

    

    


    
      
        
          	
                  LEHMAN
      COMMERCIAL PAPER INC., as Lender

                
	 
      
	
                  By:

                	
                        

                
	
                  Name:  

                	 
      
	
                  Title:

                	 
      


        

      

    


    
      
         


      

      
        8

        
          

        

      

      
         


      

    

    


    
      
        
          	
                  TORONTO
      DOMINION (TEXAS) LLC, as Lender

                
	 
      
	
                  By:

                	
                  /s/ DEBBI L. BRITO

                
	
                  Name:  

                	
                  DEBBI
      L. BRITO

                
	
                  Title:

                	
                  AUTHORIZED
      SIGNATORY

                


        

      

    


    
      
         


      

      
        9

        
          

        

      

      
         


      

    

    


    
      
        
          	
                  CAPITAL
      ONE, NATIONAL ASSOCIATION,

                  as
      Lender

                
	 
      
	
                  By:

                	
                  /s/ David Reid

                
	
                  Name:  

                	
                  David
      Reid

                
	
                  Title:

                	
                  Senior
      Vice President

                


        

      

    


    
      
         


      

      
        10

        
          

        

      

      
         


      

    

    
      
        	 
      	
                NATIXIS,
      as Lender

              
	 
      	 
      	 
      
	 
      	
                By:

              	
                /s/ Liana Tchernysheva

              
	 
      	 
      	
                Liana
      Tchernysheva

              
	 
      	 
      	
                Director

              
	 
      	 
      	 
      
	 
      	
                By:

              	
                /s/ Louis P. Laville,
III

              
	 
      	 
      	
                Louis
      P. Laville, III

              
	 
      	 
      	
                Managing
      Director

              


      

    

     

    
      
         


      

      
        11

        
          

        

      

      
         


      

    

    


    
      	 
      	
              ALLIED
      IRISH BANKS p.l.c., as Lender

            
	 
      	 
      	 
      
	 
      	
              By:

            	
              /s/ Edward Fenk

            
	 
      	
              Name:

            	
              Edward
      Fenk

            
	 
      	
              Title:

            	
              Vice
      President

            
	 
      	 
      	 
      
	 
      	
              By:

            	
              /s/ James
      Giordano

            
	 
      	
              Name:

            	
              James
      Giordano

            
	 
      	
              Title:

            	
              Assistant
      Vice President

            


    


    
      
         


      

      
        12

        
          

        

      

      
         


      

    

    


    
      	 
      	
              CREDIT
      SUISSE AG, CAYMAN ISLANDS

              BRANCH
      as Lender

            
	 
      	 
      	 
      
	 
      	
              By:

            	
              /s/ Mikhail Faybusovich

            
	 
      	
              Name:

            	
              Mikhail
      Faybusovich

            
	 
      	
              Title:

            	
              Vice
      President

            
	 
      	 
      	 
      
	 
      	
              By:

            	
              /s/ Kevin Buddhdew

            
	 
      	
              Name:

            	
              Kevin
      Buddhdew

            
	 
      	
              Title:

            	
              Associate

            


    


    
      
         


      

      
        13

        
          

        

      

      
         


      

    

    


    
      	 
      	
              UBS
      LOAN FINANCE LLC, as Lender

            
	 
      	 
      	 
      
	 
      	
              By:

            	
              /s/ Marie Haddad

            
	 
      	
              Name:

            	
              Marie
      Haddad

            
	 
      	
              Title:

            	
              Associate
      Director

            
	 
      	 
      	 
      
	 
      	
              By:

            	
              /s/ Mary
      E. Evans

            
	 
      	
              Name:

            	
              Mary
      E. Evans

            
	 
      	
              Title:

            	
              Associate
      Director

            


    


    
      
         


      

      
        14

        
          

        

      

      
         


      

    

    


    
      	 
      	
              WHITNEY
      NATIONAL BANK, as Lender

            
	 
      	 
      	 
      
	 
      	
              By:

            	
              /s/ William Jochetz

            
	 
      	
              Name:

            	
              William
      Jochetz

            
	 
      	
              Title:

            	
              Officer

            


    


    
      
         


      

      
        15

        
          

        

      

      
         


      

    

    


    
      	 
      	
              ACKNOWLEDGED
      AND AGREED AS OF

              THE
      DATE FIRST ABOVE WRITTEN:

            
	 
      	 
      	 
      
	 
      	
              ENERGY
      XXI GOM, LLC

            
	 
      	 
      	 
      
	 
      	
              By:

            	
              /s/ Ben Marchive

            
	 
      	
              Name:

            	
              Ben
      Marchive

            
	 
      	
              Title:

            	
              President

            
	 
      	 
      	 
      
	 
      	
              ENERGY
      XXI TEXAS ONSHORE, LLC

            
	 
      	 
      	 
      
	 
      	
              By:

            	
              /s/ Ben Marchive

            
	 
      	
              Name:

            	
              Ben
      Marchive

            
	 
      	
              Title:

            	
              President

            


    

     

    
      	 
      	
              ENERGY
      XXI ONSHORE, LLC

            
	 
      	 
      	 
      
	 
      	
              By:

            	
              /s/ Ben Marchive

            
	 
      	
              Name:

            	
              Ben
      Marchive

            
	 
      	
              Title:

            	
              President

            


    

     

    
      
         


      

      
        16

        
          

        

      

      
         


      

    

    


    
      	 
      	
              ACKNOWLEDGED
      AND AGREED AS OF

              THE
      DATE FIRST ABOVE WRITTEN IN ITS

              CAPACITY
      AS GUARANTOR UNDER ITS

              LIMITED
      RECOURSE GUARANTY AND

              GRANTOR
      UNDER ITS PLEDGE

              AGREEMENT
      AND IRREVOCABLE PROXY

              DELIVERED
      IN CONNECTION WITH THE

              FIRST
      LIEN CREDIT AGREEMENT:

            
	 
      	 
      	 
      
	 
      	
              ENERGY
      XXI U.S.A., INC

            
	 
      	 
      	 
      
	 
      	
              By:

            	
              /s/ Ben Marchive

            
	 
      	
              Name:

            	
              Ben
      Marchive

            
	 
      	
              Title:

            	
              President

            


    


    
      
         


      

      
        17

        
          

        

      

      
         


      

    

    
       

      ANNEX
I  

       

      Item
6.19(a) of Disclosure Schedule 

       

      DEPOSIT
ACCOUNTS OF BORROWER AND EACH SUBSIDIARY

       

      
        
          
            
              
                
                  
                    
                      
                        
                          
                            
                              
                                
                                  
                                    	
                                            Obligor

                                          	 	
                                            Depository
      Institution

                                          	 	
                                            Account
      Number

                                          
	 	 	 	 	 
	
                                            Borrower

                                          	 	
                                            Compass
      Bank

                                          	 	
                                            3804623571

                                          
	 	 	 	 	 
	
                                            Borrower

                                          	 	
                                            Amegy
      Bank National Association

                                          	 	
                                            0053059839

                                          
	 	 	 	 	 
	
                                            Borrower

                                          	 	
                                            Amegy
      Bank National Association

                                          	 	
                                            0953059839

                                          
	 	 	 	 	 
	
                                            EXXI
      GOM

                                          	 	
                                            Compass
      Bank

                                          	 	
                                            3804623704

                                          
	 	 	 	 	 
	
                                            EXXI
      GOM

                                          	 	
                                            Compass
      Bank

                                          	 	
                                            3804629479

                                          
	 	 	 	 	 
	
                                            EXXI
      GOM

                                          	 	
                                            Compass
      Bank

                                          	 	
                                            3804626392

                                          
	 	 	 	 	 
	
                                            Energy
      XXI Onshore, LLC

                                          	 	
                                            Compass
      Bank

                                          	 	
                                            3804623696

                                          
	 	 	 	 	 
	
                                            Energy
      XXI Gulf Coast, Inc.

                                          	 	
                                            The
      Royal Bank of Scotland plc

                                          	 	
                                            RBSEXC

                                          


                                  

                                

                              

                            

                          

                        

                      

                    

                  

                

              

            

          

        

      

       

      Annex
I