Unassociated Document


    ENERGY
      XXI GULF COAST, INC.


     

    Senior
      Notes due 2013


     

    REGULATION
      D PURCHASE AGREEMENT


     

    REGULATION
      D PURCHASE AGREEMENT (the “Agreement”)
      by and
      among Energy XXI Gulf Coast, Inc., a Delaware corporation (the “Company”),
      Energy XXI (Bermuda) Limited, a Bermuda company and the ultimate parent of
      the
      Company (“Parent”),
      the
      other guarantors under the indenture referred to below (the “Subsidiary
      Guarantors,”
and
      together with Parent, the “Guarantors”)
      and
      the Regulation D Purchasers listed on the signature page hereto (the
“Regulation
      D Purchasers”).

     

    WHEREAS:

     

    A. The
      Company proposes to issue and sell $750,000,000 in aggregate principal amount
      of
      its Senior Notes due 2013 (the “Notes”).
      The
      Notes will be offered and sold (i) outside the United States (the “Regulation
      S Notes”)
      to the
      initial purchasers (the “Initial
      Purchasers”)
      in a
      transaction (the “Regulation
      S Offering”)
      exempt
      from the registration requirements of the Securities Act of 1933, as amended,
      and the rules and regulations of the Securities and Exchange Commission (the
      “Commission”)
      thereunder (collectively, the “Securities
      Act”)
      in
      reliance upon Regulation S of the Securities Act (“Regulation
      S”),
      and
      (ii) within the United States (the “Regulation
      D Notes”
and,
      together with the Regulation S Notes, constitute the “Notes”) directly to the
      Regulation D Purchasers in a private placement (the “Regulation
      D Placement”)
      without being registered under the Securities Act in reliance upon Section
      4(2)
      thereof and/or Regulation D thereunder (“Regulation
      D”).

     

    B. In
      connection with the Regulation D Placement, the Company and Guarantors
      (together, the “Company
      Parties”)
      have
      entered into a placement agency agreement (the “Placement
      Agency Agreement”)
      with
      the placement agents named therein (the “Placement
      Agents”).
      Each
      of the Placement Agents have agreed to act as initial purchasers in connection
      with the Regulation S Offering (in such capacity, each, an “Initial
      Purchaser”
and,
      collectively, the “Initial
      Purchasers”)
      subject to the terms and conditions and other provisions of a Regulation S
      Purchase Agreement (the “Regulation
      S Purchase Agreement”)
      to be
      entered into between the Initial Purchasers and the Company
      Parties.

     

    C. Prior
      to
      or concurrently with the closing of the Regulation S Offering and the Regulation
      D Placement, the Company Parties will enter into an Amended and Restated First
      Lien Credit Agreement with the Lenders party thereto and The Royal Bank of
      Scotland plc, as Administrative Agent of the Lenders (such agreement and all
      related loan documents, collectively, the “Credit
      Agreement”).
      Proceeds from the sale of the Notes, and borrowing under the Credit Agreement
      will be used to finance the acquisition (the “Pogo
      Acquisition”)
      of
      certain of the offshore Gulf of Mexico oil and natural gas properties (the
      “Pogo
      Assets”)
      of
      Pogo Producing Company (“Pogo”)
      pursuant to the Purchase and Sale Agreement (the “Purchase
      and Sale Agreement”)
      dated
      as of April 24, 2007 between Pogo and Energy XXI GOM, LLC, a wholly-owned
      subsidiary of the Company (“Buyer”),
      and
      to repay certain debt and to pay fees and expenses of these transactions as
      summarized in the Preliminary CIM (as defined below). The closing of the Pogo
      Acquisition under the Purchase and Sale Agreement will occur concurrently with
      the closing of the Regulation S Offering, the Regulation D Placement and the
      borrowing under the Credit Agreement (the “Closing
      Date”).

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    D. The
      Notes
      will be issued pursuant to an indenture (the “Indenture”),
      to be
      entered into between the Company, Parent, the other Guarantors and Wells Fargo
      Bank, National Association, as trustee (the “Trustee”).
      Pursuant to the Indenture, the Guarantors shall fully and unconditionally
      guarantee, on a senior basis, to each holder of the Notes and the Trustee,
      the
      payment and performance of the Company’s obligations under the Indenture and the
      Notes (each such guarantee being referred to herein as a “Guarantee.”

     

    E. Holders
      of the Notes will be entitled to the benefits of a registration rights agreement
      (the “Registration
      Rights Agreement”)
      to be
      entered into among the Company Parties, the Initial Purchasers and the
      Regulation D Purchasers pursuant to which the Company Parties will agree, among
      other things to (i) file a registration statement (the “Registration
      Statement")
      with
      the Commission for a registered offer (the “Exchange
      Offer”)
      to
      exchange any and all of the Notes for a like aggregate principal amount of
      notes
      that are identical in all material respects to the Notes (the “Exchange
      Notes”)
      except
      for that the Exchange Notes will not contain terms with respect to transfer
      restrictions or liquidated damages, (ii) use their reasonable best efforts
      to
      cause the Registration Statement to be declared effective under the Securities
      Act and (iii) use their reasonable best efforts to consummate the Exchange
      Offer, in each case, within the timeframe, and subject to the provisions
      contained therein. 

     

    F. The
      Company, Jefferies & Company, Inc., as closing agent (the “Closing
      Agent”),
      and
      Wells Fargo Bank, National Association, as escrow agent, will enter into an
      escrow agreement (the “Escrow
      Agreement”)
      to
      provide for the escrow of the proceeds for the purchase of the Notes and the
      payment of such proceeds on the Closing Date pursuant to the terms of the Escrow
      Agreement and as set forth in this Agreement.

     

    G. This
      Agreement, the Credit Agreement, the Purchase and Sale Agreement, the Indenture,
      the Registration Rights Agreement and the Escrow Agreement are referred to
      herein collectively as the “Transaction
      Documents,”
and
      the transactions contemplated hereby and thereby are referred to herein
      collectively as the “Transactions.”
This
      Agreement, the Registration Rights Agreement and the Indenture are referred
      herein collectively as the “Regulation
      D Purchase Documents.”
      Nothing in this Agreement should be read to limit or otherwise modify the terms
      and other provisions of the Engagement Letter dated as of March 15, 2007 (the
      “Engagement
      Letter”)
      between Parent and Jefferies, provided
      that, in
      the event any terms of the Engagement Letter are inconsistent with or contradict
      any terms of this Agreement, this Agreement shall govern.

     

    H. The
      Company has prepared a preliminary confidential information memorandum, dated
      May 12, 2007 (the “Preliminary
      CIM”),
      relating to the Regulation D Placement and the Regulation S Offering, (ii)
      a
      pricing term sheet attached hereto as Schedule I, which includes pricing terms
      and other information with respect to the Notes (the “Pricing
      Supplement”
and,
      together with the Preliminary CIM, the “Time
      of Sale Document”)
      and
      (iii) a final confidential information memorandum dated the date hereof relating
      to the Regulation D Placement and the Regulation S Offering, as the same may
      be
      amended or supplemented (the “CIM”).
“CIM”
      means, as of any date or time referred to in this Agreement, the most recent
      information memorandum (whether the Time of Sale Document or the CIM, and any
      amendment or supplement to either such document), including exhibits and
      schedules thereto. 

     

    
      
        
        

      

      
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    NOW,
      THEREFORE, each of the Company Parties hereby agrees and, the Regulation D
      Purchasers hereby severally agree as follows:

     

    1. PURCHASE
      AND SALE OF REGULATION D NOTES. 

     

    (a) Purchase
      and Sale of Regulation D Notes.

     

    (i) Closing.
      Subject
      to the satisfaction (or waiver) of the conditions set forth in Sections
      5
      and
6,
      at the
      closing of the Regulation D Placement (the “Closing”),
      the
      Company shall issue and sell to the several Regulation D Purchasers, and the
      Regulation D Purchasers severally agree to purchase from the Company on the
      Closing Date (as defined below), the principal amount of Regulation D Notes
      set
      forth in the confirmations of sale delivered to the Regulation D Purchasers
      by
      or on behalf of the Company on or about the date hereof. The Closing shall
      occur
      at the offices of Vinson & Elkins LLP, First City Tower, 1001 Fannin Street,
      Suite 2500, Houston, Texas 77002-6760.

     

    (ii) Determination
      of Closing Date.
      The
      date and time of the Closing (the “Closing
      Date”)
      shall
      be 10:00 a.m., New York City time, on June 8, 2007 (or such later date as is
      mutually agreed to by the Company and the Closing Agent); provided,
      however,
      that if
      the Closing has not taken place on the Closing Date because of a failure to
      satisfy one or more of the conditions specified in Section
      5
      or
Section
      6
      hereof,
“Closing Date” shall mean 10:00 a.m., New York City time, on the first business
      day following the satisfaction (or waiver) of all such conditions after
      notification by the Company to the Closing Agent of the satisfaction (or waiver)
      of such conditions, provided
      further, that
      if
      the Closing has not occurred by June 13, 2007, each Regulation D Purchaser’s
      payment of their respective portion of the Purchase Price that was deposited
      into the escrow account will be returned to it promptly as set forth in the
      Escrow Agreement.

     

    (iii) Purchase
      Price.
      The
      purchase price for the Regulation D Notes to be purchased by the several
      Regulation D Purchasers at the Closing (in the aggregate, the “Purchase
      Price”)
      shall
      be set forth in the confirmation of sale delivered to the Regulation D
      Purchasers by or on behalf of the Company on or about the date hereof and the
      payment of the Purchase Price shall be made by the Regulation D Purchasers
      by
      wire transfer of immediately available funds in accordance with the instructions
      set forth in Section
      1(b).

     

    (b) Closing
      Mechanics.

     

    (i) Closing
      Agent to Contact Regulation D Purchasers.
      By the
      fifth business day prior to the Closing, the Closing Agent, will contact the
      Regulation D Purchasers to confirm the closing mechanics set forth
      herein.

     

    
      
        
        

      

      
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    (ii) Company
      to Deliver Executed Regulation D Notes to Closing Agent for Regulation D
      Purchasers.
      At
      least three business days prior to the Closing Date, the Company will deliver
      to
      the Closing Agent duly executed certificates representing the Regulation D
      Notes
      in the form contemplated by the Indenture, registered in the names previously
      provided by the Closing Agent to the Company, which certificates the Closing
      Agent shall hold until the Closing Agent is directed to release such
      certificates by the Company for sale to the Regulation D Purchasers as provided
      in Section
      1(b)(vi).
      

     

    (iii) Regulation
      D Purchasers to Fund Purchase Price.
      On or
      before 10:00 a.m., New York City time, on the second business day prior to
      the
      Closing Date, each of the Regulation D Purchasers will deliver their respective
      portions of the Purchase Price to the Closing Agent by wire transfer in
      immediately available funds according to the wire transfer instructions
      previously delivered to each of such Regulation D Purchasers. Regulation D
      Purchasers will receive from the Company interest on the amount they funded
      according to the prior sentence at the initial interest rate to be borne by
      the
      Regulation D Notes for the number of days such funds remain deposited into
      the
      escrow account of the Escrow Agreement (computed on the basis of a 360-day
      year), payable on the Closing Date, as set forth in the Escrow Agreement; if
      there is no Closing, Regulation D Purchasers will receive from the Company
      interest on the amount they funded according to the prior sentence based on
      the
      return on Permitted Investments (as defined in the Escrow Agreement) applicable
      to such funded amounts, payable when such funds are returned to such Regulation
      D Purchasers, as set forth in the Escrow Agreement. The delivery of funds from
      a
      Regulation D Purchaser to the Closing Agent shall be deemed to constitute
      irrevocable instructions from such Regulation D Purchaser to the Closing Agent
      that the Regulation D Purchasers’ conditions to the Closing, as set forth in
Section
      6,
      will be
      deemed to be satisfied upon receipt by the Closing Agent of the Company Closing
      Certificate (as defined below) and, in that event, such Regulation D Purchaser
      agrees that the Closing Agent may instruct the Escrow Agent to release the
      funds
      as contemplated by, and subject to, Section
      1(b)(vi).
      Funds
      received by the Closing Agent pursuant to this Section
      1
      (or
      funded by the Closing Agent in its sole discretion pursuant to Section
      1(b)(iv))
      will be
      held in trust and not as property or in the title of the Closing
      Agent.

     

    (iv) Closing
      Agent Right to Fund for Late Regulation D Purchasers.
      In the
      event that any Regulation D Purchaser shall fail to deliver all or any of its
      respective portion of the Purchase Price on or before 9:00 a.m., New York City
      time, on the Closing Date:

     

    (A) The
      Closing Agent may, in its sole discretion, but shall not be obligated to, fund
      the unfunded portion of the Purchase Price applicable to such Regulation D
      Purchaser, on behalf of such Regulation D Purchaser. The funding of any portion
      of the Purchase Price by the Closing Agent pursuant to this Section
      1(b)(iv)
      shall
      not relieve a defaulting Regulation D Purchaser of any liability that it may
      have to the Company or the Closing Agent pursuant to this Agreement or for
      the
      breach of its obligations under this Agreement.

     

    (B) In
      the
      event that the Closing Agent shall have funded any such unfunded portion as
      set
      forth in the preceding clause (A), the Closing Agent may, in its sole
      discretion, but shall not be obligated to, (I) retain, at and following the
      Closing, beneficial ownership in the Regulation D Notes as such Regulation
      D
      Purchaser would have been entitled to had it timely funded, (II) direct the
      disposition of such Regulation D Note to another party or (III) require such
      Regulation D Purchaser, upon written notice, to purchase such Registration
      D
      Notes from the Closing Agent within two business days after the Closing Date
      at
      a price equal to the initial offering price of such Regulation D Notes plus
      accrued and unpaid interest to the date of settlement.

     

    
      
        
        

      

      
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    (C) In
      the
      case of the preceding clause (B)(I) or (II), if so requested by the Closing
      Agent, (I) such Regulation D Purchaser shall take any action reasonably
      requested by the Closing Agent to effect the transfer of the applicable
      Regulation D Notes to the Closing Agent or such other party, as the case may
      be,
      and shall be deemed to have consented to the Closing Agent retaining and taking
      beneficial ownership, or directing the disposition, of such Regulation D Notes
      and (II) the Company shall transfer registration of such Regulation D Notes
      to,
      or as directed by, the Closing Agent. 

     

    (v) Distribution
      of Purchase Price Received by Closing Agent to Escrow Agent.
      Upon
      receipt of the Purchase Price from any Regulation D Purchaser, the Closing
      Agent
      will distribute such funds to the Escrow Agent for deposit into the escrow
      account to be established pursuant to the Escrow Agreement (the “Escrow
      Account”).

     

    (vi) Release
      of Purchase Price Funds; Delivery of Regulation D Notes.
      On the
      Closing Date: 

     

    (A) upon
      receipt by the Closing Agent of a certificate from Chief Financial Officer
      of
      the Company (the “Company
      Closing Certificate”)
      certifying that the conditions to the Regulation D Purchasers’ obligations to
      close as set forth in Section
      6
      have
      been satisfied and in consideration for the sale of the Regulation D Notes
      to
      Regulation D Purchasers, the Closing Agent will instruct the Escrow Agent,
      pursuant to the terms of the Escrow Agreement, to release the Purchase Price
      as
      set forth in the Escrow Agreement; and 

     

    (B) in
      consideration for the receipt of the Purchase Price deposited in the Escrow
      Account as specified above, the Company shall deliver, the Regulation D
      Purchasers the Regulation D Notes to the applicable Regulation D Purchasers
      in
      accordance with the instructions contained in Annex
      A
      hereto.

     

    2. REGULATION
      D PURCHASERS’ REPRESENTATIONS AND WARRANTIES.

     

    Each
      Regulation D Purchaser represents and warrants, severally and not jointly,
      that:

     

    (a) No
      Public Sale or Distribution.
      The
      Regulation D Purchaser is acquiring the Regulation D Notes for its own account
      and not with a view towards, or for resale in connection with, the public sale
      or distribution thereof in a manner that would violate the Securities Act;
      provided,
      however,
      that by
      making the representations herein, the Regulation D Purchaser does not agree
      to
      hold any of the Regulation D Notes for any minimum or other specific term and
      reserves the right to dispose of the Regulation D Notes at any time in
      accordance with or pursuant to a registration statement or an exemption under
      the Securities Act and subject to the terms of the Regulation D Notes and the
      Indenture. The Regulation D Purchaser is acquiring the Regulation D Notes
      hereunder in the ordinary course of its business. The Regulation D Purchaser
      does not presently have any agreement or understanding, directly or indirectly,
      with any Person to distribute any of the Regulation D Notes. As used in this
      Agreement, “Person”
means
      an individual, a limited liability company, a partnership, a joint venture,
      a
      corporation, a trust, an unincorporated organization and a government or any
      department or agency thereof.

     

    
      
        
        

      

      
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    (b) Regulation
      D Purchaser Status.
      Each of
      the Regulation D Purchasers acknowledges that it is one of the following:


     

    (i) an
      institutional “accredited investor” as defined in Rule 501(a)(1), (2), (3) or
      (7) of Regulation D under the Securities Act; or

     

    (ii) a
      “qualified institutional buyer” as defined in Rule 144A(a)(1) under the
      Securities Act. 

     

    Such
      Regulation D Purchaser also acknowledges that it has the knowledge and
      experience in financial and business matters as are necessary in order to
      evaluate the merits and risks of an investment in the Regulation D
      Notes.

     

    (c) Reliance
      on Exemptions.
      The
      Regulation D Purchaser understands that the Regulation D Notes are being offered
      and sold in reliance on specific exemptions from the registration requirements
      of United States federal and state securities laws and that the Company is
      relying in part upon the truth and accuracy of, and the Regulation D Purchasers’
compliance with, the representations, warranties, agreements, acknowledgments
      and understandings of the Regulation D Purchasers set forth herein in order
      to
      determine the availability of such exemptions and the eligibility of the
      Regulation D Purchasers to acquire the Regulation D Notes.

     

    (d) No
      General Solicitation or Advertising.
      The
      Regulation D Purchaser has not engaged, and will not engage, directly or
      indirectly in any form of “general solicitation” or “general advertising” in
      connection with the offering of the Regulation D Notes (as those terms are
      used
      in Regulation D under the Securities Act) or in any manner involving a public
      offering within the meaning of Section 4(2) of the Securities Act. 

     

    (e) Independent
      Evaluation.
      The
      Regulation D Purchaser confirms and agrees that (i) it has independently
      evaluated the merits of its decision to purchase the Regulation D Notes,
      (ii) it has not relied on the advice of, or any representations by,
      Jefferies, Greenwich Capital Markets, Inc., BNP Paribas Securities Corp., BMO
      Capital Markets Corp., Capital One Southcoast, Inc. and Natexis Bleichroeder
      Inc. (each, a “Placement
      Agent”
and,
      collectively, the “Placement
      Agents”)
      or any
      of their respective affiliates or any representative of the Placement Agents
      or
      their respective affiliates in making such decision, and (iii) neither the
      Placement Agents nor any of their respective representatives has any
      responsibility with respect to the completeness or accuracy of any information
      or materials furnished to the Regulation D Purchaser in connection with the
      transactions contemplated hereby, including the Preliminary CIM, Time of Sale
      Document and CIM.

     

    (f) Information.
      The
      Regulation D Purchaser acknowledges that the Company has offered the Regulation
      D Purchaser materials relating to the business, finances and operations of
      the
      Company or relating to the offer and sale of the Regulation D Notes specifically
      requested by the Regulation D Purchaser and that historical financial
      information and pro forma financial information included in the Time of Sale
      Document, including under the headings “Summary - Energy XXI Summary Historical
      and Pro Forma Financial Data,” “Summary - Pogo Properties Summary Historical
      Financial Data,” “Summary - Summary Unaudited Consolidated Pro Forma Financial
      Statements” relating to the Pogo Assets, is unaudited and furthermore, that the
      pro forma financial information has not been prepared in accordance with
      Regulation S-X of the Commission. The Regulation D Purchaser and its advisors,
      if any, have been afforded the opportunity to ask questions of the Company.
      The
      Regulation D Purchaser understands that its investment in the Regulation D
      Notes
      involves a high degree of risk and is able to bear the economic risk of such
      investment. The Regulation D Purchaser has such knowledge and experience in
      financial and business matters as to be capable of evaluating the merits and
      risks of its investment in the Regulation D Notes and has sought such
      accounting, legal and tax advice as it has considered necessary to make an
      informed investment decision with respect to its acquisition of the Regulation
      D
      Notes.

     

    
      
        
        

      

      
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    (g) No
      Governmental Review.
      The
      Regulation D Purchaser understands that no United States agency or any other
      government or governmental agency has passed on or made any recommendation
      or
      endorsement of the Regulation D Notes or the fairness or suitability of the
      investment in the Regulation D Notes nor have such authorities passed upon
      or
      endorsed the merits of the offering of the Regulation D Notes.

     

    (h) Transfer
      or Resale.
      The
      Regulation D Purchaser understands that: (i) the Notes have not been and will
      not be registered under the Securities Act or any state securities laws; (ii)
      the Regulation D Purchaser agrees that if it decides to offer, sell or otherwise
      transfer any of the Regulation D Notes, such Regulation D Notes may be offered,
      sold or otherwise transferred only: (A) pursuant to an effective registration
      statement under the Securities Act; (B) to the Company; (C) outside the United
      States in accordance with Regulation S under the Securities Act and in
      compliance with local laws; or (D) within the United States (1) in accordance
      with the exemption from registration under the Securities Act and in compliance
      with any applicable state securities laws, or (2) in a transaction that does
      not
      require registration under the Securities Act or applicable state securities
      laws.

     

    (i) Legends.
      The
      Regulation D Purchaser understands that upon the original issuance thereof,
      and
      until such time as the same is no longer required under applicable requirements
      of the Securities Act or applicable state securities laws, the certificates
      or
      other instruments representing the Regulation D Notes and all certificates
      or
      other instruments issued in exchange therefor or in substitution thereof, shall
      bear the legend(s) set forth in the Indenture, and that the Company will make
      a
      notation on its records and give instructions to the Trustee in order to
      implement the restrictions on transfer set forth and described
      herein.

     

    (j) Validity;
      Enforcement.
      This
      Agreement has been duly and validly authorized, executed and delivered on behalf
      of the Regulation D Purchaser and constitutes the legal, valid and binding
      obligation of the Regulation D Purchasers enforceable against the Regulation
      D
      Purchaser in accordance with its terms, except as such enforceability may be
      limited by general principles of equity or by applicable bankruptcy, insolvency,
      reorganization, moratorium, liquidation and other similar laws relating to,
      or
      affecting generally, the enforcement of applicable creditors’ rights and
      remedies.

     

    
      
        
        

      

      
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    (k) Residency.
      For
      purposes of U.S. securities laws, the Regulation D Purchaser is a resident
      of
      the jurisdiction specified with respect to such Regulation D Purchaser on
Annex A
      hereto.

     

    3. REPRESENTATIONS
      AND WARRANTIES OF THE COMPANY PARTIES.

     

    In
      addition to the other representations, warranties and agreements contained
      in
      the Agreement, each of the Company Parties hereby represents, warrants and
      agrees with, the Regulation D Purchasers as follows:

     

    (a) No
      Material Misstatement or Omission.
      The CIM
      did not, as of its date, contain any untrue statement of a material fact or
      omit
      to state a material fact necessary in order to make the statements therein,
      in
      the light of the circumstances under which they were made, not
      misleading.

     

    (b) The
      Transaction Documents.
      Each of
      the Company Parties has all necessary power and authority to execute and deliver
      the Transaction Documents to which they are a party and to perform its
      respective obligations thereunder; each of the Transaction Documents has been
      duly authorized by the Company Parties, as the case may be, and, when executed
      and delivered by the Company Parties, as the case may be, will constitute a
      valid and binding agreement of the Company Parties, as the case may be,
      enforceable against the Company Parties, as the case may be, in accordance
      with
      its terms; and the Indenture, when executed and delivered by the Company Parties
      will meet the requirements for qualification under the Trust Indenture Act
      of
      1939, as amended, and the rules and regulations of the Commission thereunder
      (collectively, the “Trust
      Indenture Act”).

     

    (c) Acquisition
      of Pogo Assets.
      After
      giving effect to the Transactions contemplated by the CIM, the Company will
      have
      acquired the Pogo Assets as contemplated by the CIM.

     

    (d) The
      Regulation D Notes.
      The
      Company has all necessary power and authority to execute, issue and deliver
      the
      Regulation D Notes; the Regulation D Notes have been duly authorized for
      issuance and sale by the Company, will be in the form contemplated by the
      Indenture and, when executed, authenticated and issued in accordance with the
      terms of the Indenture and delivered to and paid for by the Regulation D
      Purchasers pursuant to this Agreement, will constitute valid and binding
      obligations of the Company, entitled to the benefits of the Indenture,
      enforceable against the Company in accordance with their terms. The Regulation
      D
      Notes and the Guarantees will conform, in all material respects to the
      description thereof contained in the CIM.

     

    (e) The
      Guarantees.
      Each of
      the Guarantors has all necessary power and authority to execute, issue and
      deliver its respective Guarantee; the Guarantees have been duly authorized
      for
      issuance and sale by each of the Guarantors, will be in the form contemplated
      by
      the Indenture and, when executed and the Guarantees issued in accordance with
      the terms of the Indenture, will constitute valid and binding obligations of
      each of the Guarantors, entitled to the benefits of the Indenture, enforceable
      against each of the Guarantors in accordance with their terms.

     

    
      
        
        

      

      
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    (f) The
      Exchange Notes and Related Guarantees.
      Each of
      the Company Parties has all necessary power and authority to execute, issue
      and
      deliver the Exchange Notes and the related Guarantees to which they are a party;
      the Exchange Notes and the related Guarantees have been duly authorized for
      issuance and sale by the Company Parties, as the case may be, will be in the
      form contemplated by the Indenture and, when executed, authenticated and issued
      in accordance with the terms of the Indenture and delivered to and exchanged
      for
      the Notes and the related Guarantees, as the case may be, will constitute valid
      and binding obligations of the Company Parties, as the case may be, entitled
      to
      the benefits of the Indenture, enforceable against the Company Parties, as
      the
      case may be, in accordance with their terms.

     

    (g) No
      Material Adverse Change.
      Except
      as otherwise disclosed in the CIM, and for the period from and after the date
      hereof and prior to the Closing Date, except as otherwise disclosed or to be
      disclosed in the CIM: (i) there has been no material adverse change, or any
      development that could reasonably be expected to result in a material adverse
      change, in the condition, financial or otherwise, or in the earnings, business
      or operations, whether or not arising from transactions in the ordinary course
      of business, of the Company and its subsidiaries, considered as one entity,
      Parent or the Pogo Assets (any such change is called a “Material
      Adverse Change”);
      (ii)
      Parent, or the Company and its subsidiaries, considered as one entity, have
      not
      incurred any material liability or obligation (including any off-balance sheet
      obligation), indirect, direct or contingent, not in the ordinary course of
      business nor entered into any material transaction or agreement not in the
      ordinary course of business; (iii) there has been no dividend or distribution
      of
      any kind declared, paid or made by the Company or Parent, except for dividends
      paid to the Company or other subsidiaries, any of the Company’s subsidiaries on
      any class of capital stock or repurchase or redemption by the Company or Parent
      or any of its subsidiaries of any class of capital stock; and (iv) there has
      not
      occurred any downgrading from the Caa2 rating by Moody’s Investors Service, Inc.
      and the CCC rating by Standard & Poor’s Rating Services accorded to any
      securities of the Parent of the Company, nor has any notice been given of any
      intended or potential downgrading or of any review for a possible change that
      does not indicate the direction of the possible change, in the rating accorded
      any securities of the Parent or the Company or any of its subsidiaries by any
      “nationally recognized statistical rating organization” (as such term is defined
      for purposes of Rule 436(g)(2) under the Securities Act).

     

    (h) Going
      Concern of Company.
      On the
      Closing Date, after giving effect to the offering and sale of the Notes and
      the
      application of the proceeds thereof as described in the CIM, (i) the fair value
      and present fair saleable value of the assets of the Company and its
      subsidiaries on a going concern basis will exceed the sum of its stated
      liabilities and identified contingent liabilities; and (ii) each of the Company
      and its subsidiaries will not be (a) left with unreasonably small capital with
      which to carry on its business as it is proposed to be conducted, (b) unable
      to
      pay its debts (contingent or otherwise) as they mature or (c) otherwise
      insolvent. In computing the amount of such contingent liabilities at any time,
      such liabilities will be computed at the amount that, in the light of all the
      facts and circumstances existing at such time, represent the amount that can
      reasonably be expected to become an actual or matured liability.

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

     

    (i) Independent
      Accountants.
      (i)
      UHY, LLP, who have expressed their opinion with respect to the financial
      statements of the Company and, the carve-out financial statements for Castex
      Energy, Inc. (which, in each case, includes the related notes thereto) included
      in the CIM and (ii) Grant Thornton LLP, who have expressed their opinion with
      respect to the financial statements of Marlin Energy Offshore L.L.C., Marlin
      Texas GP, L.L.C. and Marlin Texas L.L.C. (which term includes the related notes
      thereto) to be included in the CIM, are each (i) independent public or certified
      public accountants as required by the Securities Exchange Act of 1934 as amended
      (the “Exchange
      Act”),
      (ii)
      in compliance with the applicable requirements relating to the qualification
      of
      accountants under Rule 2-01 of Regulation S-X and (iii) a registered public
      accounting firm as defined by the Public Company Accounting Oversight Board
      whose registration has not been suspended or revoked and who has not requested
      such registration to be withdrawn.

     

    (j) Preparation
      of the Financial Statements.
      As of
      the date hereof, the financial statements contained in the Preliminary CIM
      and
      the Time of Sale Document and to be contained in the CIM, present fairly in
      all
      material respects the consolidated financial position of (i) the Company and
      its
      subsidiaries, (ii) Marlin Energy Offshore L.L.C., Marlin Texas GP L.L.C., and
      Marlin Texas L.L.C., (iii) the assets acquired from Castex Energy, Inc., and
      (iv) the Pogo Assets, in each case, as of and at the dates indicated and the
      results of each of their respective operations and cash flows for the periods
      specified. All such financial statements have been prepared in conformity in
      all
      material respects with generally accepted accounting principles applied on
      a
      consistent basis throughout the periods involved, except as contemplated by
      the
      CIM. As of the date hereof, the financial data set forth in the CIM, and the
      financial data set forth or to be set forth in the CIM will as of its date,
      fairly present the information set forth therein on a basis consistent with
      that
      of the audited and unaudited financial statements contained in the CIM.


     

    (k) Pro
      Forma Financial Information.
      The pro
      forma financial information of the Company and its subsidiaries and the related
      notes thereto included under the captions Summary - Energy XXI Summary
      Historical and Pro Forma Financial Data,” “Summary - Summary Unaudited
      Consolidated Pro Forma Financial Statements” and “Capitalization” under the
      column “As Adjusted” and elsewhere in the CIM, as of its date, presented fairly
      the information contained therein, and the assumptions used in the preparation
      thereof are reasonable and the adjustments used therein are appropriate to
      give
      effect to the Transactions and circumstances referred to therein. 

     

    (l) Engineer
      Reports.
      The
      Company has heretofore delivered to the Placement Agents true, correct and
      complete copies of the engineering reports of (i) Netherland, Sewell &
Associates, (ii) Miller & Lents, Ltd., and (iii) Ryder Scott
      Company LP (collectively, the “Engineer
      Reports”).
      There
      have been no material adverse developments concerning the matters reported
      in
      such Engineering Reports since their respective dates.

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

     

    (m) Incorporation
      and Good Standing of the Company Parties.
      Each of
      the Company Parties has been duly incorporated or organized and is validly
      existing as a corporation, partnership or limited liability company, as
      applicable, in good standing under the laws of the jurisdiction of its
      incorporation or organization and has the power and authority (corporate or
      other) to own, lease and operate its properties and to conduct its business
      as
      described in the CIM as of its date, and to enter into and perform its
      obligations under each of the Transaction Documents to which it is a party.
      Each
      of the Company Parties is duly qualified as a foreign corporation, partnership
      or limited liability company, as applicable, to transact business and is in
      good
      standing in each jurisdiction in which such qualification is required, whether
      by reason of the ownership or leasing of property or the conduct of business,
      except where the failure to be so qualified would not, individually or in the
      aggregate, have a material adverse effect on the financial position,
      stockholders’ equity, results of operations or business of the Company, Parent
      or the Pogo Assets (a “Material
      Adverse Effect”).
      All
      of the issued and outstanding capital stock or other equity or ownership
      interest of each of the Subsidiary Guarantors has been duly authorized and
      validly issued, is fully paid and nonassessable and is owned by the Company,
      directly or through subsidiaries, free and clear of any security interest,
      mortgage, pledge, lien, charge, encumbrance or adverse claim, except as
      disclosed in the CIM. Parent does not, directly or indirectly, own any
      securities of any entity other than the Energy XXI (US Holdings) Limited, Energy
      XXI USA, Inc., the Company and its subsidiaries. As of the date hereof, the
      Company does not own or control, and as of the Closing Date, the Company will
      not own or control, directly or indirectly, any corporation, association or
      other entity other than (i) the subsidiaries listed on Annex
      B
      hereto
      and (ii) such other entities omitted from Annex
      B
      hereto,
      which, when such omitted entities are considered in the aggregate as a single
      subsidiary, would not constitute a “significant subsidiary” within the meaning
      of Rule 1-02(w) of Regulation S-X.

     

    (n) Capitalization
      and Other Capital Stock Matters.
      As of
      the date hereof, the capitalization of the Company and its subsidiaries
      presented on a consolidated basis in the CIM under the caption “Capitalization”
under the column “Actual” is a fair summary of such capitalization in all
      material respects.

     

    (o) Non-Contravention
      of Existing Instruments; No Further Authorizations or Approvals
      Required.
      None of
      the Company Parties (i) is in violation of its charter or by laws, (ii) is
      in
      default (or, with the giving of notice or lapse of time, would be in default
      or
      constitute a default) (“Default”)
      under
      any indenture, mortgage, loan or credit agreement, note, contract, franchise,
      lease or other instrument to which any of the Company Parties is a party or
      by
      which it or any of them may be bound, or to which any of the property or assets
      of the Company Parties is subject (each, an “Existing
      Instrument”),
      or
      (iii) is in violation of any law, administrative regulation or administrative
      or
      court decree applicable to any of the Company Parties except with respect to
      clauses (ii) and (iii) of this sentence, for such Defaults or violations as
      would not, individually or in the aggregate, result in a Material Adverse
      Effect. The Company Parties’ execution, delivery and performance of the
      Transaction Documents to which they are a party and the consummation of the
      Transactions, including the issuance and sale of the Notes, (i) will not result
      in any violation of the provisions of the charter or bylaws of any of the
      Company Parties, (ii) will not conflict with or constitute a breach of, or
      Default or a Debt Repayment Triggering Event (as defined below) under, or result
      in the creation or imposition of any security interest, mortgage, pledge, lien,
      charge, encumbrance or adverse claim upon any property or assets of any of
      the
      Company Parties pursuant to, or require the consent of any other party to any
      Existing Instrument or other third party and (iii) will not result in any
      violation of any law, administrative regulation or administrative or court
      decree applicable to any of the Company Parties except with respect to clauses
      (ii) and (iii) of this sentence, for such conflicts, breaches, Defaults, Debt
      Repayment Triggering Events or violations as would not, individually or in
      the
      aggregate, result in a Material Adverse Effect. As used herein, a “Debt
      Repayment Triggering Event”
means
      any event or condition that gives, or with the giving of notice or lapse of
      time
      would give, the holder of any note, debenture or other evidence of indebtedness
      (or any person acting on such holder’s behalf) the right to require the
      repurchase, redemption or repayment of all or a portion of such indebtedness
      by
      the Company Parties.

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

     

    (p) Regulatory
      Approval.
      No
      consent, approval, authorization or other order of, or registration or filing
      with, any court or other governmental or regulatory authority or agency, is
      required for each of the Company Parties’ execution, delivery and performance of
      the Transaction Documents to which it is a party and consummation of the
      Transactions, except (i) with respect to the transactions contemplated by the
      Registration Rights Agreement or the filing of a Current Report on Form 8-K
      with
      the Commission as may be required under the Securities Act and the Exchange
      Act,
      as the case may be, (ii) as required by the state securities or “blue sky” laws,
      and (iii) for such consents, approvals, authorizations, orders, filings or
      registrations that have been obtained or made and are in full force and effect
      except as would not have a Material Adverse Effect.

     

    (q) No
      Material Actions or Proceedings.
      Except
      as otherwise disclosed in the CIM, there are no legal or governmental actions,
      suits or proceedings pending or, to the best of the Company’s knowledge, (i)
      threatened against or affecting any of the Company Parties, (ii) which has
      as
      the subject thereof any officer or director of, or property owned or leased
      by,
      the Company Parties or (iii) relating to environmental or discrimination
      matters, where in any such case (A) any such action, suit or proceeding, if
      so
      determined adversely, would reasonably be expected to result in a Material
      Adverse Effect or adversely affect the consummation of the Transactions or
      (B)
      any such action, suit or proceeding is or would be material in the context
      of
      the offer and sale of Notes. No material labor dispute with the employees of
      any
      of the Company Parties, or with the employees of any principal supplier of
      the
      Company Parties, exists or, to the best of the Company’s knowledge, is
      threatened or imminent.

     

    (r) Intellectual
      Property Rights.
      Except
      as otherwise disclosed in the CIM, the Company Parties own or possess, and
      as of
      the closing of the Transaction will own and possess, sufficient trademarks,
      service marks, trade names, patents, patent rights, copyrights, domain names,
      licenses, approvals, trade secrets, inventions, know-how (including unpatented
      and/or unpatentable proprietary or confidential information, systems or
      procedures), licenses and other similar rights (collectively, “Intellectual
      Property Rights”)
      reasonably necessary to conduct their businesses as now conducted and as to
      be
      conducted as described in the CIM, except where the failure to own or possess
      such Intellectual Property Rights would not have a Material Adverse
      Effect.

     

    (s) All
      Necessary Permits, etc.
      Except
      as otherwise disclosed in the CIM, each of the Company Parties possess such
      valid and current certificates, authorizations or permits issued by the
      appropriate state, federal or other applicable regulatory agencies or bodies
      and
      such valid licenses or other rights to use all databases, geological data,
      geophysical data, engineering data, seismic data, maps and other technical
      information, in each case, necessary to conduct their respective businesses,
      and
      neither the Company nor any Guarantor has received, or has any reason to believe
      that it has received or will receive, any notice of proceedings relating to
      the
      revocation or modification of, or non-compliance with, any such certificate,
      authorization or permit which, singly or in the aggregate, if the subject of
      an
      unfavorable decision, ruling or finding, would result in a Material Adverse
      Effect.

     

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

     

    (t) Title
      to Properties.
      Each of
      the Company Parties has (i) generally satisfactory title to its oil and gas
      properties, title investigations having been carried out by the Company Parties
      in accordance with the practice in the oil and gas industry in the areas in
      which the Company Parties operate except as, in each case, would not result
      in a
      Material Adverse Effect, (ii) good and marketable title to all other real
      property owned by it to the extent necessary to carry on its business and (iii)
      good and marketable title to all personal property owned by it, in each case
      free and clear of all liens, encumbrances and defects except such as are
      described in the CIM or such as do not materially affect the value of the
      properties of the Company Parties, considered as one enterprise, and do not
      interfere with the use made and proposed to be made of such properties, by
      the
      Company Parties, considered as one enterprise; and all of the leases and
      subleases material to the business of the Company Parties, considered as one
      enterprise, and under which the Company Parties hold properties described in
      the
      CIM, are in full force and effect, and none of the Company Parties has any
      notice of any material claim of any sort that has been asserted by anyone
      adverse to the rights of any of the Company Parties under any of the leases
      or
      subleases mentioned above, or affecting or questioning the rights of any of
      the
      Company Parties to the continued possession of the leased or subleased premises
      under any such lease or sublease.

     

    (u) Gas
      Imbalances; Prepayments.
      On a
      net basis there are no gas imbalances, take-or-pay or other prepayments that
      would require the Company or any of its subsidiaries to deliver Hydrocarbons
      produced from the Oil and Gas Properties at some future time without then or
      thereafter receiving full payment therefor exceeding one-half bcf of gas (on
      an
      mcf equivalent basis) in the aggregate, other than as disclosed in the CIM
      or as
      would not result in a Material Adverse Effect.

     

    (v) Tax
      Law Compliance.
      Except
      as disclosed in the CIM, the Company Parties have filed all necessary federal
      and state income and franchise tax returns and have paid all taxes required
      to
      be paid by any of them and, if due and payable, any related or similar
      assessment, fine or penalty levied against any of them except as may be being
      contested in good faith and by appropriate proceedings, except as would not
      result in a Material Adverse Effect. The Company has made adequate charges,
      accruals and reserves in the applicable financial statements referred to in
      Sections
      3(j)
      above in
      respect of all federal and state and income and franchise taxes for all periods
      as to which the tax liability of the Company or any of its subsidiaries has
      not
      been finally determined, other than as disclosed in the CIM or as would not
      result in a Material Adverse Effect.

     

    (w) Company’s
      Accounting System.
      The
      Company makes and keeps accurate books and records and maintains a system of
      accounting controls sufficient to provide reasonable assurances that (i)
      transactions are executed in accordance with management’s general or specific
      authorization; (ii) transactions are recorded as necessary to permit preparation
      of financial statements in conformity with generally accepted accounting
      principles as applied in the United States and to maintain accountability for
      assets; (iii) access to assets is permitted only in accordance with management’s
      general or specific authorization; and (iv) the recorded accountability for
      assets is compared with existing assets at reasonable intervals and appropriate
      action is taken with respect to any differences in each case, other than as
      disclosed in the CIM or as would not result in a Material Adverse
      Effect.

     

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

     

    (x) Insurance.
      Each of
      the Company Parties is insured by recognized, financially sound and reputable
      institutions with policies in such amounts and with such deductibles and
      covering such risks as are generally deemed adequate and customary for their
      businesses including, but not limited to, policies covering real and personal
      property owned or leased by the Company Parties against theft, damage,
      destruction, acts of vandalism, earthquakes and hurricanes, other than as
      disclosed in the CIM or as would not result in a Material Adverse Effect. The
      Company has no reason to believe that it or any Guarantor will not be able
      (i)
      to renew its existing insurance coverage as and when such policies expire or
      (ii) to obtain comparable coverage from similar institutions as may be necessary
      or appropriate to conduct its business as now conducted and at a cost that
      would
      not result in a Material Adverse Change. Except as described in the CIM and
      except as would not result in a Material Adverse Effect, none of the Company
      Parties has been denied any insurance coverage which it has sought or for which
      it has applied.

     

    (y) No
      Unlawful Contributions or Other Payments.
      Neither
      the Company Parties nor, to the best of the Company’s knowledge, any employee or
      agent of the Company Parties, has made any contribution or other payment to
      any
      official of, or candidate for, any federal, state or foreign office in violation
      of any law.

     

    (z) Disclosure
      Controls and Procedures; Deficiencies in or Changes to Internal Control Over
      Financial Reporting.
      Parent
      has established and maintains disclosure controls and procedures (as defined
      in
      Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as
      amended), which (i) are designed to ensure that material information relating
      to
      the Parent, including its consolidated subsidiaries, is made known to the
      Parent’s principal executive officer and its principal financial officer by
      others within those entities and are effective in all material respects to
      perform the functions for which they were established. Based on the most recent
      evaluation of its disclosure controls and procedures, Parent is not aware of
      (i)
      any significant deficiencies or material weaknesses in the design or operation
      of internal control over financial reporting which are reasonably likely to
      adversely affect its ability to record, process, summarize and report financial
      information or (ii) any fraud, whether or not material, that involves management
      or other employees who have a significant role in Parent’s internal control over
      financial reporting. Parent is not aware of any change in its internal control
      over financial reporting that has occurred during its most recent fiscal quarter
      that has materially affected, or is reasonably likely to materially affect,
      its
      internal control over financial reporting.

     

    (aa) Compliance
      with Environmental Laws.
      Except
      as described in the CIM or as would not, singly or in the aggregate, result
      in a
      Material Adverse Effect, (i) neither the Company nor any of its subsidiaries
      is
      in violation of any federal, state or local statute, law, rule, regulation,
      ordinance, code, policy or rule of common law or any judicial or administrative
      interpretation thereof, including any judicial or administrative order, consent,
      decree or judgment, relating to pollution or protection of human health, the
      environment (including, without limitation, ambient air, surface water,
      groundwater, land surface or subsurface strata) or wildlife, including, without
      limitation, laws and regulations relating to the release or threatened release
      of chemicals, pollutants, contaminants, wastes, toxic substances, hazardous
      substances, petroleum or petroleum products (collectively, “Hazardous
      Materials”)
      or to
      the manufacture, processing, distribution, use, treatment, storage, disposal,
      transport or handling of Hazardous Materials (collectively, “Environmental
      Laws”),
      (ii)
      the Company Parties have all permits, authorizations and approvals required
      under any applicable Environmental Laws and are each in compliance with their
      requirements, (iii) there are no pending or threatened administrative,
      regulatory or judicial actions, suits, demands, demand letters, claims, liens,
      notices of noncompliance or violation, investigation or proceedings relating
      to
      any Environmental Law against any of the Company Parties and (iv) there are
      no
      events or circumstances that might reasonably be expected to form the basis
      of
      an order for clean-up or remediation, or an action, suit or proceeding by any
      private party or governmental body or agency, against or affecting any of the
      Company Parties relating to Hazardous Materials or any Environmental
      Laws.

     

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

     

    (bb) Compliance
      with Laws.
      The
      Company has not been advised, and has no reason to believe, that it and each
      of
      the Guarantors are not conducting business in compliance with all applicable
      laws, rules and regulations of the jurisdictions in which it is conducting
      business, except where failure to be so in compliance would not result in a
      Material Adverse Effect.

     

    (cc) Company
      Parties Not an “Investment Company.”
      Neither
      the Company nor any Guarantor is, and after receipt of payment for the Notes,
      will be, an “investment company” within the meaning of Investment Company Act of
      1940, as amended, and the rules and regulations of the Commission
      thereunder.

     

    (dd) Brokers.
      Except
      for the Placement Agents, there is no broker, finder or other party that is
      entitled to receive from the Company any brokerage or finder’s fee or other fee
      or commission as a result of the Regulation D Placement or the transactions
      contemplated thereby.

     

    (ee) No
      Registration Required Under the Securities Act.
      Assuming the accuracy of the representations and warranties of the Placement
      Agents contained in Section
      1(B)
      of the
      Placement Agency Agreement and of the Regulation D Purchasers contained in
      this
      Agreement and the compliance of such parties with the agreements set forth
      herein and therein, it is not necessary, in connection with the issuance and
      sale of the Regulation D Notes, in the manner contemplated by the Transaction
      Documents and the CIM, to register the Regulation D Notes under the Securities
      Act or to qualify the Indenture under the Trust Indenture Act. 

     

    (ff) QIBs
      and Accredited Investors.
      The
      Company will not offer or sell any of the Regulation D Notes to any person
      whom
      it reasonably believes is not (i) a “qualified institutional buyer” as defined
      in Rule 144A (“QIBs”)
      or
      (ii) an institutional “accredited investor” (as defined in clauses (1), (2), (3)
      and (7) of Rule 501(a) of Regulation D).

     

    (gg) Regulation
      D Purchasers; Compliance With Rule 502(d).
      The
      Company will exercise reasonable care to ensure that the Regulation D Purchasers
      are not “underwriters” within the meaning of Section 2(a)(11) of the Securities
      Act and, without limiting the foregoing, that such purchases will comply with
      Rule 502(d) under the Securities Act.

     

    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

    

     

    (hh) No
      General Solicitation.
      To the
      knowledge of the Company, none of the Company Parties or any of their respective
      Affiliates have engaged, or will engage, directly or indirectly in any form
      of
“general solicitation” or “general advertising” in connection with the offering
      of the Regulation D Notes (as those terms are used in Regulation D under the
      Securities Act) or in any manner involving a public offering within the meaning
      of Section 4(2) of the Securities Act. To the knowledge of the Company, none
      of
      the Company Parties have entered, and will enter, into any arrangement or
      agreement with respect to the distribution of the Regulation D Notes, except
      for
      this Agreement, the Placement Agency Agreement, the Indenture, the Escrow
      Agreement, the Engagement Letter and the Registration Rights Agreement, and
      the
      Company agrees not to enter into any such arrangement or agreement.


     

    (ii) No
      Offer and Sale Within Six Months.
      None of
      the Company Parties nor any of their respective Affiliates have sold or issued
      any security of the same or similar class or series as any of the Notes that
      would be required to be integrated with the Notes in a manner that would require
      registration under the Securities Act during the six-month period preceding
      the
      earlier of the date of this Agreement and the Closing Date, including any sales
      pursuant to Rule 144A, Regulation D or Regulation S. None of Parent, the Company
      nor any of its Affiliates have any intention of making, and will not make,
      an
      offer or sale of any securities that would be required to be integrated with
      the
      Notes in a manner that would require registration under the Securities Act,
      for
      a period of six months after the date of this Agreement, except for the offering
      of Notes as contemplated by this Agreement, the Registration Rights Agreement
      and the Regulation S Offering. As used in this paragraph, the terms “offer” and
“sale” have the meanings specified in Section 2(a)(3) of the Securities Act.


     

    The
      Company acknowledges that the Placement Agents and, for purposes of the opinion
      to be delivered pursuant to Section
      6
      hereof,
      counsel to the Company, will rely upon the accuracy and truthfulness of the
      foregoing representations and hereby consents to such reliance.

     

    4. COVENANTS.

     

    (a) Reasonable
      Best Efforts.
      Each
      party shall use its reasonable best efforts to timely satisfy each of the
      conditions to be satisfied by it as provided in Sections
      5
      and
6
      of this
      Agreement.

     

    (b) Form
      D.
      The
      Company agrees to file a Form D with respect to the Regulation D Notes as
      required under Regulation D and to comply with any applicable state securities
      and “Blue Sky” laws in connection with the sale of the Regulation D
      Notes.

     

    (c) Use
      of
      Proceeds.
      The net
      proceeds from the sale of the Notes will be used by the Company in the manner
      described in the Preliminary CIM and described or to be described in the CIM
      under the caption titled “Use of Proceeds.”

     

    (d) Fees
      and Expenses.
      Except
      as otherwise set forth in the Regulation D Documents, each party to this
      Agreement shall bear its own expenses in connection with the sale of the
      Regulation D Notes to the Regulation D Purchasers.

     

    (e) Publicity.
      The
      Regulation D Purchasers agree that they will not issue any press release or
      otherwise make any public statement, filing or other communication regarding
      the
      offering or the business, operations or financial condition of Parent or the
      Company without the prior consent of the Company, except to the extent required
      by law or legal process, in which case such Regulation D Purchaser shall provide
      the Company with prior notice of such disclosure. Parent and the Company agree
      that they will not publicly disclose the names of the Regulation D Purchasers
      or
      include the names of the Regulation D Purchasers, without the prior written
      consent of the Regulation D Purchasers, in any press release or other public
      statement, filing or other communication, except (a) in any registration
      statement in which such Regulation D Purchaser is identified as a selling
      securityholder, or (b) to the extent required by law or legal process (including
      but not limited to by the filing of one or more Form D’s with the Commission
      regarding the Regulation D Placement).

     

    
      
        
        

      

      
        16

        
          

        

      

      
        
        

      

    

     

    (f) Withholding
      Taxes.
      The
      Regulation D Purchasers shall deliver to the Company a properly completed and
      duly executed applicable Internal Revenue Service Form W-8 or W-9 that
      establishes a complete exemption from United States withholding tax. The
      Regulation D Purchasers will provide replacement forms on the obsolescence
      of
      such forms or inaccuracy of any information thereon.

     

    5. CONDITIONS
      TO THE COMPANY’S OBLIGATION TO SELL.

     

    The
      obligation of the Company hereunder to issue and sell the Regulation D Notes
      to
      the Regulation D Purchasers at the Closing is subject to the satisfaction,
      at or
      before the Closing Date, of each of the following conditions, provided
      that
      these conditions are for the Company’s sole benefit and may be waived by the
      Company at any time in its sole discretion by providing the Regulation D
      Purchasers with prior written notice thereof.

     

    (a) The
      representations and warranties of the Regulation D Purchaser shall be true
      and
      correct in all material respects as of the date when made and as of the Closing
      Date as though made at that time (except for representations and warranties
      that
      speak as of a specific date), and the Regulation D Purchaser shall have
      performed, satisfied and complied in all material respects with the covenants,
      agreements and conditions required by this Agreement to be performed, satisfied
      or complied with by the Regulation D Purchaser at or prior to the Closing
      Date.

     

    (b) No
      injunction, restraining order or order of any nature by a governmental authority
      shall have been issued as of the Closing Date that would prevent or materially
      interfere with the consummation of the Offering or any of the transactions
      contemplated thereby; and no stop order suspending the qualification or
      exemption from qualification of any of the Securities in any jurisdiction shall
      have been issued and no proceeding for that purpose shall have been commenced
      or, to the knowledge of the Regulation D Purchasers after reasonable inquiry,
      be
      pending or contemplated as of the Closing Date.

     

    (c) At
      least
      $750.0 million in aggregate principal amount of Notes shall have been sold
      by
      the Company to the Regulation D Purchasers and the Initial Purchasers and an
      amount shall have been borrowed by the Company under the Credit Agreement in
      an
      amount sufficient to repay all outstanding borrowings under the Amended and
      Restated Second Lien Credit Agreement, dated as of July 28, 2006 among the
      Company, various lenders named therein, BNP Paribas, and RBS Securities
      Corporation (the “Second
      Lien Facility”).

     

    
      
        
        

      

      
        17

        
          

        

      

      
        
        

      

    

     

    (d) No
      action
      shall have been taken and no statute, rule, regulation or order shall have
      been
      enacted, adopted or issued by any federal, state or foreign governmental or
      regulatory authority of competent jurisdiction that would, as of the Closing
      Date, render impossible the issuance or sale of the Regulation D Notes; and
      no
      injunction or order of any federal, state or foreign court shall have been
      issued that would, as of the Closing Date, prevent the issuance or sale of
      the
      Notes.

     

    6. CONDITIONS
      TO THE REGULATION D PURCHASERS’ OBLIGATION TO PURCHASE.

     

    The
      several obligations of the Regulation D Purchasers hereunder to purchase the
      Regulation D Notes at the Closing are subject to the satisfaction, at or before
      the Closing Date, of each of the following conditions, provided
      that (a)
      these conditions are for the Regulation D Purchasers’ sole respective benefit
      and may be waived by the Regulation D Purchasers at any time in their sole
      discretion (each with respect to itself only) by providing the Company with
      prior written notice thereof and (b) the Regulation D Purchasers acknowledge
      that their respective portions of the Purchase Price may be released from the
      Escrow Account pursuant to the terms of the Escrow Agreement upon receipt by
      the
      Closing Agent of the Company Closing Certificate as set forth in Section
      1(b):

     

    (a) Each
      of
      the Company Parties shall have executed and delivered, or caused to be
      delivered, to the Regulation D Purchasers or the Closing Agent (i) each of
      the Transaction Documents to which it is a party and (ii) the Regulation D
      Notes
      being purchased by the Regulation D Purchasers at the Closing pursuant to this
      Agreement, in each case in form and substance reasonably satisfactory to the
      Regulation D Purchasers or their agents.

     

    (b) The
      Transactions shall have been consummated in accordance with their terms and
      in
      accordance with the applicable Transaction Documents and as described in the
      Preliminary CIM and as described or to be described in the CIM.

     

    (c) At
      least
      $750.0 million in aggregate principal amount of Notes shall have been sold
      by
      the Company to the Regulation D Purchasers and the Initial Purchasers and an
      amount shall have been borrowed by the Company under the Credit Agreement in
      an
      amount sufficient to repay all outstanding borrowings under the Second Lien
      Facility.

     

    (d) The
      Regulation D Notes shall have been designated for trading on PORTAL, to the
      extent so eligible.

     

    (e) On
      the
      Closing Date, the Regulation D Purchasers or the Closing Agent (on behalf of
      the
      Regulation D Purchasers) shall have received the opinions of Vinson & Elkins
      LLP, U.S. counsel for Parent and the Company, and Appleby Hunter Bailhache,
      Bermuda counsel for Parent, in each case dated as of the Closing Date,
      substantially to the effect set forth on Annex
      C.

     

    (f) The
      Company Parties shall have each delivered to the Regulation D Purchasers or
      the
      Closing Agent (on behalf of the Regulation D Purchasers) a certificate
      evidencing qualification by such entity as a foreign corporation and good
      standing issued by the Secretaries of State (or comparable office) of each
      of
      the jurisdictions in which the Company Parties operate as of a date within
      30
      days prior to the Closing Date.

     

    
      
        
        

      

      
        18

        
          

        

      

      
        
        

      

    

     

    (g) The
      Company Parties shall have delivered to the Regulation D Purchasers or the
      Closing Agent (on behalf of the Regulation D Purchasers) a certificate, executed
      by the Secretary of each of the Company Parties, and dated as of the Closing
      Date, as to (i) the resolutions consistent with Sections
      3(b), 3(d),
      3(e)
      and
3(f)
      as
      adopted by Board of Directors of each such entity in a form reasonably
      acceptable to the Regulation D Purchasers, and (ii) the memorandum of
      association, the certificate of incorporation and bylaws, or other
      organizational documents of each such entity.

     

    (h) The
      representations and warranties of the Company Parties contained herein shall
      be
      true and correct as of the date when made and as of the Closing Date as though
      made at that time (except for representations and warranties that speak as
      of a
      specific date), and the Company shall have performed, satisfied and complied
      in
      all material respects with the covenants, agreements and conditions required
      by
      the Regulation D Purchase Documents to be performed, satisfied or complied
      with
      by the Company Parties, as applicable, at or prior to the Closing Date. The
      Regulation D Purchasers or the Closing Agent (on behalf of the Regulation D
      Purchasers) shall have received certificates, executed by an authorized officer
      of each of the Parent and the Company, dated as of the Closing Date, to the
      foregoing effect. The statements of the Company Parties and their respective
      officers made in any certificates delivered pursuant to this Agreement may
      be
      made only in their official, rather than individual capacity, and shall be
      true
      and correct on and as of the Closing Date.

     

    (i) No
      action
      shall have been taken and no statute, rule, regulation or order shall have
      been
      enacted, adopted or issued by any federal, state or foreign governmental or
      regulatory authority of competent jurisdiction that would, as of the Closing
      Date, render impossible the issuance or sale of the Regulation D Notes; and
      no
      injunction or order of any federal, state or foreign court shall have been
      issued that would, as of the Closing Date, prevent the issuance or sale of
      the
      Regulation D Notes.

     

    7. TERMINATION.

     

    In
      the
      event that the Closing shall not have occurred due to the failure of the Company
      Parties or the Regulation D Purchasers to satisfy the conditions set forth
      in
Sections
      5
      and
6
      above
      (and the nonbreaching party’s failure to waive such unsatisfied condition(s)),
      the nonbreaching party shall have the option to terminate this Agreement with
      respect to such breaching party at the close of business on the third business
      day following the date previously scheduled to be the Closing Date subject
      to
Section
      1(a)(ii).

     

    8. INDEMNIFICATION.
      

     

    (i) In
      consideration of the Regulation D Purchasers’ execution and delivery of the
      Regulation D Purchase Documents and the issuance of the Regulation D Notes
      under
      the Indenture, and acquiring the Regulation D Notes hereunder and in addition
      to
      all of the other obligations of the Company under this Agreement, the Company,
      shall defend, protect, indemnify and hold harmless the Regulation D Purchasers
      and the Regulation D Purchasers’ stockholders, partners, members, officers,
      directors, employees and direct or indirect investors and any of the foregoing
      Persons’ agents or other representatives, including, without limitation, those
      retained in connection with the transactions contemplated by this Agreement
      (each, an “Indemnitee”
and
      collectively, the “Indemnitees”),
      as
      incurred, from and against any and all actions, causes of action, suits, claims,
      losses, costs, penalties, fees, liabilities and damages, and expenses in
      connection therewith (irrespective of whether any such Indemnitee is a party
      to
      the action for which indemnification hereunder is sought), and including
      reasonable attorneys’ fees and disbursements (the “Indemnified
      Liabilities”),
      incurred by any Indemnitee as a result of, or arising out of, or relating to
      any
      misrepresentation or breach of any representation or warranty made by the
      Company in the Note Purchase Documents or any other certificate, instrument
      or
      document contemplated hereby or thereby. To the extent that the foregoing
      undertaking by each of the Parent and the Company may be unenforceable for
      any
      reason, each of the Parent and the Company shall make the maximum contribution
      to the payment and satisfaction of each of the Indemnified Liabilities which
      is
      permissible under applicable law. 

     

    
      
        
        

      

      
        19

        
          

        

      

      
        
        

      

    

     

    (ii) Promptly
      after receipt by an Indemnitee under this Section
      8
      of
      notice of any claim or the commencement of any action or proceeding (including
      any governmental investigation), such Indemnitee will, if a claim for
      indemnification in respect thereof is to be made against the Company, notify
      the
      Company in writing of the commencement thereof; but the omission to so notify
      will not relieve it from any liability which the Company may have to any
      Indemnitee to the extent it is not materially prejudiced as a result thereof.
      In
      case any such action or proceeding is brought against any Indemnitee, and it
      notifies the Company of the commencement thereof, the Company will be entitled
      to participate therein, and to the extent that it may elect, by written notice
      delivered to such Indemnitee promptly after receiving the aforesaid notice
      from
      such Indemnitee, to assume the defense thereof, with counsel reasonably
      satisfactory to such Indemnitee; provided,
      however,
      that if
      the defendants (including any impleaded parties) in any such action include
      both
      the Indemnitee and the Company (as applicable) and the Indemnitee shall have
      reasonably concluded that there may be legal defenses available to it and/or
      other Indemnitees which are different from or additional to those available
      to
      the Company, the Indemnitee or Indemnitees shall have the right to select
      separate counsel to defend such action on behalf of such Indemnitee or
      Indemnitees. Upon receipt of notice from the Company to such Indemnitee of
      its
      election to so appoint counsel to defend such action and approval by the
      Indemnitee of such counsel, the Company will not be liable to such Indemnitee
      under this Section
      8
      for any
      legal or other expenses subsequently incurred by such Indemnitee in connection
      with the defense thereof unless: (A) the Indemnitee shall have employed separate
      counsel in accordance with the proviso to the preceding sentence (it being
      understood, however, that the Company shall not be liable for the expense of
      more than one separate counsel (in addition to any local counsel), approved
      by
      the Indemnitee representing the Indemnitees who are parties to such action);
      (B)
      the Company shall not have employed counsel reasonably satisfactory to the
      Indemnitee to represent the Indemnitee within a reasonable time after notice
      or
      commencement of the action; (C) the Company has authorized the employment of
      counsel for the Indemnitee at the expense of the Company; or (D) the use of
      counsel chosen by the Company to represent the Indemnitee would present such
      counsel with a conflict of interest. 

     

    (iii) The
      Company will not without the prior written consent of the Indemnitees, settle
      or
      compromise or consent to the entry of any judgment with respect to any pending
      or threatened claim, action, suit or proceeding in respect of which
      indemnification or contribution may be sought hereunder (whether or not the
      Indemnitees are actual or potential parties to such claim or action) unless
      such
      settlement, compromise or consent includes an unconditional release of each
      Indemnitee from all liability arising out of such claim, action, suit or
      proceeding and does not include an admission of guilt of, or failure to act
      by,
      the Indemnitee, or include any injunctive relief against any Indemnitee. Neither
      the Company nor the Parent shall be liable for any settlement, compromise or
      the
      consent to the entry of judgment in connection with any such action effected
      without its written consent, but if settled with its written consent or if
      there
      be a final judgment for the plaintiff in any such action other than a judgment
      entered with the consent of such Indemnitee, or the Company shall indemnify
      and
      hold harmless any Indemnitee from and against any loss or liability by reason
      of
      such settlement or judgment. 

     

    
      
        
        

      

      
        20

        
          

        

      

      
        
        

      

    

     

    (iv) Each
      Indemnitee shall furnish such information regarding itself or the claim in
      question as the Company may reasonably request in writing and as shall be
      reasonably required in connection with the defense of such claim and litigation
      arising therefrom.

     

    (v) Notwithstanding
      anything to the contrary herein, the rights and remedies provided in this
Section
      8
      are the
      sole rights with respect to the transactions contemplated by this Agreement
      and
      no party hereto shall make any other claim for costs, damages of expenses
      (including fees and expenses of attorneys, consultants, experts or other
      representatives) to any fine of or penalty on or any liability of any other
      nature or otherwise, under, arising out of or relating to this Agreement, or
      the
      transactions contemplated hereby, whether based on contract, tort, strict
      liability, other laws or otherwise.

     

    (vi) Notwithstanding
      anything to the contrary herein, the provisions of this Section
      8
      are
      intended solely for the benefit of the Regulation D Purchasers and not for
      the
      benefit of, nor may any provision hereby be enforced by, any other
      Person.

     

    (vii) No
      indemnification will or may be sought under this Section
      8,
      by any
      Person who would have been entitled to indemnification under this Section
      8
      two
      years after the date of this Agreement.

     

    9. MISCELLANEOUS.

     

    (a) Notices.
      Any
      notices, consents, waivers or other communications required or permitted to
      be
      given under the terms of this Agreement must be in writing and will be deemed
      to
      have been delivered: (i) upon receipt, when delivered personally; (ii) upon
      receipt, when sent by facsimile (provided confirmation of transmission is
      mechanically or electronically generated and kept on file by the sending party);
      or (iii) one Business Day after deposit with an overnight courier service,
      in
      each case properly addressed to the party to receive the same. The addresses
      and
      facsimile numbers for such communications shall be:

     

    If
      to the
      Company:

     

    Energy
      XXI Gulf Coast, Inc.

    Suite
      2626

    1021
      Main

    Houston,
      Texas 77002

    Facsimile:
      713-351-3300

    Attn:
      David West Griffin, Director

     

    
      
        
        

      

      
        21

        
          

        

      

      
        
        

      

    

     

    Copy
      to:

     

    Vinson
      & Elkins LLP

    First
      City Tower

    1001
      Fannin Street

    Suite
      2500

    Houston,
      Texas 77002-6760

    Facsimile:
      713-758-2346

    Attn:
      T.
      Mark Kelly, Esq.

     

    and
      if to
      the Regulation D Purchasers, to the applicable address and facsimile number
      set
      forth on Annex
      A
      hereto,
      or to such other address and/or facsimile number and/or to the attention of
      such
      other Person as the recipient party has specified by written notice given to
      each other party prior to the effectiveness of such change. Written confirmation
      of receipt (A) given by the recipient of such notice, consent, waiver or other
      communication, (B) mechanically or electronically generated by the sender’s
      facsimile machine containing the time, date, recipient facsimile number and
      an
      image of the first page of such transmission or (C) provided by an overnight
      courier service shall be rebuttable evidence of personal service, receipt by
      facsimile or receipt from an overnight courier service in accordance with
clause
      (A),
      (B)
      or
(C)
      above,
      respectively.

     

    (b) Governing
      Law; Jurisdiction; Jury Trial.
      This
      Agreement shall be governed by, and construed in accordance with, the laws
      of
      the State of New York. Any legal suit, action or proceeding arising out of
      or
      based upon this Agreement or the transactions contemplated hereby may be
      instituted in the federal courts of the United States of America located in
      the
      Borough of Manhattan in the City of New York or the courts of the State of
      New
      York in each case located in the Borough of Manhattan in the City of New York.
      Each party hereby irrevocably waives, and agrees not to assert in any suit,
      action or proceeding, any claim that it is not personally subject to the
      jurisdiction of any such court, that such suit, action or proceeding is brought
      in an inconvenient forum or that the venue of such suit, action or proceeding
      is
      improper. Each party hereby irrevocably waives personal service of process
      and
      consents to process being served in any such suit, action or proceeding by
      mailing a copy thereof to such party at the address for such notices to it
      under
      this Agreement and agrees that such service shall constitute good and sufficient
      service of process and notice thereof. Nothing contained herein shall be deemed
      to limit in any way any right to serve process in any manner permitted by law.
      Each party hereby irrevocably waives any right it may have, and agrees not
      to
      request, a jury trial for the adjudication of any dispute hereunder or in
      connection with or arising out of this Agreement or any transaction contemplated
      hereby. 

     

    
      
        
        

      

      
        22

        
          

        

      

      
        
        

      

    

     

    (c) Successors
      and Assigns.
      This
      Agreement shall be binding upon and inure to the benefit of the parties and
      their respective successors and assigns; provided
      that
      no
      party shall assign any of its rights or obligations hereunder without the prior
      written consent of the other party.

     

    (d) Survival.
      Unless
      this Agreement is terminated under Section
      7,
      the
      representations and warranties of the parties hereto contained in Sections
      2
      and
3,
      respectively, and the agreements and covenants set forth in Sections
      4
      and
8
      shall
      survive the Closing.

     

    (e) Headings.
      The
      headings of this Agreement are for convenience of reference and shall not form
      part of, or affect the interpretation of, this Agreement.

     

    (f) Severability.
      If any
      term, provision, covenant or restriction of this Agreement is held by a court
      of
      competent jurisdiction to be invalid, illegal, void or unenforceable, the
      remainder of the terms, provisions, covenants and restrictions set forth herein
      shall remain in full force and effect and shall in no way be affected, impaired
      or invalidated, and the parties hereto shall use their best efforts to find
      and
      employ an alternative means to achieve the same or substantially the same result
      as that contemplated by such term, provision, covenant or restriction. It is
      hereby stipulated and declared to be the intention of the parties that they
      would have executed the remaining terms, provisions, covenants and restrictions
      without including any of such that may be hereafter declared invalid, illegal,
      void or unenforceable.

     

    (g) Entire
      Agreement.
      This
      Agreement and the Escrow Agreement constitutes the entire agreement of the
      parties to this Agreement and supersedes all prior written or oral and all
      contemporaneous oral agreements, understandings and negotiations with respect
      to
      the subject matter hereof.

     

    (h) Amendment.
      This
      Agreement may not be amended or modified unless in writing by all of the parties
      hereto, and no condition herein (express or implied) may be waived unless waived
      in writing by each party whom the condition is meant to benefit. The failure
      by
      any party to exercise any right or remedy under this Agreement or otherwise,
      or
      delay by a party in exercising such right or remedy, shall not operate as a
      waiver thereof. Any amendment to this Agreement made in conformity with the
      provisions of this Section
      8(i)
      shall be
      binding on the Regulation D Purchasers and all holders of the Regulation D
      Notes
      purchased under this Agreement, as applicable. 

     

    (i) Counterparts.
      This
      Agreement may be executed in two or more identical counterparts, all of which
      shall be considered one and the same agreement and shall become effective when
      counterparts have been signed by each party and delivered to the other party;
      provided,
      that a
      facsimile signature shall be considered due execution and shall be binding
      upon
      the signatory thereto with the same force and effect as if the signature were
      an
      original, not a facsimile signature.

     

    (j) Further
      Assurances.
      Each
      party shall do and perform, or cause to be done and performed, all such further
      acts and things, and shall execute and deliver all such other agreements,
      certificates, instruments and documents, as any other party may reasonably
      request in order to carry out the intent and accomplish the purposes of this
      Agreement and the consummation of the transactions contemplated
      hereby.

     

    
      
        
        

      

      
        23

        
          

        

      

      
        
        

      

    

     

    (k) No
      Third Party Beneficiaries.
      This
      Agreement is intended for the benefit of the parties hereto and their respective
      permitted successors and assigns, and is not for the benefit of, nor may any
      provision hereof be enforced by, any other Person; provided,
      however,
      that
      each of the Placement Agents may rely upon Sections 1,
      2,
      3,
      and
4
      hereof
      as if such representations, warranties, agreements and covenants, as applicable,
      were made directly to the Placement Agents. The parties further agree that
      the
      Placement Agents may rely on or, if the Placement Agents so requests, be
      specifically named as an addressee of, the legal opinions to be delivered
      pursuant to Section
      6(e)
      of this
      Agreement.

     

    (l) Limitation
      on Duties of Closing Agent and Placement Agents; Exculpation.
      Each
      party hereto agrees for the express benefit of each of the Closing Agent and
      the
      Placement Agents, their respective affiliates and their respective
      representatives that:

     

    (i) Neither
      the Closing Agent, nor any of its respective affiliates or any of their
      representatives has any duties or obligations other than those specifically
      set
      forth herein.

     

    (ii) None
      of
      the Closing Agent, the Placement Agents nor any of their respective affiliates
      or respective representatives (1) shall be liable for any improper payment
      made
      in accordance with the information provided by the Company; (2) makes any
      representation or warranty, or has any responsibilities as to the validity,
      accuracy, value or genuineness of any information, certificates or documentation
      delivered by or on behalf of the Company pursuant to this Agreement, the
      Placement Agency Agreement or the other Transaction Documents or in connection
      with any of the transactions contemplated hereby or thereby, including any
      information in the Preliminary CIM or the CIM or (3) shall be liable (x) for
      any
      action taken, suffered or omitted by any of them in good faith and reasonably
      believed to be authorized or within the discretion or rights or powers conferred
      upon it by this Agreement, the Placement Agency Agreement or any other
      Transaction Document or (y) for anything that any of them may do or refrain
      from
      doing in connection with this Agreement, the Placement Agency Agreement or
      any
      other Transaction Document, except for such party’s own gross negligence,
      willful misconduct or bad faith. 

     

    (iii) Each
      of
      the Closing Agent, the Placement Agents, their respective affiliates and their
      respective representatives shall be entitled to (1) rely on, and shall be
      protected in acting upon, any certificate, instrument, opinion, notice, letter
      or any other document or security delivered to any of them by or on behalf
      of
      the Company, and (2) be indemnified by the Company for acting as Placement
      Agent
      and Closing Agent, respectively, hereunder pursuant the indemnification
      provisions set forth in the Placement Agency Agreement, which hereby are
      incorporated by reference herein.

     

    [SIGNATURE
      PAGE FOLLOWS]

     

    
      
        
        

      

      
        24

        
          

        

      

      
        
        

      

    

     

    IN
      WITNESS WHEREOF, the parties hereto have caused their respective signature
      page
      to this Regulation D Purchase Agreement to be duly executed as
      of          , 2007.

    
      	 	 	 
	 	ENERGY
              XXI
              GULF COAST, INC.
	 
 	 
 	 
 
	
            	By:  	/s/ J. Granger Anderson III
	 	
              

              Name:
                J. Granger Anderson III

              Title:
                Vice President, Land

            
	 	
            


    

    
      	 	 	 
	 	ENERGY XXI (BERMUDA)
              LIMITED
	 
 	 
 	 
 
	
            	By:  	/s/ David West Griffin
	 	
              

              Name:
                David West Griffin

              Title:
                Chief Financial Officer

            
	 	 


    

    
      	 	 	 
	 	ENERGY
              XXI
              TEXAS, LP
	 
 	 
 	 
 
	
            	By:  	/s/ J. Granger Anderson III
	 	
              

              Name:
                J. Granger Anderson III

              Title:
                Vice President, Land

            
	 	
            


    

    
      	 	 	 
	 	ENERGY
              XXI
              TEXAS GP, LLC
	 
 	 
 	 
 
	
            	By:  	/s/ J. Granger Anderson III
	 	
              

              Name:
                J. Granger Anderson III

              Title:
                Vice President, Land

            
	 	
            


    

    
      	 	 	 
	 	ENERGY
              XXI
              GOM, LLC
	 
 	 
 	 
 
	
            	By:  	/s/ J. Granger Anderson III
	 	
              

              Name:
                J. Granger Anderson III

              Title:
                Vice President, Land

            


    

    
 

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	 	 	 
	 	PURCHASER
	 
 	 
 	 
 
	 	
              
Insert
              name of Purchaser
	 	 
	
            	By:  	
            
	 	 	
              

              Name:

              Title:

            
	 	 	 
	 	
              Address: 

              
                

              

              
                

              

              Telephone:

              
                

              

              Fax: 

              
                
 

            




    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    Annex
      A

     

    Registration
      Information

     

    Legal
      Name Of Regulation D Purchaser:
      ______________________________________________________________

     

    Aggregate
      principal amount of Regulation D Notes to be purchased by you: $______________
      

    (if
      special denominations required, please note)

     

    Address
      Of Regulation D Purchaser:
      _________________________________________________________________ 

     

    
      
        	 	Attention:	_________________________
	
                Telephone
                  Number: 
                  Fax
                    Number: 

                   

                

              	
                __________________________________

                
                  __________________________________

                  
                    __________________________________

                     

                  

                

              


      

    

    Nominee
      (Name in which the Regulation D Notes are to be registered, if different than
      name of Regulation D Purchaser): ___________________________

     

    
      
        
          	
                  Tax
                    I.D. Number:

                	__________________________________


        

      

    

     

    (If
      Acquired in the name of a nominee, the taxpayer I.D. number of such
      nominee)

     

    Person
      To
      Receive Copies of Regulation D Purchase Documents 

     

    
      
        
          	
                  Name:

                  
                    Telephone
                      Number:

                    
                      Email:

                    

                  

                	
                  __________________________________

                  __________________________________

                  
                    __________________________________

                  

                


        

      

    

     

    Operations
      Contacts

    
      
        	
                Primary:


                
                  Telephone
                    Number: 

                  
                    Email:


                    
                      Secondary:


                      
                        Telephone
                          Number:  

                        
                          Email:


                        

                      

                    

                  

                

              	
                __________________________________

                
                  __________________________________

                  
                    __________________________________

                    
                      __________________________________

                      
                        __________________________________

                        
                          __________________________________

                           

                        

                      

                    

                  

                

              


      

    

    Mail
      Payment Notices (if different than mailing address):

    
      
        
          	 	__________________________________


        

        
        

         

        
          	 	Attention:
                  	_________________________


        

        
          	
                  Telephone
                    Number:  

                   

                	
                  __________________________________

                  __________________________________

                  __________________________________

                   

                
	
                  Fax
                    Number:  

                  State
                    of Principal Place of Business: 

                	
                   

                  __________________________________

                  __________________________________

                
	
                  Custodian
                    Information: 

                	 
	
                  Name:


                  
                    DTC
                      Participant No.  

                     

                  

                	
                  __________________________________

                  __________________________________

                   

                
	Physical Delivery Instructions:
	 


        

      

    

    
      
        
          	
                	__________________________________


        

         

        
          	 	Attention:	_________________________
	
                  Telephone
                    Number:  

                	
                  __________________________________

                  __________________________________

                
	
                  Fax
                    Number:  

                	__________________________________


        

      

    

     

    Tax
      Withholding Form Attached (indicate type):
      ____________________________________________________

     

    Wire
      Transfer Instructions for Payments to Regulation D Purchaser under the Escrow
      Agreement: ____________________

     

    
      
        
        

      

      
        
          Annex
            A-1

        

        
          

        

      

      
        
        

      

    


    Annex
      B

    


    List
      of Subsidiaries of the Company

    


    Energy
      XXI Texas, LP

    


    Energy
      XXI Texas GP, LLC

    


    Energy
      XXI GOM, LLC

    


    
      
        
        

      

      
        
          Annex
            B-1

        

        
          

        

      

      
        
        

      

    


    Annex
      C

     

    Opinion
      of Vinson & Elkins, as U.S. counsel for Parent and the Company, and Appleby
      Hunter Bailhache, as Bermuda counsel for Parent, to be delivered pursuant to
      Section
      6(b)
      of the Purchase Agreement.
      [To
      be
      allocated among counsel]

     

    References
      to the Preliminary CIM in this Exhibit include any supplements thereto at the
      Closing Date.

     

    1. Each
      of
      the Company and the Guarantors is a corporation duly incorporated, validly
      existing and in good standing under the laws of its jurisdiction of formation,
      with limited liability power and corporate power, as the case may be, and
      authority to own, lease and operate its properties and to conduct its business
      as described in the CIM and to enter into and perform its respective obligations
      under the Regulation D Purchase Agreement, Escrow Agreement, the Registration
      Rights Agreement and the Indenture (collectively the “Note
      Purchase Documents”),
      as
      the case may be.

     

    2. Each
      of
      the Company and the Guarantors has all necessary corporate power and authority
      to execute and deliver the Note Purchase Documents, to perform its obligations
      thereunder to issue the Regulation D Notes.

     

    3. The
      Regulation D Purchase Agreement has been duly authorized, executed and delivered
      by each of the Guarantors and the Company.

     

    4. Each
      of
      the Indenture, Escrow Agreement, and the Registration Rights Agreement has
      been
      duly authorized, executed and delivered by the Company and each of the
      Guarantors, as the case may be, and constitutes a valid and binding agreement
      of
      the Company and each of the Guarantors, as the case may be, enforceable against
      the Company and each of the Guarantors, as the case may be, in accordance with
      its terms. The Indenture is in sufficient form for qualification under the
      Trust
      Indenture Act.

     

    5. The
      Regulation D Notes, when executed, authenticated and issued in accordance with
      the terms of the Indenture and delivered to and paid for by the Regulation
      D
      Purchasers pursuant to the Purchase Agreement, will constitute valid and binding
      obligations of the Company, entitled to the benefits of the Indenture,
      enforceable against the Company in accordance with their terms.

     

    6. The
      Guarantees, when the Regulation D Notes have been executed, authenticated and
      issued in accordance with the terms of the Indenture and delivered to and paid
      for by the Regulation D Purchasers pursuant to the Purchase Agreement, will
      constitute valid and binding obligations of the Guarantors, entitled to the
      benefits of the Indenture, enforceable against the Guarantors in accordance
      with
      their terms.

     

    7. The
      Exchange Notes and the related Guarantees have been duly authorized by the
      Company and the Guarantors, as the case may be. 

     

    
      
        
        

      

      
        
          Annex
            C-1

        

        
          

        

      

      
        
        

      

    

     

    8. The
      execution and delivery of the Note Purchase Documents by Parent, the Company
      and
      the subsidiaries of the Company, the performance by such companies of their
      respective obligations thereunder, including the issuance and sale of the Notes
      and the Guarantees, (i) will not result in any violation of the provisions
      of
      the charter, by-laws or equivalent constituent documents of Parent, the Company
      or any Guarantor; (ii) will not constitute a breach of, or default or a Debt
      Repayment Triggering Event under, or result in the creation or imposition of
      any
      security interest, mortgage, pledge, lien, charge, encumbrance or adverse claim
      upon any property or assets of Parent, the Company or any Guarantor, pursuant
      to
      any material Existing Instrument listed on identified on the annexed schedule
      furnished to us by the Company, and which the Company has represented lists
      all
      material agreements and instruments to which the Company or any of its
      subsidiaries is a party or by which the Company or any of its subsidiaries
      is
      bound or to which any of the property or assets of the Company or any of its
      subsidiaries is subject; (iii) will not result in any violation of any federal,
      Delaware or New York law or, to the best knowledge of such counsel any
      administrative regulation or administrative or court decree, applicable to
      Parent, the Company or any of the subsidiaries of the Company; or (v) will
      not
      require any consent, approval, authorization or other order of, or registration
      (provided no opinion is given with respect to federal or state securities laws),
      or filing with, any court or other governmental or regulatory authority or
      agency, except (i) with respect to the transaction contemplated by the
      Registration Rights Agreement and may be required under the Securities Act
      and
      the Exchange Act, (ii) as required by federal or state securities or “blue sky”
laws and (iii) for such consents, approvals, authorizations, orders, filings
      or
      registrations which have been obtained or made.

     

    9. Assuming
      the accuracy of the representations and warranties of Parent, the Company and
      the Regulation D Purchasers contained in the Purchase Agreement and the
      compliance of such parties with the agreements set forth herein and therein,
      it
      is not necessary, in connection with the issuance and sale of the Regulation
      D
      Notes to the Regulation D Purchasers, in the manner contemplated by Note
      Purchase Documents and the CIM, to register the initial sale of the Regulation
      D
      Notes under the Securities Act or to qualify the Indenture under the Trust
      Indenture Act it being understood no opinion is given with respect to subsequent
      resales of the Regulation D Notes.

     

    10. Neither
      the Parent nor the Company is, and after receipt of payment for the Notes,
      will
      be, an “investment company” within the meaning of, and subject to registration
      under, Investment Company Act. 

     

    
      
        
        

      

      
        
          Annex
            C-2