The Biggest Reason to Be Wary of Energy XXI's Future

Energy XXI is one of those oil and gas producers that has flown under many investors' radars over the past couple of years because, frankly, it doesn't deal with the more popular topic in the oil production space today: shale drilling. Funny thing is, it has become the largest producer of oil and gas in the near-shore region of the Gulf of Mexico because it has adapted some of those shale drilling techniques and applied them to the offshore environment. While the company's fundamentals all point to what would be considered a top choice in the independent oil and gas space, there is one thing you need to keep in mind with this company: the high costs of an offshore spill.

With BP spending almost $3,000 per barrel for just the cleanup aspect of the 2010 Macondo well blowout -- a price that doesn't even include the trust fund or the potential Clean Water Act fines -- the costs for a potential spill are extremely high. Find out more in the following video about why potential investors in Energy XXI need to keep this possibility in mind.

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Tyler Crowe has no position in any stocks mentioned. You can follow him at under the handle TMFDirtyBird, on Google+, or on Twitter, @TylerCroweFool. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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