WAIVER, CONSENT AND FOURTH AMENDMENT TO AMENDED AND RESTATED FIRST LIEN CREDIT AGREEMENT

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

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

WHEREAS, the Borrower intends to tender for exchange (the “ Exchange Offer ”) at least a majority in principal amount of the PP Notes outstanding (and not held by Borrower or its Affiliates) pursuant to which the tendering holders of PP Notes shall be entitled to receive Second Lien Notes (hereinafter defined) in a principal amount determined at an exchange rate of 0.80 for tenders made prior to a date that is ten (10) days following commencement of the offer and 0.75 for tenders made after a date that is ten (10) days following but prior to expiration of the offer;

WHEREAS, in conjunction with the Exchange Offer, the Borrower intends to sell (the “ Private Placement ”) an additional amount of Second Lien Notes in an aggregate principal amount of at least $50,000,000 and not more than $89,000,000 (and, in connection therewith, Parent will issue to each of the purchasers of such Second Lien Notes ordinary shares in the amount of 220,412 shares for every $1,000,000 of such Second Lien Notes such purchaser purchases as part of the Private Placement);

WHEREAS, pursuant to the Exchange Offer and the Private Placement, the Borrower intends to issue certain 16% second lien junior secured notes due 2014 in an aggregate principal amount of up to $338,000,000 pursuant to that certain Indenture dated on or about the Effective Date;

WHEREAS, the Borrower has requested that the Administrative Agent, the Issuer, and the Lenders amend the First Lien Credit Agreement in order to permit the Borrower to enter into the Second Lien Indenture (as hereinafter defined) and to grant certain collateral to secure the obligations under and in connection with the Second Lien Indenture;

WHEREAS, concurrently with issuing the Second Lien Notes (as hereinafter defined), EXXI, Inc. will contribute the $126,000,000 principal amount of PP Notes  to the Borrower as a capital contribution and the Borrower will cancel such PP Notes (the “ Pledged Notes Contribution and Cancellation ”); and

WHEREAS, the parties hereto desire to amend the First Lien Credit Agreement in certain other respects as set forth herein.

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

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

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

(a)            Section 1.1 .

(1)           Section 1.1 of the First Lien Credit Agreement is hereby amended by deleting the following terms therefrom:  “Pledged Notes Sales Contribution”, “Pledged Notes Security Agreement”, “PP Notes Letter Agreement”, “Second Lien Administrative Agent”, “Second Lien Credit Agreement” and “Second Lien Loan Documents”.

(2)           Section 1.1 of the First Lien Credit Agreement is hereby amended by adding the following definition(s) in the proper alphabetical order:

“ Intercreditor Agreement ” means the Intercreditor Agreement, dated on or before October 25, 2009, executed and delivered by the Administrative Agent, the Second Lien Agents and the Obligors pursuant to the terms of this Agreement, as amended, supplemented, amended and restated, replaced or otherwise modified from time to time.

“ Second Lien Agents ” means the “Trustee” and the “Collateral Agent” under the Second Lien Indenture, and includes each other Person appointed as successors thereto respectively.

“ Second Lien Indebtedness ” means the Indebtedness and related monetary obligations of the Borrower and the Guarantors (including, without limitation, all fees, premiums, penalties, yield protections, breakage costs, damages, indemnification obligations, reimbursement obligations and expenses (including, without limitation, reasonable fees and expenses of counsel, accountants and other professional advisors), together with interest on the foregoing) arising or incurred under the Second Lien Indenture, the Second Lien Notes and the other Second Lien Note Documents.

“ Second Lien Indenture ” means the Indenture, dated on or before October 25, 2009, pursuant to which the Second Lien Notes are issued, as amended, supplemented, amended and restated, refinanced or otherwise modified from time to time in accordance with Section 7.2.11 and the Intercreditor Agreement.

“ Second Lien Note Documents ” means the Second Lien Indenture, the Second Lien Notes and the other agreements, documents or instruments delivered in connection with any of the foregoing (including, without limitation, the “Security Documents” (as defined in the Second Lien Indenture)).

“ Second Lien Noteholders ” shall have the meaning given to the term “Noteholders” in the Second Lien Indenture (or such corresponding term in the event the Borrower’s obligations under the Second Lien Indenture are refinanced in accordance with the terms hereof and of the Intercreditor Agreement).

“ Second Lien Notes ” means the Borrower’s 16% second lien junior secured notes due 2014 and shall have the meaning given the term “Notes” as defined in the Second Lien Indenture (or such corresponding term in the event the Borrower’s obligations under the Second Lien Indenture are refinanced in accordance with the terms hereof and of the Intercreditor Agreement); for the avoidance of doubt, the “Second Lien Notes” shall include any Notes (as defined in the Second Lien Indenture) issued under the Second Lien Indenture in capitalization of Borrower’s interest payment obligations on then outstanding Second Lien Notes.

(3)           The definition of “Change in Control” in Section 1.1 of the First Lien Credit Agreement is hereby amended by adding the phrase “or under any Second Lien Note Documents” after the phrase “under a Loan Document” in the parenthetical at the end of each of subsections (b) and (c) thereof.

(4)           The definition of “Interest Expense” in Section 1.1 of the First Lien Credit Agreement is hereby amended by adding the phrase “and the Second Lien Note Documents” after the phrase “and the PP Debt Documents”.

(5)           The definition of “Loan Documents” in Section 1.1 of the First Lien Credit Agreement is hereby amended by adding the phrase “the Intercreditor Agreement,” after the phrase “each Guaranty,” in the fifth line thereof.

(6)           The definition of “No Less Favorable Terms and Conditions” in Section 1.1 of the First Lien Credit Agreement is hereby amended and restated as follows:

“ No Less Favorable Terms and Conditions ” means, with respect to any refinancing of any Indebtedness permitted hereunder, terms and conditions that are, taken as a whole, no less favorable to the Lenders and evidenced by documentation that shall not (a) increase the principal amount of or interest rate on such outstanding Indebtedness, (b) reduce either the tenor or the average life of such Indebtedness, (c) change the respective primary obligor(s) on the refinancing Indebtedness, (d) change the security, if any, for the refinancing Indebtedness (except to the extent that only a subset of existing security is granted to holders of such refinancing Indebtedness) or (e) afford the holders of such refinancing Indebtedness other covenants, defaults, rights or remedies, taken as a whole, more burdensome to the obligor(s) than those contained in such Indebtedness (and in the case of PP Debt and Second Lien Indebtedness, none of the provisions contained in the refinancing Indebtedness shall be materially more favorable taken as a whole to the Noteholders or the Second Lien Noteholders, as the case may be, than the corresponding provision in the Indenture or the Second Lien Indenture, as the case may be, as in effect at the time of such refinancing).

(7)           The definition of “Obligor” in Section 1.1 of the First Lien Credit Agreement is hereby amended and restated as follows:

“ Obligor ” means, as the context may require, the Borrower and each other Person that is a Subsidiary of the Parent that is obligated under any Loan Document.

(8)           The definition of “Total Debt” in Section 1.1 of the First Lien Credit Agreement is hereby amended and restated as follows:

“ Total Debt ” means, on any date and without duplication, the outstanding principal amount of all Indebtedness of the Borrower and its Subsidiaries of the type referred to in clause (a) (which, in the case of the Loans or PP Debt or Second Lien Indebtedness, shall be deemed to equal the actual daily amount of the Loans or PP Notes or Second Lien Notes, as the case may be, outstanding for such date), clause (b) (which, in the case of Letter of Credit Outstandings shall be deemed to equal the actual daily amount of Letter of Credit Outstandings for such date), clause (c) , clause (f) (but excluding any current non-cash asset or liability (including in respect of Hedging Agreements) described in or calculated pursuant to the requirements of Statement of Financial Accounting Standards 133 and 143, in each case as amended (provided that, for the avoidance of doubt, the calculation of Total Debt shall include any current assets or liabilities in respect of the termination of any Hedging Agreement), and clause (g) , in each case of the definition of “Indebtedness” (exclusive of intercompany Indebtedness between the Borrower and its Subsidiaries but including the Indebtedness in respect of principal hereunder and under the PP Notes and under the Second Lien Notes, as the case may be) and any Contingent Liability in respect of any of the foregoing.

(9)           The definition of “Transaction Documents” in Section 1.1 of the First Lien Credit Agreement is hereby amended and restated in its entirety as follows:

“ Transaction Documents ” means, collectively, the PP Debt Documents, the Second Lien Note Documents, the PSA and the documents and agreements executed and delivered in connection with the PSA, in each case as amended, supplemented, amended and restated or otherwise modified from time to time in accordance with Section 7.2.11 .

(b)            Section 2.1.2 .  The last sentence of Section 2.1.2 of the First Lien Credit Agreement is hereby amended and restated as follows:

“Notwithstanding anything herein to the contrary, no Issuer shall be obligated to issue, renew or extend a Letter of Credit if (i) any Lender is at such time an Impacted Lender hereunder or (ii) the Administrative Agent or the Issuer in good faith determines that there is a reasonable possibility that a Lender may become an Impacted Lender, unless such Issuer has entered into arrangements reasonably satisfactory to such Issuer with the Borrower or such Lender to eliminate such Issuer’s risk with respect to such Lender.”

(c)            Section 6.21 .  Section 6.21 of the First Lien Credit Agreement is hereby amended and restated in its entirety as follows:

“SECTION 6.21. Restrictions on Liens .  Other than as provided under the Second Lien Note Documents and the PP Debt Documents, neither the Borrower nor any of its Subsidiaries is a party to any material agreement or arrangement or subject to any order, judgment, writ or decree, that either restricts or purports to restrict its ability to grant Liens to the Administrative Agent and the Lenders on or in respect of their Properties to secure the Obligations and the Loan Documents.”

(d)            Section 7.1.1(i) .  Section 7.1.1(i) of the First Lien Credit Agreement is hereby amended by adding the phrase “or the Second Lien Indenture” after the word “Indenture” and before the comma following the word “Indenture” in such Section.

(e)            Section 7.2.2(g) .  Section 7.2.2(g) of the First Lien Credit Agreement is hereby amended and restated in its entirety as follows:

“(g)           Indebtedness incurred pursuant to (i) the PP Debt Documents, and Contingent Liabilities of the Subsidiary Guarantors in respect of the PP Debt; and, the refinancing of all such Indebtedness so long as such refinancing is on No Less Favorable Terms and Conditions, provided , however , that such Indebtedness (x) is unsecured and does not exceed an aggregate outstanding principal amount of U.S.$400,000,000 and (y) does not have a maturity date that is prior to the later to occur of (A) the date that is six (6) months after the Stated Maturity Date or (B) the date that is the originally scheduled “Stated Maturity” (as defined in the Indenture) with respect to the payment of principal on the PP Notes and (ii) the Second Lien Note Documents (in an aggregate principal amount not to exceed the sum of (x) $338,000,000 plus (y) the aggregate principal amount of Indebtedness resulting from the capitalization of interest through either the increase of principal amount of outstanding Second Lien Notes or the issuance of additional Second Lien Notes thereunder or a combination thereof), and Contingent Liabilities of the Subsidiary Guarantors in respect of the Second Lien Indebtedness, and the refinancing of all such Indebtedness so long as (A) such refinancing is on No Less Favorable Terms and Conditions and is in accordance with the terms and provisions of this Agreement and the Intercreditor Agreement and (B) the trustee or other agent in respect of such refinancing Indebtedness executes and delivers the Intercreditor Agreement unless such Indebtedness is not secured by assets and properties of the Borrower and its Subsidiaries;”

(f)            Section 7.2.3(k) .  Section