The keys to a successful E&P company include having a simple story investors will gravitate to and understand, hedging to stabilize cash flow for their comfort, and maintaining strong investor relations, three chief financial officers said in early October at the second annual New York event of The Oil Council.

But economic and market uncertainties make it harder to conclude a financing deal or make an acquisition, they said.

“I think the most important thing for any CFO is the KISS principle: ‘Keep the Story Simple,’” said West Griffin, chief financial officer of Energy XXI. The second factor is to have a good investor relations program and good relationships with all stakeholders, including shareholders, bankers, even potential acquisition targets. “You never know when you are going to need something done with some of these people,” he said.

Griffin also advocated maintaining buying discipline, as there is nothing worse than “to spend stupid money. Buy right and don’t do the wrong transactions,” he said.

He should know, as Energy XXI has grown from an initial $300-million listing on the London AIM in 2005 to a market cap of $2.3 billion. Its biggest acquisition, for $1 billion, was of properties from ExxonMobil on the shelf, which closed in December 2010. Today it is the third-largest producer on the Gulf of Mexico shelf behind Chevron and Apache Corp.

Griffin said the average price Energy XXI has paid for its Gulf shelf acquisitions is $18 per barrel of oil equivalent (BOE) versus an industry average of $24 per BOE. The company typically saves money by not paying investment banker fees for bond issues and warrant exchanges, but does use investment bankers to handle new equity issues.

Recently, Energy XXI transitioned its production hedges to Brent oil prices, from West Texas Intermediate, collecting almost $40 million in the process. “You can’t take the approach of ‘set it and forget it,’” he advised.

“The one thing you can’t predict is the regulatory environment,” said Scott Bernstein, executive vice president of corporate finance for Buccaneer Resources. A company can hedge oil and gas price uncertainty, but there is little it can do about government and regulatory uncertainty, he said.

A challenge for the public Houston company is that while it has no debt, it has very little cash on hand, either. A plus is that it obtained a credit facility with an advance against future receivables from the state of Alaska’s new drilling incentives. It hopes to drill in the Cook Inlet in 2012. “The state is one of only three with Triple A credit, so it has a better credit rating than we do, and in essence, is like our partner,” Bern-stein said.

“All of the uncertainty is problematic, whether you are going to do a bank financing or do an acquisition,” agreed Paul Wiesner, former CFO of Tracker Resource Development LLC. It sold its Bakken acreage to Hess last year for $1 billion.