WTI - Earnings call transcript Q2 2019

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Operator

Ladies and gentlemen, thank you for standing by. Welcome to the W&T Offshore Second Quarter 2019 Conference Call. [Operator Instructions]. This conference is being recorded, and a replay will be available on the company's website following the call.

I will now turn the call over to Al Petrie, Investor Relations Coordinator. ahead. go Please

Al Petrie

And On like Christie. conference the team, XXXX management to Thank welcome behalf all would Financial Quarter Second to W&T today's results. of I review you, Offshore's of Operating you call to

forward-looking the remind expressed W&T's Before comments that differ actual statements. should noted results may like of in variety from It our that statements. to you a we anticipated forward-looking factors would expectations begin, be I these results to or include could materially cause

also we may financial on Please for call of non-GAAP Today's contain XXXX measures. reconciliations disclosure refer certain quarter non-GAAP second earnings a measures. forward-looking and to released the statements release that yesterday

turn At to call over W&T's this to Tracy time, I'd the Chairman like Krohn, and CEO.

Tracy Krohn

and second Steve Facilities; for everyone, our David the me during They're all joining Al. Executive VP available our With call. and of Good quarter and Chief call. conference are Chief Drilling, thanks our answer and Janet later today Yang, questions Bump, Schroeder, to Officer. VP and our Executive morning, us Technical for Officer; XXXX Financial Thanks, Completions

our So on give more Mobile acquisition in on before earnings, highly second working in operatorship nine strong interest Mobile grow of shareholder our producing Mexico Gulf the June announced you of XX. consists accretive and of value area. stringent related to This all investment that criteria in shallow detail met like and as we've would we I Bay past outlined our Bay fields water I discuss to quarter acquisition

increased related effective and to developed $XXX equivalent, oil producing current capture operations credit of post purchase us price subject to closing proved is recognize revolving cost our opportunity the net will at further XX% grow proved under January adjacent scale, equipment reserves our to which to rationalized The of includes barrels free and It the positive assets fund adjustments X facilities. million as be availability date are These well facility. and as and cash that cash flow. operations, cash million are XX flow low-decline and with provides efficiencies

total the nature low at The into to abandonment properties, P&A $XX the future well costs these million, these the occur due with don't assets. until long-live associated discounted and of very liabilities

expect of opportunity drilling growth no reserves expected the become life the a in as closing transaction is Based transaction to We have in the also shareholders. forward in area. August, or end believe Closing and EBITDA the potential presence W&T's beginning We and adjusted ability that our and the extensions, generate through our date, enhances will on value from opportunities. field strategy planned. upgrade added future for move as to complements operator for from facility, perfectly revenue little well, capital expand our with September. ongoing acquisition The continues we the largest to production this benefit and at to

adjusted to our in of more important where million of CapEx. Mexico, EBITDA $XX capital So compared turning Program generating that million acquisitions. active an to to the XXXX. over rigs investing first $XX.X run. EBITDA We production to And This we expenditures, is while Drilling by quarter with very in million, particular, EBITDA XX% the X our as the quarter in excluding maintain grew continued performance, We're adjusted adjusted and pleased second in we by with Gulf our increases versus of generated $XX significant very value results. create

positive is cash of the ability flow. our pillars generate of One to our success

quarter compared XXXX. to of the of quarter production second increased oil the per BOE XX,XXX X% in million XXXX, barrels of our to day X.X first So or equivalent

of experienced for above including half of major liquids -- downtime from though first XXXX, oil facility as XXXX in second for coming and normal, and Bend the included back. including NGLs. Production well this Mahogany, were strong have and continue -- quarters over We production Big downtime the at with production as guidance, second we operational of Even fields, first production to our XX% production events quarter dial Dantzler. end and issues several third-party non-operated large nonrecurring the

day. As have estimate in a our oil increased yesterday's you barrels of guidance range full production equivalent initial release, XX,XXX year saw of we XXXX to of XX,XXX to includes per This by production operational and and estimated the Mobile of incorporated balance Barry the downtime production deferrals from September acquisition beginning all in our downtime and Bay the for of year-to-date Hurricane XXXX. created

and the XX,XXX XX,XXX is be expected barrels third W&T's equivalent to quarter guidance day. oil production of between per For XXXX,

For oil prices NGL -- crude per realized sales and of strong and the barrel NGL was price $XX.XX sales realized quarter second me, $XX.XX sales barrel. was realized price XXXX, at excuse the per average

the million. and in $XXX.X This spot prices. refineries. the increased revenue $X price was in second XX% differentials increased sales about averaged the sales driven quarter increase Cushing Crude reflects higher for volumes. barrel than The in average by second commodity per higher GOM to oil quarter proposal WTI production an higher Revenues realized demand

for in guidance quarter as Mobile half the of came the second the acquisition timing work full and third our prior LOE costs projects. as of X% to year workover costs Bay to $XX.X GOM our additional quarter additional quarter due second the the at in LOE associated than below facility with our adjusted We account XXXX projects. over in guidance on range, lower lower and well So was planned million, from resulting primarily which delays

we've as -- adding our like these G&A was year production costs This is transportation in significant rate as new also acquisition the cost to as point increases from XXXX We taking acquisition. out full gathering adjusted I volumes forward essentially to key the that factor third-party going additional unchanged estimate positive would account and pipelines. our a as properties. despite on experienced from well well eight

the significantly estimates $X.XX income of which of We XXXX per net second of per outpaced reported consensus the $X.XX or share. million share, in quarter $XX.X

million net about been we or will we the claims payment cash adjusted enhance at that am pleased position. expect Our million essentially per greatly which third our I in share. $XX refund report and same that IRS the word to of approved from income $X.XX was quarter, received have $XX.X the our finally

At revolving million we XX, availability $XX.X had cash facility. on cash the This has $XXX.X Bay made bank deposit our million under in the of million and and we acquisition. equivalents June netted Mobile $XX

facility, today's date, $XXX As available. RBL reduced the are and full is undrawn that of we've our revolver now on million so

XXXX, earnings XXXX oil As of equivalent as report and our of our XX million barrels $X.X we SEC consultants. received and independent unchanged engineering reserves XX, PV-XX, by recently reserves was from our -- both reserve Ned discussed reserve year-end in our prepared Sue, proved [ph] release, it XXXX. billion, midyear was were June essentially

compared $XX.XX reserves gas compared year-end proved new first at average acquisition. were which XX% year-end price Good to $X.XX PV-XX lower Mobile crude of the replace reserves in XXXX developed nonproducing, news and the these proved do reserves reserves, XXXX. due of barrel liquids. XXXX XXXX $XX.XX Keep previous price related interim developed on mind, property is in production include that not here estimates revisions average mid-year were pricing. positive mid-year The and X of of and to the at oil Mcf pending with The natural XX% based SEC Bay year-to-date combination an revisions $X.XX months and per was per with of midyear GOM

Mahogany operations now year. at field, online turning to the brought late in So we November well our A-XX last

reached day the a high-quality well. well reminder, of of And discovery exceptionally A-XX in over In barrels rate the A-XX February, barrels over the bit production. As per already of from up a per well April, X,XXX of of a a of equivalent the equivalent bay, produced T-Sand first oil oil X,XXX day. P-sand rate

perform ramp-up oil is producer And T or in where in a date over barrels in production staged the early a in July, to than per well field, equivalent of continuing the This and -- the thus early well our significantly well. on was than day. perform best X,XXX T-Sand rate index of producing is are field. drilled prior production rates We the third to the productivity in double well at has the completion to to higher of far shown sand the more

drilling So wells. completing we're these and getting better at

A-X well and productivity skid from able this work-over to enhanced another the of log P-sand was producing pay successful recent the zone to to confect functionality well. accelerate well A-XX A-X the production sidetrack order the Sand the Following restore over safety-valve producer, to in on in 'P'

of Sand. completion the development A-XX well, and sidetrack to Following sidetrack 'P' move will targeting then well the of A-X further rig

interest we reminder, the Drilling of XXX% wells, Joint Venture have the the field of is A-X Mahogany a sidetrack, working Program. in all which part with a exception the As of

of are Virgo zone intervals. quarter, The pay, well of of net flowback, of was And and the of well Tim drilled South online XX TD last December. XXX to that well barrels first Knoll day XXXX, sand XXX Mcfe currently the At Tim first of feet zone. We pay new in in per approximately currently in Virgo well fourth the June, front-owned that in your zones. out year, sand A-XX of Ewing the XXX the We quarter the the the the online successfully in discovered exceeded deepwater that both A-X plan X.X-second per these quarter day. XXX producing wells we drilled vertical well brought X.X-second well rigs Bank brought was at logged fields high net future. with permeability X,XXX X.X-second it late sand of This deepwater A-X predrill accounted X,XXX we oil X over The and a of Viosca XXXX rate and utilizing estimates. the equivalent is program. approximately XXX high complete the porosity Monza completed in X.X-second is At well which on South feet was field, producing the in drilling and in

well, an at Monza in company at well On June W&T Deep. which in the JV. XX interest wells exploration The oil in the discovery. drilling owns announced we the XXXX the our one program -- X, in planned under Gladden operated of first XX.XX% the is a discovery

and currently well be pipeline through quarter it's expected fourth Medusa a the subsea tieback. Gladden online Spar, to the completing XXXX We the existing to brought are via

and of X wells inception. in to our with a JV, total drilled program Monza that continue We have pleased since be

than between better XX of we XXX have the Mexico awarded and include Mississippi included water Garden net combined, So the million approximately Island. and which Marsha Pass These shallow leases water in for blocks approximately added blocks reflects paid XX,XXX to Main acreage. a in and W&T's interest gross W&T XXX% the Banks, These $X.X XX Lease blocks XXX. We inventory. of acres Eugene and on awarded was which Canyon South blocks. and gulf all in working recently Sale seven XXXX, water and eight March deep of deepwater Canyon all shallow will This blocks

All term. one which blocks a lease of year with year have exception the term, has deepwater a five blocks, the the lease of of seven

block leases for number of parent rate XX.X%, future companies exciting ranked see Royalty remaining is the the participating they're bids. acreage a fourth going at shelf drilling. sale, XX are rate Of and seven opportunities lease eight in the we've acquired, deepwater of for the We on XX.XX%. to some available W&T in the high the the be

So adding mix growing results well looking program, of wells. in XXXX an million focused some for XXXX. of $XXX which ahead of different the production capital We're be the will which rest the an high-return continue enhance million would development as XXXX, low-risk, account year, in well the of half acquisitions, projects on assuming excluding a projects, planned with as estimated success to budget $XXX to in to taking exploration schedule into second our exploration

a excluding focus take means to generated from on that Our continuing cash we fund generating acquisitions, will with cash which drilling, flow, and measured capital operations. remains expenditures, to available while significant our free cash approach

flow we're with biggest acquisitions. So positive or important to making consistent drill very the accomplishment. focusing has been whether bit that's probably cash on clearly That's us our and projects,

cash We good for our cash formulas flow continue Our market still three shareholder worth we new see we'll discipline. value. have acquisitions, and Mobile and that TON decades, Bay flow to flow generate driven the and over free and cash a strong us to expected us, criteria allow grow acquisition by opportunities to is for review further capital meet

very the We're about of optimistic W&T. future

Gulf executing pending have that our the recent significant of the on maintaining in achieve operating believe continuing to We additional near-term focus remain water both which be while cash growth on risk deliver properties and to growth, and enhanced Mexico well We to that develop sale. will flow. to continue value. positioned shallow with by deepwater GOM by results premier excellent a and maximize balance efficiently further strong in basis lease of strategy, upsides, sheet, our mitigating and we acquisition that and portfolio to long-term an focused shareholder We're is

operator, now that, we line open the with can So for questions.

Operator

Instructions]. [Operator

comes question of from Stifel. first Your Scialla Mike

Michael Scialla

the So plans at do the all that? at talk plants, to gas be? terms new there properties the the of quickly acquisition? could you Just in drill consolidating how about timing could any what potentially all? And wondering the And savings you on of might

Tracy Krohn

assuming -- I'll we address to think part folks. I actually have fully week Bay it that And will making additional both plant. area the folks plant, plants our the the with those to up back some Yellowhammer But in and plans I question, would first acquisitions our own some talked potentially GOM I temper that and Mobile in will fill went that consolidating. of hope supports, of toward Actually, we that future. drilling be talked success. the to last Exxon and idea of the hope about I [indiscernible] utilizing the that to

So is my ideal because it we of a production. so -- both we're and plants use generating lot situation

of not we're reasonable that to that a plants. would amount consolidate event the accomplish we able time, the in So within

Okay.

and second on that goal up Gas prospects We that part you part to working we're we drilling. want and I of We're firming looked -- need that the with have today that on we've now. Oil we of your and at, Alabama toward about the your actually to question date that can't meeting what do. So give answers question, some your that drill, yet. that to do exact of see and Board

on worked It's ago, years I been tell to we any Mobile actually working just I've XX people, been wells drilled field. since about a for long the many time transaction discovery have when been for I in made like this this years. here.

were high pressured, deep wells some in challenges and had and the So unique they northward producers. these

when right, forward that sure make commit, program. we with it we'll do we'll So that and move

Michael Scialla

That sounds good.

see You could, another acquisitions, for appetite breather road? fully sounds you is that additional And Mobile you're year? do gauge something see I one on you deal? done integrating specifically, it in reviewing still to take Or get down your mentioned Bay and that want like the you this year? need a I if focus to of, is opportunity area, could kind the potentially that this further Or doing that

Tracy Krohn

acquisitions open. more shape. We the do wide the wherewithal our balance to in financial that it. to We're the end intend absolutely of I And believe sheet's before do year. good then we have

Michael Scialla

get were frame testing? to completed? are of well of a last the talk in just if normal couple quarter One extensive there You time one I wondering me, sort of can of, issues sort completed? you that But good. getting about it completed? should ago, -- Very -- the a online discovery mentioned the you Gladden Or that the with have getting it months tieback. wondering Deep just, doing all for Or any fourth in any announced there at is you we if timing like the

Tracy Krohn

to Well, looking out my hotspot and put on Facilities at I'm he's right the now, Completions Drilling going right me. since here VP

David, to So, you that? answer want

David Bump

Sure two This in It's right doing the a of a -- David zoned is Yes. completion We're singles-owned it a of enough. Bump. began to plan -- completion. completion from middle we're now.

the some Hurricane from as well delays. some adding the as -- that's as Barry well time caused So a delay

early existing we that target. However, of we're -- by quarter completed on track prepared [indiscernible] infrastructure. has our middle to have well to And the XX-foot for to fourth meet a already the It's And have August. the mid-September, tieback, early already of end

Operator

Global. from And your is Mike Kelly at question Seaport next

Michael Kelly

air, hoping balls you're maybe a I of it for was bit some expect in organic is the us which of terms And right of a now. I XXXX. could for CapEx what to it you brush the little a what But kind me of tap frame for quarter. we got potentially as number could let vacant broad of parts. kind just stands program, moving you've going in growth? know give If in preview just terms, Great --

Tracy Krohn

question. Mike. speak better process Yes. We're I a right that today, answers here that That's great for have in middle budget we you, as the of on actually

budget First will enough good think you figure way we will year, trying need clearly, our you acquisitions of budget goes We thinking normally be to that the production's and up. appropriate I don't that, part the on a I forward that forecast to there's an those. this is budget going that that, I I we to tell time. market clearly, I about can't at acquisitions would tell we're horizon, much what up. more that. for point but going for think in how see But out

Michael Kelly

that. Appreciate Maybe it. exploration. about could Got bit gears a and talk little you shift

in if success that give an you'll And production? on really how to you're us exploration of development of You case the 'XX, remind scenario, you targeting second mentioned just exploration then us, just half exploration the front. have into maybe can quickly rig the online and a in what could turned sense

Tracy Krohn

a a a well be reserves we're drilling couple within are saying, be well. would will maybe sooner expecting I couple is well, We're reasonably The guys and there, assuming deepwater little Yes. bit find going a than more of I'm it that years, say. substantial. I'm referencing conservative to But of little that. online max, even a years. call My it we

Operator

with next Zack your And [ph]. Pancraft DRZ question is from

Unidentified Analyst

not for given the Exxon's year-to-date, -- acquisitions recently. great here free the the stock with given, at. trade a your back accretive opinions quarter. your on currently you're stocks buying with how what start where the on generating? the $X you're Just on But happy your at in I own position appetite cash to sense Congrats range, with make of made acquisitions, especially flow that, it the understand does kind I have imagine at point stock low you

Tracy Krohn

But trading be have I been this No. It's to have will dismiss don't in all in I stock tell flow look cash paying tell budget an of you a you stock back acquisition look I this a would that creative. consider never-ending mean, I our to function nor I dismiss we pretty that do that buy for us, to option back happy ability. it's will never is But We've past. I don't dividends. source. to Well, no. I as need as unending it where at. our the as able job we're an buying at at opportunity. I of

I think we're the a attention of on reserves are available. putting And relatively readily that. lot

So I will it of don't months, really that be we'll to quite good continue about I'm positive. know several side sure next your question. the proceed and not how feel to acquisition I in how exactly feel but cash really the answer good flow it,

in So shareholder, increase certainly trying largest camp as the value. shareholder, a be going of the as to to I'm that

Operator

Your S&P next John of Capital. comes Evans from question

John Evans

infrastructure. I'm of just curious the from standpoint the Exxon

throughput last of So mean, to you one can you've this you able through? than been And I your the produce Exxon some the is of and be your and to too? sell. able of able you of that the the that's some in that benefits, really to of of acquisition Gulf big one stuff the maximize things put move because over been is basically years issues sell couple the the guys you've to more infrastructure hampered with

Tracy Krohn

capacity. thinking this treating There is a preowned about excess -- facility field as of possibility this

at we'll that. be So, looking yes,

it's want requirements don't that smooth day-to-day a that transition. operations is what that important yet. don't -- this But And assimilated for it capacity to I now, properties think both do both because we think point the about fill question of hoping a -- haven't your really sure we answer we really time up exactly understand to in these -- we'll and quite what to make I yes, this at plants how Right problem I'm them. we of are. as a I possibility. know have have

John Evans

the Is was is is value most your think the -- acquisition portfolio. too in Okay. acquisition what a just a it has gassy just good And deal. that Exxon all? is And then at this rest Or than the the market? more switch of of you

kind thoughts of can So us you just your potentially of give forward? like going

Tracy Krohn

the water drill oil care It believe care of to way. for oil onshore, Sure. gas, do shallow normal or and What I accretive whether we all We look very that asset whether deepwater, even every a agnostic. We We of in to about believe acquire matter. at good it's very class We're for. criteria. being we to that we is our try have here. meets as dominant it's pretty don't value. don't you it's want mean value care it's

with there something base; first it bit; crude in way do the the of acquisition that is something The make valuable criteria is, near second, upgrades and can is with to can The to do the those we are facilities and enhance Exxon good, last, properties answers term. solid all workovers, more there a the we value drill is the to questions recompletions yes.

-- So this of mantra. all vein over given for on our decades, that the that meets this every in box processes we check acquisition -- this three

So and it as what know aren't. to a making make flow well, not gas is But acquisition. as people volume course. I'm about that really a this as that's than difference on we this cash doesn't any very they at gas positive, of basis that pleased liquids we're us, look think value valuable as being and I

John Evans

from is, might IRS, have do $XX And cash potentially that last close And revolver deal, happen? thought in getting back process the to when you once size? Okay. you the million then of any your you the increase of question the and expect you're do

Tracy Krohn

over of to it to with all the for whole the for able line, either short not ways that privilege because for getting damn practically the way. sure credit just requirement we've We've the value answer decades nothing. three not an I a for been particularly right, I'm not around, I'm it. questions increase. figure real immediate concerned not to necessarily funds, having lot But resolve then is that your expect there's good increase you're When done if to it I now. Well, come want to financing any out paying deals

at So do anything now all. we nothing practically feel like with we can

Operator

[Operator Instructions].

Tracy Krohn

looks like operator, done Okay, now. we're

So we it, everyone Thank you. we'll appreciate to soon. and talk

Operator

And in thank this morning's participating for you conference. all

now disconnect. may You

W&T Offshore (WTI) 2 Aug 192019 Q2 Earnings call transcript