WTI - Earnings call transcript Q3 2019

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Operator

Ladies and gentlemen, thank you for standing by. Welcome to the W&T Offshore Third Quarter 2019 Conference Call.

During today's call, all parties will be in listen-only mode.

Following the company's prepared comments, the call will be open for questions and answers.

During the question-and-answer session, we ask that you limit your questions to one and a follow-up.

the rejoin always can queue. You

is This will call. and replay recorded, made conference available the call be following on a website being the company's

would to conference Manager. turn like Petrie, Investor Relations I over now to Al the

Al Petrie

you, XXXX would to conference financial results. I call and Thank management review W&T to of like And operating of welcome on the operator. Offshore's team, you to all today's behalf third quarter

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

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

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

Tracy Krohn

morning, quarter Vice us Chief thank Good our Executive Officer; you President Al. call. and are Yang, joining today President questions William conference me XXXX Financial for everyone, Executive call. Janet of President, Officer; Thanks, third They're and our Williford, for Vice Mexico; to Jim Vice our the Chief our Manager, Technical General Steve and available all Geosciences. later Hersch, and during answer Schroeder, Gulf With

offshore to purchase discuss free to cash third before to our quarter strategy balance strong our our sheet continued use So, elaborate flow I earnings, I'd on like good and assets.

procedure making of Mexico. as we've the Gulf the So, acquisitions in have in we for outlined past, a

cash a for, have reserve flow base. we look thing First and properties that good

thing and do flow. upgrades increase bit. the can we are that we workovers, that cash And recompletions properties with facility for, look for we then, near-term last the look thing drill we to can Second enhance

we The answer are we pursue. want properties to to those and to that positive things assets are pursue want that those all

and that's that with our making focusing drill bit we important success whether whether that's consistently on or we So, to both. grow the generate more We the positive use flow built fund projects, acquisitions note cash value. by make acquisitions drilling it's or to cash to

note, accretive closed Gulf that in shallow on included related an Bay of million. is acquisition on and and So, water XX, shallow producing facilities XXXX, interest and acquisition that offshore as the infrastructure. for Mexico This nine operatorship, working well fields water August $XXX.X Mobile onshore we as

adjacent the operator area. largest W&T us thereby These free the cash are providing operations, rationalize operations current recognize now Bay capture scale, opportunity to assets the is cost and efficiencies further low increased Mobile to in cash and flow grow decline our positive to flow.

the reserves We capital, upgrade opportunities. also field potential further through additional as in opportunity as little life drilling have and well for extensions with facility growth from

and acquisitions at at looking opportunities Gulf I've good for I ever as that seen beginning the So, we were acquisition told the the environment Mexico closely of in current the you of year, that as it. is

the a We have in XXXX, of transaction executed the remains I've best one ever market and seen. great

are any opportunities to to W&T. will meet and We criteria actively continue that our pursue accretive

performance, in our with Bay production, to Mobile of quarter closing particular, organic the success. our with results, and we're increases turning third the So, drilling pleased our in acquisition

$XX with and four while in GOM strong running. the investing excluding $XX.X environment, a expenditures, in capital pricing program maintained despite EBITDA million adjusted drilling acquisitions, We've an weaker of million rigs active maintained

$XX versus continue EBITDA of we to million significant generating our adjusted This create is very over more CapEx. value by important as

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

one the production assets. Mobile XX% XXXX. our of to XXXX, So, month of Bay This new of second equivalent from production equivalent of day increased third quarter XX,XXX of per included oil oil barrels barrels to or X.X the in million compared our quarter

quarters of within facility of downtime. quarter Total and as to in first production three well despite production third-party as downtime of guidance XXXX. the due for XX% XXXX weather, issues, liquids third impact were the comprised the production non-operative Production

quarter day, of which at guidance of a to production barrels fourth includes full XXXX, and per For Bay. the production is of W&T's Mobile expected be quarter equivalent XX,XXX oil between XX,XXX

quarter of XXXX, declined third per and barrel, of gas. and was NGLs sales price oil realized oil, natural crude gas average the $X.XX $XX.XX $XX.XX per For prices barrel Mcf. for natural per realized NGL with sales price of The price

which Crude reflects per oil for the barrel for average GOM Cushing spot differentials $X.XX quarter averaged higher about production coastal increased third in refineries. than WTI demand prices,

the realized to slightly declined due volumes, about quarter-over-quarter sales for revenues decline Despite million. quarter sales decreased third prices. Revenues in commodity the $XXX.X slightly higher by X% to

at our So, and due our in resulting costs expense, timing guidance to non-operated of in maintenance projects. lower facility was below which million, primarily delays workover third $XX.X planned quarter LOE from the came range,

basis, were Mobile costs Mexico acquisition. of with quarter-over-quarter a LOE On due Bay to costs additional Gulf up the associated

guidance Our year. G&A balance guidance. production for cost cost also release this came lower updated of includes and in Yesterday's the our than

per in third XXXX $XX.X previously or non-cash $X.XX deferred includes allowance to share, $XX.X $X.XX income of net reported quarter due primarily million recorded against net reduction we the So, valuation of share, a benefit or per a which million tax tax assets. of

or Our per was income million adjusted share. net $XX.X $X.XX

and $XXX.X million cash So, our million of million $XX.X total comprised equivalents which we in $XXX $XXX.X at was facility. million, September of bank XX, cash had under and revolving availability liquidity of

revolver to at $XXX credit million before of cost utilized end then quarter. million the the paid fund the closing, We of Mobile the facility down acquisition $XX subsequently our Bay

an million XXXX. in refund refunds cash also due. remaining there quarter, XXXX third $X a taxes, We the early of is $XX.X to In received the NOLs in received in October we and million due refund of $XX.X related million income a additional totaling through carryback

Turning operations. to now

the via Ship the XXXX. have T fourth which in drilled successful to a The we results was Field, quarter sidetrack was completion. quarter T strong our targeting brought recently Mahogany in of and sidetrack, third our We with drill XXX will bit. continue the be the A-XX A-X online the Shoal A-X sand successfully sand well, At followed

the net pre-drill exceeded Ewing A-X December. year, June, a day. Bank XXX estimates. deepwater that equivalent oil in fields, XXX producing We that well last per brought the which in well feet of approximately South barrels at of bay, rate And we logged well Timbalier the approximately late online completed At X,XXX XXX was of

The joint drilling barrels the wells XXX of per well A-X approximately program. in The was third South of high-quality day. quarter quarter XXXX well in Tim successfully Both oil The two drilled completed of discovered the producing venture are the Monza equivalent XXXX. and is X,XXX of in the operator these first sands. well

well at in approximately Deep June feet at exploration our we XXX So, Gladden an of in announced X, XXXX net oil on attractive that of accounted X,XXX pay. water oil discovery first feet

program the barrels and production for owns ahead the operated about day, is of W&T was of placed well, third approximately The company is well of schedule that's the currently oil. under discovery. XX oil quarter JV. and wells XX.XX% Monza equivalent the one per on in and a XX% well interest the completed in which planned drilling X,XXX This the producing

JV wells XX to year program. addition online XXX of In well the sidetrack be that, Ship the quarter. number the the third drilled in B-X Shoal by end are the expected drilling Both to are and we and both in Cameron East successfully XX

water X, leases blocks company August XXX regionwide XX, awarded XX,XXX of Mexico proximity effective XXX recently held These awarded XXX% The November lease two was cover Shoal of rate W&T Ship on leases, leases $XXX,XXX, shallow acreage. five-year a term from acres the about $X.X the Gulf for be XX.X%. two XXXX. and in current so reflects to W&T and will and for million sale close which lease and paid a So, XXXX, approximately blocks, the in acreage interest working XXX a the are royalty with

XXXX ahead the of rest into and XXXX. to Now, looking

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

We narrowed full-year excluding previous million to our expenditure for $XXX guidance our million capital from of million $XXX to to acquisitions. estimate $XXX million, XXXX $XXX range

XXXX. year's further and plans to continue cash process grow and still market early that value. shareholder in meet of details a are us see our opportunities We we'll review provide and criteria for budget we'll well and acquisitions flow on XXXX new into We Mexico allow to next our Gulf good

we future despite to the W&T weak optimistic be for So, about commodity continue prices.

both We've and acquisitions got a water and a that of properties good deepwater through shallow will with balance upside significant portfolio premier sheet enhanced and further organic be drilling.

is We're flows growth which well-positioned within Gulf that that excellent we generate Mexico an of in basin to believe growth. to cash achieve the and sustainable

on to balance our maintaining while near-term continuing maximize operating efficiently our and focused remain value. by We to long-term sheet strategy, deliver and mitigating risk executing results shareholder strong

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

Operator

question comes first Thank instructions]. with you. Capital. John [Operator the ROTH And Yeah. from White

John White

congratulations Good strong quarter. a on morning and

Tracy Krohn

Thanks, John.

John White

early expenses ship but tight real in at XXXX activity ask expectations. you might or came well point a talk you as a below running percentage little you are characterize would this It activity? how that to Bay would about Mobile You're a as How of question, total there over be that yet?

Tracy Krohn

little we're John, operations, this, assimilating have that that personnel property. processes sort transitioning. duplication bit question. added out people great like several thing. transition a there. still still That's Sure. you with and Typically, We've We're of of of

all a you with that typical overcome acquisition are and Those kind. this things So, out. of larger smooth

wells through go Mobile one in have two area. Bay the to for undertaken We process permitting the or

in permits I don't well in we'll think the at done XXXX, process on it. those permitting We expect drilling with wells XXXX. we'll to any advance be least get be but in

have So, to just see. we'll

to hasn't will activity drilling I any long the There Alabama there. think see then, out been plants the And activity out is of in sort eager some state there. a more we time.

now we from of plant acquired plant a currently, operator. that course, have we've Bay Yellowhammer, former and Mobile at then, the operate the Exxon, We

assimilating to both what both and those we're we're so, of those going figuring do out plants. And with

and end before here. them be both is you'll would that's That we need up. ideal. reduce we'll of where year thought then see fill the if not costs combine to But costs. First then, see to possible, the And lower those the

that. sure, In before fact, I'm well

You the of transition. few we production long run, that net expect costs may go that, up. just while see the effect down is before a and for it will we higher costs go But to

John White

Thanks $XX for on the million XX, down that, subsequent you Did the revolver? September paid say details. to you

Tracy Krohn

That's We correct. did.

Janet Yang

Prior to.

Tracy Krohn

sorry. I'm Yeah, to, that's Prior right.

Janet Yang

subsequent. Not

John White

Okay.

today? sheet is So, the balance the on is it what balance

Janet Yang

Yeah.

John White

Okay. Thanks much. very

Tracy Krohn

sir. you, Thank

Operator

from next with the question Stifel. comes And Thank Mike you. Scialla

Michael Scialla

Tracy. morning, Good

Tracy Krohn

Hi, Mike.

Michael Scialla

guidance you of well stayed the ask to oil and unchanged, NGL wanted did rest the like year. about you the reduce guidance for but for looks your year. I It bit midpoint a pretty the

Just want to contributed what that. to see

Tracy Krohn

to a Well, with Mahogany our is of Field. out had the part clean well reserves there. was or out that one but some upset for in to production a we've work primarily had and had and of in bunch it that We of that gas of associated shut it that We days, do bunch two we online. We three then out added up field, had get it here, burnt back the some sand. platform

that's you're reduction as think of that. seeing, a So, the I what production in slight function oil

Michael Scialla

Got you.

flow your else market pile a flow? is you looks. the Okay. done the And would until you've you that anything acquisition, given or If, the cash for could get up there the cash Would how you you real cash been with meantime? flow an do just the acquisition do that couldn't see continue there, free attractive of you to like while about something in for desire use open you reason, how prioritize free for whatever

Tracy Krohn

Well, in any it? a event, isn't it's problem, quality

Michael Scialla

is. It

Tracy Krohn

projects would a on short if of a pricing down take to things see continue a little running bit things the to I if puts then we're that bit that a stymie would time. prices We Clearly, look – at and both. on what – at do. go to of and not was that see drill it static, remain new little It's expect

Michael Scialla

Very good. Thank you.

Tracy Krohn

sir. you, Thank

Operator

with the Capital from you. question comes And Thank Tullis Richard Securities. next One

Richard Tullis

Tracy morning, Janet. and Good Hey.

assets guidance? a of from XQ? daily percentage Mobile is what questions. couple the with Bay, included quick that in Just in the acquired those asset production What's the QX oil associated

Tracy Krohn

repeat you please? I'm sir. Would the I apologize. sorry, question,

Richard Tullis

Tracy. sorry, Yeah,

associated and what's Regarding included how Mobile guidance oil asset percentage the from with production the much that in production? is that Bay, XQ

Tracy Krohn

hand. It's gas. barrels mostly I NGLs. that my of day at X,XXX don't a It's liquids, right have about

Richard Tullis

Okay.

Tracy Krohn

So, XX% liquids. roughly

Richard Tullis

And nat the rest gas? is

Tracy Krohn

Yeah. Yes, sir.

Richard Tullis

Tracy, trying quarters? next Okay. of could gauge the what the likely be the And properties the Just magnitude potential as then, of M&A production currently available become over side, just as go? over to scale what to far several available the deals or adds on

Tracy Krohn

imagine billion. out we that there. of ranges Gulf few things or available the Mexico, assets in a Well, to are a million it It's big available from properties range. a that a There's of lot few

those selling the most use who might of as kind It's these can your in properties you going to that trade and hands are go of Gulf properties inevitable to be there. So, Mexico. imagination from of

Richard Tullis

Thanks I today, that's so Tracy. all Well, have Okay. much.

Tracy Krohn

sir. you, Thank

Operator

And you. next Thank Scialla the Stifel. from follow-up a is question Mike with

Tracy Krohn

sir. Yes,

Michael Scialla

you're see happened to yet? that a has stand? redetermination. – with And the I does wanted going that base what been if so, Has I through borrowing completed think where

Tracy Krohn

hasn't should I been that of completed It have yet, No. we're an in the couple on weeks. close. announcement but getting next

Michael Scialla

go you Okay. – guys ahead. And I know

Tracy Krohn

Yeah. it. out The of we get what need bottom line is we'll I think

Michael Scialla

Yeah.

Okay. And did work on the sheet in you of guys lot price balance improving a collapse the after XXXX.

more a balance obviously, in the you'd comfortable just you're You've, wondered anything a balance got like spot I or where with sheet to is now? strong now. do if sheet there's it

Tracy Krohn

negatives. We're pricing doing plan We're I that in think we're to on. things of positive. cash keep spite effect what to we some flow that trying do, is the continue

cycles, But we see pretty go cash flow these forward. accordingly. I adjust good as going through So, we'll

to decisions we're to good these opportunities, cash? different times have that in So, really any when And with kind in what that the it's bigger event. of do present options are, nice

Michael Scialla

Yeah.

know potential Okay. been to or And that wells. I of anticipate pretty to there a while some ask cautious that any you but pretty that keeping of your I The over for you've there time? ramp well you'd Is production rate Gladden that is, other at rate kind is Deep. on obviously, a nice, with wanted

Tracy Krohn

have Well, I don't that's I a information. problem. hope quality really good

We haven't flowing well a that long. been

completions be are radii. and with think of we type as in okay? when They're what fairly So, small inches because – several it, and about So, these they're tend and but they're feet can you cautious wellbores we we're in in diameter. as diameter, they're conservative wells to small do diameter, not

down you draw careful produce And wellbore, be you that. so, you need in when the to how

screw pull So, up and completion. you'll if it the hard, too screens you the damage

wellbores. of very the delta the So, we're cognizant pressure into

what not produce the we kind guides of, well. – that's of really that is well, So, how guides kind what

Michael Scialla

for shot would me. to… Understood. that – And don't one I a to want last here. you something long It's if it's probably cause

Tracy Krohn

in We're Mike. sometimes, it. okay, I business the It's get long-shot you know.

Michael Scialla

right. All information, in you any give don't to discovery made good. doubt I want interesting answer Hess just I'll ask Canyon. up Mississippi and but want All proprietary to an it. looking

Just have for wonder that that if in that there's supportive draw area? of can from that. Is prospects anything you any you that the

Tracy Krohn

that have success the I to can't the others in like comment area. well. people all success just I really draw Well, yet tend that I and on have of see always because don't really of to details well we the upon as

will looking be So, that our that will I'm CEOs sure something at. be

Michael Scialla

Great. Thanks, Tracy.

Tracy Krohn

Thank you, sir.

Operator

the a One with from And Securities. you. follow-up Thank Capital Richard Tullis next question is

Richard Tullis

Tracy, for many what haven't the you I are the the just drill? thinking you Yeah. with you active know How keeping but year? prepared front might And more. exploration you theme, exploration budget next yet, How there? on one be could wells

Tracy Krohn

pricing. function really have of don't of I answers a lot Yeah. the is Richard, on you good that. that, for A

making to So, with we what on want we're and to cash. figure our trying out that do markets guesses and

of are to is that tend of those to in And I want preserve for things time, a certainly, down periods the sustained period good pricing opportunities. these really usually we that, represent liquidity. find that of one

of the think case, not to and So, I lot the if opportunity optimistic harder acquisitions, I'm for change here that going I've plethora to And shift and do that then the of drill call around sold time. buy to seeing months. represent that's last about centers here. the good in well couple enough that's it's that really properties opportunity probably it. believe properties, be If that I of bit. the will a that believe I to earnings pretty in But I I we'll us. good news is But going believe that now a whole think really We're being explained

Richard Tullis

Well, you. that's Thank Tracy. Appreciate helpful, it.

Tracy Krohn

you, sir. Thank

Operator

at would floor Thank to closing to comments. for I return time, you. And this like any the management

Tracy Krohn

talking to is the Hopefully, we'll I now. now. for news future. in all right not-too-distant That's fairly all good the think sir. you, be Thank And you

you So, look continue and talking we you soon. to forward we so as to Thank hopefully, that well. much

Operator

conclude so for Thank teleconference. does That you. Thank today's attending you today's much presentation.

may disconnect now your You lines.

W&T Offshore (WTI) 4 Nov 192019 Q3 Earnings call transcript