WTI - Earnings call transcript Q1 2022

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Operator

Good day, and welcome to W&T Offshore First Quarter 2022 Earnings Conference Call. [Operator Instructions] At this time, I'd like to turn the conference over to Brent Collins, Director of Investor Relations. Please go ahead.

Brent Collins

Thank you, operator. And on behalf of the management team, I'd like to welcome all of you to today's conference call to review W&T Offshore's first quarter 2022 financial and operational results.

like statements. you I’d may our begin, forward-looking include we to that remind comments Before be that from should statements. actual or It noted expressed results cause factors expectations to W&T's could differ these materially in the results a anticipated forward-looking variety of call non-GAAP measures. contain certain also may Today's financial yesterday of refer non-GAAP Please issued the forward-looking on release earnings disclosures to measures. statements we that for and reconciliations Tracy like Krohn, turn over our and I'd the to that, to With Chairman CEO. call

Tracy Krohn

joining us day conference to everyone. for quarter And Thanks, our Brett. XXXX for thanks call. Good first

So President with and President and Schroeder, William Executive me Executive today Steve are Janet Vice President and Williford, Chief Yang, our Technical Vice Chief Vice and Senior Officer; Operating Officer. Officer; Chief Financial our our

the We call. are to on all available answer questions during later

strong year. pleased results provided the financial which quarter I'm in exciting solid first with foundation an a very operational for the So

cash simple, build and creative on is the generate strategy Our maintain free production conventional high capitalize value. to quality opportunities flow, shareholder

all to guidance. delivered our LOE things are EBITDA to free more Two, below low the than million So we were $XX.X fourth we compared flow guidance. doubled quarter. of grew to end in One, production cash by adjusted provided costs $XX.X here and the million Three, our was XX% the our the quarter.

February, note well Cota the properties quarter. of after bought we remaining down the $XX.X first rate end last, properties paid Cameron XXth creative So day. consecutive of debt. free we then And X,XXX the fourth, closed And we the quarter East that equivalent brought in gross the the oil would those this marks acquisition the online generated very million per I in flow. production to that producing interest shortly of barrels and W&T cash has at Thus to in

also quarter can better. we can level, the commodities our a first three of at as for pricing exceptionally the team So sustain executed believe In year higher be experienced finance all operations and even we an on and see basis. rest you high sequential the

X% of the quarter barrel up edges realized fourth in up per was the barrels price prior to production day. almost quarter. XX,XXX before XX% to $XX.XX by equivalent $XX.XX, equivalent of Our impact oil over the from increased And our per average oil

did below We low strong to during quarter the for our also key guidance job the free resulted to and LOE good combination of coming and G&A. the the adjusted of a favorable the XX% of managing cost midpoint compared below EBITDA our in end us production, The increase in quarter cash control allowed flow XXXX. fourth our cost double than pricing in and a more range

in financial on we're build today. much focused these on And execution results. So position stronger operational solid clearly to quarter remain first we a

National for this understanding opportunities upstream that intention well. Oil the two Korean earlier announced together include formalizes oil of entities memorandum in with the gas week, a opportunities as could America pursue other and to various in North this and work So we Corporation to

excited very reasons. couple of So this I'm a about for agreement

us to allows First, opportunities to wouldn't our due agreement company on consider And own a KNOC scale. respected we our highly industry. that in is this likely the

I'm together. to it drilling By from beneficial will this Second, successful. technical and MOU combining more really to our be opportunities look made be range that to respective and even strengths capture projects us methodology mutually Carbon confident that allows company's can to working respective projects both at opportunities shareholders. These acquisitions. could

the to is acquisition of properties are large to producing any integral both opportunity. strong to key of factors and we February, continue our which then of providing ANKOR proved our selected those success quickly. strategy So a past In closing accretive closed complementary valuation, acquisitions, and opportunities a part and base we when water which flow, consider solid reserves free acquisition included shallow cash

So in $XX.X interest XXX%. approximately total assets million in the brings working to which April, interest purchased deputies for working the properties remaining those in we

assuming XP the pricing oil equivalent, to million So of for strip year working with barrels estimate and respectively. reserves X.X oil of equivalent proved as X.X in properties oil, interest XXX% be W&T's approximately April we XX% barrels million and in XXXX, XX, of with XX% oil XXXX,

expertise So W&T X,XXX believe as existing highly our net as oil to was infrastructure and and at our day. quarter scale approximately we are even drive of per down We more economic. production, can to accretive assets these and assets end W&T's interests these barrels use equivalent operational costs make well

successfully the Cota to with on recently completed per in well is drilled very sales current gross barrels performing to East So Cameron, about of well we Well XXXX; equivalent early oil day. that operations, in X,XXX production moving turned XXX/XXX was March.

a reminder, net as XXX approximately during encountered So oil of tied drilling. we feet

well. We the our XX.X%. are in have an additional interest XX% Once increase thresholds But working met. interest certain performance can to

we that, the of quarter that in the call XXXX continue XXXX thresholds. positively in turn with We to I'll to first recompletions production impacted quarter. and plan perform over meet economic workovers And to two recompletions the performed that During Janet.

Janet Yang

million first with cash total less of capital cash is in Even million Net is we the free spending, good and quarter. which and costs Cota cash $XX.X capital the quarter and down well, first the for everyone. in and attributed Capital morning excluding expenditures flow associated costs. changes we with discussed the generated drilling in $XXX.X to equivalents $XX.X first investing $XX.X that completion quarter. of debt well end XXXX. were last working debt quarter costs Tracy, seismic of you, the the primarily in pay million debt was that for at million exploratory This activities Thank

trailing times, a months adjusted which EBITDA about is compared dramatic to to two debt a improvement net year XX is Our times ago. X.X

With creative opportunities to recent issuances criteria, strong exiting the evaluate EBITDA our year, adjusted continue futures this meaningful program our equity debt meet prices, no strict net to Our current debt,. systematically XXXX of which we down ATM additional shows no paying time. that balance a forecast TTM amount will and assumes and on under acquisitions while sheet to us one hand, a below with cash

credit facility revolving the our provides flexibility during X, XXXX, quarter, ATM financial we and until it. filed been extended January us program, during additional and need has Our used, if was quarter which not the was which

of revolving As had our March of million $XXX.X million XX, facility. XXXX, we equivalents cash $XXX.X cash availability of available of borrowing $XX comprised and million liquidity under in credit and

lenders are portion discussion. prior of added call As regarding our you help maturity. notes we We mature to of earnings the November notes to the potential facilitate will senior in refinancing of institutional investors those additional XXXX. our yesterday disclosures intend many on in soon this with some all lien second and of discussions release commence our And aware, that

to second XXXX. the Looking quarter ahead of

actual Our compared at and XX.X, quarter production with between first per the for of is XXXX day, X% Boe quarter-over-quarter an midpoint guidance which XX.X is approximately production. increase

also to the We production closed we year so increased far which this full have XX.X our the XXXX benefit year. XX.X to of guidance day, Boe acquisitions reflects per

of production provide as into Bay significant ranging recall W&T and hedged substantial gas with be you These of positively into be oil, downside natural cover of our company expected are call second anticipated protection $XX Mobile gas For call entered recent to Taking that gas part of purchased a natural expected to to a price Munich remainder operating of per between price lease MMBtu hedges, quarter our its options were part of $XX.X G&A account allow transaction will Re the is the natural capture the to amount for natural $XX strike fully offset and XXXX, the and $X approximately for options acquisition XX% expense remainder our other also million. we $X year. which $XX.X cash between for to from prices million million, while costs hedged and The gas. XX% are million increases. we're

the on first for of costs seismic expenditures million wells, We completions settlements costs $XX capital as unchanged and for $X.X expenditures in the drilling $XX facilities, million planned recompletion. long at remains to ARO related and $XX leasehold, P&A lead quarter remains acquisition this at excludes unchanged Similarly, expenditures million. in for XXXX. to Our XXXX range spent $XX about which are year, range as shelf capital full million million opportunities, in well and included the budget deepwater for to

all it over of turn can I be Tracy As to our a guidance in reminder, found will that With yesterday's release. again. press

Tracy Krohn

Janet. Thanks,

to effort So call, our strong believe with ongoing Board, environmental the executive before to ESG out the our employees culture. work current contributing the and we'd responsibility our our and corporate where ESG our cornerstones communities you I the close like positively the talk our also that and of leadership, governments but about extends report, operate continuing to sound to stewardship, and ESG We not quality just commitment high to is we of We're employees. to demonstrate our efforts.

incorporated So into incentive we moving plan. as to intend practice such, continue with our forward. metrics that we have ESG And

in both So with EBITDA a many environment, flow and positioned price cash cash throughout meaningful position generated how that in Everything well and the we very expect strong XXXX XXXX. which quarter in we're and with operationally started opportunities current significant one, and pleased closing, is We've well continue financially. presents for to liquidity W&T.

to like that number opportunities beyond. We XXXX plan in have well, a of and drill Cota we drilling organic the

creative assets acquisitions Mexico's focus within Additionally, with Gulf vast for we our of are area. constantly evaluating of the pool

opportunities like on is pillar success. ANKOR of quickly and a So executing evaluating our

operator We the well-established water both and deepwater Mexico premier of properties decline significant and have a rates in upside. Gulf a of are with low portfolio shallow that

on value. executing by centered made success Our is our possible shareholder which maximizing long-term strategy is on

E&P team's equity any our XX% one management given in our interests those shareholders aligned public with the W&T’s is of of company. highest our stake So are highly which of

a operator, see lines continued in for and can a As with XXXX. I we forward for to success questions. And that shareholder, future W&T open bright look the

Operator

question Michael today come ahead. from [Operator with will first Instructions] go Our Please Stifel. Scialla

Michael Scialla

Are it though with as just can just motivated in you of it an agreement what this they Hey to memorandum of looking to everybody. partner drilling on do acquisitions Gulf motivated Mexico? to KNOC a or more enter you understanding point, to good deal? enter partner say inventory with that wanted you this Interesting think them ask is looking morning, you? to with on Tracy you about, what at they anything is the Are to even

Tracy Krohn

talked regard that long us that this a we've we've and I think in in you we think some met oil company. we to and of a well. that about talking sub might in ANKOR Mexico management to to And international the their company, and in it technical - to fact has a oil vested for of had them do. been have that which in with shares And the been we've as forward, for team them a the the we've can relationship. countries a We good assets of experience basin, we a relationship They KNOC past, talking to the I time around company. around it of Gulf gradually good that are the highly And for gives it's have good we fact period. time I a moving think into an been some of other they with and us developed executive international an long purchased very in a have through deliver. the things them is management. them properties is and Yes, And with perspective different aspects interest And that

company of lot we're and So, good. you a to know, relationship. see synergy the have this this relationships fortunate very here Like, have I very with been just

Michael Scialla

as balance one looks do opportunity below to you like debt in year. forward Anything also this this I Maybe the to mentioned times you with just that the might go, going release. And Janet, you the to else you you And leverage else anything see any the with want given mentioned on things some refinance to notes. seeing you do unfolds. to sheet, how the sheet reference how an year? second you're lien that to that as see mentioned opportunity. look update potential the balance

Janet Yang

refinancing at But XXXX. know of some our XXXX, up until Sure financials We November time do strong. yes, have but our are not we - prices debt. looking certainly are in are we you

definitely are opportunistically so, to we gun. those refinance the we're under at not, notes And you out opportunities know, we're there, again looking

acquisitions do leverage make of based so, or net about right. without And And additional we're want that going our without anything we to assumptions very on sure based we pricing forward on excited going current recent kind going down yes, the or under ATM just one-time. any like it

a good opportunities also flow. many and we low that to are there's, a lot of you ANKOR know, low cash risk So, our and like goal this of risks is lever. acquisition, realized But be of lot that that, others like

dry build to and way. powder have want the out be a able and also to we there the risk to advantage adjusted So company in to very so take go grow

So both balancing we're kind right of now.

Michael Scialla

one there term the Is if to Very I not any considered? is more early the loan in could or good of it. related to take being on repay just that not option part

Janet Yang

we certainly well. yes, that can We as can do

yes thinking don't that we're its rate. but can. We necessarily good interest think do we I we - will certainly not that,

Operator

[Operator from Instructions] The John next go ROTH Capital. question comes of White ahead. Please

John White

in of experiencing favorable. equipment you very in shortage It on looks guide the production the firing ANKOR service you're all that shortages are personnel. the the results. about in Gulf onshore looks like talking Mexico? talking Congratulations strong the Are looks strong on and very oil cylinders. about and sector, The companies

Tracy Krohn

thanks, more in personnel specialty we seeing see a crews yes, than has about work. so, Yes, our areas. point. Mainly first, in for personnel at answer Well, short just bit with this it boats the problematic we're and different it and, been transportation anything John. is And in little

items. you issues, know, necessarily unusual reasons, other had you and our adjusted that problem not mainly for we the problem. on coming generally about a think to through for we've see more people later But think up adjust that is personnel And had put it's on going back nine an and the but motor I when business, are issues. I materials. down. same done do some We've to different some recessionary really, not lead year certainly prices had this when have we'll this supply this about doing to had month related before is this prices And a We've on go lag to got that it. although, market long may work some So to be -- of drilling lot COVID they're chain And long we've we're to things. you fortunately

instance we year still think deepwater year. with particular a plan we'll I starting So be on later on -- that later this in already in good to next drill well

be LOE all to affected and P&A CapEx and G&A, this. and going So by

just So the the idea is but margins. cost, to not control the margins, margins, the EBITDA

Operator

Instructions] Our Michael ahead. next from is [Operator follow-up of question go Scialla a Stifel. Please

Michael Scialla

year? of mentioned, the shelf three the mentioned you the Magnolia in any are at on finding And the still well those? given Yes, you timing tightness sense around Tracy, year, end the you wells that this of

William Williford

you. on with So William, mostly Michael, we this is I'll self-work answer that some are is associated long items. for Essentially, that question lead doing

in doing We to XX. rig get in are order those to platform platforms it's have that things do prepare those to rigs to order between on we drill so

Michael Scialla

them any William, all though, year? Do on And Okay. sense this think done time? you'll get you

William Williford

as We far long yes, moving. we'll as Now, the items, already. get that started get lead stuff it actually

in get to dollars that spending those are those to confident We rigs able be we And [indiscernible]. pair XXXX feel we'll platforms. pretty

Michael Scialla

Got it.

the equally to across Okay. this year? is weighted for fairly, year, anticipated And be spend in capital that terms still the of

William Williford

great. We water ramp see later the little up we we start on that'd Holy said a Grail drilling the in That's once be well year. well, will

Michael Scialla

-- that you Great. of initiate that's something of opportunities with assets. set can the couple Can busy And wells size of just while you you'd you that some Is go the sense a ANKOR mentioned a there. give or the for would any opportunity recompletion keep ahead.

William Williford

got a a up, capital you industry return Well, investment everyone that in few quick with should give prices of looking to opportunity spin couple we're noticed And out right -- more is in away. an yes, actually as which and at us see as started right go we now wells. a we a

not So we're but only as opportunities well with ANKOR our other portfolio. looking at

Michael Scialla

just ANKOR Tracy of able assets was higher And Good. something legacy been on the to are that I LOE or assets you've guidance. P&A had low those that mentioned assume the lower attack came able those that your at in said LOE, LOE? a with for you is you assets to

Tracy Krohn

are officially we over X. operations that on we just able May Yes, to LOE, reduce took

right course see operations. area, on our positive transition with on chains course, is that regard -- now supply and period date and those as now line and the we that and boats a that all there focus for in that's But, But to the LOE. opposed different. specific of our LOE results should helicopters So What to But cost. have Effective to was the people taking own now that inflationary is we should footprint again stuff. be of was restraint we personnel we're in why the the always a area I able margins on to because try maintain hold on of we our margins. try do to

Michael Scialla

I relates the you that you think saw margins, done can to on about guess anything maybe with work you there? the he say contracts those assets an at had too, opportunity mentioned to you've I looked assets as improve any of when there some

William Williford

Yes, that got we've as quite, we it. as here head soon on, again, basically we've took done William

Some definitely of costs. we're costs, things right now transportation that less the transportation is and market the at looking on

at and we've to With of to that seen bids fairly And also the think period looking hydrocarbons. on pipelines, selling opportunities time. there opportunities add additional as lower to our short we're a that well. at we value in looking out going We're do

LOE as before at as far those things Tracy as side costs far things. of So looking lower what are of the that the along looking quick as with some we're at hits, mentioned with

Michael Scialla

have last term of plan any Got with you to be have deepwater a now? long Any And thoughts at said that Is one Magnolia. loan term field? prices me. it. repay kind on just or be from guess you well currently opportunity? there $X for one I But gas to a it know then I you're accelerating to, your And not that think, Janet it would were maybe I as is in there well in early. looking $X with if conjunction in

William Williford

the you I moment. would sir? for repeat sorry, question a I'm got distracted

Michael Scialla

the there higher term any put prices, gas prices accelerate know had in that? gas drill and kind given given to there you to when a the the it expired, about what maybe thought well is know, trying like you think Yes, I loan but of the I looks plan XXXX high

William Williford

this And all interests had expensive, high And Oh, With shallow a a big difference. it We there. is yes, issue that albeit is course, gas pressure. is, own is certainly absolutely. pressure we makes Every gas This the $X prior cost. of deep to lot is high cost this $X water. high and this, more makes a temperature. the pretty doable. A and high very well, a a this

we pretty so get as some And equipment will pressure high have to well.

So that's on the not price. restraints at that. point, are this -- It's not those it's

Michael Scialla

that Okay. or And -- repay to want you would that would loan you be could be before term do to need the would separate?

William Williford

all. at Not

Operator

ladies our conference remarks. and And and will conclude CEO for I'd Krohn, question-and-answer to we at closing like gentlemen, back Chairman to session. this time, the over turn Tracy

Tracy Krohn

very quarter. see you, little regime future. bit and you we to better look a operator. We're in a Thank Thank very again, to you near pricing happy Well, to good much. forward the talking

Operator

may now your The for conference now attending thank today's you concluded. presentation. lines. And We has you disconnect

W&T Offshore (WTI) 4 May 222022 Q1 Earnings call transcript