WTI - Earnings call transcript Q2 2022

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Operator

Good morning, and welcome to the W&T Offshore Second Quarter 2022 Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note, this event is being recorded. I’d now like to turn the conference over to Brent Collins, Director of Investor Relations. ahead. go Please

Brent Collins

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

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

Tracy Krohn

Brent. Thanks, quarter thanks joining second us to our for call. and Good day conference for XXXX everyone

So Officer; Executive with and Officer. me today to and They'll Vice later the be William help Chief call. our and Chief President Operating during available our Executive President Vice questions Williford, answer are Janet Yang, Financial

results in quarterly in quarter history. were the among results the best second our financial Our

free generate shareholder conventional accretive flow, opportunities Our value. always been to opportunistically capitalize strategy has simple, maintain quality build and high cash production, on

outstanding in ability in Our was excellence the to execute and financial results our quarter. operational significant driver maintain a strong second

advantage contracts in Average maintaining increase the low-end forward above So to portion a the hedge with natural LOE net production higher gas here's and We This were in the of coal the in prices. was in proceeds million cash contributor into guidance. at EBITDA which the prices $XXX.X of a position, and gain net participate was financial million transaction million, while was sharp million, quarter. gas of diluted value and our in $X.XX over quarter quarter. XX% or resulted results still prices natural gas income Adjusted from which $XX.X guidance. daily entering on by our strike new monetize up of flow $XXX ability share. end higher the costs quarter-over-quarter of the gas generated key in reported XX% big delivered that took high million we million, increased was natural we a and $XXX was $XXX things of times cash below times ago. our our cash clearly in came We and flow per net first almost free over the to of increased last equivalents and Cash what $XXX.X to X X a year free cash from quarter.

got about reserves to X$.X SEC to X mid-year months Last, last and times X% pre-tax trailing to equivalent value to there in Our months net half $XXX.X year proved our billion than trailing barrels XXXX. net stated quarter. X.X XX adjusted goal to times our of debt times improved less We're to XX debt significantly grew and EBITDA from the oil million anticipated. we at XX% now end EBITDA X.X compared PV-XX of increased time by

a for quarter teams finance the and sequential operations our high quarter, level. to in pricing executed had very of ability three clearly In it experienced all outstanding the commodities we both basis. due we So to part and higher sustained an a large was second on

$XXX.XX average barrel. per oil was for Our price realized

$X.XX per gas $XX.XX our we liquids, Mcf. gas for realized barrel For natural natural and per

per of was oil to XX.XXXX production equivalent (ph) over prior barrels XX% up the day. quarter Our

and well this from from We we as also from production a workovers acquisitions recompletions. quarter benefited two earlier year our Cota well and full producing the from as closed

favorable LOE guidance. pricing good quarter and in end resulted strong production, coming the our below of hedge adjusted gas of of during combination also $XXX position EBITDA the job low of monetization managing in our We million. the costs a our portion a of did natural key The

of have million generated We now of XXXX. in adjusted $XXX.X EBITDA the half first

So we $XXX (ph), the of million. for we and in XXXX, full around generated generated put for year full year the million this to $XXX XXXX perspective

second The ago. us a $XXX.X the quarter reduce $XXX generated that net marks also corporate our quarter This free flow. million has XXth from cash we to allowed consecutive million to debt year

financial continue a execution solid building we're focused strong So We operational to results. on remain in these on position.

assets a and significant evident report. We outstanding mid-year have an these our in is value asset base of reserve

million Sewell XXX.X Our January XXX.X oil XX, oil X% equivalent consultants, Netherlands, barrels end of mid-year million and barrels engineering as reserves proved year were with of independent W&T's equivalent of reserve XXXX, up XXXX. prepared SEC at totaled reserves, compared

mid-year of balance classified were was So gas, were approximately natural developed the producing. and oil reserves proved XX% about proved as liquids XX%

million revisions. minimal So spent strong revisions, oil production and of over barrels the times equivalent. oil million barrels replaced purchases reserve past continue and equivalent, X.X of totaled performance, XX.X in see $X.X yet drilling positive to XX year-to-date XX price We revisions of minerals place approximately positive months capital of which we

mid-year addition, that's XX% $X.X billion with of pricing XXXX. reserves In compared year at our SEC increase of proved utilizing an PV-XX the end billion, was $X.X

$X.XX XXX/XXX oil of And reserves that the we year enjoyed in this with in barrel price compared XXXX. per turned natural year at sales of full Mcf year successfully So at Mcf, and an $XX.XX we compared The a per XXXX to previously second based was at production quarter $X.XX completed XXXX. and on quarter. March average Cameron end East price well gas of drilled end PV-XX the Cota an of mid-year $XX.XX SEC average were with crude in reached per

the four recompletes positively quarter. workovers and Additionally, two impacted we production that performed in

field to Magnolia recompletions in the XXXX. preparation we well at that of long XXX our of regard lead moving plan remainder items we're to meet ahead additional and year. the drilling, spud continue in workovers thresholds the Banks future to perform for economic Holy So to In quarter first this Garden with in Grail

any don't For the XXXX, currently have planned. drilling second half of additional we

in balance meaningful a activities excluding the continue associated while acquisition with amount quarter with evaluate on investing of our million in to cash changes second will and So a working criteria, of paying systematically sheet to $X.X capital hand, accretive opportunities down But we XXXX. were debt. CapEx meet strong

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

have at facility, In unexercised cash addition market we equity remains and $XXX revolver, for the million. still the, to which the

second approaching maturity, a or to our notes. are Now our -- the refinance capital of those regarding debt all notes second markets lien senior monitor continue to that we portion

longer at an refinance to market-based notes covenants interest rate. financing, providing tenors Our and with the is attractive preference

unused in the able and to pay access market should difficult maturity. to equity the debt us at those our we're path access a under us that debt future However, if event facility position, to due market anticipated that Strong gives availability to cash credit there's needed, at cash combined our confidence to cost. notes a able for access undrawn off the not flows, those with continue significant be be markets to ATM we'll facility address our notes to reasonable volatility,

and of of XXXX, XX,XXX between production increasing by year our at guidance our per that Looking midpoint is of year. X% acquisitions guidance production to so reflects XX,XXX the ahead quarter for our of We're benefit the we've and to continued to XX,XXX far day, day. strength equivalent barrels equivalent full per base the and XX,XXX the third the oil barrels of oil this production closed

costs million G&A $XX are expected lease between between be million, while be operating expense cash and $XX quarter Third and is $XX million expected million. to to $XX

XXXX remains in full $XX at budget million So excludes unchanged million to opportunities. CapEx our year for that for the $XX acquisition

remains recompletions. for for the and million. half at million for this spent facilities, Similarly, settlements related Grail costs long second on $XX XXXX. expenditures this So the from million to expenditures our quarter second $XX lead Holy in ARO seismic with range, wells as of planned We leasehold, already about rather included $XX as incurred items unchanged range costs and well to capital earlier in year P&A

this all morning's As press of release. a be can found our guidance in reminder,

environment, well and performed liquidity this 'XX, operationally a current first we with represents the EBITDA closing, company. the expect flow year. XXXX, for of half the and thus in financially. a and continue We've in opportunity and far well we strong generated So lot significant cash in positioned price large in that, throughout very which cash of W&T that is both of amount should

provides line improvement our are of cash clear or sight Our second maturity. off nearing position notes either lien refinance pay that to

planning and portfolio reported rates media premier a of In Mexico shallow the Gulf that assets have we both to significant deepwater low decline producing the Mexico that properties has Gulf recent in basin. weeks, players have upside. water of sell of large and several So in

opportunities and of pool vast area. Gulf's the acquisitions [Technical to evaluating constantly our evaluating for are on within Quickly focus we always, As assets accretive Difficulty] executing

Operator

difficulty having the with conference conference you. this is speaker a go me, Pardon some call We've Thank location. Pardon speaker with be Sir, operator. the rejoined location. seem the operator. is please connection just me, ahead. the the rejoin We in the We'll moment. main this to

Tracy Krohn

I had Conference We're disruptions. we've you. this doing understand Thank EnerCom Colorado. Denver, Unfortunately, communications in call some the from

I we're evaluating the Gulf in of in area. the for assets as usual. apologize are you there was wrapping So up inconvenience. I Mexico thunderstorms that telling the just

time, those We share fair get our we'll over of expect that anyway.

of XX% stake with aligned of highest equity, in interest any the and company. given Our is those management W&T's big shareholders, are which very one team's our our publicly of

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

Operator

question with Please [Operator Instructions] now We'll Our go ahead. is session. first Scialla the question-and-answer from begin Mike Stifel.

Michael Scialla

Tracy. morning, Good

Tracy Krohn

morning, Mike. Good

Michael Scialla

just on you question, for or notes. is ask guess, First the wanted to second lien I Janet. I

are back or trading in you and I cash options you prefer on the guess open keep your of a may do address thoughts open? now. more of market You those. mentioned right how build buying to bit discount They those a at notes

Tracy Krohn

I'm notes right now. out buying Well, not

November We We'll will X. that at option buy par. them have at

purchase out So likely more those that that's perhaps would we notes. time go a and

talking news all can the at policies the little unstable of The has question get to folks brought in bit with interest is we notes. the regard is refinancing. the we good administration that been midst and terms. about some are a refinancing Markets what know going those to We have up of economy. rates forth The with

but path, that's news to the with think, have have notes only to built really a just real So a off we good ones the that if that, of paying is up. see we we're the We lot what cash struggling I not clear do.

So I'd to they current, get give a about prefer them not do I'm to little dry terribly go refinanced us acquisitions. if powder and it. concerned even

Michael Scialla

with they loan, anything doesn't I of if do the your with there's trigger go any term other with guess, no issue I nothing -- current, that that? there's mean,

Janet Yang

loan. term the Not with

Michael Scialla

Good. Okay.

Janet Yang

non-recon. and Separate No.

there. we're So okay

Michael Scialla

-- have just Good, to curious And the quarter? a disclosed to Surprised missed And to this, you But with say much you if that it. in the did I you bit that the the okay. I workover well I the contributed for talk could just the and quarter? XX% wanted might was may Cota you what April, closed the have and quarter. the on recompletions production about maybe second contributed the acquisition, how

where figure -- So came from? out that the just surprise trying where to

Tracy Krohn

Yes. We downtime [Technical fall, that at as stuff, with we've Difficulty]. the ongoing full a Overall, of some separate didn't associated we -- base item. last with disclose the production that end our got and was had mobile a

Michael Scialla

guys. it. choppy, Appreciate I got was of gist a That little Okay. you think but it. Thank I've the

Tracy Krohn

They're Yeah. a area. bunch in of having thunderstorms the

that's signal. radio I think disrupting what's the

Janet Yang

Thank you, Mike.

Tracy Krohn

Thanks Mike.

Operator

The Jeff Robertson from with next Water Tower question ahead. Please Research. is go Instructions] [Operator

Jeff Robertson

Tracy. it The cycle lead ordering, A are time the you that correct? assume you, long time bring Grail. on Holy Thank I question that production. that on Is will to shorten items

Tracy Krohn

the that We rig it's a floating on to No. Actually, on we're are actually on do get ability well some the and subsea This to this substructure. putting not provide to vessel. had These is the modification trees. itself. trees dry platform

tree. has it to to adapt to dry the the do So with marine riser

understand is moving that as down. got we're vessel and the to up drilling, You

confirmed have to So that make we riser. and for we've the we compensate integrity motion of the got sure that

down the we equipment to and and on up So to drilling. this a just do as has lot rigged do that up parts with we're tree of dry had that's to need get moving

Jeff Robertson

for or Okay. all that on or... what be working in partners you your will settled Have looking interest well are you

Tracy Krohn

Right now XXX%. we have

this no, So for partners well. for not particularly I'm looking

Jeff Robertson

Okay. will it prospects Magnolia? that, up additional set And on then lastly at

Tracy Krohn

answer to don't the We we know after I'll able be drill yet. that question well.

Jeff Robertson

lastly, And right. on All then the just notes, on following Mike's Okay. up question.

options how that you leverage in are? -- you with your all them Given look could that and probably what like you pay refinancing cash, off give you does

Tracy Krohn

bet your it You [indiscernible] does.

Jeff Robertson

Okay. That's what I figured.

Tracy Krohn

But collapsed, insurance. thing a bravado problematic. out there us it. to little that Yeah, we here. I bit could can we're flow markets It's can't suddenly We Jeff. a to really. well ATM strong. give forget, of it We not speaking right. more refinanced, If get is bit unexercised. Cash have refinance you're little as this It's that the be don't did another as additional option then

Jeff Robertson

Thanks. appreciate I Okay. the color.

Tracy Krohn

sir. Yes,

Operator

question Stifel. Please Scialla Your with next a is from ahead. Mike follow-up go

Michael Scialla

Yeah. Hi again.

on to ask wanted Grail. Holy Just

correct to with were attributable if in the difference splitting 'XX. you looks so, think way there might quarter. well that I of is that? timing slipped initially at or talking is have bit. about to inflation that, have the any slipped it may that the that It little look like And capital associated a fourth be might Was there into not the

Tracy Krohn

inflation, parts -- not spending really it the up. quarter fourth in drilling We'll side we'll regulatory it's the the start of slipped. has the getting It money next It's start well year. quarter, and and just first we'll spend the Mike. lined in No, of

Michael Scialla

Okay.

So what hasn't really any? spend planning you were changed fourth quarter to

Tracy Krohn

little a deal of well. didn't mob Mob quarter. most in Yeah. much. as would will probably hasn't And has It the -- in see drilling fourth be on the costs really in the expect that fourth great -- but drilling be or costs location quarter and the we'll hopefully, bit, of The a demob in you'll the quarter. it first we be CapEx that having fourth we changed timing a changed function of quarter

Michael Scialla

just I thoughts And on is sale lease Did policy. approved? in looks have and Okay. act Act Inflation ask on just wanted Reduction going that you leases to like It go any then to through. the being any in general that XXX

Tracy Krohn

leases what we Really, to familiar know yes, that did that sure is. I But sale. Yes. say, two last enough with I'm not in lease it yeah, I'm quite it have

able that's bidder We -- get hopefully, So to high we'll continue. and leases. those be two were back on

spent dollars as it'd but wasn't those for have great, the So nice that leases to be inventory.

Michael Scialla

me. one for Okay. last just And then

You it latest get prepared want to mentioned, quarter, market. thoughts remarks on the Tracy, your we've in about your but M&A talked just every and

forward quickly. are Sounds moving things like really pretty

Tracy Krohn

being some things up seen sale. different We've are. they’re Yeah, are for about properties that

this reasons the shake the larger volume so looking course, of of starting some Of why we atypical does in Mexico. at like a it different be of usual. a of picking There's always bit. to But another we're loose, one much. of is are seem the bunch Gulf Gulf of properties yeah, deal and as to Mexico, up the properties But

Michael Scialla

Thank Sounds good. you.

Tracy Krohn

Thank you.

Operator

questions, Instructions] no remarks. would turn any Krohn to like question-and-answer [Operator Tracy I back Showing the conference closing for over further to this our session. concludes

Tracy Krohn

again forward. like to you area. thunderstorms much. slight everybody, news going from the or battle for you, Apologize talking soon. W&T Denver while forward it We look Thank interruption in for you some through joining communications hearing Thanks we in the The us. good to weather looks for so is, fair

Operator

The concluded. you Thank presentation. today's for now conference attending has

now disconnect. You may

W&T Offshore (WTI) 8 Aug 222022 Q2 Earnings call transcript