Earnings call transcript Q2 2023

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Operator

Ladies and gentlemen, thank you for standing by, and welcome to the W&T Offshore Second Quarter 2023 Conference Call.

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

Following the company’s prepared remarks, the call will be open for questions. [Operator Instructions] This conference is being recorded, and a replay will be made available on the company's website following the call.

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

Al Petrie

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

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

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

With Chairman the turn and Krohn, CEO. that, like our Tracy to call over I'd to

Tracy Krohn

With and our are Vice Officer, and me our available Executive Al. Vice Operating new and Chief Williford, Trey today Hartman, Chief for Thanks, and everyone, morning. Good William President day, Sameer Financial Officer; President thanks to Executive later. Accounting Parasnis, Officer; Chief answer our questions be this joining will us

before as was I welcome Stifel joined for working He would Sameer who and adviser Sameer trusted helping in Parasnis, get strategic like us financial results, with into and key But new July. We've instrumental initiatives. to CFO years. earthy been complete the at in W&T a our operational I some

financing these Some loan the drilling XXXX in debt in term joint included XXXX, and XXXX. our equity refinancing of venture and in corporate at-the-market offering

will relationship valuable a has markets working already with senior forward. experience Sameer strong extensive say, moving to and be to capital leadership our Needless and financial W&T team his

successful and our me So reviewing let begin rationale. long-standing by strategic

flow, opportunistically shareholder on quality delivers invest generate free capital have that EBITDA. delivered simple, consecutive value. valuable accretive adjusted flow quarters prioritize conventional free a and opportunities always production has generates maintain strategy cash meaningful base build we Our high because production cash cash asset XX strong prudently of We and to been capitalize and flow,

into for that perspective put me you. Let

for economic and flow XXXX, the beginning free every prices of quarter through since positive pandemic, successfully generated several cash navigating cycles. commodity have We COVID-XX volatile the highly

ensure balance a complementary strong prioritizing by and assets. cash cash flow, we opportunistically So ample we acquire to maintained sheet

So of the gas second This senior our payments We've issuing notes. uncertain all significantly and environment. redeeming XXXX with debt balance in prices XXXX and far XXXX, softer we oil in included us our notes while natural lien XXXX economic lien and second sheet. reduced new much our began financial strengthening This lower provided prices. seen so by flexibility that's interest outstanding

we portion year decided reduce delay capital drilling a current until capital and XXXX. because of proactively to those our factors, budget significant So of our investments

And We pricing scenario have a opportunities. acquisition right balance cash lower act acquisition to the opportunity believe position we arise. quickly should strong enhances and see we that a sheet

free we're as flow currently in is that important generation value strategic feel patience we and are acquisition all potential We cash evaluating. for looking opportunities that

years, the we've created do acquisitions seamlessly while future. strong integrating the to excellence, producing Over operational we so continue by and maintaining plan to in significant value property

we uplift In strategy. return arising and of million range This $XX foresee from us production $XX year, projects and of drilling recompletion rate for continue million some million delay our remainder on decline the mitigate maintain to from XXXX those to no the We will million to $XXX production plans $XX our to cash. workover to help but expenditure reducing to of of a focused maintaining that will are with meantime, the number allow opportunities capital a assuming levels. high for and continue are acquisitions we program

drilling ability are our our adjust plans largely by production. of attributes of drilling our base losing One existing leases held opportunities our asset to without the most is attractive since

and highlights would guidance. I results. some our at barrels key production by of We of midpoint accomplishments. oil Now turning quarter was day, to second the per to to which increased like XX,XXX XX% out point

XX,XXX barrels million. net We reported per the cash of activities quarter EBITDA recovered equivalent flow, strong due cash continued production pricing. of expected, of day generated million generated As million oil We of to from adjusted from $XX.X our free XXnd and planned $XX.X in $X.X first despite operating and unplanned commodity downtime. quarter consecutive softening

million Mexico. the at the us acquisition dry to meaningful of significant an strong RBL maintained million we a and base, $XXX.X and But with quarter cash to cash powder with continue second Gulf balance end evaluate opportunities of equivalents the of $XX undrawn cash gives in

reducing million EBITDA at is at our $XXX.X And net of less our XX and just remains a net overall, debt amortization at Mobile trailing adjusted XXXX. June for virtue X.Xx Bay turn. XX, debt than by months So low to debt of

those We independent proved reserves PV-XX reserves pricing reserve SEC reported $XXX.X The prepared using our third-party engineering barrel SEC reserves midyear billion. $X.X Netherland, by is of equivalent. million of were Sewell & The oil value Associates. consultants,

to teams in delivered at strategy helps to results. much execute believe debt of Mexico Gulf the level that results. position today, beyond the in in execution remain We with driven outstanding high we success those our both base ability clearly continue and and focused that our effort. and down to we're operational Helped our a building outstanding our operations sustainable and adhered stronger improve finance balance to with fairly continued of consistent and our a on and by sheet, is XXXX pay on We ability financial and

that to Mobile first we field. planned Last the required quarter Bay projects the facility maintenance shutting call, periodic several discussed that had at and pipeline temporarily we of in us field XXXX, underway the

temporarily lower of at our experienced oil XX,XXX contributed day, the an XX%. QX our quarter. of non-operated reduced Production events the production behind volume downtime equivalent QX of with as increase in us. first to are that some These per But barrels production unplanned fields saw several production deferrals also We levels. XXXX you now

X.X natural for Bcf quarter. the barrels being of with Our of that oil, NGLs XX of guidance barrels million production gas was of XXX,XXX in and line

taking QX midpoint guidance into declines focused for the few account, of only reduction compared wells. new acquisitions of the the down the years capital X% expect production We’ve in XXXX, many half to drilling last rather XXXX years, on XXXX, second to see last than over QX. we So on modest – with

low guidance of Our the workover production recompletions the much second help and to base decline seven We natural our high continue saw of to on workovers benefit we’ll asset unconventional reflects returning reservoirs. and focus mitigate of XXXX. second decline than quarter, onshore compared declines half during in the with the higher

from very quarter we the operating inflationary to see side, as to cost in increasing the environment. XX% XXXX. $XX.XX our QX but $XX.XX results the expansion production were current per in able QX LOE lease encouraging nearly in control barrel we flat, flat essentially quarter. first remain With declined XXXX inflationary the We were margin focused despite on compared pressures industry, expense on maintain to continued our and So second to cost and cost

lease so expected $XX For be quarter, between $XX million. and operating lower, expense is our the million third for to guidance

costs continue our XX% second million also $XX the We $XX.X XXXX. G&A to QX control in and G&A were In quarter, down million, costs. cash

We’ll we modestly continue between our For are increase expecting million. million to G&A $XX.X margins. maximize and $XX.X the help costs cash to to quarter, manage controllable third

our balance So sheet. turning to

end debt of was of had second net $XXX.X $XXX.X net At During cash reduced of debt million quarter, and the of XXXX, $XXX.X total debt from million. total almost year million, which $XXX cash equivalents we’ve by we the of million, end XXXX.

along totaling at large As I par a retire position notes with second notes. senior previously, was January and debt XXXX our proceeds issuing to the mentioned in second total of our by a outstanding senior driven offering in considerable all reduction $XXX of lien in private XXXX XXXX the portion new using lien cash million

term have rig and acquisitions, make the cash, build paying capital no out to drive flexibility long to have ramp have or to or additional debt flexibility continue opportunities. commitments down drilling obligations, term continue do we up to we defer because we further near But

commodity costs. environment We and to we capital will as in expenditures continue current pricing monitor service defer XXXX

the $XX of are – lead me, items, this expenditures for six and and million in I And $XX QX recompletions. So range have capital XXXX, first we in and $X,XXX planned of long $XX months by million. leasehold, CapEx in $XX.X mentioned, have me, range CapEx costs year. our spent for million Included excuse invested lowered and range this for – about million a XXXX $XX we in to now excuse related million seismic be $XX million facilities, as

provide We expect flexibility to execute accretive continue cash meaningful quickly. to opportunities flow, free on generating which this

also reserve our to directly call, and out in well the operational close the to strength ability to mid-year XXXX technical base of I before like world our we production through you to point excellence. commission assets. report. I’d about performance to demonstrates see enhance GOM This positive of like continue our talk reserve class I’d points which that to revisions, Now our

of equivalent, decrease X.X barrels million So and for X.X by oil. production midyear of performance million million X.X XXXX, a we barrels reported of proved million reserves XXX.X due which of offset barrels oil of pricing of revisions revisions barrels positive to included SEC

these results on and the while less completing acquisitions over past We’re on emphasis bolt-on months, focused we’ve since pleased with drilling. reducing debt XX net

natural XX% with in oil XX% pricing approximately lower reserves, PV-XX we of proved $X.X gas. NGLs, a midyear liquids of XXXX had our billion, XX% which also were SEC SEC was of seen XX% value XXXX, has Impact and of crude in proved decrease and reserves XX%

gas – price along gas from demand Our natural export large online the good potential Market are has facilities for are reserve a position rather is related future and recovery line with higher in natural anticipating upside XXXX. LNG new very Coasts increased Gulf prices. strong

positioned reserves our that increasing of demand. All benefit to are well from

PV-XX of $XX.XX XX% proved average MMBtu. barrel of and XX% oil shareholders gas. years. believe were per on and were reserves prices Year a built high $X.XX month Midyear prices proved MMBtu of for will as continue $X.XX reserves many end $XX.XX provide our cash were in per XXXX non-producing, crude per that We classified group XX oil GOM and producing, flow of XX% natural per to for natural we’ve sustainable developed proved assets and gas undeveloped. meaningful proved performing based SEC developed barrel XXXX Our

with corporate our contributing shareholder environmental operate. sustainability W&T’s our concerted where ESG is we’ve So built and sound employees culture made success on our to effort initiatives, communities ongoing the regard positively a of and we metrics. work also addressing ESG and and governance and stewardship, concerns to in improving

who ESG standards continuous we of and our year, Committee We Governments our corporate believe member, Dr. and Chair improvement assist will the guide this our help efforts. ESG added oversees the our highest the and that Chang Safety Board of Nancy in to new commitment Earlier us Chang, Dr. governance. Environmental is that

ESG efforts. the issue will we XXXX going progress report Our sustainability that’s when continued our our demonstrated to weeks be ongoing our commitment few in in highlight next

we’re So This well pleased continued closing, we thank success in and financially. team both the in for W&T, future. at optionality XXXX, thus moving flexibility positioned how strong and well like in far believe operationally strong very I’d position which with us forward. financial provides with to performed we’re our I

liquidity inorganically, criteria. us opportunities organically both to to that growth opportunities, improving our cash execute accretive are Our enables on continue we longstanding poised and to evaluate position and and meet

world-class the is a and of be success. our of is We executing area within a assets. believe focus Gulf producing Mexico strong and continue to evaluating on and opportunities will pillar Quickly our basin

portfolio the and significant properties have premier decline upside. water in of and rates We Mexico of low have deepwater both a that shallow Gulf

in shareholders efforts of EMP highest any and stake is management interests given public with Our of our company. highly our equity, one XX% the team’s aligned those of W&T’s are which

As confident XXXX in future very in is and a bright question. shareholder, W&T’s not that I’m beyond

now questions. Operator, for will lines the open

Operator

Please ahead. first our ROTH. question go come John from And will Instructions] White [Operator with

John White

taking acquisitions? question. reflect the Good the expenditures about for I potential in of optimism year, my wondering, does in morning. reduction increased some the Thanks remainder that capital does was for way

Tracy Krohn

usual, Well, finger John, you very as the your in a on a of word, substantial put yes. portion thinking. And

and process part out We’re thought here. yes, substantial They different a of always is flow going to look little opportunities. that a for the but ebb bit,

John White

Thank answer. you. call I Okay. operator. – to the appreciate the pass back straightforward That’s I’ll the

Tracy Krohn

Thanks, John.

Operator

Pendleton question Stifel. ahead. with will from come next Please Our Nate go

Nate Pendleton

strong Good quarter. all. the on Congrats morning,

Tracy Krohn

Thanks, Nate.

Nate Pendleton

decisions? more some environment service investment offer capital on color you its earlier on in the Could GOM that you alluded the and to impact your

Tracy Krohn

Sure.

are expensive. bit do see Holy that’ll our this have get. out that to platform – is because one, or that in more A in because I uncertainty bit We drill Folks key process hear the to coming components. rig months to up, rig only my Magnolia of own process the and of more refurbishing I We and in opinions. inflation decided difficult lot of on in and but different there’s of defer prospect. drilling because we’re the also a moment. pricing the which of in lot particularly little little some a go a breaks on good Grail a are of bit the – to transportation, opinions winter servicing at a we is seasonal They’re of our a weather. one pricing, of wintertime not

People that inflation the some because hurricanes, with with fact, pressure wave wind they’re and issues do the in costs vessels our affects helicopters winter often in that but the and I think personnel and summer occur obvious whatnot with of and quality. upward see more regard in to cases out due activity drilling really continued there. and to in

empirical it’s bit little I factor think that’s but us. a still more for a

cost get we’re is chains plateau at there of the better, I think I a as a in seeing the little time. that supply think this that goods so concerned we’re seeing point

little a of story. different are Services bit a

to So where want ahead have at sure well of in make the and the we’re them need we personnel we getting to that right curve time. equipment

And that’s in softening prices plus the for more everyone. part so of makes commodity the continued it difficult equation

Nate Pendleton

what your regarding offshore speak And comments CCS, you W&T of and as to the detail. the potential advantages exploring see prior doing onshore? you the for of Thanks versus CCS can

Tracy Krohn

and technology I to do underground aware to of need long great And to feel don’t a get takes out we’ve that. sure. until effort it. go to the people that There’s just come I that. and to mean, dumping a the start has time is the need coming permits. What it COX off that gases think real on deal do be with infrastructure to the to separate sequestration separated with slew changes it ground. The the regard of stack, that people that is in in a Yes, it’s it’s along offshore. whole how it pure before get technology flue-gas And out and particulates out be of just COX and not. And that you got

components, that doubtful sulfur it’s will course maybe of nitration And probably it’ll these be There emissions. gas other some two COX. pure just and is of be compound dioxide

We the So see encapsulate money. out the ground. what great COX deal the spending of I value already going a to in fit able reservoirs of to huge and really you don’t description have of be in need that volumes

point to tends Texas or the premise matter. permitting. Alabama real So in for the Louisiana or time There again, that isn’t problem, be in at this

cash that think up, permitting I speeds little in a that until rather this time. waste point So I’d a it’s focus that on of process at bit generate of our energy. flow things

Nate Pendleton

for Got it. Thanks taking my question.

Tracy Krohn

Yes, sir.

Operator

question will go Research. Please Tower from next Jeff with come Water Robertson Our ahead.

Jeff Robertson

morning, Thank Tracy. you. Good

maybe your concerns You bit in and you your talk of market? see valuations you into you talked the that spending. some capital pricing little on outlook affecting the their other about way and a about decision people volatility pricing acquisition see volatility seeing Are play

Tracy Krohn

factor affected do. Oil in most. the gas day are projects we day, always by commodity Yes, by week, Clearly, that almost price everything and by week, it's even week maybe are. we

I I So be go, Mobile gas you prices can't at price is point short-term, don't oil gas of that. the pretty oil from is a hedged but facility. either. we going not isn't way hedged company are hedged to rest the in are on not and they're the Bay corporate perception heavily We're you But the can do we going is what the our for which but all at up. time. to tell know my on now, that hedged see tell week this I going

Jeff Robertson

million funding over one for Can assume considerations debt? around the you plays of on million size it with you You all if thoughts an would you or balance on just cash all But about sure cash, $XXX use – have a talk opportunity. at acquisition just $XXX sheet. can June the little you do depends I'm all how your out? the of that share XX,

Tracy Krohn

purchase, not them think as all as entities individual of basis, on at hybrids. corporate look as we all a properties, them We for Yes. but necessarily

them more proved have reserves. of Some producing

disproportionate more numbers. pipe them Some of some in have of them proved in have reserves, undeveloped

better them cash Some than flow have of others.

more have them of decommissioning Some liabilities. abandonment

important more about So liabilities years. concerned you they're consideration We've because entities that concerned the not in private as understand course, strategic size think a think matter it's lot equity of done different. all gotten And it's does this they're that – billion the have to. Perhaps that the business over decommissioning involved of they're around really properties have attention not paid players. about the an much $X that here. We of then that because there's they're not that's over well. very size, I And important the

would tell good drill workovers, upside upgrades that property, And to a flow But and I something flow able the to to then bring be and situation with that we the is cash the cash bit drill might ideal that short-term. that facility is can you we fruition. generate consider we can do rest recompletions,

properties they're – So a bit we've bunch seen of little over different years. different. They're the a all

of things also we So good value. take have pretty the have value from a appreciation and away that

Jeff Robertson

you. Thank

Operator

is Instructions] follow-up John Our with question [Operator a from ROTH next ahead. Please White go MKM.

John White

wanted to to and come recent but on my him working appointment, another going I with back also I had to look Sameer and wanted on I forward Yes. congratulations offer his question, forward. to

Sameer Parasnis

working John. I you, appreciate Thank you to as look with it. I forward well.

John White

has do XXXX? Tracy, your into did previous on pushed that indicate those Great. well comments comments Holy been Grail,

Tracy Krohn

sir. XXXX. around February we begin that's of – there Yes, Yes, expect to

John White

to thank it the Okay, operator. turn back you. I’ll

Operator

back the I to would any for Tracy This will now our question-and-answer closing conclude Krohn remarks. turn session. over to like conference

Tracy Krohn

again look We forward much. Look, our appreciate Thank have to conference other we'll talking some attention. your operator. Hopefully, very we you with you call. next soon. Thanks, before news

Operator

disconnect presentation. you attending much for very today's your now you may The lines. conference Thank And has now concluded.

W&T Offshore (WTI) 2 Aug 232023 Q2 Earnings call transcript