W&T Offshore, Inc. (NYSE: WTI) (“W&T” or the “Company”)
today reported operational and financial results for the first
quarter of 2024 and declared second quarter 2024 dividend of $0.01
per share.
This press release includes non-GAAP financial
measures, including Adjusted Net (Loss) Income, Adjusted EBITDA,
Free Cash Flow and Net Debt, which are described and reconciled to
the most comparable GAAP measures below in the accompanying tables
under “Non-GAAP Information.”
Key highlights for the first quarter of 2024 and
through the date of this press release include:
- Completed
accretive acquisition of six shallow water Gulf of Mexico (“GOM”)
fields in January 2024 (the “Cox acquisition”);
- Paid $77.2
million for the Cox acquisition where W&T acquired and will
operate 100% working interests in six fields that are located
adjacent to existing W&T operations;
- Hired select
Cox offshore personnel while completing all required regulatory
transfers of operatorship, lease ownership and financial
responsibility;
- Integrated
accounting, production reporting, cost tracking and other data into
existing W&T systems, while integrating and inspecting fields
to ensure W&T’s health, safety and environmental standards are
implemented; and
- Year-end 2023
proved reserves based on an independent engineering report prepared
by Netherland Sewell and Associates (“NSAI”) of 21.8 million
barrels of oil equivalent (“MMBoe”), which is around 17% higher
than W&T’s expectation of 18.7 MMBoe at the time of acquisition
announcement;
- Generated
production of 35.1 thousand barrels of oil equivalent per day
(“MBoe/d”) (55% liquids) in the first quarter of 2024, an increase
of approximately 3% over fourth quarter 2023 and above the midpoint
of guidance;
- Three of the
Cox fields, Mobile 916, West Delta 073, and Eugene Island 064, were
shut-in during the first quarter 2024. As such, Adjusted EBITDA did
not reflect the full potential of the Cox acquisition;
- Reported net
loss of $11.5 million, or $(0.08) per diluted share;
- Adjusted Net
Loss totaled $7.6 million, or $(0.05) per share, which excludes the
net unrealized gain on outstanding derivative contracts and non-ARO
plugging and abandonment (“P&A”) costs;
- Reported
Adjusted EBITDA in the first quarter of 2024 of $49.4 million, an
increase of approximately 10% over the fourth quarter of 2023;
- Produced net
cash from operating activities of $11.6 million and Free Cash Flow
of $32.4 million in the first quarter of 2024, marking the 25th
consecutive quarter of positive Free Cash Flow;
- Reported cash
and cash equivalents of $94.8 million and Net Debt of $296.4
million at March 31, 2024, which reflects the impact of funding the
Cox acquisition using cash on hand;
- Continued to
maintain a low leverage profile with Net Debt to trailing twelve
months (“TTM”) Adjusted EBITDA of 1.6x;
- Adopted a
quarterly cash dividend policy in November 2023 and paid dividends
of $0.01 per common share in December 2023 and March 2024;
- Declared second
quarter of 2024 dividend of $0.01 per share, which will be payable
on May 31, 2024 to stockholders of record on May 24, 2024;
- Expanded the
size of the Board to six members and appointed Mr. John D. Buchanan
to fill the vacancy on the Board effective April 8, 2024; and
- Scheduled first
quarter 2024 earnings conference call for 8:30 am central time on
Monday, May 13, 2024.
Tracy W. Krohn, W&T’s Board Chair and Chief
Executive Officer, commented, “Our ability to execute our strategic
vision enabled W&T to deliver another quarter of solid results.
We reported production above the midpoint of our guidance range and
more importantly, we increased oil production by approximately 15%
quarter-over-quarter primarily due to the Cox acquisition. This
helped us increase Adjusted EBITDA to $49.4 million, a 10% increase
quarter-over-quarter, which outpaced the 3% increase in production
over the same period. In addition, we recorded lease operating
expenses below the low end of our guidance, Some of this decrease
in lease operating expenses was due to deferrals of workovers and
facilities projects, further contributing to our increased Adjusted
EBITDA. We have made good progress integrating these new assets
into W&T, and we still have more work to do that should help to
increase production from the new fields. We will continue to focus
on increasing our production, particularly our oil production, and
managing our operating costs. Our focus on free cash flow
generation resulted in W&T reporting over $32 million in Free
Cash Flow, the 25th consecutive quarter of positive Free Cash Flow,
and more than double our Free Cash Flow in both the prior quarter
and first quarter of 2023.
“Our strong balance sheet allowed us to close on
the Cox acquisition utilizing a portion of our cash on hand, and we
remain focused on expanding our healthy cash balance of almost $100
million. We plan to continue to utilize our significant cash
position and expertise in acquiring complementary GOM assets to
enhance the scale of W&T. Acquisitions remain a key component
of our success, and it is our ability to integrate and enhance the
assets that we acquire that has allowed us to grow reserves and
production over the past 40 years. We remain well positioned to
enhance our portfolio through additional accretive acquisition
opportunities. We also remain committed to increasing shareholder
value and returning value to our shareholders through the quarterly
dividend program that we initiated in November 2023. We believe in
our proven strategy and expect to continue to execute operationally
and financially in 2024 and beyond.”
Production, Prices and
Revenue: Production for the first quarter of
2024 was 35.1 MBoe/d compared with 34.1 MBoe/d for the fourth
quarter of 2023 and 32.5 MBoe/d for the corresponding period in
2023. The increase in production compared to the fourth quarter of
2023 was primarily driven by the inclusion of the Cox acquisition,
which closed in January 2024 and was partially offset by natural
decline. First quarter 2024 production was comprised of 15.4
thousand barrels per day (“MBbl/d”) of oil (44%), 3.8 MBbl/d of
natural gas liquids (“NGLs”) (11%), and 96.0 million cubic feet per
day (“MMcf/d”) of natural gas (45%). Production in the second
quarter of 2024 will be negatively impacted by planned maintenance
which required shut-ins of select fields and is reflected in second
quarter guidance.
W&T’s average realized price per Boe before
realized derivative settlements was $42.55 per Boe in the first
quarter of 2024, an increase of 2% from $41.55 per Boe in the
fourth quarter of 2023 and a decrease of 4% from $44.32 per Boe in
the first quarter of 2023. First quarter 2024 oil, NGL and natural
gas prices before realized derivative settlements were $76.44 per
barrel, $21.78 per barrel, and $2.48 per Mcf, respectively.
Revenues for the first quarter of 2024 were
$140.8 million, which was approximately 6% higher than fourth
quarter of 2023 revenue of $132.3 million due to higher production
volumes coupled with slightly higher realized prices. First quarter
2024 revenue was approximately 7% higher than $131.7 million of
revenue in the first quarter of 2023 due to higher production
volumes, slightly offset by moderately lower realized natural gas
and NGL prices.
Lease Operating Expense: Lease
operating expense (“LOE”), which includes base lease operating
expenses, insurance premiums, workovers and facilities maintenance
expenses, was $70.8 million in the first quarter of 2024, which was
below the bottom end of the previously provided guidance range
primarily due to some workovers and facilities maintenance expenses
being deferred. LOE for the first quarter of 2024 was approximately
10% higher compared to $64.6 million in the fourth quarter of 2023,
primarily due to higher base lease operating expenses related to
the Cox acquisition and higher than the $65.2 million for the
corresponding period in 2023. On a component basis for the first
quarter of 2024, base LOE and insurance premiums were $61.0
million, workovers were $3.0 million and facilities maintenance and
other expenses were $6.8 million. On a unit of production basis,
LOE was $22.14 per Boe in the first quarter of 2024. This compares
to $20.61 per Boe for the fourth quarter of 2023 and $22.29 per Boe
for the first quarter of 2023. LOE per Boe is expected to be higher
in the second quarter of 2024 due to the completion of deferred
workovers and facilities projects. Overall, full year 2024 LOE is
projected to be approximately $23.00 per Boe.
Gathering, Transportation Costs and
Production Taxes: Gathering, transportation
costs and production taxes totaled $7.5 million ($2.36 per Boe) in
the first quarter of 2024, compared to $6.6 million ($2.11 per Boe)
in the fourth quarter of 2023 and $6.1 million ($2.10 per Boe) in
the first quarter of 2023. Gathering, transportation costs and
production taxes increased due to additional production and
assumption of commercial contracts related to the Cox
acquisition.
Depreciation, Depletion and Amortization
(“DD&A”): DD&A was $10.61 per Boe in the first
quarter of 2024. This compares to $10.73 per Boe and $7.74 per Boe
for the fourth quarter of 2023 and the first quarter of 2023,
respectively.
Asset Retirement Obligations
Accretion: Asset retirement obligations accretion was
$2.49 per Boe in the first quarter of 2024. This compares to $2.35
per Boe and $2.57 per Boe for the fourth quarter of 2023 and the
first quarter of 2023, respectively.
General & Administrative Expenses
(“G&A”): G&A was $20.5 million for the first
quarter of 2024, which increased from $18.3 million in the fourth
quarter of 2023 primarily due to higher payroll and benefits
related costs. G&A increased by $0.6 million year-over-year
from $19.9 million in the first quarter of 2023 due to higher
medical claims offset by a decrease in legal expenses. On a unit of
production basis, G&A was $6.41 per Boe in the first quarter of
2024 compared to $5.82 per Boe in the fourth quarter of 2023 and
$6.81 per Boe in the corresponding period of 2023. G&A in the
first quarter of 2024 included $3.0 million of non-cash
compensation expense compared with $3.1 million in the fourth
quarter of 2023 and $1.9 million in the first quarter of 2023.
Derivative Gain: In the first
quarter of 2024, W&T recorded a net gain of $4.9 million
related to commodity derivative contracts comprised of a $1.1
million unrealized gain related to the increase in fair value of
open contracts and $3.8 million of realized gains. W&T
recognized a net gain of $13.2 million in the fourth quarter of
2023 and a net gain of $39.2 million in the first quarter of 2023
related to commodity derivative activities.
As of March 31, 2024, W&T has approximately
65.0 MMcf/d of natural gas swaps for the second quarter of 2024 and
no existing hedges for oil. A significant portion of W&T’s
natural gas hedges, in the form of sold swaps and purchased calls
and puts, were entered into in conjunction with the non-recourse
Mobile Bay term loan (the “Term Loan”) entered into by borrowers
owned by the Company’s wholly-owned subsidiary Aquasition Energy
LLC. W&T’s natural gas hedges transition from swaps until first
quarter of 2025 to exclusively puts thereafter. The $2.35/MMBtu
volume-weighted average strike price on the cumulative puts
provides downside protection while providing full upside potential
should future natural gas prices increase as demonstrated by the
current forward curve for 2025 and 2026.
A summary of the Company’s outstanding
derivative positions is provided in the investor presentation
posted on W&T’s website.
Interest Expense: Net interest
expense in the first quarter of 2024 was $10.1 million
compared to $9.7 million in the fourth quarter of 2023 and $14.7
million in the first quarter of 2023. The decrease in interest
expense in the first quarter of 2024 compared with the first
quarter of 2023 was primarily due to two offsetting factors related
to the redemption of the $552.5 million 9.75% Senior Second Lien
Notes and issuance of the new $275.0 million 11.75% Senior Second
Lien Notes. Lower interest expense on the reduced principal balance
was partially offset by a higher interest rate on the new notes as
well as decreased interest income due to a lower cash balance.
Other
Expense: During 2021 and 2022, as a
result of the declaration of bankruptcy by a third party that is
the indirect successor in title to certain offshore interests that
were previously divested by the Company, W&T recorded a
contingent loss accrual related to anticipated non-ARO plugging and
abandonment costs. During the first quarter of 2024, the Company
reassessed its existing obligations and recorded an additional $5.3
million.
Income Tax Expense: W&T
recognized income tax expense of $1.0 million in the first quarter
of 2024. This compares to the recognition of income tax expense of
$1.9 million and $8.6 million for the quarters ended December 31,
2023 and March 31, 2023, respectively.
Balance Sheet and Liquidity: As
of March 31, 2024, W&T had available liquidity of $144.8
million comprised of $94.8 million in unrestricted cash and cash
equivalents and $50.0 million of borrowing availability under
W&T’s first priority secured revolving facility provided by
Calculus Lending LLC. As of March 31, 2024, the Company had total
debt of $391.2 million and Net Debt of $296.4 million. Of W&T’s
total debt of $391.2 million, only $279.9 million is recourse to
W&T. The remaining $111.3 million is held at W&T’s
subsidiary, Aquasition Energy LLC, and is non-recourse to W&T.
As of March 31, 2024, Net Debt to TTM Adjusted EBITDA was 1.6x.
Capital Expenditures: Capital
expenditures on an accrual basis (excluding acquisitions) in the
first quarter of 2024 were $3.2 million, and asset retirement
settlement costs totaled $3.8 million. Investments related to
acquisitions in the first quarter of 2024 totaled $80.5 million,
which included $77.2 million for the Cox acquisition and $3.3
million of final purchase price adjustments related to W&T’s
acquisition of properties in September 2023.
Cox Acquisition and
Integration
In January 2024, W&T was the successful
bidder for six fields in the Gulf of Mexico, including Eugene
Island 064, Main Pass 061, Mobile 904, Mobile 916, South Pass 049
and West Delta 073, all of which include a 100% working interest
and an average 82% net revenue interest. They are located in water
depths ranging between approximately 15 and 400 feet. W&T
expects that the properties’ proximity to W&T’s areas of
existing operations could provide the ability for W&T to
capture operational synergies. The final purchase price for the
assets was $77.2 million, including certain closing costs, which
was funded from the Company’s cash on hand. Key highlights of the
transaction are as follows:
- Adds
significant proved reserves of 21.8 MMBoe1 (60% liquids) based on
an independent engineering report prepared by NSAI;
- Based on the
cash consideration paid of $77.2 million, this equates to a price
of $3.54 per Boe of proved reserves;
- Field logistics
are being examined to see if more cost-effective tie-ins and
throughput can be done with existing W&T facilities adjacent to
the newly acquired fields; and
- In first
quarter 2024 the net production from these six fields acquired was
approximately 3.3 MBoe/d, which is approximately 50% below the
assets’ potential due to three of the six fields being shut-in. As
it has done after prior acquisitions, W&T is inspecting and
optimizing operations, and also negotiating midstream services at
the newly acquired fields. This required temporarily shutting in
Mobile 916, West Delta 073, and Eugene Island 064. W&T will
provide additional information on these fields in the future.
OPERATIONS UPDATE
Well Recompletions and
Workovers
During the first quarter of 2024, the Company
performed three workovers and three recompletions that positively
impacted production for the quarter. W&T plans to continue
performing these low cost, short payout operations that impact both
production and revenue.
Cash Dividend Policy
The Company paid its first quarter 2024 dividend
of $0.01 per share on March 25, 2024 to stockholders of record on
March 18, 2024.
The Board of Directors declared a second quarter
2024 dividend of $0.01 per share which is to be paid on May 31,
2024 to stockholders of record on May 24, 2024.
Addition to W&T’s Board of
Directors
In April 2024, W&T’s Board of Directors
voted to expand the size of the Board to six members and appointed
Mr. John D. Buchanan to fill the vacancy on the Board effective
April 8, 2024. He will stand for election in the upcoming annual
meeting of shareholders. Mr. Buchanan has more than 30 years of
experience as a seasoned oil and gas, commercial and banking
attorney. He most recently served as an Assistant General Counsel
at ExxonMobil and also has prior experience working at the Federal
Reserve Bank of Dallas, where he served as General Counsel and
Corporate Secretary.
Second Quarter and Full Year 2024
Production and Expense Guidance
The guidance for the second quarter and full
year 2024 in the table below represents the Company’s current
expectations. Please refer to the section entitled “Forward-Looking
and Cautionary Statements” below for risk factors that could impact
guidance.
|
|
|
Production |
Second Quarter 2024 |
Full Year 2024 |
Oil (MBbl) |
1,225 – 1,400 |
5,100 – 5,800 |
NGLs (MBbl) |
280 – 315 |
1,150 – 1,375 |
Natural gas (MMcf) |
8,800 – 10,060 |
37,000 – 44,500 |
Total equivalents (MBoe) |
2,972 – 3,392 |
12,417 – 14,592 |
Average daily equivalents (MBoe/d) |
32.7 – 37.3 |
33.9 – 39.9 |
Expenses |
Second Quarter 2024 |
Full Year 2024 |
Lease operating expense ($MM) |
83.0 – 92.0 |
295.0 – 332.0 |
Gathering, transportation & production taxes ($MM) |
8.1 – 8.9 |
34.5 – 39.0 |
General & administrative – cash ($MM) |
13.7 – 15.1 |
59.0 – 66.5 |
General & administrative – non-cash ($MM) |
2.9 – 3.3 |
12.5 – 14.0 |
DD&A ($ per Boe) |
|
11.4 – 12.9 |
|
W&T expects substantially all taxes in 2024
to be deferred.
Conference Call
Information
W&T will hold a conference call to discuss
its financial and operational results on Monday, May 13, 2024 at
8:30 a.m. Central Time (9:30 a.m. Eastern Time). Interested parties
may dial 1-844-739-3797. International parties may dial
1-412-317-5713. Participants should request to connect to the
“W&T Offshore Conference Call”. This call will also be webcast
and available on W&T’s website at www.wtoffshore.com under
“Investors”. An audio replay will be available on the Company’s
website following the call.
About W&T Offshore
W&T Offshore, Inc. is an independent oil and
natural gas producer with operations offshore in the Gulf of Mexico
and has grown through acquisitions, exploration and development. As
of March 31, 2024, the Company had working interests in 63 fields
in federal and state waters (which include 54 fields in federal
waters and nine in state waters). The Company has under lease
approximately 693,900 gross acres (536,200 net acres) spanning
across the outer continental shelf off the coasts of Louisiana,
Texas, Mississippi and Alabama, with approximately 532,400 gross
acres on the conventional shelf, approximately 153,500 gross acres
in the deepwater and 8,000 gross acres in Alabama state waters. A
majority of the Company’s daily production is derived from wells it
operates. For more information on W&T, please visit the
Company’s website at www.wtoffshore.com.
Forward-Looking and Cautionary
Statements
This press release contains forward-looking
statements within the meaning of Section 27A of the Securities Act
of 1933, as amended, and Section 21E of the Securities Exchange Act
of 1934, as amended. All statements other than statements of
historical facts included in this release regarding the Company’s
financial position, operating and financial performance, business
strategy, plans and objectives of management for future operations,
projected costs, industry conditions, potential acquisitions, the
impact of and integration of acquired assets, and indebtedness are
forward-looking statements. When used in this release,
forward-looking statements are generally accompanied by terms or
phrases such as “estimate,” “project,” “predict,” “believe,”
“expect,” “continue,” “anticipate,” “target,” “could,” “plan,”
“intend,” “seek,” “goal,” “will,” “should,” “may” or other words
and similar expressions that convey the uncertainty of future
events or outcomes, although not all forward-looking statements
contain such identifying words. Items contemplating or making
assumptions about actual or potential future production and sales,
prices, market size, and trends or operating results also
constitute such forward-looking statements.
These forward-looking statements are based on
the Company’s current expectations and assumptions about future
events and speak only as of the date of this release. While
management considers these expectations and assumptions to be
reasonable, they are inherently subject to significant business,
economic, competitive, regulatory and other risks, contingencies
and uncertainties, most of which are difficult to predict and many
of which are beyond the Company’s control. Accordingly, you are
cautioned not to place undue reliance on these forward-looking
statements, as results actually achieved may differ materially from
expected results described in these statements. The Company does
not undertake, and specifically disclaims, any obligation to update
any forward-looking statements to reflect events or circumstances
occurring after the date of such statements, unless required by
law.
Forward-looking statements are subject to risks
and uncertainties that could cause actual results to differ
materially including, among other things, the regulatory
environment, including availability or timing of, and conditions
imposed on, obtaining and/or maintaining permits and approvals,
including those necessary for drilling and/or development projects;
the impact of current, pending and/or future laws and regulations,
and of legislative and regulatory changes and other government
activities, including those related to permitting, drilling,
completion, well stimulation, operation, maintenance or abandonment
of wells or facilities, managing energy, water, land, greenhouse
gases or other emissions, protection of health, safety and the
environment, or transportation, marketing and sale of the Company’s
products; inflation levels; global economic trends, geopolitical
risks and general economic and industry conditions, such as the
global supply chain disruptions and the government interventions
into the financial markets and economy in response to inflation
levels and world health events; volatility of oil, NGL and natural
gas prices; the global energy future, including the factors and
trends that are expected to shape it, such as concerns about
climate change and other air quality issues, the transition to a
low-emission economy and the expected role of different energy
sources; supply of and demand for oil, natural gas and NGLs,
including due to the actions of foreign producers, importantly
including OPEC and other major oil producing companies (“OPEC
Plus”) and change in OPEC Plus’s production levels; disruptions to,
capacity constraints in, or other limitations on the pipeline
systems that deliver the Company’s oil and natural gas and other
processing and transportation considerations; inability to generate
sufficient cash flow from operations or to obtain adequate
financing to fund capital expenditures, meet the Company’s working
capital requirements or fund planned investments; price
fluctuations and availability of natural gas and electricity; the
Company’s ability to use derivative instruments to manage commodity
price risk; the Company’s ability to meet the Company’s planned
drilling schedule, including due to the Company’s ability to obtain
permits on a timely basis or at all, and to successfully drill
wells that produce oil and natural gas in commercially viable
quantities; uncertainties associated with estimating proved
reserves and related future cash flows; the Company’s ability to
replace the Company’s reserves through exploration and development
activities; drilling and production results, lower–than–expected
production, reserves or resources from development projects or
higher–than–expected decline rates; the Company’s ability to obtain
timely and available drilling and completion equipment and crew
availability and access to necessary resources for drilling,
completing and operating wells; changes in tax laws; effects of
competition; uncertainties and liabilities associated with acquired
and divested assets; the Company’s ability to make acquisitions and
successfully integrate any acquired businesses; asset impairments
from commodity price declines; large or multiple customer defaults
on contractual obligations, including defaults resulting from
actual or potential insolvencies; geographical concentration of the
Company’s operations; the creditworthiness and performance of the
Company’s counterparties with respect to its hedges; impact of
derivatives legislation affecting the Company’s ability to hedge;
failure of risk management and ineffectiveness of internal
controls; catastrophic events, including tropical storms,
hurricanes, earthquakes, pandemics and other world health events;
environmental risks and liabilities under U.S. federal, state,
tribal and local laws and regulations (including remedial actions);
potential liability resulting from pending or future litigation;
the Company’s ability to recruit and/or retain key members of the
Company’s senior management and key technical employees;
information technology failures or cyberattacks; and governmental
actions and political conditions, as well as the actions by other
third parties that are beyond the Company’s control, and other
factors discussed in W&T Offshore’s most recent Annual Report
on Form 10-K and subsequent Quarterly Reports on Form 10-Q found at
www.sec.gov or at the Company’s website at www.wtoffshore.com under
the Investor Relations section.
W&T OFFSHORE, INC. |
Condensed Consolidated Statements of
Operations |
(In thousands, except per share data) |
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
March 31, |
|
December 31, |
|
March 31, |
|
|
2024 |
|
2023 |
|
2023 |
Revenues: |
|
|
|
|
|
|
|
|
|
Oil |
|
$ |
107,015 |
|
|
$ |
94,076 |
|
|
$ |
97,000 |
|
NGLs |
|
|
7,469 |
|
|
|
6,851 |
|
|
|
7,795 |
|
Natural gas |
|
|
21,616 |
|
|
|
29,401 |
|
|
|
24,804 |
|
Other |
|
|
4,687 |
|
|
|
2,012 |
|
|
|
2,126 |
|
Total revenues |
|
|
140,787 |
|
|
|
132,340 |
|
|
|
131,725 |
|
|
|
|
|
|
|
|
|
|
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
Lease operating expenses |
|
|
70,830 |
|
|
|
64,643 |
|
|
|
65,186 |
|
Gathering, transportation and production taxes |
|
|
7,540 |
|
|
|
6,620 |
|
|
|
6,136 |
|
Depreciation, depletion, and amortization |
|
|
33,937 |
|
|
|
33,658 |
|
|
|
22,624 |
|
Asset retirement obligations accretion |
|
|
7,969 |
|
|
|
7,377 |
|
|
|
7,510 |
|
General and administrative expenses |
|
|
20,515 |
|
|
|
18,251 |
|
|
|
19,919 |
|
Total operating expenses |
|
|
140,791 |
|
|
|
130,549 |
|
|
|
121,375 |
|
|
|
|
|
|
|
|
|
|
|
Operating (loss) income |
|
|
(4 |
) |
|
|
1,791 |
|
|
|
10,350 |
|
|
|
|
|
|
|
|
|
|
|
Interest expense, net |
|
|
10,072 |
|
|
|
9,729 |
|
|
|
14,713 |
|
Derivative gain, net |
|
|
(4,877 |
) |
|
|
(13,199 |
) |
|
|
(39,240 |
) |
Other expense, net |
|
|
5,230 |
|
|
|
3,772 |
|
|
|
233 |
|
(Loss) income before income
taxes |
|
|
(10,429 |
) |
|
|
1,489 |
|
|
|
34,644 |
|
Income tax expense |
|
|
1,045 |
|
|
|
1,932 |
|
|
|
8,639 |
|
Net (loss) income |
|
$ |
(11,474 |
) |
|
$ |
(443 |
) |
|
$ |
26,005 |
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income per
share: |
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
(0.08 |
) |
|
$ |
— |
|
|
$ |
0.18 |
|
Diluted |
|
|
(0.08 |
) |
|
|
— |
|
|
|
0.17 |
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares
outstanding |
|
|
|
|
|
|
|
|
|
Basic |
|
|
146,857 |
|
|
|
146,578 |
|
|
|
146,418 |
|
Diluted |
|
|
146,857 |
|
|
|
146,578 |
|
|
|
148,726 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
W&T OFFSHORE, INC. |
Condensed Operating Data |
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
March 31, |
|
December 31, |
|
March 31, |
|
|
2024 |
|
2023 |
|
2023 |
Net sales volumes: |
|
|
|
|
|
|
|
|
|
|
|
|
Oil (MBbls) |
|
|
1,400 |
|
|
|
1,219 |
|
|
|
1,350 |
|
NGLs (MBbls) |
|
|
343 |
|
|
|
329 |
|
|
|
294 |
|
Natural gas (MMcf) |
|
|
8,733 |
|
|
|
9,533 |
|
|
|
7,677 |
|
Total oil and natural gas (MBoe) (1) |
|
|
3,199 |
|
|
|
3,136 |
|
|
|
2,924 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average daily equivalent sales
(MBoe/d) |
|
|
35.1 |
|
|
|
34.1 |
|
|
|
32.5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average realized sales prices
(before the impact of derivative settlements): |
|
|
|
|
|
|
|
|
|
|
|
|
Oil ($/Bbl) |
|
$ |
76.44 |
|
|
$ |
77.17 |
|
|
$ |
71.85 |
|
NGLs ($/Bbl) |
|
|
21.78 |
|
|
|
20.82 |
|
|
|
26.51 |
|
Natural gas ($/Mcf) |
|
|
2.48 |
|
|
|
3.08 |
|
|
|
3.23 |
|
Barrel of oil equivalent ($/Boe) |
|
|
42.55 |
|
|
|
41.55 |
|
|
|
44.32 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average operating expenses per
Boe ($/Boe): |
|
|
|
|
|
|
|
|
|
|
|
|
Lease operating expenses |
|
$ |
22.14 |
|
|
$ |
20.61 |
|
|
$ |
22.29 |
|
Gathering, transportation and production taxes |
|
|
2.36 |
|
|
|
2.11 |
|
|
|
2.10 |
|
Depreciation, depletion, and amortization |
|
|
10.61 |
|
|
|
10.73 |
|
|
|
7.74 |
|
Asset retirement obligations accretion |
|
|
2.49 |
|
|
|
2.35 |
|
|
|
2.57 |
|
General and administrative expenses |
|
|
6.41 |
|
|
|
5.82 |
|
|
|
6.81 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) MBoe is determined using the ratio of six
Mcf of natural gas to one Bbl of crude oil, condensate or NGLs
(totals may not compute due to rounding). The conversion ratio does
not assume price equivalency and the price on an equivalent basis
for oil, NGLs and natural gas may differ significantly. The
realized prices presented above are volume-weighted for production
in the respective period.
W&T OFFSHORE, INC. |
Consolidated Balance Sheets |
(In thousands) |
(Unaudited) |
|
|
|
|
|
|
|
|
|
March 31, |
|
December 31, |
|
|
2024 |
|
2023 |
Assets |
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
94,822 |
|
|
$ |
173,338 |
|
Restricted cash |
|
|
4,417 |
|
|
|
4,417 |
|
Receivables: |
|
|
|
|
|
|
Oil and natural gas sales |
|
|
66,959 |
|
|
|
52,080 |
|
Joint interest, net |
|
|
18,280 |
|
|
|
15,480 |
|
Other |
|
|
1,901 |
|
|
|
2,218 |
|
Prepaid expenses and other assets |
|
|
21,342 |
|
|
|
17,447 |
|
Total current assets |
|
|
207,721 |
|
|
|
264,980 |
|
|
|
|
|
|
|
|
Oil and natural gas properties
and other, net |
|
|
825,628 |
|
|
|
749,056 |
|
Restricted deposits for asset
retirement obligations |
|
|
22,346 |
|
|
|
22,272 |
|
Deferred income taxes |
|
|
38,040 |
|
|
|
38,774 |
|
Other assets |
|
|
32,740 |
|
|
|
38,923 |
|
Total assets |
|
$ |
1,126,475 |
|
|
$ |
1,114,005 |
|
|
|
|
|
|
|
|
Liabilities and Shareholders’ Equity |
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
Accounts payable |
|
$ |
75,966 |
|
|
$ |
78,857 |
|
Accrued liabilities |
|
|
15,559 |
|
|
|
31,978 |
|
Undistributed oil and natural gas proceeds |
|
|
52,835 |
|
|
|
42,134 |
|
Advances from joint interest partners |
|
|
2,864 |
|
|
|
2,962 |
|
Current portion of asset retirement obligation |
|
|
37,745 |
|
|
|
31,553 |
|
Current portion of long-term debt, net |
|
|
6,987 |
|
|
|
29,368 |
|
Total current liabilities |
|
|
191,956 |
|
|
|
216,852 |
|
|
|
|
|
|
|
|
Asset retirement
obligations |
|
|
492,066 |
|
|
|
467,262 |
|
Long-term debt, net |
|
|
384,241 |
|
|
|
361,236 |
|
Other liabilities |
|
|
16,672 |
|
|
|
19,420 |
|
Commitments and
contingencies |
|
|
20,780 |
|
|
|
18,043 |
|
|
|
|
|
|
|
|
Shareholders’ equity: |
|
|
|
|
|
|
Preferred stock |
|
|
— |
|
|
|
— |
|
Common stock |
|
|
1 |
|
|
|
1 |
|
Additional paid-in capital |
|
|
588,563 |
|
|
|
586,014 |
|
Retained deficit |
|
|
(543,637 |
) |
|
|
(530,656 |
) |
Treasury stock |
|
|
(24,167 |
) |
|
|
(24,167 |
) |
Total shareholders’ equity |
|
|
20,760 |
|
|
|
31,192 |
|
Total liabilities and
shareholders’ equity |
|
$ |
1,126,475 |
|
|
$ |
1,114,005 |
|
|
W&T OFFSHORE, INC. |
Condensed Consolidated Statements of Cash
Flows |
(In thousands) |
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
March 31, |
|
December 31, |
|
March 31, |
|
|
2024 |
|
2023 |
|
2023 |
Operating
activities: |
|
|
|
|
|
|
|
|
|
Net (loss) income |
|
$ |
(11,474 |
) |
|
$ |
(443 |
) |
|
$ |
26,005 |
|
Adjustments to reconcile net (loss) income to net cash provided by
operating activities: |
|
|
|
|
|
|
|
|
|
Depreciation, depletion, amortization and accretion |
|
|
41,906 |
|
|
|
41,035 |
|
|
|
30,134 |
|
Share-based compensation |
|
|
3,032 |
|
|
|
3,124 |
|
|
|
1,922 |
|
Amortization and write off of debt issuance costs |
|
|
1,292 |
|
|
|
1,266 |
|
|
|
3,249 |
|
Derivative gain, net |
|
|
(4,877 |
) |
|
|
(13,199 |
) |
|
|
(39,240 |
) |
Derivative cash settlements, net |
|
|
2,599 |
|
|
|
(2,809 |
) |
|
|
(5,328 |
) |
Deferred income taxes |
|
|
733 |
|
|
|
3,838 |
|
|
|
4,396 |
|
Changes in operating assets and liabilities: |
|
|
|
|
|
— |
|
|
|
|
Accounts receivable |
|
|
(17,362 |
) |
|
|
(2,989 |
) |
|
|
17,505 |
|
Prepaid expenses and other current assets |
|
|
433 |
|
|
|
(28,262 |
) |
|
|
31,489 |
|
Accounts payable, accrued liabilities and other |
|
|
(852 |
) |
|
|
43,155 |
|
|
|
(38,055 |
) |
Asset retirement obligation settlements |
|
|
(3,788 |
) |
|
|
(9,052 |
) |
|
|
(8,642 |
) |
Net cash provided by operating
activities |
|
|
11,642 |
|
|
|
35,664 |
|
|
|
23,435 |
|
|
|
|
|
|
|
|
|
|
|
Investing
activities: |
|
|
|
|
|
|
|
|
|
Investment in oil and natural gas properties and equipment |
|
|
(7,080 |
) |
|
|
(12,139 |
) |
|
|
(13,158 |
) |
Acquisition of property interests |
|
|
(80,515 |
) |
|
|
1,479 |
|
|
|
— |
|
Deposit related to acquisition of property interests |
|
|
— |
|
|
|
8,850 |
|
|
|
— |
|
Purchases of furniture, fixtures and other |
|
|
(24 |
) |
|
|
(347 |
) |
|
|
(156 |
) |
Net cash used in investing
activities |
|
|
(87,619 |
) |
|
|
(2,157 |
) |
|
|
(13,314 |
) |
|
|
|
|
|
|
|
|
|
|
Financing
activities: |
|
|
|
|
|
|
|
|
|
Proceeds from issuance of long-term debt |
|
|
— |
|
|
|
— |
|
|
|
275,000 |
|
Repayments of long-term debt |
|
|
(275 |
) |
|
|
(7,687 |
) |
|
|
(562,012 |
) |
Debt issuance costs |
|
|
(312 |
) |
|
|
— |
|
|
|
(6,354 |
) |
Payment of dividends |
|
|
(1,469 |
) |
|
|
(1,466 |
) |
|
|
— |
|
Other |
|
|
(483 |
) |
|
|
(9 |
) |
|
|
(723 |
) |
Net cash used in financing
activities |
|
|
(2,539 |
) |
|
|
(9,162 |
) |
|
|
(294,089 |
) |
Change in cash, cash
equivalents and restricted cash |
|
|
(78,516 |
) |
|
|
24,345 |
|
|
|
(283,968 |
) |
Cash, cash equivalents and
restricted cash, beginning of period |
|
|
177,755 |
|
|
|
153,410 |
|
|
|
465,774 |
|
Cash, cash equivalents and
restricted cash, end of period |
|
$ |
99,239 |
|
|
$ |
177,755 |
|
|
$ |
181,806 |
|
|
W&T OFFSHORE, INC. AND
SUBSIDIARIESNon-GAAP Information
Certain financial information included in
W&T’s financial results are not measures of financial
performance recognized by accounting principles generally accepted
in the United States, or GAAP. These non-GAAP financial measures
are “Net Debt”, “Adjusted Net Loss”, “Adjusted EBITDA” and “Free
Cash Flow” or are derivable from a combination of these measures.
Management uses these non-GAAP financial measures in its analysis
of performance. These disclosures may not be viewed as a substitute
for results determined in accordance with GAAP and are not
necessarily comparable to non-GAAP performance measures which may
be reported by other companies. Prior period amounts have been
conformed to the methodology and presentation of the current
period.
We calculate Net Debt as total debt (current and
long-term portions), less cash and cash equivalents. Management
uses Net Debt to evaluate the Company’s financial position,
including its ability to service its debt obligations.
Reconciliation of Net (Loss) Income to
Adjusted Net Loss
Adjusted Net Loss adjusts for certain items that
the Company believes affect comparability of operating results,
including items that are generally non-recurring in nature or whose
timing and/or amount cannot be reasonably estimated. These items
include unrealized commodity derivative gain, net, allowance for
credit losses, write-off of debt issuance costs, non-recurring
IT-transition costs, non-ARO plugging and abandonment costs, and
other which are then tax effected using the Federal Statutory
Rate.
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
March 31, |
|
December 31, |
|
March 31, |
|
|
2024 |
|
2023 |
|
2023 |
|
|
|
(in thousands) |
|
|
|
(Unaudited) |
Net (loss) income |
|
$ |
(11,474 |
) |
|
$ |
(443 |
) |
|
$ |
26,005 |
|
Unrealized commodity
derivative gain, net |
|
|
(1,122 |
) |
|
|
(14,785 |
) |
|
|
(39,470 |
) |
Allowance for credit
losses |
|
|
84 |
|
|
|
28 |
|
|
|
— |
|
Write-off debt issuance
costs |
|
|
— |
|
|
|
— |
|
|
|
2,330 |
|
Non-recurring costs related to
IT services transition |
|
|
758 |
|
|
|
413 |
|
|
|
785 |
|
Non-ARO P&A costs |
|
|
5,352 |
|
|
|
4,137 |
|
|
|
6 |
|
Other |
|
|
(214 |
) |
|
|
(240 |
) |
|
|
378 |
|
Tax effect of selected items
(1) |
|
|
(1,020 |
) |
|
|
2,194 |
|
|
|
7,554 |
|
Adjusted net
loss |
|
$ |
(7,636 |
) |
|
$ |
(8,696 |
) |
|
$ |
(2,412 |
) |
|
|
|
|
|
|
|
|
|
|
Adjusted net loss per common
share: |
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
(0.05 |
) |
|
$ |
(0.06 |
) |
|
$ |
(0.02 |
) |
Diluted |
|
$ |
(0.05 |
) |
|
$ |
(0.06 |
) |
|
$ |
(0.02 |
) |
|
|
|
|
|
|
|
|
|
|
Weighted average shares
outstanding: |
|
|
|
|
|
|
|
|
|
Basic |
|
|
146,857 |
|
|
|
146,578 |
|
|
|
146,418 |
|
Diluted |
|
|
146,857 |
|
|
|
146,578 |
|
|
|
146,418 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Selected items were tax effected with the
Federal Statutory Rate of 21% for each respective period.
W&T OFFSHORE, INC. AND
SUBSIDIARIESNon-GAAP Information
Adjusted EBITDA/ Free Cash Flow
Reconciliations
The Company also presents non-GAAP financial
measures of Adjusted EBITDA and Free Cash Flow. The Company defines
Adjusted EBITDA as net (loss) income plus net interest expense,
income tax expense, depreciation, depletion and amortization, ARO
accretion, excluding the unrealized commodity derivative gain,
allowance for credit losses, non-cash incentive compensation,
non-recurring IT-transition costs, non-ARO plugging and abandonment
costs, and other. Company management believes this presentation is
relevant and useful because it helps investors understand W&T’s
operating performance and makes it easier to compare its results
with those of other companies that have different financing,
capital and tax structures. Adjusted EBITDA should not be
considered in isolation from or as a substitute for net income, as
an indication of operating performance or cash flows from operating
activities or as a measure of liquidity. Adjusted EBITDA, as
W&T calculates it, may not be comparable to Adjusted EBITDA
measures reported by other companies. In addition, Adjusted EBITDA
does not represent funds available for discretionary use.
The Company defines Free Cash Flow as Adjusted
EBITDA (defined above), less capital expenditures, plugging and
abandonment costs and net interest expense (all on an accrual
basis). For this purpose, the Company’s definition of capital
expenditures includes costs incurred related to oil and natural gas
properties (such as drilling and infrastructure costs and the lease
maintenance costs) and equipment, but excludes acquisition costs of
oil and gas properties from third parties that are not included in
the Company’s capital expenditures guidance provided to investors.
Company management believes that Free Cash Flow is an important
financial performance measure for use in evaluating the performance
and efficiency of its current operating activities after the impact
of accrued capital expenditures, plugging and abandonment costs and
net interest expense and without being impacted by items such as
changes associated with working capital, which can vary
substantially from one period to another. There is no commonly
accepted definition of Free Cash Flow within the industry.
Accordingly, Free Cash Flow, as defined and calculated by the
Company, may not be comparable to Free Cash Flow or other similarly
named non-GAAP measures reported by other companies. While the
Company includes net interest expense in the calculation of Free
Cash Flow, other mandatory debt service requirements of future
payments of principal at maturity (if such debt is not refinanced)
are excluded from the calculation of Free Cash Flow. These and
other non-discretionary expenditures that are not deducted from
Free Cash Flow would reduce cash available for other uses.
The following table presents a reconciliation of
the Company’s net (loss) income, a GAAP measure, to Adjusted EBITDA
and Free Cash Flow, as such terms are defined by the Company:
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
March 31, |
|
December 31, |
|
March 31, |
|
|
2024 |
|
2023 |
|
2023 |
|
|
(in thousands) |
|
|
(Unaudited) |
Net (loss) income |
|
$ |
(11,474 |
) |
|
$ |
(443 |
) |
|
$ |
26,005 |
|
Interest expense, net |
|
|
10,072 |
|
|
|
9,729 |
|
|
|
14,713 |
|
Income tax expense |
|
|
1,045 |
|
|
|
1,932 |
|
|
|
8,639 |
|
Depreciation, depletion and
amortization |
|
|
33,937 |
|
|
|
33,658 |
|
|
|
22,624 |
|
Asset retirement obligations
accretion |
|
|
7,969 |
|
|
|
7,377 |
|
|
|
7,510 |
|
Unrealized commodity
derivative gain, net |
|
|
(1,122 |
) |
|
|
(14,785 |
) |
|
|
(39,470 |
) |
Allowance for credit
losses |
|
|
84 |
|
|
|
28 |
|
|
|
— |
|
Non-cash incentive
compensation |
|
|
3,032 |
|
|
|
3,124 |
|
|
|
1,922 |
|
Non-recurring costs related to
IT services transition |
|
|
758 |
|
|
|
413 |
|
|
|
785 |
|
Non-ARO P&A costs |
|
|
5,352 |
|
|
|
4,137 |
|
|
|
6 |
|
Other |
|
|
(214 |
) |
|
|
(240 |
) |
|
|
378 |
|
Adjusted
EBITDA |
|
$ |
49,439 |
|
|
$ |
44,930 |
|
|
$ |
43,112 |
|
|
|
|
|
|
|
|
|
|
|
Capital expenditures, accrual
basis (1) |
|
$ |
(3,156 |
) |
|
$ |
(10,319 |
) |
|
$ |
(7,367 |
) |
Asset retirement obligation
settlements |
|
|
(3,788 |
) |
|
|
(9,052 |
) |
|
|
(8,642 |
) |
Interest expense, net |
|
|
(10,072 |
) |
|
|
(9,729 |
) |
|
|
(14,713 |
) |
Free Cash
Flow |
|
$ |
32,423 |
|
|
$ |
15,830 |
|
|
$ |
12,390 |
|
|
(1) A reconciliation of the adjustment used to calculate Free
Cash Flow to the Condensed Consolidated Financial Statements is
included below:
|
|
|
|
|
|
|
|
|
|
Capital expenditures, accrual
basis reconciliation |
|
|
|
|
|
|
|
|
|
Investment in oil and natural gas properties and equipment |
|
$ |
(7,080 |
) |
|
$ |
(12,139 |
) |
|
$ |
(13,158 |
) |
Less: changes in operating assets and liabilities associated with
investing activities |
|
|
(3,924 |
) |
|
|
(1,820 |
) |
|
|
(5,791 |
) |
Capital expenditures, accrual basis |
|
$ |
(3,156 |
) |
|
$ |
(10,319 |
) |
|
$ |
(7,367 |
) |
|
The following table presents a reconciliation of
cash flow from operating activities, a GAAP measure, to Free Cash
Flow, as defined by the Company:
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
March 31, |
|
December 31, |
|
March 31, |
|
|
2024 |
|
2023 |
|
2023 |
|
|
(in thousands) |
|
|
(Unaudited) |
Net cash provided by operating activities |
|
$ |
11,642 |
|
|
$ |
35,664 |
|
|
$ |
23,435 |
|
Allowance for credit
losses |
|
|
84 |
|
|
|
28 |
|
|
|
— |
|
Amortization of debt items and
other items |
|
|
(1,292 |
) |
|
|
(1,266 |
) |
|
|
(3,249 |
) |
Non-recurring costs related to
IT services transition |
|
|
758 |
|
|
|
413 |
|
|
|
785 |
|
Current tax expense (benefit)
(1) |
|
|
312 |
|
|
|
(1,906 |
) |
|
|
4,243 |
|
Changes in derivatives
receivable (1) |
|
|
1,156 |
|
|
|
1,223 |
|
|
|
5,098 |
|
Non-ARO P&A costs |
|
|
5,352 |
|
|
|
4,137 |
|
|
|
6 |
|
Changes in operating assets
and liabilities, excluding asset retirement obligation
settlements |
|
|
17,781 |
|
|
|
(11,904 |
) |
|
|
(10,939 |
) |
Capital expenditures, accrual
basis |
|
|
(3,156 |
) |
|
|
(10,319 |
) |
|
|
(7,367 |
) |
Other |
|
|
(214 |
) |
|
|
(240 |
) |
|
|
378 |
|
Free Cash Flow |
|
$ |
32,423 |
|
|
$ |
15,830 |
|
|
$ |
12,390 |
|
|
(1) A reconciliation of the adjustments used to calculate Free
Cash Flow to the Condensed Consolidated Financial Statements is
included below:
|
|
|
|
|
|
|
|
|
|
|
Current tax benefit: |
|
|
|
|
|
|
|
|
|
|
Income tax expense |
|
$ |
1,045 |
|
|
$ |
1,932 |
|
|
$ |
8,639 |
|
Less: Deferred income taxes |
|
|
733 |
|
|
|
3,838 |
|
|
|
4,396 |
|
Current tax (benefit) expense |
|
$ |
312 |
|
|
$ |
(1,906 |
) |
|
$ |
4,243 |
|
|
|
|
|
|
|
|
|
|
|
|
Changes in derivatives
receivable (payable) |
|
|
|
|
|
|
|
|
|
|
Derivatives receivable, end of period |
|
$ |
1,427 |
|
|
$ |
271 |
|
|
$ |
524 |
|
Derivatives (receivable) payable, beginning of period |
|
|
(271 |
) |
|
|
952 |
|
|
|
4,574 |
|
Change in derivatives receivable |
|
$ |
1,156 |
|
|
$ |
1,223 |
|
|
$ |
5,098 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CONTACT: |
Al Petrie |
Sameer Parasnis |
|
Investor Relations
Coordinator |
Executive VP and CFO |
|
investorrelations@wtoffshore.com |
sparasnis@wtoffshore.com |
|
713-297-8024 |
713-513-8654 |
1 Reserves as of December 31, 2023 using year-end SEC
pricing
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