W&T Offshore, Inc. provides financial and operational results for the first quarter 2008. Some of the highlights for the first quarter 2008 include:
-- Revenues increased 45% to a record $356.5 million and Adjusted EBITDA increased 66% to a record $279.2 million for the first quarter 2008
-- Production was 5.1 million barrels of oil equivalent ("BOE") (30.8 billion cubic feet equivalent "Bcfe"), which exceeded the high end of guidance
-- Oil sales represent 57% of our revenue in first quarter 2008 compared to 40% in the same quarter last year
-- 100% success in the exploration drilling program, successfully drilling four conventional shelf exploration wells
-- Drilled four additional exploration wells after the close of the first quarter for a 100% success rate
-- Adjusted earnings per share increased 279% to an all time record quarter of $1.10
Tracy W. Krohn, Chairman and Chief Executive Officer, stated, "We are very pleased with our financial and operating results. As our numbers suggest, we are truly benefiting from higher commodity prices and we continue to see the benefits from the Kerr-McGee transaction and the efforts we are making in our operations," continued Mr. Krohn. "So far this year, our exploration drilling program has been 100% successful. We believe that our continued level of high success is further evidence that the Gulf of Mexico continues to be a basin with above average exploration success rates for W&T. Additionally, with our large inventory of high quality prospects and a highly experienced operations team, we believe we can maintain our attractive success rates in this basin. Furthermore, our drilling activity has recently increased further and we have eleven rigs running today and believe we are on track to achieve our corporate goals for 2008."
Revenues, Net Income and EPS: Net income for the first quarter of 2008 was $79.8 million, or $1.05 per diluted share, on revenues of $356.5 million compared to net income for the same quarter of 2007 of $13.0 million, or $0.17 per diluted share, on revenues of $246.5 million. Net income increased in the first quarter 2008 principally due to a higher realized price of $11.57 per thousand cubic feet equivalent ("Mcfe"), versus $7.67 per Mcfe in 2007. Operating income for the first quarter of 2008 also reflects the impact of a $6.2 million unrealized derivative loss ($4.1 million after-tax), or $0.05 per diluted share, while operating income for the first quarter of 2007 included an unrealized loss of $13.9 million ($9.0 million after-tax), or $0.12 per diluted share. Without the effect of these unrealized derivative losses, net income for the first quarter 2008 would have been $83.9 million, or $1.10 per diluted share, and net income for the corresponding quarter of 2007 would have been $22.1 million, or $0.29 per diluted share.
Cash Flow from Operating activities and Adjusted EBITDA: EBITDA and Adjusted EBITDA are non-GAAP measures and are hereinafter defined in "Non-GAAP Information" later in this press release. Net cash provided by operating activities for the three months ended March 31, 2008 increased 65% to $242.4 million from $146.7 million in the first three months of 2007. The increase was associated with higher sales as a result of higher realized prices. First quarter 2008 Adjusted EBITDA was $279.2 million compared to $168.7 million during the prior year's first quarter, or a 66% increase.
Production and Prices: We sold 17.7 billion cubic feet ("Bcf") of natural gas at an average price of $8.70 per thousand cubic feet ("Mcf") in the first quarter of 2008. We also sold 2.2 million barrels ("MMBbls") of oil and natural gas liquids at an average price of $92.52 per barrel ("Bbl") during the same time period. On a natural gas equivalent ("Bcfe") basis, we sold 30.8 Bcfe at an average price of $11.57 per Mcfe. For the first quarter of 2007, we sold 20.4 Bcf of natural gas at an average price of $7.20 per Mcf and 2.0 MMBbls of oil and natural gas liquids at an average price of $51.00 per Bbl. On a Bcfe basis, we sold 32.1 Bcfe at an average price of $7.67 per Mcfe. Volumes in 2008 were lower due to natural reservoir declines, partially offset by an increase from our exploration and development drilling efforts.
Lease Operating Expenses: LOE for the first quarter of 2008 decreased to $49.8 million, or $1.62 per Mcfe, from $63.6 million, or $1.98 per Mcfe, in the first quarter of 2007. The decrease in LOE is primarily due to lower workover expenses, decreased facility expenditures, reduced insurance premiums, and the completion of our hurricane remediation efforts at the end of 2007.
Depreciation, depletion, amortization and accretion: DD&A increased to $145.5 million, or $4.72 per Mcfe, in the first quarter of 2008 from $124.2 million, or $3.87 per Mcfe, in the same period of 2007. DD&A increased due to capital expenditures, increased future development costs and higher estimated asset retirement obligations, partially offset by the addition of reserves from the acquisition of the remaining interest in the Ship Shoal 349/359 "Mahogany" field.
Capital Expenditures and Operations Update: During the first quarter of 2008, the Company was 100% successful in the drilling of four conventional shelf exploration wells. For the quarter ended March 31, 2008, capital expenditures for oil and gas properties of $245.8 million included $116.7 million to acquire the remaining interest in the Ship Shoal 349/359 "Mahogany," $74.4 million for development activities, $41.3 million for exploration, and $13.4 million for other capital items.
Drilling Highlights: In the first quarter of 2008, the Company drilled or participated in the drilling of four conventional shelf exploration wells, all of which were commercially successful.
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