W&T Offshore, Inc. has provided financial and operational results for the second quarter 2008. Some of the highlights for the second quarter 2008 include:
Tracy W. Krohn, Chairman and Chief Executive Officer, stated, "We drilled ten wells this quarter and continue to enjoy high success rates. We are eleven of thirteen in exploration wells for the year, an 85% success rate, and one for one in development drilling. We currently have nine rigs running and expect to maintain this level of activity through the remainder of the year. We still have several high potential projects in the program and are looking forward to bringing some of our recent successes on production," continued Mr. Krohn. "The Company had its best quarter ever financially enjoying record revenues, adjusted EBITDA and net income. We are pleased with our success thus far this year."
Revenues, Net Income and EPS: Net income for the second quarter of 2008 was $134.6 million, or $1.77 per diluted share, on revenues of $461.0 million, compared to net income for the same quarter of 2007 of $45.5 million, or $0.60 per diluted share, on revenues of $272.6 million. Net income increased in the second quarter 2008 principally due to a higher realized price of $14.89 per thousand cubic feet equivalent ("Mcfe"), a 70% increase over the $8.74 per Mcfe realized in the comparable period in 2007.
Net income for the six months ended June 30, 2008 was $214.4 million, or $2.82 per diluted share, on revenues of $817.5 million, compared to net income of $58.6 million, or $0.77 per diluted share, on revenues of $519.1 million for the first six months of 2007. Operating income for the second quarter of 2008 also reflects the impact of a $10.2 million unrealized derivative loss ($6.7 million after-tax), or $0.09 per diluted share, while operating income for the second quarter of 2007 included an unrealized derivative loss of $1.1 million ($0.7 million after-tax) and the loss on extinguishment of debt of $2.8 million ($1.9 million after-tax), or $0.03 per diluted share. Without the effect of these unrealized losses, net income for the second quarter 2008 would have been $141.3 million, or $1.86 per diluted share, and net income for the corresponding quarter of 2007 would have been $48.1 million, or $0.63 per diluted share.
Cash Flow from Operating activities and Adjusted EBITDA: EBITDA and Adjusted EBITDA are non-GAAP measures and are defined in "Non-GAAP Information" later in this press release. Net cash provided by operating activities for the three months ended June 30, 2008 increased 89% to $305.6 million from $161.7 million in the comparable period in 2007.
The increase was associated with higher sales as a result of higher realized prices. Second quarter 2008 Adjusted EBITDA was $374.1 million, which represents an 80% increase over the $207.5 million reported during the prior year's second quarter. Adjusted EBITDA was $653.3 million for the six months ended June 30, 2008, compared to $376.2 million for the comparable period of 2007.
Production and Prices: We sold 17.0 billion cubic feet ("Bcf") of natural gas at an average price of $11.53 per thousand cubic feet ("Mcf") in the second quarter of 2008. We also sold 2.3 million barrels ("MMBbls") of oil and natural gas liquids at an average price of $113.74 per barrel ("Bbl") during the same time period. On a natural gas equivalent ("Bcfe") basis, we sold 31.0 Bcfe at an average price of $14.89 per Mcfe. For the second quarter of 2007, we sold 18.3 Bcf of natural gas at an average price of $7.81 per Mcf and 2.1 MMBbls of oil and natural gas liquids at an average price of $60.44 per Bbl.
On a Bcfe basis, we sold 31.2 Bcfe at an average price of $8.74 per Mcfe. The production volume decrease is primarily attributable to properties that experienced natural reservoir declines, partially offset by increased production from our successful drilling and development efforts.
For the six months ended June 30, 2008, our natural gas production totaled 34.7 Bcf and was sold at an average price of $10.09 per Mcf while our oil and liquids production totaled 4.5 MMBbls, which was sold at an average price of $103.46 per Bbl. On a combined basis our production was 61.8 Bcfe sold at an average price of $13.23 per Mcfe. For the comparable 2007 period, we produced 38.7 Bcf of natural gas that was sold at an average price of $7.49 per Mcf and 4.1 MMBbls of oil and liquids production sold at an average price of $55.94 per Bbl. On a combined basis our production was 63.3 Bcfe sold at an average price of $8.20 per Mcfe.
Lease Operating Expenses: LOE for the second quarter of 2008 was up slightly to $54.3 million, or $1.75 per Mcfe, from $53.9 million, or $1.73 per Mcfe, in the second quarter of 2007. The increase in LOE is due to an increase in operating costs and workover expenditures offset by a decrease in major maintenance expenses.
Depreciation, depletion, amortization and accretion: DD&A increased to $153.8 million, or $4.97 per Mcfe, in the second quarter of 2008 from $126.0 million, or $4.04 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 resulting from increasing our interest in Ship Shoal 349 field from 59% to 100% and reserves added as a result of our successful drilling efforts. DD&A for the six months ended 2008 was $299.3 million or $4.85 per Mcfe, compared to DD&A of $250.2 million, or $3.95 per Mcfe, for the same period in 2007.
Capital Expenditures and Operations Update: During the second quarter of 2008, the Company was 80% successful in the drilling of seven conventional shelf and two deep shelf exploration wells and one conventional shelf development well. For the quarter ended June 30, 2008, capital expenditures for oil and gas properties was $153.3, million, $59.2 million for development activities, $85.7 million for exploration, and $8.4 million for other capital items.
For the first half of 2008, our capital expenditures for oil and gas properties were $399.2 million, including $133.6 million for development activities, $127.0 million for exploration, $116.6 million for the acquisition of an additional interest in SS349 "Mahogany" and $22.0 million for seismic, capitalized interest and other leasehold costs.
The Company is revising its 2008 well count from 50 to a range of between 30 to 35 wells. A revised capital expenditures budget will be provided in an operations update before the end of the month.
Tracy W. Krohn, Chairman and Chief Executive Officer, stated, "During the second quarter our drilling activity increased but we are revising our well count for 2008 due to equipment delays, revisions to outside operators' drilling programs and further technical evaluation, including reviews of seismic information. A majority of the wells removed from the 2008 program will be moved into the 2009 program."
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