W&T has provided an update on its 2008 drilling activities and 2009 capital expenditures, as well as production, reserves and ceiling test impairment guidance.
For full year 2008, the Company has made discoveries and successfully completed 18 of 24 exploration wells, for a success rate of 75%, which included 16 out of 19 conventional shelf wells, and two of five wells on the deep shelf. Additionally, the Company successfully drilled and completed two of two development wells, both of which were on the conventional shelf. For the 26 wells drilled in 2008, the Company achieved a success rate of 77%. Furthermore, at year-end 2008 we were in the early stages of drilling three exploration wells and two development wells.
During the fourth quarter, the Company drilled or participated in the drilling of the following successful wells:
Lease Name/Well Category Working Interest %
2009 Capital Expenditure Guidance: Because of continued market uncertainty, the Company has not yet established a full-year capital budget for 2009. However, as is normally the case, we anticipate fully funding our 2009 capital expenditures with internally generated cash flow, which will result in reduced drilling activity compared to 2008 levels. We intend to remain flexible as the year progresses and, should economic conditions improve, we will be well positioned to take advantage of our drilling opportunities.
Production: We expect to meet our full-year production guidance for 2008. Our exit rate of production on December 31, 2008 was 221 MMcfe per day.
Ceiling Test Impairment and Reserve Guidance: As a result of severely depressed commodity price levels at year-end 2008, the Company expects to record a significant non-cash ceiling test impairment to its full-cost pool. Such non-cash charge will not have any impact on our bank or senior note covenants.
Although the Company's year-end reserves are still under evaluation by its independent third-party petroleum consultant, the Company expects proved reserves to be significantly lower than year-end 2007. This decrease in estimated proved reserves is largely due to the steep decline in year-end oil and gas prices.
Tracy W. Krohn, Chairman and Chief Executive Officer, stated, "We remain confident in the Company's ability to generate consistent operating cash flow throughout the current economic downturn. Furthermore, our strong liquidity position of $350 million in cash and a $500 million undrawn revolver allows us flexibility and the ability to pursue opportunities in 2009 including acquisitions, drilling and other strategic opportunities."
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