W&T Offshore Reports Third Quarter 2009 Results

W&T Offshore has provided financial and operational results for the third quarter 2009. Some of the highlights for the third quarter 2009 include:

  • Commenced production at GC 646 "Daniel Boone," which started up on September 28, 2009 and is currently producing at a gross daily rate of approximately 6,000 barrels of oil and 5,700 thousand cubic feet of natural gas per day, or 6,950 barrels of oil equivalent per day. We have a 60% working interest
  • Adjusted EBITDA increased 22% sequentially to $97.5 million from $79.8 million in the second quarter of 2009
  • Through September 30, 2009, we have had a 73% success rate in our drilling program, successfully drilling eight out of eleven wells, including six of eight exploration wells and two of three development wells
  • Production increased to 25.7 Bcfe, or a 29% increase over third quarter 2008 and revised the mid-point of full year guidance upward
  • Oil and natural gas liquids production increased to 1.9 MMbbls and represented 45% of third quarter volumes
  • Hedged approximately 20 Bcfe of 2010 production

Tracy W. Krohn, Chairman and Chief Executive Officer, commented, "As our production volumes have grown with increasing percentages of oil and natural gas liquids, we have seen our cash flows from operations rise. With the commencement of production from our Daniel Boone project in late September, we should be able to increase our oil production and build our cash position for redeployment in new opportunities."

"Our plan is to remain disciplined in our approach as we evaluate drilling opportunities from our Gulf of Mexico prospect inventory and also continue to search for the right acquisition opportunities both offshore and onshore," added Mr. Krohn.

Revenues, Net Income/Loss and EPS: Net loss for the third quarter of 2009 was $1.3 million, or $0.02 per common share, on revenues of $167.0 million, compared to net income for the same quarter of 2008 of $78.2 million, or $1.02 per share, on revenues of $289.8 million. Net loss for the third quarter of 2009 reflects the impact of a $2.1 million unrealized derivative loss ($1.5 million after-tax). Without the effect of the unrealized derivative loss, net income for the third quarter of 2009 would have been $0.2 million, or $0.00 per share. Net income for the third quarter of 2008 included an unrealized derivative gain of $27.3 million ($18.2 million after-tax). Without the effect of the unrealized derivative gain, net income for the third quarter of 2008 would have been $60.0 million, or $0.79 per share. The net loss in the third quarter is principally due to a lower average realized price of $6.30 per thousand cubic feet equivalent ("Mcfe"), versus $14.57 per Mcfe (unhedged) during the same period in 2008, partially offset by a 29% increase in production volumes over the third quarter of 2008.

Net loss for the nine months ended September 30, 2009 was $238.0 million, or $3.17 per common share, on revenues of $434.9 million, compared to net income of $292.6 million, or $3.83 per share, on revenues of $1.1 billion for the first nine months of 2008. The nine months ended September 30, 2009 includes a $205.0 million ceiling test impairment, which was recorded in the first quarter of 2009. Without the effect of the loss on extinguishment of debt and the unrealized derivative loss, net loss for the nine month period would have been $56.7 million, or $0.75 per share. The year-over-year decreases in revenue and net income are attributable to lower oil and natural gas prices as well as a decrease in sales volumes. The sales volume decreases for oil and natural gas are primarily attributable to the deferral of production caused by Hurricanes Gustav and Ike beginning in August 2008, the sale of one of our fields in Louisiana state waters and natural reservoir declines.

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 September 30, 2009 decreased 91% to $45.5 million from $492.3 million for the three months ended September 30, 2008. The decrease was mainly a result of lower realized prices and changes in working capital. For the nine months ended September 30, 2009, net cash provided by operating activities decreased 91% to $91.9 million from $1.0 billion for the comparable period in 2008. The decrease was mainly a result of lower realized prices, lower production volumes and increased working capital. Third quarter 2009 Adjusted EBITDA was $97.5 million compared to $208.4 million during third quarter 2008. Adjusted EBITDA was $228.4 million for the nine months ended September 30, 2009, compared to $861.7 million for the comparable period in 2008.

Production and Prices: We sold 14.0 billion cubic feet ("Bcf") of natural gas at an average realized price of $3.08 per thousand cubic feet ("Mcf") in the third quarter of 2009. We also sold 1.9 million barrels ("MMBbls") of oil and natural gas liquids at an average realized price of $61.09 per barrel ("Bbl") during the same period. For the third quarter of 2008, we sold 10.9 Bcf of natural gas at an average realized price of $10.60 per Mcf and 1.5 MMBbls of oil and natural gas liquids at an average realized price of $116.54 per Bbl. On a natural gas equivalent ("Bcfe") basis, we sold 25.7 Bcfe at an average realized price of $6.30 per Mcfe in the third quarter of 2009 compared to 19.9 Bcfe sold at an average realized price of $14.57 per Mcfe in the third quarter of 2008. The third quarter 2008 volumes were adversely affected by Hurricanes Gustav and Ike.

For the nine months ended September 30, 2009, our natural gas production totaled 39.9 Bcf and was sold at an average realized price of $3.98 per Mcf, while our oil and natural gas liquids production totaled 5.3 MMBbls, which was sold at an average realized price of $50.82 per Bbl. On a combined basis, our production was 71.9 Bcfe sold at an average realized price of $5.98 per Mcfe. For the comparable 2008 period, we produced 45.6 Bcf of natural gas that was sold at an average realized price of $10.21 per Mcf and 6.0 MMBbls of oil and natural gas liquids production sold at an average realized price of $106.71 per Bbl. On a combined basis, our production was 81.7 Bcfe sold at an average realized price of $13.56 per Mcfe.

Lease Operating Expenses: On a nominal basis, LOE for the third quarter of 2009 increased to $53.8 million, or $2.10 per Mcfe, from $52.4 million, or $2.64 per Mcfe, in the third quarter of 2008. The increase of $1.4 million is attributable to increases in insurance costs of $3.1 million and workovers of $3.5 million, offset by a decrease in base lease operating expenses of $3.0 million and facility expenditures of $4.4 million. Also included in lease operating expenses for the third quarter of 2009 are $4.0 million of hurricane remediation costs related to Hurricanes Ike and Gustav that were either not yet approved by our insurance underwriters for reimbursement or were not covered by insurance. Included in lease operating expenses for the 2008 period are $1.8 million of hurricane remediation costs related to Hurricanes Ike and Gustav that were not covered by insurance. Lease operating expenses will be offset in future periods to the extent these costs are recovered under our insurance policies. Due to higher production volumes in the third quarter of 2009, LOE per Mcfe was lower compared to the same period of 2008. Production in the third quarter of 2008 was adversely affected by Hurricanes Ike and Gustav.

On a nominal basis, LOE for the nine months ended September 30, 2009 increased to $158.1 million, or $2.20 per Mcfe, compared to $156.6 million, or $1.92 per Mcfe for the same period in 2008. LOE for the first nine months of 2009 included $19.3 million in hurricane remediation costs versus $1.8 million in hurricane remediation costs during the same time frame in 2008. Excluding this, LOE was lower in the 2009 period by 10% due to a decrease in base lease operating expenses and lower facilities expenses. The decrease in base lease operating expenses primarily reflects modifications in operations, lower overall service and supply costs and the sale of one of our fields in Louisiana state waters in 2009.

Depreciation, depletion, amortization and accretion: DD&A decreased to $88.1 million, or $3.43 per Mcfe, in the third quarter of 2009 from $113.9 million, or $5.73 per Mcfe, in the third quarter of 2008. DD&A decreased primarily as a result of a lower depreciable base (due to impairment charges at December 31, 2008 and March 31, 2009 of $1.2 billion and $205 million, respectively) and a reduction of our asset retirement obligations, partially offset by higher production volumes. DD&A for the nine months ended September 30, 2009 was $264.2 million, or $3.68 per Mcfe, compared to DD&A of $413.2 million, or $5.06 per Mcfe, for the same period in 2008.

Liquidity and Capital Expenditures: Our cash balance at September 30, 2009 was $107.3 million and we had $262.3 million of undrawn capacity under our revolving credit facility. We just completed the semi-annual redetermination of our borrowing base, and it has been reaffirmed at $405.5 million.

For the three months ended September 30, 2009, our capital expenditures for oil and natural gas properties were $36.3 million consisting of $9.5 million for exploration activities, $22.9 million for development activities and $3.9 million for seismic, capitalized interest and other leasehold costs. Our exploration and development capital expenditures consisted of $22.9 million on the conventional shelf and other projects, $8.2 million in the deepwater and $1.3 million on the deep shelf.

For the first nine months of 2009, our capital expenditures for oil and natural gas properties were $276.0 million, including $89.7 million for exploration activities, $167.1 million for development activities and $19.2 million for seismic, capitalized interest and other leasehold costs. Our development and exploration capital expenditures consisted of $216.2 million on the conventional shelf and other projects, $39.0 million in the deepwater and $1.6 million on the deep shelf. Our capital expenditures have been funded from cash on hand and cash provided by operations.

On October 29, 2009, we closed on the sale of 36 non-core oil and natural gas fields to a third party producer, subject to the terms of the purchase and sale agreement. The sale was effective August 1, 2009. Production from these fields represented approximately 9% of our total October production.

Drilling Highlights: In the third quarter of 2009, the Company drilled one successful development well on the conventional shelf.
 

Events  SUBSCRIBE TO OUR NEWSLETTER

Our Privacy Pledge
SUBSCRIBE


Most Popular Articles


From the Career Center
Jobs that may interest you
Senior Proposals Specialist
Expertise: Business Development|Marketing|Sales
Location: Houston, TX
 
Principal Consultant
Expertise: Business Development
Location: Houston, TX
 
Chloride Sales Manager
Expertise: Business Development|Customer Service|Sales
Location: The Woodlands, TX
 
search for more jobs

Brent Crude Oil : $54.15/BBL 0.51%
Light Crude Oil : $51.47/BBL 1.45%
Natural Gas : $3.22/MMBtu 3.30%
Updated in last 24 hours