W&T Offshore Sees Exploration Success During 2Q06
During the second quarter, W&T Offshore successfully drilled eight out of eleven wells, including one in the deep shelf in the Gulf of Mexico. Since the beginning of 2006, W&T Offshore has successfully drilled eleven out of fourteen exploration wells and five out of five development wells. Three wells were in the deepwater, three were in the deep shelf and thirteen were conventional shelf wells. The Company has also drilled three noncommercial wells to date, of which two were on the conventional shelf with a total net cost of $13 million and one was in the deepwater, with a net cost of $6 million.
Second Quarter to Date Successful Wells: Field Name/Well Category Working Interest % Eugene Island 205 C-2ST Exploration / Shelf 100% West Delta 30 D-3ST Exploration / Shelf 100% Mobile Bay 823 BB-2 Exploration / Shelf 100% West Delta 30 D-6ST Exploration / Shelf 100% Eugene Island 205 C-4ST Exploration / Deep Shelf 100% East Cameron 321 A-22ST Development / Shelf 100% East Cameron 321 A-12ST Development / Shelf 100% West Delta 30 D-2ST Development / Shelf 100% Second Quarter to Date Noncommercial Wells: Field Name/Well Category Working Interest % Eugene Island 205 D-4ST Exploration / Shelf 100% Garden Banks 240 #1 Exploration / Deepwater 33% Venice BLD #1 Exploration / Shelf 100%
Lease Sale Update: W&T has been awarded the four leases on which it was the apparent high bidder at the Central Gulf of Mexico lease sale on March 15, 2006. Of the four blocks, one is on the shelf and three are in the deepwater. Production and Hurricane Update: As of June 15, 2006, the Company was producing approximately 215 MMcfe net per day, which is approximately 88% of our pre-Hurricane Katrina production level. The Company expects to return to pre-hurricane rates in the third quarter. The Company also estimates 17 MMcfe per day of net production was shut-in, primarily due to issues with field infrastructure and product sales pipelines. Insurance Update: W&T has approximately $28 million in hurricane insurance receivables and the Company estimates that additional receivables of approximately $50 million will accrue during the year as work continues. The Company believes it will collect all of the insurance receivables accrued. Kerr-McGee Transaction Update: The daily production from Kerr-McGee properties is 178 MMcfe as of June 11, 2006. The Kerr-McGee merger transaction is on track to be completed upon receiving final regulatory approval from the MMS. The Company expects to close during the third quarter of 2006. Updated Second Quarter and Full-Year 2006 Guidance: W&T is revising its second quarter guidance to reflect better than expected production from new successful discoveries, several successful development programs in the second quarter and the deferral of a gas sales pipeline repair project into the third quarter. The Company is not adjusting full-year production guidance at this time. Second quarter Lease Operating Expense (LOE) guidance is being revised because there were lower operating expenses and no significant expenditures for workover activity. Full year LOE guidance is not being adjusted at this time, however, the Company is guiding towards the high-end of the range. Offsetting the Company's lower base operating expenses is the Company's increase in current estimates for the 2006-2007 insurance premiums.
Estimated Revised Second Prior Second Estimate for Production Quarter 2006 Quarter 2006 Full-Year 2006 Crude oil (MMBbls) 1.3 - 1.4 1.2 - 1.3 5.8 - 6.1 Natural gas (Bcf) 11.0 - 11.3 10.7 - 11.0 48.2 - 51.1 Total (Bcfe) 19.0 - 19.4 18.1 - 18.6 83.0 - 87.7 Operating expenses Revised Second Prior Second Prior ($ in millions, Quarter 2006 Quarter 2006 Full-Year 2006 except as noted) Lease operating expense $15.8 - $16.8 $18.4 - $19.4 $75.3 - $82.3 Gathering, Transportation & Production Taxes 4.8 - 5.8 3.6 - 4.0 15.1 - 16.5
Founded in 1983, W&T Offshore is an independent oil and natural gas company focused primarily in the Gulf of Mexico, including exploration in the deepwater, where it has developed significant technical expertise. W&T has grown through acquisition, exploitation and exploration and now holds working interests in over 100 fields in federal and state waters and a majority of its daily production is derived from wells it operates.
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