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W&T Offshore, Inc., First Quarter 2023 Results
W&T Offshore, Inc., announced first quarter 2023 results.
Highlights
- Reported first quarter 2023 production of 32.5 thousand barrels of oil equivalent per day ("MBoe/d") (56% liquids), or 2.9 million barrels of oil equivalent ("MMBoe");
- Production during the quarter was impacted by several planned periodic facility and pipeline maintenance projects at the Mobile Bay field as well as unplanned downtime at several non-operated fields that temporarily reduced production volumes;
- Shut-in production has mostly been restored and total Company production is currently averaging approximately 38.1 Mboe/d;
- Generated net income of $26.0 million or $0.17 per diluted share in the first quarter of 2023, which includes $39.2 million in net unrealized gain on outstanding derivative contracts;
- Adjusted Net Loss totaled $2.4 million, or $0.02 per share in the first quarter of 2023, which excludes the net unrealized gain on outstanding derivative contracts;
- Reported Adjusted EBITDA of $43.1 million for the first quarter of 2023;
- Produced Free Cash Flow of $12.4 million for the first quarter of 2023, the 21st consecutive quarter of positive Free Cash Flow;
- Closed the previously-announced offering of $275 million in aggregate principal amount of 11.75% Senior Second Lien Notes due 2026 (the "2026 Senior Second Lien Notes") on January 27, 2023;
- The Company used the net proceeds of the offering, along with cash on hand, to fund the redemption of all of the Company's outstanding 9.75% Senior Second Lien Notes due 2023 (the "2023 Senior Second Lien Notes");
- Maintained strong cash and cash equivalents of $177.4 million at March 31, 2023;
- Decreased Net Debt to $225.9 million as of March 31, 2023, which is down substantially from Net Debt of $504.8 million a year ago;
- Continued to maintain a low leverage profile with Net Debt to trailing twelve months ("TTM") Adjusted EBITDA of 0.4 times compared to over 2.0 times one year ago;
- Appointed a new independent director to the Board, Dr. Nancy Chang, who will serve as chair of the Environmental, Safety and Governance Committee and as a member of the Audit Committee and the Nominating and Corporate Governance Committee; and
- Named apparent high bidder in the most recent Gulf of Mexico ("GOM") lease sale on two shallow water blocks, Eugene Island South Addition block 371 and Eugene Island South Addition block 387. These two blocks cover a total of approximately 10,000 gross acres.
Production, Prices, and Revenue
W&T's average realized price per barrel of oil equivalent ("Boe") before realized derivative settlements was $44.32 per Boe in the first quarter of 2023, a decrease of 16% from $52.82 per Boe in the fourth quarter of 2022 and a decrease of 20% from $55.29 per Boe in the first quarter of 2022. Crude oil, NGL, and natural gas prices, before realized derivative settlements for the first quarter of 2023, were $71.85 per barrel, $26.51 per barrel, and $3.23 per Mcf, respectively.
Revenues for the first quarter of 2023 were $131.7 million, which was lower than fourth quarter 2022 revenue of $189.7 million and lower than $191.0 million in the first quarter of 2022, due to a combination of lower realized prices and lower production volumes.
Lease Operating Expense
Gathering, Transportation Costs, and Production Taxes
Depreciation, Depletion, Amortization, and Accretion ("DD&A")
General & Administrative Expenses ("G&A")
Derivative (Gain) Loss
For the remainder of 2023, W&T is approximately 57% hedged for natural gas and currently has no hedges for oil. A significant portion of the W&T's natural gas hedges, in the form of sold swaps and purchased calls and puts, were entered into in conjunction with the non-recourse Mobile Bay term loan entered into by borrowers owned by the Company's wholly-owned subsidiary Aquasition Energy LLC and will continue through the life of that loan.
A summary of the Company's outstanding derivative positions is provided on W&T's website in the "Investors" section under the "Financial Information" tab.
Interest Expense
Income Tax
Balance Sheet and Liquidity
On January 27, 2023, W&T closed an offering of $275 million in aggregate principal amount of 2026 Senior Second Lien Notes at par in a private offering that was exempt from registration under the Securities Act of 1933, as amended. The Company used the net proceeds of the offering, along with cash on hand, to fund the redemption of all of the Company's outstanding 2023 Senior Second Lien Notes. On the closing date of the offering of the 2026 Senior Second Lien Notes, the Company satisfied and discharged the indenture governing the existing 2023 Senior Second Lien Notes.
Capital Expenditures and Acquisitions
OPERATIONS UPDATE
Front-end Engineering and Design and permitting processes are underway on the Holy Grail well at Garden Banks 783 in the Magnolia Field.
Well Recompletions and Workovers
During the first quarter of 2023, the Company performed one recompletion and four workovers that positively impacted production for the quarter. W&T plans to continue performing these low cost, short payout operations that impact both production and revenue.
Addition to W&T's Board of Directors
W&T appointed Dr. Nancy Chang as a new independent director to the Company's Board of Directors. Dr. Chang will serve as a member of the Audit Committee and the Nominating and Corporate Governance Committee and as the chair of the Environmental, Safety and Governance Committee. Dr. Chang is a widely respected and internationally recognized scientist as well as a highly successful senior executive in both the private and public sectors. Dr. Chang's impressive prior experience as a member of a number of boards of directors and having served on the Board of the Federal Reserve Bank in Houston will make her a valuable member of W&T's Board. In particular, her experiences as founder and chief executive officer of a successful, publicly-traded company and one of the largest healthcare-focused investment management firms in the world will bring unique perspectives, talents and insights to the Board. She will stand for election at the Company's upcoming annual meeting of shareholders.
Lease Sale 259
W&T was the apparent high bidder in the most recent GOM lease sale on two shallow water blocks, Eugene Island South Addition block 371 and Eugene Island South Addition block 387. These two blocks cover a total of approximately 10,000 gross acres. If awarded, the Company will pay approximately $340,000 in total for the awarded leases combined, which reflects a 100% working interest in the acreage. The blocks have a lease term of five years and an 18.75% royalty. Despite submitting the apparent high bid on these leases, the Bureau of Ocean Energy Management reserves the right not to award the blocks based on their minimum bidding criteria. W&T expects to receive the final award results over the next 90 days.
Second Quarter and Full Year 2023 Production and Expense Guidance
The guidance for the second quarter and full year 2023 in the table below represents the Company's current expectations. Please refer to the section entitled "Forward-Looking and Cautionary Statements" below for risk factors that could impact guidance.Related Categories :
First Quarter (1Q) Update
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