Todays Agenda I. Overview Tracy W. Krohn II. Acquisition Tracy W. Krohn III. Financials Manuel Mondragon IV. Operations Steve Schroeder V. Break VI. Reserves Clifford Williams VII. Development Clifford Williams VIII. Exploration…
Presenters Tracy W. Krohn Founder, Chairman, Chief Executive Officer and President Steve Schroeder Chief Operating Officer and Senior Vice President Jeffrey M. Durrant Senior Vice President of Exploration/Geoscience Clifford…
W&T Offshore Overview Tracy W. Krohn
Company Highlights Reserve Data 2 Proved Reserves (Bcfe) 785 Proved Developed Reserves (Bcfe) 533 Proved Developed % 68% Natural Gas % 55% Highlights Field Statistics (as of 10/01/06) Ticker WTI (NYSE) of Producing Fields w/WI 177…
W&Ts Business Strategy, Part I How We Got Here 1. Generate high return on equity focusing on GOM assets 2. Enhance returns and growth rate through the drill bit Large prospect inventory generated from high held-by-production position 3.…
W&Ts Business Strategy, Part II Deeper and Deeper and Deeper in Deeper Continued long-term success for W&T will depend on our success in finding oil and gas reserves as we move further away from the shoreline or drill deeper under the…
How to Turn 12,000 into 2.45 Billion 2006 80 2006 August 24: Closed KMG WTI vs. Crude Oil Prices July 19: First ever equity offering transaction 1996 2000 70 Spring: Purchased 2004 Feb: Closed BP Drilled first operated deep…
Significant GOM Footprint 3rd Largest Shelf GOM Acreage Position 2.0 Million Gross Acres 410 MMcfe/day Production Mobile Metairie Viosca Knoll Main W. Main Pass Cameron Pass S. and E. Houston Grand Isle West Eugene Ship Delta…
Experienced Management Team Name Age W&T Title Tracy W. Krohn 52 23 Founder, Chairman, Chief Executive Officer, and President J. F. Freel 94 23 Founder, Secretary and Chairman Emeritus W. Reid Lea. Ph.D. 47 8 Executive Vice President &…
Strong Insider Ownership and Control 1. Substantial ownership represents a clear alignment of interest with public shareholders Mr. Tracy Krohn currently owns 54% of W&Ts outstanding common stock Mr. Krohns Family owns an additional…
Incentive Plan All full-time employees participate, including offshore personnel Basic Both Basic and Extraordinary Mix of Cash and Res.Stock Grants are a blend of cash and Extraordinary Part I restricted stock grants (3 year…
Myths vs. Facts about W&T Offshore Myths Myths Facts Facts 1. 100% Leverage to Natural Gas 1. Actually, W&T will be over 30% Production Crude Oil/NGL production pro- forma for KMG 2. Lack of prospects in KMG 2. Actually, W&T had…
Rig Myth Part I Rig Prices Will Remain High te Ra es ic ion Pr at Rig Utilization Rate/Prices y iliz dit s ice Commodity Prices Ut mo Pr g m Ri g Co Ri 6 month lag 6…
Rig Myth Part II Rig Availability Will Be Tight 9 80 8 8 8 Since Q1 2005, there are 71 70 Newbuild Jackups to be built 7 7 7 and delivered by 2010 60 6 Cum. Newbuild J/U 6 50 Newbuild J/U 5 5 5 40 4 4 4 4…
CASH 2005 Netback (/Mcfe) (1) /Mcfe 8.00 7.21 6.84 6.75 7.00 6.22 5.87 5.63 6.00 5.00 4.00 3.00 2.00 1.00 - WTI EPL BDE CPE ATPG ME Source: John S. Herold 1. Netback is defined as oil & gas revenue less production costs divided by…
Margins Throughout Several Price Cycles 2001-2005 EBITDA-EBIT Margins Weighted Average 80% 78% 72% 69% 60% 56% 54% 52% 44% 40% 38% 34% 31% 24% 20% 3% 0% WTI ME BDE EPL CPE ATPG EBIT EBITDA 21 21
Low Cost Structure 2001-2005 Average Expenses per Mcfe 3.00 2.58 2.58 2.50 2.06 2.00 1.72 1.50 1.40 1.19 1.00 0.50 0.00 WTI ME BDE EPL ATPG CPE LOE G&A Interest Note: LOE includes Gathering, Transportation and…
Commitment and Focus % Gulf of Mexico Production Year-to-Date through 06/30/06 100% 100% 100% 86% 86% 79% 74% 75% 50% 25% 0% WTI BDE CPE EPL ME ATPG 24 24
Mix of Production % Oil / Liquids Production Year-to-Date Through 06/30/06 60% 56% 50% 40% 38% 40% 30% 29% 28% 30% 20% 10% 0% (1) CPE WTI EPL ATPG ME BDE 1. Post KMG closing, WTI will be approximately 32-37% oil /…
ROACE vs. Peers 2001-2005 ROACE Weighted Average (1) 60% 50% 50% 40% 35% 30% 20% 20% 17% 8% 10% 1% 0% WTI BDE ME EPL CPE ATPG 1. Calculation: Total EBIT/Weighted Average Book Capitalization for the five year period. EBIT…
ROACE vs. Everyone Else 2001-2005 ROACE Weighted Average (1) 60% 50% 50% 39% 40% 35% 31% 30% 25% Google 19% Exxon Merck 20% Starbucks Amazon 9% 10% 7% Yahoo Ford 0% WTI MRCK GOOG XOM SBUX AMZN…
Confidential Acquisition Overview
Winning Acquisition Strategy Key to our successful strategy is our ability to target under-exploited assets Key Acquisition Factors Kerr-McGee Example 1. Cash Flow KMG has strong production rates, including several behind pipe,…
Transaction History Ability to overcome natural decline rates Strong acquire and exploit capabilities Reserves 2003 YE 2004 YE 2005 YE Annual Compound Acquisition (date) Acq'd Reserves Reserves Reserves Change (1) Vastar (1999) 18…
Volumes - Report Card Approximately 2X initial reserve bookings (Bcfe) 682 Bcfe 700 600 Initial 290 Bcfe of Booked Production from Reserves 290 Bcfe Transactions 682 Bcfe 500 (Aggregate Total Net at Estimated Transaction)…
Dollars - Report Card Value created from Major Transactions since 1999 ( in millions) 2,250 Probable and Possible: 2,041 Probable: 102 Bcfe 557MM PV-10 Possible: 69 Bcfe 346 MM PV-10 1,750 PV-10 Value at 12/31/05 1,250 750…
Drilling Prospects by Acquisition 97 wells drilled on 190 fields acquired is approximately a well per field to date Fields Development Exploration Transaction Acq'd Wells Drilled Wells Drilled Vastar 7 2 7 Amoco 5 11 5 EEX 40 4 15…
Financial Overview Manuel Mondragon
Financial Overview Policies Prudent balance sheet management Budget for drilling activities funded with internally generated operating cash flow Use financial leverage for acquisitions Use hedging to protect budget or economics…
Capital Expenditures / Other Capital Projects 2003 2004 2005 12 Exploration Wells 32 Exploration Wells 22 Exploration Wells 7 Development Wells 7 Development Wells 7 Development Wells 126 MM 265 MM 323 MM 5% 9% 12% 9% 28% 8% 37%…
Combined Capital and Major Expense Program 2006E 2006E Program Program by by Location Location 2006E 2006E Program Program by by Category Category 38% 42% 8% 11% 51% 50% Conventional Shelf Deep Shelf Deepwater…
Drill from Cash Flow . W&T has funded capital expenditures largely through internally generated cash flow Capital Expenditures (including acquisition costs) ( in millions) 500 472 396 400 324 323 300 283 266 271 201…
Amortization Schedule Senior Secured Debt 300 Million Senior Secured Revolving Credit Facility - Three Year Maturity Term Loan A Term Loan B Nov 24, 2006 112,500,000 1Q07 112,500,000 2007 1,500,000 2Q07 112,500,000 2008…
Commodity Hedging Schedule 3rd quarter non-cash gain of approximately 4.4 MM from derivative contracts 3Q 2006 4Q 2006 2007 2008 Crude Oil (Bbls/day) Swaps Volumes 1,800 2,700 -- -- Price 69.72 69.85 -- -- Collars Volumes -- --…
2006 and 2007 Guidance Initial Full-Year Estimated Production Full-Year 2006 2007 Crude oil (MMbls) 6.4 - 6.6 9.6 - 10.5 Natural gas (Bcf) 60.2 - 62.1 92.2 - 101.2 Total (Bcfe) 98.4 - 101.4 149.7 - 164.3 Daily Production (Mmcfe/d) 272 -…
Operations Overview Steve Schroeder
Operations Overview W & T 2005 Current Gross Acreage 930,000 2.0 Million of Operated Fields 48 74 of Operated Blocks/Leases 77 143 Production/MMcfe/d 190 410 of Staff 150 220 of Major Hurricanes 2 ZERO 45 45
W&T Offshore Operations Production Operations Only W&T 2005 Current Boats 9 16 Helicopters 5 8 Mobile Metairie ICY Viosca Knoll Main W. Cameron Venice Main Pass Pass S. and E. Houston Grand Isle West Eugene Ship Delta S.…
Integration of KMG Operations Integration of KMG is our Number 1 priority for remainder 2006 / 2007 Assumed operations on October 1 36 of 37 KMG operators accepted positions with W&T Transitioned P&A and compressor installation…
Professional Staffing WTI (12-31-05) Current Projected Engineers 13 23 28 - Deepwater team 1 4 12 12 Geologists 9 12 15 Land 4 8 10 Acquisition & 4 6 6 Divestiture (1) Includes full-time consultants 48 48
Total Production WTI within 4% of year over year 250 245 240 KMG down 29% of year over year 227 225 218 214 200 192 190 Mmcfe/d 13 red 4o ove 174 175 ec 79 f2 dR of 45 cfe/ 22 Mm160 m 7M cf 9M e/d f7 mc 148 7 0o…
Hurricane Update 50 50
Hurricane Update As of 10/1/06, approximately 29 MMcfe/d is still off-line for our combined production Estimated insurance claims of 80 - 100MM for hurricane damage 47MM submitted to date 17MM recovered to date 100% of insurance…
Gas Compressor Projects 52 52
Gas Compressor Projects High Island 177 Compressors HI-177 Gas Production Example Turbine compressor installed in Mar 2004 60 Increased production by 5 7 MMCFD 50 Recip compressor recylindered late 2005 Replacing recip…
3rd Party Processing Existing 3rd Party Processing 15+ Operated platforms with PHAs 5M+ in fees Potential Deals Negotiating at 6 locations Additional fees or other compensation Metairie Houston Processing Legend Operated…
Operated Rig Analysis Our proposed 2007 drilling plan includes approximately 25 wells Rig types by level of complexity Types of rigs necessary for proposed 2007 drilling program. 55 55
Drilling with Casing Description Bit composed of steel body and aircraft grade aluminium face Diamond central and shoulder cutters Fully drillable with PDC or roller cone bit Benefits Reduces rig time Saves rental costs Improves…
Half Trip Completions Operation Typical Conventional Completion Perforate with kill weight completion fluid Set packer Run tubing Half Trip Completion Run TCP guns with packer on tubing Set production packer Pull seals from…
Deepwater Development Projects Queen of Hearts Subsea Tree 59 59
Queen of Hearts 60 60
Queen of Hearts New Era rig mobilized from Queen of Hearts location Three completions in two reservoirs 2,700 BOPD gross test rate Mega-150 ton crane used to set production module Pipeline and umbilical Fabricated Contracts…
Cypress 62 62
Cypress New Era rig to mobilize to location in November Initial completion in largest reservoir Minimal facilities required Pipeline and umbilical In fabrication Contracts for installation awarded First production scheduled in…
Break Time (15 minutes)
Reserves Overview Cliff Williams
Mid-Year 2006 Internal Reserve Evaluation Prior Reviews W & T 12/31/05 Kerr McGee 09/30/05 Mid Year 2006 Internal Reserve Review No plans to routinely release mid-year update SEC Case Flat Pricing at 6/30/06 Natural Gas…
Combined Company Proved Reserves Mid Year 2006 WTI Reserves Combined Reserves 32% 32% 45% Natural Gas 55% Natural Gas 68% 505 Bcfe 68% KMG Reserves 785 Bcfe 32% 74% Natural Gas Reserve Reconciliation Reserves Mid Year…
Proved and Probable & Possible Reserves Mid Year 2006 WTI Reserves 35% 48% Combined Reserves 40% Natural Gas 25% 31% 17% 52% Natural 1,050 Bcfe Gas KMG Reserves 26% 38% 44% 68% Natural Gas 1,782 Bcfe 36% 732 Bcfe…
Proved Reserve Diversification Mid year Category DW 71% Proved Reserves W & T Operated 15% DS 7% Shelf 78% Mobile Metairie Viosca Knoll Main W. Main Pass Proved Developed Cameron Pass S. and E. Grand Isle West East…
Top 20 Fields Proved Reserves Well dispersed by location and category 13 conventional shelf 6 deepwater 1 deep shelf The largest field accounts for only: 10% of proved PV10 Ship Shoal 349 (WTI) 11% of proved reserves Ship Shoal…
Top Fields Proved Reserves Top 20 Fields Account for: MO 823 71% Proved Reserves 69% Proved PV10 50% Current Production ST 41 MP 108 Mobile WC 180 ST 228 Metairie MP 69 Viosca Knoll Main W. Main Pass Cameron Pass S. and E.…
Proved Reserve Bookings Well Up dip Potential Gas Proved Reserve Bookings Lowest known gas Non Proved Gas Down dip potential Water 72 72
Proved Reserve Bookings A A Lowest Known Gas Amplitude Limit & Amplitude Limit & Estimated Estimated Gas/Water Contact Gas/Water Contact 3-D Seismic Courtesy of WesternGeco 73 73
Constant Reserve Life Profile Trend of Reserve Life 1 At mid-year, Proved R/P is 5.6 and Proved Developed R/P is 3.8 10.0 8.7 8.0 6.9 6.6 Wtd Average 6.3 5.8 5.7 Proved Reserve / 6.0 5.6 Production - 6.3 4.5 4.1 4.2 Wtd…
Development Overview Cliff Williams
Development Highlights Successful development drilling High impact development projects Specific fields examples Conventional Shelf Deepwater Deep Shelf Top producing fields Production outlook 2007 76 76
2006 YTD Development Success 100% Success rate 9 8 7 2 1 Gross Wells 6 5 4 3 6 6 2 1 1 0 Total Development Deep Shelf Conventional Shelf Wells W&T Kerr-McGee 78 78
Next Six Months Development Projects Main Pass 185 Mobile Bay 824 Production Legend Grand Isle 3 Timing: 1Q 2007 Timing: 4Q 2006 Timing: 1Q 2007 Working Interest: 100% Completed Expected Working Interest: 25% Working Interest: 33%…
Production Timing Only includes recent exploration and development projects. Does not include any projected drilling programs Approximate Net Initial Rate - MMcfe/d Project Name Category WI Q3 2006 Q4 2006 2007 Eugene Island 205 Deep…
East Cameron 321 Conventional Shelf Discovered 1971 220 water depth 75 wells drilled Reserves between 2,700 7,800 feet subsea Cumulative production 513 Bcfe 81 81
East Cameron 321 Conventional Shelf 40 Acquired remaining working interest and assumed operator ship in 2005 Prepared field depletion plan 30 WTI 100% Working Interest Net MMCFE/D Mobilized platform rig in September 2005…
Cypress - Operated Deepwater Development Successful Exploration Well Drilled 2005 100% WI 83.33% NRI 523 Water depth EW 989 1 49 Bcfe 3-P Reserve Potential, 9 MMcfe/d net DTR DTR3030Sand Sand Cris CrisSSSand Sand MP3A…
Cypress - Operated Deepwater Development Subsea well tie back planned 1Q 2007 to Mahogany Evaluation technique Sampling Formation pressures Fluid samples Sidewall core Reservoir model Evaluate depletion scenarios Flow…
Pluto MC 718 3 M1:50 Sand Operated by Mariner 49% Working Interest 2,800 Water depth Directionally drilled to 20,685 feet (MD) 18,125 feet (TVD) Smart Well Technology MC718 3 - 25 Bcfe 3-P reserve potential Successful…
Pluto MC 718 3 M1:50 Deepwater Sand Initial production in mid-September 2006 Current Rate 42.0 MMcfe/d Gross (15.7 MMcfe/d net) Example of limited proved reserve bookings 86 86
South Timbalier 41 Non-Operated Deep Shelf EPL Operator Water Depth 70 feet Wells drilled below 15,000 subsea 40% WI 32.53% NRI Active Platforms 5 Recent successful well producing 7 MMcfe/d net Field producing 40MMcfe/d…
Top 20 Producing Fields The 20 top producing fields are well dispersed throughout the GOM, and primarily located on the conventional shelf On a combined basis, these fields account for 61% of proved PV10 60% of proved reserves…
Combined Top 20 Producing Fields Top Fields W&T Offshore MO 823 Kerr-McGee ST 41 MP 108 Mobile VR 115 SS 349 Metairie MP 69 Viosca Knoll Main W. Main Pass WC 180 Cameron Pass S. and E. Houston Grand HI 177 Eugene Ship Isle…
Average Daily Production 2001-2007E Strong forecast year-over-year daily production growth(1)(2)(3) 20+% growth at mid-point from 2005-2006E 45+% growth at mid-point from 2006E-2007E Wall Street equity research analyst reports a…
Exploration Prospects Inventory Approximately 200 prospects with 25 prospects per year = 8 years of inventory 90 106 38 30 76 52 28 68 10 82 114 196 Infield High Potential = Total Prospects W&T Offshore Kerr-McGee…
Where are the Prospects Coming From Farm-in OBO Lease Acquisition/Merger 100% Farm-in 90% Operated-by-others (OBO) 80% 42% 37% 44% 70% 59% Leases Sales 60% 17% Re-exploration of acquisition 50% 16% properties 40% 6 wells…
Significant Seismic GOM Database 3,100 blocks of 3-D coverage Volume based deals in place allow further acquisition of data 16 MM acres Goal is to obtain a continuous 3-D database covering W & T properties 96 96
Kerr-McGee In-Field Exploration 50+ Identified Drilling Opportunities Total Net Unrisked Reserve Potential 370 Bcfe Ship Shoal Breton Sound Main Pass Total Net Risked Reserve Potential 210 Bcfe 4+ Prospects 2+ Prospects 2 Prospects…
Kerr-McGee High Potential Exploration 38+ Total Exploration Prospects Deep & Ultra Total Net Unrisked Reserve Potential 5.0 Tcfe Deep Total Net Risked Reserve Potential 700+ Bcfe NW GULF 13 Prospects Mobile Metairie Viosca Knoll…
Main Pass 108 Field New 3-D Seismic Acquisition Geophysical Pursuit/WesternGeco 64 Block Commitment Seismic Acquisition Underway 2007 Completion 99 99
Types of Drilling Plays Conventional Shelf Deep Shelf Deepwater Water…
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