HOUSTON, Feb. 3, 2017 /PRNewswire/ -- W&T
Offshore, Inc. (NYSE: WTI) today reported its year-end 2016 proved
reserves, production for the fourth quarter and full year of 2016,
an update on the flow rate at SS 349 A-18 well at Mahogany and an
extension on the appeal before the United States Department of
Interior Board of Land Appeals ("IBLA") regarding Bureau of Ocean
Energy Management (BOEM) orders.
Year-End 2016 Proved Reserves
The Company's year-end 2016 SEC proved reserves were 74.0
million barrels of oil equivalent ("Boe"), or 444.0 billion cubic
feet ("Bcfe"), with 55% comprised of liquids (44% crude oil and 11%
natural gas liquids ("NGLs")) and 45% natural gas.
Approximately 64% of our 2016 proved reserves were classified as
proved developed producing, 23% as proved developed non-producing
and 13% as proved undeveloped. Total production of
approximately 15.4 million Boe in 2016 was substantially offset by
upward revisions due to performance despite lower SEC average
prices.
The present value of our reported SEC proved reserves,
discounted at 10% ("PV-10"), was $754.9
million. The 2016 SEC PV-10 is based on an average
crude oil price of $39.25 per barrel
and average natural gas price of $2.48 per Mcf, both before adjustment for
quality, transportation fees, energy content, and regional price
differentials. For 2015, the average crude oil price was
$46.79 per barrel and $2.59 per Mcf and PV-10 was $965 million.
For comparative purposes, utilizing the forward closing prices
on the New York Mercantile Exchange (NYMEX) for crude oil and
natural gas on December 30, 2016 (the
last trading day of 2016), total proved reserves at December 31, 2016 would have been 77.6 million
Boe, with a PV-10 value of $1.2
billion, an increase of $457.3
million over the SEC PV-10. This would also have
resulted in a reserve replacement rate of 102% in 2016 over 2015.
The NYMEX based PV-10 uses an un-weighted average crude
oil price of $56.31 per barrel and
$3.07 per Mcf for natural gas as
shown in the table below.
In the SEC case, positive revisions totaled 14.2 million Boe,
primarily as a result of better than projected performance in
several of our key fields, the addition of certain incremental
proved drilling locations, as well as ongoing success in managing,
and reducing lease operating expenses across the vast majority of
our asset base, thereby extending field life. Offsetting our
positive technical reserves gains, was a 1.2 million Boe negative
revision to proved reserves due to a 16% decline in the crude oil
price and a 4% decline in the natural gas price (based on SEC rules
and protocol), which are used to calculate 2016 proved
reserves.
Proved Reserve
Reconciliation
|
Year To Date
2016
|
|
|
Oil &
NGLs
|
|
|
|
|
|
|
|
PV-10(1)
|
|
|
(MBbls)
|
|
GAS
(MMcf)
|
|
MMcfe
|
|
MBoe
|
|
($ in
thousands)
|
Balance, December
31, 2015
|
|
42,118
|
|
205,416
|
|
458,126
|
|
76,354
|
|
$
965,631
|
Revisions due
to:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pricing (2)
|
|
(852)
|
|
(2,300)
|
|
(7,411)
|
|
(1,235)
|
|
|
Performance (3)
|
|
8,512
|
|
34,414
|
|
85,485
|
|
14,247
|
|
|
Production
|
|
(8,743)
|
|
(39,731)
|
|
(92,188)
|
|
(15,365)
|
|
|
Balance, December
31, 2016
|
|
41,036
|
|
197,798
|
|
444,011
|
|
74,002
|
|
$
754,933
|
|
|
(1)
|
PV-10 for this
presentation excludes any provision for asset retirement
obligations or income taxes.
|
|
|
(2)
|
In accordance with
guidelines established by the SEC, our estimated proved reserves as
of December 31, 2016 were determined to be economically
producible under existing economic conditions, which requires the
use of the 12-month average commodity price for each product,
calculated as the unweighted arithmetic average of the
first-day-of-the-month price for the year end December 31,
2016. The West Texas Intermediate posted price and the Henry
Hub spot price were utilized as the referenced price and after
adjusting for quality, transportation, fees, energy content and
regional price differentials. In determining the estimated realized
price for NGLs, a ratio was computed for each field of the NGLs
realized price compared to the crude oil realized price.
Then, this ratio was applied to the crude oil price using SEC
guidance. Such prices were held constant throughout the
estimated lives of the reserves. Future production and
development costs are based on year-end costs with no
escalations.
|
|
|
(3)
|
Due to positive
performance revisions and lease operating expense
reductions.
|
The table below is a reconciliation of proved reserves
calculated at SEC pricing compared to proved reserves at NYMEX on
December 30, 2016.
|
|
YE 2016 - SEC
Pricing (1)
|
|
YE 2016 - NYMEX
Strip Pricing (2)
|
|
NYMEX vs. SEC
Variance
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equiv
|
|
Equiv
|
|
|
|
Equiv
|
|
Equiv
|
|
|
|
Equiv
|
|
Equiv
|
|
|
|
|
MMcfe
|
|
MBoe
|
|
PV-10
|
|
MMcfe
|
|
MBoe
|
|
PV-10
|
|
MMcfe
|
|
MBoe
|
|
PV-10
|
PDP
|
|
283,881
|
|
47,314
|
|
$449,407
|
|
301,198
|
|
50,200
|
|
$
735,549
|
|
17,317
|
|
2,886
|
|
$286,142
|
PDNP
|
|
104,362
|
|
17,394
|
|
228,918
|
|
109,823
|
|
18,304
|
|
338,696
|
|
5,461
|
|
910
|
|
109,778
|
PUD
|
|
55,769
|
|
9,295
|
|
76,608
|
|
54,577
|
|
9,096
|
|
138,016
|
|
(1,192)
|
|
(199)
|
|
61,408
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
Proved
|
444,011
|
|
74,002
|
|
$754,933
|
|
465,598
|
|
77,600
|
|
$1,212,261
|
|
21,587
|
|
3,598
|
|
$457,328
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PROB
|
|
234,212
|
|
39,035
|
|
|
|
238,235
|
|
39,706
|
|
|
|
4,022
|
|
670
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
2P
|
|
678,224
|
|
113,037
|
|
|
|
703,833
|
|
117,306
|
|
|
|
25,609
|
|
4,268
|
|
|
|
|
|
|
|
|
|
(1) SEC
pricing is based on $39.25 oil and $2.48 gas for all
years.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2) NYMEX
strip price is based on the following forward strip.
|
|
|
|
|
|
|
|
|
|
Year
|
|
Oil
|
|
Gas
|
|
|
|
|
|
2017
|
|
$
55.99
|
|
$
3.62
|
|
|
|
|
|
2018
|
|
56.59
|
|
3.14
|
|
|
|
|
|
2019
|
|
56.10
|
|
2.87
|
|
|
|
|
|
2020
|
|
56.05
|
|
2.88
|
|
|
|
|
|
2021
|
|
56.21
|
|
2.90
|
|
|
|
|
|
2022
|
|
56.51
|
|
2.93
|
|
|
|
|
|
2023+
|
|
56.77
|
|
3.12
|
|
|
|
|
•
|
Boe are determined
using the ratio of six Mcf of natural gas to one Bbl of crude oil,
condensate or NGLs (totals may not compute due to rounding).
NGLs are converted to barrels using a ratio of 42 gallons to one
barrel. The energy-equivalent ratios do not assume price
equivalency, and the energy-equivalent prices for crude oil, NGLs,
and natural gas may differ significantly.
|
Tracy W. Krohn, W&T
Offshore's Chairman and Chief Executive Officer, stated, "As a
result of the prolific projects that we acquired and developed over
the last few years and the exceptional reservoirs characteristics
of the Gulf of Mexico, we almost
replaced our entire 2016 production through performance revisions
alone despite a 16.1% drop in crude oil prices and a 4.2% decrease
in natural gas prices. Several of our most important fields
performed substantially better than previously predicted by our
independent third party reservoir engineering auditors, primarily
due to probable and possible reserve recovery and we believe that a
number of our fields have further unrecognized upside."
"Despite our dramatically reduced capital budget in 2016 that
included the completion of only one new well, we successfully held
our SEC reserves steady from the prior year. This was also
accomplished despite the negative impact of lower prices used in
SEC reserve calculations. When we evaluate our reserves based
on the forward NYMEX strip price, not only do we see reserve
growth, but the value of our proved reserves increases by
$457.3 million," concluded Mr.
Krohn.
Fourth Quarter and Full Year 2016 Production
Production for the fourth quarter of 2016 was 3.7 million Boe
(or 22.2 Bcfe), compared to the fourth quarter 2015 of 4.1 million
Boe (or 24.7 Bcfe). Fourth quarter 2016 production was
comprised of 1.7 million barrels of oil, 0.4 million barrels of
natural gas liquids (NGLs) and 10.0 Bcf of natural gas, at an
average realized sales price of $30.83 per Boe or $5.14 per Mcfe. Oil and NGLs production
were 55% of total production in the fourth quarter of 2016 compared
to 57% of total production in the fourth quarter of 2015.
For the full year 2016, production was 15.4 MMBoe (or 92.2
Bcfe), compared to 17.0 MMBoe (or 102.3 Bcfe) in 2015. Total
2016 production was comprised of 7.2 million barrels of oil, 1.5
million barrels of NGLs and 39.7 Bcf, at an average realized sales
price of $25.76 per Boe.
SS 349 A-18 Flow Rate Update at Mahogany
The recently completed Ship Shoal 349 (Mahogany) A-18 well
recently reached a production rate of 5,217 Boe per day (4,032
barrels of oil per day and 7.1 MMcf per day).
BOEM Update
In 2016, the Company received orders from the BOEM directing the
Company to provide financial assurances in the form of additional
security with respect to certain designated leases, rights of way
and rights of use and easement. Previously, we have filed
appeals with the United States Department of Interior Board of Land
Appeals ("IBLA") regarding these BOEM orders. The IBLA,
acknowledging that the BOEM and the Company were seeking to resolve
the BOEM orders through settlement discussions, agreed to stay the
effectiveness of the orders to May 31,
2017.
About W&T Offshore
W&T Offshore, Inc. is an independent oil and natural gas
producer with operations offshore in the Gulf of Mexico and has grown through
acquisitions, exploration and development. The Company
currently has working interests in approximately 52 fields in
federal and state waters (50 producing and two fields capable of
producing) and has under lease approximately 750,000 gross acres,
including approximately 490,000 gross acres on the Gulf of Mexico
Shelf and approximately 260,000 gross acres in the deepwater.
A majority of the Company's daily production is derived from wells
it operates. For more information on W&T Offshore, please
visit the Company's website at www.wtoffshore.com.
Forward-Looking Statements
This press release contains forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as
amended. These forward-looking statements reflect our current views
with respect to future events, based on what we believe are
reasonable assumptions. No assurance can be given, however, that
these events will occur. These statements are subject to risks and
uncertainties that could cause actual results to differ materially
including, among other things, market conditions, oil and gas price
volatility, uncertainties inherent in oil and gas production
operations and estimating reserves, unexpected future capital
expenditures, competition, the success of our risk management
activities, governmental regulations, uncertainties and other
factors discussed in W&T Offshore's Annual Report on Form 10-K
for the year ended December 31, 2015
and subsequent Form 10-Q reports found at www.sec.gov or at our
website at www.wtoffshore.com under the Investor Relations section.
Investors are urged to consider closely the disclosures and risk
factors in these reports.
CONTACT:
|
Lisa
Elliott
Dennard Lascar Associates
lelliott@dennardlascar.com
713-529-6600
|
Danny
Gibbons
SVP & CFO
investorrelations@wtoffshore.com
713-624-7326
|
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/wt-offshore-announces-year-end-2016-proved-reserves-production-for-2016-an-update-on-the-a-18-well-at-mahogany-and-an-extension-of-the-appeal-with-ibla-regarding-boem-orders-300401823.html
SOURCE W&T Offshore, Inc.