W&T Offshore, Inc. (NYSE: WTI) (“W&T” or the “Company”)
today reported operational and financial results for the fourth
quarter and full year 2020 including the Company’s year-end 2020
reserves report and 2021 guidance.
Key highlights included:
- Produced 38,261
barrels of oil equivalent per day (“Boe/d”), or 3.5 million barrels
of oil equivalent (“MMBoe”) (47% liquids), in the fourth quarter of
2020, above the high end of W&T’s guidance range, reflecting an
11% increase from the third quarter of 2020 as production was
brought back online from hurricane and other unplanned
downtime;
- Reported net
income for full year 2020 of $37.8 million or $0.26 per share, and
a net loss of $8.9 million or $0.06 per share in the fourth quarter
of 2020;
- Reported
Adjusted Net Loss1 of $22.9 million or $0.16 per share for full
year 2020, and an Adjusted Net Loss of $6.7 million or $0.05 per
share in the fourth quarter of 2020;
- Generated
significant Adjusted EBITDA1 of $159.0 million for the full year
2020, and $35.3 million for the fourth quarter of 2020, despite a
difficult pricing environment and substantial production downtime
associated with an extraordinarily active hurricane season;
- Free Cash Flow1
totaled $76.0 million for the full year 2020 and $14.2 million in
the fourth quarter of 2020;
- Reported
year-end 2020 proved reserves (utilizing SEC pricing) of 144.4
million barrels of oil equivalent (“MMBoe”), compared with 157.4
MMBoe at year-end 2019;
- Upward revisions
of 26.2 MMBoe in 2020 related to improved well performance and
technical revisions, and 3.9 MMBoe from acquisitions and drilling,
were offset by 27.7 MMBoe of reductions due to lower commodity
prices, and 15.4 MMBoe of production;
- Disclosed that
year-end 2020 proved reserves (utilizing NYMEX strip pricing as of
December 31, 2020) would have been 169.5 MMBoe;
- Remained focused
on controlling expenses and reported fourth quarter 2020 lease
operating, gathering and transportation, and general and
administrative costs that were at the low end or below W&T’s
guidance ranges;
- Announced 2021
preliminary capital spending of between $30 million and $60 million
to achieve stable production and maintain the ability to generate
free cash flow to fund the reduction of debt and potential
acquisitions; and
- Provided 2021
production and expense guidance.
1 A non-GAAP financial measure; see “Non-GAAP Information”
attached to this release for more information including
reconciliations to most comparable GAAP measures.
Tracy W. Krohn, W&T's Chairman and Chief
Executive Officer, stated, “I am quite pleased with our response to
the extraordinary challenges that 2020 presented. We managed
through a global pandemic, commodity price declines and a record
number of named storms in the Gulf of Mexico. We have continued to
take steps to protect our employees and contractors during the
pandemic and, to-date, our people and our operations have not been
materially impacted by COVID-19. In the fourth quarter, our
operations team did an excellent job of returning our properties to
production ahead of schedule which helped us exceed our
guidance. In addition, we were able to keep our
operating and overhead costs low despite the additional operational
work required to restore production.”
“Despite the difficulties we faced in 2020, we
continued our focus on delivering free cash flow. By adjusting
quickly to the changing environment early in 2020 and reducing our
planned capital expenditures, we were able to generate $76.0
million in Free Cash Flow in 2020 compared with $74.0 million in
2019. We utilized a portion of our 2020 Free Cash Flow to retire
$72.5 million of our senior notes for $23.9 million, with the added
benefit of saving over $7.1 million in annualized interest and
preserving long-term capital. Additionally, we recently
completed the consolidation of our two natural gas treatment
facilities that serve the Mobile Bay area into a single facility
with more than enough capacity for our current operations as well
as production from future natural gas drilling projects in the
area. The consolidation of these facilities is expected to result
in approximately $5 million per year in savings, beginning in 2021,
as well as lower our Scope 1 emissions.”
“It is my pleasure to announce that W&T
Offshore’s inaugural Environment, Social and Governance (“ESG”)
report will be coming out shortly with our annual report and
include key metrics for the past three years. We founded W&T
nearly 40 years ago with the same core values we have today that
have guided our success and provided the foundation for W&T to
grow into a trusted operator. We believe that every employee has a
responsibility to ensure that we operate with the highest regards
toward ESG and we have empowered our management to allocate
resources and tools necessary to create a working environment
focused on accomplishing our ESG objectives.”
“Entering 2021, while market and pricing
conditions are improving, our strategy remains unchanged. We have
assembled a premier portfolio of conventional, low-declining
producing properties that generate a solid foundation of cash flow
with significant upside. While we have a substantial inventory of
drilling opportunities with potentially high rates of return, we
are not devoting all of our free cash flow to drilling, rather we
are maximizing financial flexibility. The current price environment
should allow us to generate meaningful free cash flow which we can
use to reduce debt or potentially fund additional opportunities.
Accordingly, our capital spending in 2021 is expected to be in the
range of $30 to $60 million. The timing of our capital spending
will be weighted to late 2021, which should benefit production in
2022. As a result, our 2021 production guidance of 38,000 to 42,000
Boe/d is modestly lower than our full year 2020 average, but higher
than the fourth quarter of 2020. The lower decline profile of our
conventional asset base allows for reductions in capital
expenditures without significantly impacting near-term production
levels. The energy industry is cyclical and we have faced adversity
many times in the past, but our success over nearly 40 years has
been because of our unwavering strategic focus that has positioned
W&T to create value,” concluded Mr. Krohn.
For the fourth quarter of 2020, W&T reported
a net loss of $8.9 million, or $0.06 per share. Excluding primarily
an $11.5 million unrealized commodity derivative loss, a $6.9
million non-cash tax benefit, and a $2.7 million credit related to
a settlement with the U.S. Bureau of Safety and Environmental
Enforcement (“BSEE”), the Company’s Adjusted Net Loss was $6.7
million, or $0.05 per share. In the fourth quarter of 2019, W&T
reported net income of $9.6 million, or $0.07 per share, and
Adjusted Net Income of $24.4 million or $0.17 per share. In the
third quarter of 2020, W&T reported a net loss of $13.3
million, or $0.09 per share. For that same period, Adjusted Net
Loss was $19.9 million or $0.14 per share.
Adjusted EBITDA totaled $35.3 million for the
fourth quarter 2020, which represents an increase of 81% compared
to $19.5 million in the third quarter of 2020 driven by increased
pricing and production, and a decrease of 55% compared to $79.0
million in the fourth quarter of 2019 driven by lower realized
pricing and lower production.
Free Cash Flow for the fourth quarter of 2020
totaled $14.2 million compared with $26.8 million in the same
period in 2019 and $5.9 million in the third quarter of 2020.
Adjusted Net (Loss) Income, Adjusted EBITDA and
Free Cash Flow are non-GAAP financial measures, which are described
in more detail and reconciled to the most comparable GAAP measures,
in the attached tables below under “Non-GAAP Information.”
Production, Prices and
Revenues: Production for the fourth quarter of 2020 was
38,261 Boe/d or 3.5 MMBoe, an increase of 11% compared to 34,459
Boe/d in the third quarter of 2020 and down 28% versus 52,773 Boe/d
in the fourth quarter of 2019. Production for the fourth quarter of
2020 was above the high end of production guidance due to faster
recovery from hurricane downtime and unplanned downtime compared to
forecast. Fourth quarter 2020 production was comprised of 1.3
million barrels (“MMBbls”) of oil, 0.4 MMBbls of natural gas
liquids (“NGLs”) and 11.2 billion cubic feet (“Bcf”) of natural
gas. Liquids production comprised 47% of total production in the
fourth quarter of 2020.
For the fourth quarter of 2020, W&T’s
average realized crude oil sales price was $42.84 per barrel. The
Company’s realized NGL sales price was $16.30 per barrel and its
realized natural gas sales price was $2.63 per Mcf. The Company’s
combined average realized sales price for the quarter was $25.63
per Boe, which represents a 17% decrease from $30.75 per Boe that
was realized in the fourth quarter of 2019 and an increase of 16%
compared to $22.16 per Boe in the third quarter of 2020.
Revenues for the fourth quarter of 2020
decreased 38% to $94.7 million compared to $151.9 million in the
fourth quarter of 2019 driven by lower pricing and production, and
increased 31% compared to $72.5 million in the third quarter of
2020, driven by increased production and pricing
quarter-over-quarter.
Lease Operating Expenses: Lease
Operating Expense (“LOE”) which includes base lease operating
expenses, insurance premiums, workovers, facilities maintenance and
hurricane repairs was $43.3 million in the fourth quarter of 2020,
at the low end of guidance, compared to $53.3 million in the fourth
quarter of 2019 and $36.4 million in the third quarter of 2020. On
a component basis for the fourth quarter of 2020, base lease
operating expenses and insurance premiums were $33.0 million,
workovers were $1.7 million, facilities maintenance expenses were
$3.9 million and hurricane repairs totaled $4.7 million. On a unit
of production basis, LOE was $12.31 per Boe in the fourth quarter
of 2020, up 12% from $10.98 per Boe in the fourth quarter of 2019,
reflecting lower production somewhat offset by lower costs, and up
7% from $11.49 per Boe in the third quarter of 2020, reflecting
higher costs associated with hurricane repair.
Gathering, Transportation Costs and
Production Taxes: Gathering, transportation costs and
production taxes totaled $5.3 million, or $1.51 per Boe in the
fourth quarter of 2020, compared to $7.7 million, or $1.59 per Boe
in the fourth quarter of 2019, and $4.8 million, or $1.52 per Boe
in the third quarter of 2020. Costs were slightly below the low end
of guidance in the fourth quarter of 2020.
Depreciation, Depletion, Amortization
and Accretion (“DD&A”): DD&A, including accretion
for asset retirement obligations, was $7.54 per Boe of production
for the fourth quarter of 2020 compared to $7.79 per Boe for the
fourth quarter of 2019 and $7.93 per Boe for the third quarter of
2020.
General and Administrative Expenses
(“G&A”): G&A was $7.7 million for the
fourth quarter of 2020, well below the guidance range of $11.7
million to $12.9 million. The fourth quarter of 2020 benefitted
from a $2.7 million credit related to a settlement with BSEE that
resolved certain pending civil penalties issued by BSEE. G&A in
the fourth quarter of 2019 totaled $17.6 million and included
higher litigation and incentive compensation costs while the third
quarter of 2020 totaled $14.5 million and included increased legal
costs incurred in reviewing potential acquisition opportunities and
higher benefits costs. On a unit of production basis,
G&A declined significantly to $2.18 per Boe in the fourth
quarter of 2020 compared with $3.62 per Boe in the fourth quarter
of 2019, and $4.57 per Boe in the third quarter of
2020.
Derivative (Gain) Loss: In the
fourth quarter of 2020, W&T recorded a net loss of $11.5
million on its outstanding commodity derivative contracts,
substantially all of which was an unrealized commodity derivative
loss, largely due to higher quarter-end oil and natural gas prices
compared to third quarter of 2020. This compared to a net loss of
$18.7 million in the fourth quarter of 2019 of which $18.1 million
was an unrealized commodity derivative loss, and a net loss of
$11.2 million in the third quarter of 2020 of which $13.1 million
was an unrealized commodity derivative loss.
In the fourth quarter of 2020 and in early 2021,
W&T added the following derivative positions:
|
|
Production Period |
|
Instrument |
|
Avg. Daily Volumes |
Weighted Avg Swap Price |
Weighted Avg Put Price |
Weighted Avg Call Price |
Crude Oil - WTI NYMEX: |
|
|
|
|
(bbls) |
(per Bbl) |
(per Bbl) |
(per Bbl) |
Mar 2022 - May 2022 |
|
Swaps |
|
|
1,000 |
$41.90 |
|
|
Mar-22 |
|
Swaps |
|
|
1,076 |
$42.75 |
|
|
Apr-22 |
|
Swaps |
|
|
1,055 |
$42.75 |
|
|
May-22 |
|
Swaps |
|
|
1,000 |
$42.75 |
|
|
Mar 2021 - Dec 2021 |
|
Costless Collars |
200 |
|
$40.00 |
$54.90 |
Mar 2022 - May 2022 |
|
Costless Collars |
1,000 |
|
$35.00 |
$47.50 |
Mar 2022 - May 2022 |
|
Costless Collars |
1,000 |
|
$35.00 |
$49.50 |
|
|
|
|
|
|
|
|
|
|
Production Period |
|
Instrument |
|
Avg. Daily Volumes |
Weighted Avg Swap Price |
Weighted Avg Put Price |
Weighted Avg Call Price |
Natural Gas - Henry Hub NYMEX: |
|
|
|
|
(MMBTU) |
(per MMBTU) |
(per MMBTU) |
(per MMBTU) |
Mar 2022 - May 2022 |
|
Costless Collars |
10,000 |
|
$2.25 |
$3.40 |
Mar-22 |
|
Swaps |
|
|
10,095 |
$2.69 |
|
|
Apr-22 |
|
Swaps |
|
|
11,571 |
$2.69 |
|
|
May-22 |
|
Swaps |
|
|
10,000 |
$2.69 |
|
|
|
|
|
|
|
|
|
|
|
|
A listing of the Company’s current outstanding
derivative positions is included in the tables below as well as in
the Investor Relations section of W&T’s web site under the
“Financial Info” tab.
Interest Expense: Interest
expense, as reported in the income statement, in the fourth quarter
of 2020 was $15.4 million compared with $16.6 million in the same
period in 2019 and $14.1 million in the third quarter of 2020. The
reduction in expense from the prior year relates primarily to
reduced interest costs following the retirement of $72.5 million in
principal of W&T’s 9.75% Senior Second Lien Notes in early
2020.
Income Tax: W&T recorded a
non-cash income tax benefit of $6.9 million in the fourth quarter
of 2020 compared to a non-cash income tax benefit of $8.2 million
in the fourth quarter of 2019 and a non-cash income tax benefit of
$21.1 million in the third quarter of 2020.
For the year ended December 31, 2020, the income
tax benefit was positively impacted by adjustments related to the
enactment of the CARES Act on March 27, 2020. Additionally, the
third and fourth quarters of 2020 were impacted by the Treasury
issuing regulations under IRC Section 163(j) on July 28, 2020
related to the business interest expense limitation. W&T’s
effective tax rate was not meaningful for the three months ended
December 31, 2020 or September 30, 2020.
As of December 31, 2020, W&T’s deferred tax
valuation allowance was $22.4 million. The Company continually
evaluates the need to maintain a valuation allowance on its
deferred tax assets. Any future reduction of a portion or all of
the valuation allowance would result in a non-cash income tax
benefit in the period the decision occurs. W&T is not currently
forecasting any cash income tax expense for the
near-term.Balance Sheet and Liquidity: Total
liquidity on December 31, 2020 was $174.3 million, consisting of
cash and cash equivalents of $43.7 million and $130.6 million of
availability under W&T’s revolving bank credit facility. At
December 31, 2020, the Company had $80.0 million in borrowings on
its $215 million revolving credit facility and $4.4 million of
letters of credit outstanding. Total long-term debt, including
$80.0 million in revolving credit facility borrowings, was $625.3
million, net of unamortized debt issuance costs.
In early 2020, W&T purchased in the open
market $72.5 million of its Senior Second Lien Notes for $23.9
million, reducing the liability associated with the notes to $552.5
million, which resulted in annualized interest savings of $7.1
million.
In January 2021, W&T’s bank group completed
its regularly scheduled semi-annual borrowing base redetermination
and the borrowing base was set at $190 million. As of March 3,
2021, the borrowings against the facility in the ordinary course of
business have been reduced by $32 million to $48 million. The next
regularly scheduled redetermination is in the spring of
2021. W&T is currently in compliance with all
applicable covenants of the Credit Agreement and the Senior Second
Lien Notes indenture.
Capital Expenditures: In March
2020, due to the uncertain commodity outlook in light of the
COVID-19 pandemic, W&T suspended drilling and completion
activities and significantly reduced its 2020 capital expenditure
budget to $15 million to $25 million from its prior level of $50
million to $100 million. Per the Statement of Cash Flows, capital
expenditures in the fourth quarter of 2020 (excluding acquisitions)
were $3.0 million. Capital expenditures for full year 2020 totaled
$17.6 million.
2021 CAPITAL INVESTMENT
PROGRAM
Under current commodity pricing conditions,
W&T intends to focus on generating free cash flow which can be
used toward debt reduction and additional accretive acquisitions.
The Company’s preliminary capital expenditure budget for 2021 is
expected to be in the range $30 million to $60 million, which
excludes opportunistic acquisitions of oil and gas properties from
third parties. W&T has significant flexibility to adjust its
spending up or down at any time since it has no long-term rig
contracts or drilling obligations. Furthermore, the lower decline
profile of the Company’s producing asset base allows reductions in
capital expenditures without significantly impacting near-term
production levels.
W&T’s overall inventory of drillable
projects remains strong and currently the 2021 capital program will
be focused on lower-risk, high-return projects. Additionally, in
2021, the Company expects to spend about $17 to $21 million on
asset retirement obligations (“ARO”) compared to $3.3 million spent
on ARO in 2020.
W&T forecasts its full year 2021 production
to be in the range of 38,000 to 42,000 Boe/d, above the fourth
quarter 2020 rate of 38,261 Boe/d, but modestly lower than full
year 2020 average production of 42,046 Boe/d.
Environmental, Social and Governance
(“ESG”) Commentary and COVID-19 Response
W&T is issuing its 2020 initial corporate
ESG report later this month which will communicate W&T’s 2020
corporate responsibility and ESG initiatives as well as related key
performance indicators. In the creation of its inaugural report,
the Company consulted the Sustainability Accounting Standards
Board’s (“SASB”) Oil and Gas Exploration and Production
Sustainability Accounting Standard, the recommendations of the Task
Force on Climate-related Financial Disclosures (“TCFD”), and other
reporting guidance from industry frameworks and standards.
W&T is committed to the health and safety of
all its employees and contractors and has taken steps to ensure
their continued safety in its response to the COVID-19 pandemic. At
its corporate office, W&T instituted 100% remote work on March
23, 2020, and subsequently reopened its offices and implemented
actions to protect employees including temperature checks, mask
wearing, social distancing, and limiting headcount to 50% or less
in its offices during peak COVID-19 outbreaks in the
community.
For its field operations, the Company instituted
screening, which includes a questionnaire and temperature check, of
all personnel prior to entry into heliports and shorebases as well
as its Alabama gas treatment plant. The Company conducts daily
temperature screenings at all offshore facilities, implemented
procedures for distancing and hygiene at its field locations, and
provides COVID-19 testing for field project crews.
W&T will continue to monitor the COVID-19
situation and follow the advice of government and health
advisors. To-date, the Company’s operations and its employees
have not been materially impacted by COVID-19.
Full Year-End 2020 Financial
Review
W&T reported net income for full year 2020
of $37.8 million, or $0.26 per share, and Adjusted Net Loss of
$22.9 million, or $0.16 per share. For the full year 2019, W&T
reported net income of $74.1 million, or $0.52 per share, and
Adjusted Net Income of $85.9 million, or $0.60 per share. The
Company generated $159.0 million in Adjusted EBITDA for the full
year 2020 compared to $282.9 million in 2019, with the decline
driven primarily by lower realized pricing and production mix.
Revenues totaled $346.6 million for 2020 compared with $534.9
million in 2019, with the reduction due primarily to decreases in
commodity prices. Net cash provided by operating activities for the
twelve months ended December 31, 2020 was $108.5 million compared
with $232.2 million in 2019. Free Cash Flow totaled $76.0 million
in 2020 compared with $74.0 million in 2019.
Production for 2020 was 42,046 Boe/d or 15.4
MMBoe, comprised of 5.6 MMBbls of oil, 1.7 MMBbls of NGLs, and 48.4
Bcf of natural gas. Full year 2019 production averaged 40,634 Boe/d
or 14.8 MMBoe and included 6.7 MMBbls of oil, 1.3 MMBbls of NGLs,
and 41.3 Bcf of natural gas. While production increased
year-over-year primarily due to the full year impact of additional
production from the Mobile Bay and Magnolia acquisitions, 2020
production was negatively impacted by the eight named storms that
entered the GOM. In addition, and to a lesser extent, the Company
experienced unplanned downtime at Mobile Bay, previously-announced
planned downtime at the Magnolia field and a combination of
operated and non-operated production that was shut-in due to the
decline in oil prices, and natural decline.
For the full year 2020, W&T’s realized crude
oil sales price was $38.45 per barrel, NGL sales price was $11.26
per barrel and natural gas price was $2.05 per Mcf. The combined
average sales price was $21.76 per Boe, or 39% lower than $35.63
per Boe sales price that was realized for full year 2019. For the
full year 2019, W&T’s realized oil price was $59.89 per barrel,
NGL price was $17.60 per barrel and natural gas price was $2.57 per
Mcf.
For the full year 2020, LOE was $162.9 million
compared to $184.3 million in 2019 with the decrease primarily due
to shut-ins of certain fields during 2020 as a result of downtime
events and decreases in workover and facilities expenses, partially
offset by increased costs related to asset acquisitions and
hurricane repairs during 2020.
Gathering, transportation costs and production
taxes totaled $20.9 million, or $1.36 per Boe in 2020, compared to
$28.5 million, or $1.92 per Boe in 2019. The decrease was due
primarily to a larger portion of production coming from the Mobile
Bay field in 2020 compared to 2019 where gathering and
transportation costs per unit for natural gas are lower compared to
other properties. That reduction in cost was partially offset by
higher Mobile Bay production taxes.
For the full year 2020, G&A was $41.7
million, down 24% compared with full year 2019 G&A of $55.1
million. The decrease year-over-year is primarily due to lower
employee benefits and salaries resulting from Payroll Protection
Program (“PPP”) funds received in April 2020 and lower incentive
compensation awards. G&A per Boe was $2.71 in 2020, down 27%
from $3.72 in 2019.
OPERATIONS UPDATE
W&T successfully drilled one well in the
first quarter of 2020 at East Cameron 338/349, the Cota well, but
suspended all other drilling activity in 2020 due to the uncertain
pricing environment.
The Cota well is in over 290 feet of water and
was drilled to a total depth of over 6,000 feet and encountered
approximately 100 feet of net oil pay. The well is currently in the
development phase of the project. Initial production is expected in
the latter part of 2021. The Company has an initial 30% working
interest in the Cota well but the interest will increase to 38.4%
once the well is brought online and certain performance thresholds
are met.
W&T participated in two federal GOM lease
sales in 2020 and was awarded a total of four blocks including
Eugene Island block 345, Eugene Island South Addition block 389 and
Ewing Banks block 979, all in shallow water, and Garden Banks block
782 in deepwater. The Company invested approximately $1.2 million
in the leases.
Well Recompletions and
Workovers: During the fourth quarter of 2020, the Company
performed two workovers that in total added approximately
800 net Boe per day to production.
Consolidation of Onshore Natural Gas
Treatment Plants Supporting Mobile Bay Assets: In January
2021, the Company completed the consolidation of its two onshore
natural gas treatment facilities that service the Mobile Bay area
into the Onshore Treating Facility (“OTF”) which was acquired in
2019 from ExxonMobil, and closed its Yellowhammer treatment
facility. The OTF has more than sufficient capacity to meet
W&T’s current and expected needs as it further develops its
Mobile Bay and regional natural gas assets in the future. The
consolidation of the facilities is expected to result in savings of
approximately $5 million per year beginning in 2021.
Year-End 2020 Proved
Reserves
The Company's year-end 2020 SEC proved reserves
were 144.4 MMBoe, down modestly from 157.4 MMBoe at year-end
2019. W&T recorded upward revisions of 26.2 MMBoe
in 2020 related to improved well performance and technical
revisions, and 3.9 MMBoe from acquisitions, primarily from the
purchase of additional interests in the Mobile Bay area and in the
Magnolia field. These additions were offset by 27.7 MMBoe of
reductions due to lower commodity prices, and 15.4 MMBoe of
production. The SEC twelve-month first day of the month average
realized prices used in the report for year-end 2020 were $37.78
per barrel of oil and $2.05 per Mcf of natural gas, while for
year-end 2019 they were $58.11 per barrel of oil and $2.63 per Mcf
of natural gas.
About 34% of year-end 2020 SEC proved reserves
were liquids (22% crude oil and 12% NGLs) and 66% natural gas. At
year end, approximately 83% of 2020 proved reserves were classified
as proved developed producing, 8% as proved developed non-producing
and 9% as proved undeveloped.
Using average realized NYMEX strip prices at
year-end 2020 of $44.43 per barrel of oil and $2.66 per Mcf of
natural gas, proved reserves would have been 169.5 MMBoe, comprised
of 34.7 MMBbls of oil, 20.7 MMBbls of NGLs, and 684.7 Bcf of
natural gas.
W&T’s reserve life ratio at year-end 2020,
based on year-end 2020 SEC proved reserves and 2020 production was
9.4 years, while based on NYMEX strip pricing reserves, it was 11.0
years.
The present value of W&T’s reported SEC
proved reserves, discounted at 10% ("PV-10"), at year-end 2020 was
$741 million, down about 43% from $1.3 billion at the end of 2019.
The 2020 SEC PV-10 is based on twelve-month first day of the month
average realized prices of $37.78 per barrel of crude oil and $2.05
per Mcf of natural gas, both after adjustment for quality,
transportation, fees, energy content, and regional price
differentials. For 2019, the SEC PV-10 was based on twelve-month
first day of the month average realized prices of $58.11 per barrel
and an average natural gas price of $2.63 per Mcf, both after
adjustments for quality, transportation, fees, energy content, and
regional price differential.
Utilizing average realized NYMEX strip pricing
as of December 31, 2020 of $44.43 per barrel of oil and $2.66 per
Mcf of natural gas, the PV-10 would have been $1.1 billion.
Summary Reconciliation W&T Offshore, Inc.
Consolidated |
|
|
|
|
|
|
|
|
|
|
|
Oil |
|
NGL |
|
Gas |
|
Net |
|
Net |
|
|
|
MBbls |
|
MBbls |
|
MMcf |
|
MMcfe |
|
MBoe |
|
PV-10 |
BALANCE, DECEMBER 31, 2019 |
37,767 |
|
|
24,469 |
|
|
571,117 |
|
|
944,534 |
|
|
157,422 |
|
|
$1,302,457 |
REVISIONS OF PREVIOUS ESTIMATES |
3,603 |
|
|
(2,295) |
|
|
149,384 |
|
|
157,235 |
|
|
26,206 |
|
|
|
REVISIONS DUE TO SEC BASE PRICE CHANGE |
(4,477) |
|
|
(3,572) |
|
|
(117,776) |
|
|
(166,067) |
|
|
(27,678) |
|
|
|
EXTENSIONS, DISCOVERIES |
193 |
|
|
4 |
|
|
174 |
|
|
1,356 |
|
|
226 |
|
|
|
PURCHASES OF MINERALS IN PLACE |
737 |
|
|
448 |
|
|
14,754 |
|
|
21,870 |
|
|
3,645 |
|
|
|
SALES OF MINERALS IN PLACE |
0 |
|
|
0 |
|
|
0 |
|
|
0 |
|
|
0 |
|
|
|
PRODUCTION |
(5,629) |
|
|
(1,696) |
|
|
(48,384) |
|
|
(92,334) |
|
|
(15,389) |
|
|
|
BALANCE, DECEMBER 31, 2020 |
32,196 |
|
|
17,358 |
|
|
569,269 |
|
|
866,594 |
|
|
144,432 |
|
|
$740,876 |
(1) PV-10 for this presentation excludes any provision for
asset retirement obligations or income taxes.
In accordance with guidelines established by the
SEC, estimated proved reserves as of December 31, 2020 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, 2020. The WTI spot price and the Henry Hub spot
price were utilized as the reference prices and after adjusting for
quality, transportation, fees, energy content and regional price
differentials, the average realized prices were $37.78 per barrel
for oil, $10.29 per barrel for NGLs and $2.05 per Mcf for natural
gas. 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. This ratio was then 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.
Standardized measure of future net cash flows
was (i) $493.7 million at December 31, 2020, which is calculated as
PV-10 of $740.9 million less discounted cash outflows of $204.2
million associated with ARO and $43.0 million associated with
income taxes and (ii) $986.9 million at December 31, 2019, which is
calculated as PV-10 of $1,302.5 million less discounted cash
outflows of $184.9 million associated with ARO and $130.7 million
associated with income taxes.
First Quarter and Full Year 2021
Production and Expense Guidance
The guidance for the first quarter and full year
2021 in the table below represents the Company's current best
estimate of the range of likely future results. Guidance could be
affected by the factors described below in "Forward-Looking
Statements".
|
|
First Quarter |
Full Year |
Production |
2021 |
2021 |
|
|
|
Oil
(MMBbls) |
1.22 -
1.35 |
4.97 -
5.57 |
|
|
|
NGL's
(MMBbls) |
0.36 -
0.40 |
1.47 -
1.63 |
|
|
|
Natural Gas
(Bcf) |
10.7 -
11.8 |
44.4 -
49.0 |
|
|
|
Total
(MMBoe) |
3.4 -
3.7 |
13.8 -
15.4 |
|
|
|
Total
(Boe/d) |
37,300 -
41,300 |
38,000 -
42,000 |
|
|
|
Operating Expenses |
First Quarter |
Full Year |
($ in millions) |
2021 |
2021 |
|
|
|
Lease
operating expenses |
$41 -
$45 |
$153 -
$169 |
|
|
|
Gathering,
transportation & |
|
|
production
taxes |
$5.4 -
$5.9 |
$22 -
$24 |
|
|
|
General and
administrative |
$12.3 -
$13.6 |
$51 -
$56 |
|
|
|
Current income tax expense rate |
0% |
0% |
Conference Call Information: W&T will hold
a conference call to discuss its financial and operational results
on Thursday, March 4, 2021, at 9:00 a.m. Central Time (10:00 a.m.
Eastern Time). Interested parties may participate by dialing (844)
739-3797. International parties may dial (412) 317-5713.
Participants should request to connect to the “W&T Offshore
Call.” This call will also be webcast and available on W&T’s
website at www.wtoffshore.com on the “Overview” page under the
“Investor Relations” section. An audio replay will be available on
the Company’s website following the call.
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 43 producing fields
in federal and state waters and has under lease approximately
737,000 gross acres, including approximately 527,000 gross acres on
the Gulf of Mexico Shelf and approximately 210,000 gross acres in
the Gulf of Mexico deepwater. A majority of the Company’s daily
production is derived from wells it operates. For more information
on W&T, please visit the Company’s website at
www.wtoffshore.com.
Forward-Looking and Cautionary
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, 2020 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. We refer to feet of “pay” in our discussions
concerning the evaluation of our recently drilled wells. This
refers to geological indications, typically obtained from well
logging, of the estimated thickness of sands which we believe are
capable of producing hydrocarbons in commercial quantities. These
indications of “pay” may not necessarily forecast the amount of
future production or reserve quantities from the well, which can be
dependent upon numerous other factors.
W&T
OFFSHORE, INC. AND SUBSIDIARIES |
Condensed
Consolidated Statements of Operations |
(In
thousands, except per share data) |
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended |
|
Twelve
Months Ended |
|
|
|
December 31, |
|
|
September 30, |
|
|
December 31, |
|
December 31, |
|
|
|
2020 |
|
|
|
2020 |
|
|
|
2019 |
|
|
|
2020 |
|
|
|
2019 |
|
|
|
|
|
|
|
|
|
|
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Oil |
|
$ |
54,535 |
|
|
$ |
46,589 |
|
|
$ |
101,106 |
|
|
$ |
216,419 |
|
|
$ |
399,790 |
|
NGLs |
|
|
6,267 |
|
|
|
4,464 |
|
|
|
6,912 |
|
|
|
19,101 |
|
|
|
22,373 |
|
Natural gas |
|
|
29,423 |
|
|
|
19,213 |
|
|
|
41,256 |
|
|
|
99,300 |
|
|
|
106,347 |
|
Other |
|
|
4,523 |
|
|
|
2,251 |
|
|
|
2,620 |
|
|
|
11,814 |
|
|
|
6,386 |
|
Total revenues |
|
|
94,748 |
|
|
|
72,517 |
|
|
|
151,894 |
|
|
|
346,634 |
|
|
|
534,896 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
costs and expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lease operating expenses |
|
|
43,332 |
|
|
|
36,437 |
|
|
|
53,299 |
|
|
|
162,857 |
|
|
|
184,281 |
|
Gathering, transportation costs and production taxes |
|
|
5,313 |
|
|
|
4,826 |
|
|
|
7,707 |
|
|
|
20,947 |
|
|
|
28,474 |
|
Depreciation, depletion, amortization and accretion |
|
|
26,547 |
|
|
|
25,127 |
|
|
|
37,818 |
|
|
|
120,284 |
|
|
|
148,498 |
|
General and administrative expenses |
|
|
7,678 |
|
|
|
14,476 |
|
|
|
17,564 |
|
|
|
41,745 |
|
|
|
55,107 |
|
Derivative loss (gain) |
|
|
11,529 |
|
|
|
11,161 |
|
|
|
18,659 |
|
|
|
(23,808 |
) |
|
|
59,887 |
|
Total costs and expenses |
|
|
94,399 |
|
|
|
92,027 |
|
|
|
135,047 |
|
|
|
322,025 |
|
|
|
476,247 |
|
Operating (loss) income |
|
|
349 |
|
|
|
(19,510 |
) |
|
|
16,847 |
|
|
|
24,609 |
|
|
|
58,649 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
expense, net |
|
|
15,402 |
|
|
|
14,135 |
|
|
|
16,635 |
|
|
|
61,463 |
|
|
|
59,569 |
|
Gain on debt
transactions |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(47,469 |
) |
|
|
- |
|
Other
expense |
|
|
752 |
|
|
|
751 |
|
|
|
(1,176 |
) |
|
|
2,978 |
|
|
|
188 |
|
(Loss) income before income tax (benefit) expense |
|
|
(15,805 |
) |
|
|
(34,396 |
) |
|
|
1,388 |
|
|
|
7,637 |
|
|
|
(1,108 |
) |
Income tax
benefit |
|
|
(6,858 |
) |
|
|
(21,057 |
) |
|
|
(8,171 |
) |
|
|
(30,153 |
) |
|
|
(75,194 |
) |
Net (loss) income |
|
$ |
(8,947 |
) |
|
$ |
(13,339 |
) |
|
$ |
9,559 |
|
|
$ |
37,790 |
|
|
$ |
74,086 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and
diluted (loss) earnings per common share |
|
$ |
(0.06 |
) |
|
$ |
(0.09 |
) |
|
$ |
0.07 |
|
|
$ |
0.26 |
|
|
$ |
0.52 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
average common shares outstanding |
|
|
141,721 |
|
|
|
141,624 |
|
|
|
140,769 |
|
|
|
141,622 |
|
|
|
140,583 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
W&T
OFFSHORE, INC. AND SUBSIDIARIES |
Condensed
Operating Data |
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended |
|
Twelve
Months Ended |
|
|
|
December 31, |
|
|
|
September 30, |
|
|
|
|
December 31, |
|
December 31, |
|
|
|
2020 |
|
|
|
2020 |
|
|
|
|
2019 |
|
|
2020 |
|
|
2019 |
Net sales
volumes: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Oil (MBbls) |
|
|
1,273 |
|
|
|
1,115 |
|
|
|
|
1,778 |
|
|
5,629 |
|
|
6,675 |
NGL (MBbls) |
|
|
385 |
|
|
|
407 |
|
|
|
|
415 |
|
|
1,696 |
|
|
1,271 |
Oil and NGLs (MBbls) |
|
|
1,658 |
|
|
|
1,521 |
|
|
|
|
2,194 |
|
|
7,325 |
|
|
7,946 |
Natural gas (MMcf) |
|
|
11,174 |
|
|
|
9,897 |
|
|
|
|
15,966 |
|
|
48,384 |
|
|
41,310 |
Total oil and natural gas (MBoe) (1) |
|
|
3,520 |
|
|
|
3,170 |
|
|
|
|
4,855 |
|
|
15,389 |
|
|
14,831 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average
daily equivalent sales (MBoe/d) |
|
|
38.3 |
|
|
|
34.5 |
|
|
|
|
52.8 |
|
|
42.0 |
|
|
40.6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average
realized sales prices: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Oil ($/Bbl) |
|
$ |
42.84 |
|
|
$ |
41.81 |
|
|
|
$ |
56.84 |
|
$ |
38.45 |
|
$ |
59.89 |
NGLs ($/Bbl) |
|
|
16.30 |
|
|
|
10.99 |
|
|
|
|
16.64 |
|
|
11.26 |
|
|
17.60 |
Oil and NGLs ($/Bbl) |
|
|
36.68 |
|
|
|
33.57 |
|
|
|
|
49.23 |
|
|
32.15 |
|
|
53.13 |
Natural gas ($/Mcf) |
|
|
2.63 |
|
|
|
1.94 |
|
|
|
|
2.58 |
|
|
2.05 |
|
|
2.57 |
Barrel of oil equivalent ($/Boe) |
|
|
25.63 |
|
|
|
22.16 |
|
|
|
|
30.75 |
|
|
21.76 |
|
|
35.63 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average
costs and expenses per Boe ($/Boe): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lease operating expenses |
|
$ |
12.31 |
|
|
$ |
11.49 |
|
|
|
$ |
10.98 |
|
$ |
10.58 |
|
$ |
12.43 |
Gathering, transportation costs and production taxes |
|
|
1.51 |
|
|
|
1.52 |
|
|
|
|
1.59 |
|
|
1.36 |
|
|
1.92 |
Depreciation, depletion, amortization and accretion |
|
|
7.54 |
|
|
|
7.93 |
|
|
|
|
7.79 |
|
|
7.82 |
|
|
10.01 |
General and administrative expenses |
|
|
2.18 |
|
|
|
4.57 |
|
|
|
|
3.62 |
|
|
2.71 |
|
|
3.72 |
(1) MBoe is 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). The conversion ratio does not assume price
equivalency and the price on an equivalent basis for oil, NGLs and
natural gas may differ significantly.
W&T
OFFSHORE, INC. AND SUBSIDIARIES |
Condensed
Consolidated Balance Sheets |
(In
thousands) |
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
December
31, |
|
|
December
31, |
|
|
2020 |
|
|
2019 |
|
|
|
|
|
|
|
|
Assets |
|
|
|
|
|
|
|
Current
assets: |
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
43,726 |
|
|
|
$ |
32,433 |
|
Receivables: |
|
|
|
|
|
|
|
Oil and natural gas sales |
|
|
38,830 |
|
|
|
|
57,367 |
|
Joint interest, net |
|
|
10,840 |
|
|
|
|
19,400 |
|
Income taxes |
|
|
- |
|
|
|
|
1,861 |
|
Total receivables |
|
|
49,670 |
|
|
|
|
78,628 |
|
Prepaid expenses and other assets |
|
|
13,832 |
|
|
|
|
30,691 |
|
Total current assets |
|
|
107,228 |
|
|
|
|
141,752 |
|
|
|
|
|
|
|
|
|
Oil and natural gas properties and other, net - at cost |
|
|
8,588,356 |
|
|
|
|
8,552,513 |
|
Less accumulated depreciation, depletion and amortization |
|
|
7,901,478 |
|
|
|
|
7,803,715 |
|
Oil and natural gas properties and other, net |
|
|
686,878 |
|
|
|
|
748,798 |
|
Restricted deposits for asset retirement obligations |
|
|
29,675 |
|
|
|
|
15,806 |
|
Deferred income taxes |
|
|
94,331 |
|
|
|
|
63,916 |
|
Other assets |
|
|
22,470 |
|
|
|
|
33,447 |
|
Total assets |
|
$ |
940,582 |
|
|
|
$ |
1,003,719 |
|
|
|
|
|
|
|
|
|
Liabilities and Shareholders’ Deficit |
|
|
|
|
|
|
|
Current
liabilities: |
|
|
|
|
|
|
|
Accounts payable |
|
$ |
41,304 |
|
|
|
$ |
102,344 |
|
Undistributed oil and natural gas proceeds |
|
|
19,167 |
|
|
|
|
29,450 |
|
Advances from joint interest partners |
|
|
7,308 |
|
|
|
|
5,279 |
|
Asset retirement obligations |
|
|
17,188 |
|
|
|
|
21,991 |
|
Accrued liabilities |
|
|
30,033 |
|
|
|
|
30,896 |
|
Total current liabilities |
|
|
115,000 |
|
|
|
|
189,960 |
|
|
|
|
|
|
|
|
|
Long-term
debt - carrying value |
|
|
625,286 |
|
|
|
|
719,533 |
|
Asset
retirement obligations, less current portion |
|
|
375,516 |
|
|
|
|
333,603 |
|
Other
liabilities |
|
|
33,066 |
|
|
|
|
9,988 |
|
Commitments
and contingencies |
|
|
- |
|
|
|
|
- |
|
Shareholders’ deficit: |
|
|
|
|
|
|
|
Common stock, $0.00001 par value; 200,000 shares authorized;
145,174 issued and 142,305 |
|
|
|
|
|
|
|
outstanding at December 31, 2020; 144,538 issued and |
|
|
|
|
|
|
|
141,669 outstanding at December 31, 2019 |
|
|
1 |
|
|
|
|
1 |
|
Additional paid-in capital |
|
|
550,339 |
|
|
|
|
547,050 |
|
Retained deficit |
|
|
(734,459 |
) |
|
|
|
(772,249 |
) |
Treasury stock, at cost; 2,869 shares for both dates presented |
|
|
(24,167 |
) |
|
|
|
(24,167 |
) |
Total shareholders’ deficit |
|
|
(208,286 |
) |
|
|
|
(249,365 |
) |
Total liabilities and shareholders’ deficit |
|
$ |
940,582 |
|
|
|
$ |
1,003,719 |
|
|
|
|
|
|
|
|
|
|
W&T
OFFSHORE, INC. AND SUBSIDIARIES |
Condensed
Consolidated Statements of Cash Flows |
(In
thousands) |
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three
Months Ended |
Twelve
Months Ended |
|
|
|
December 31, |
|
|
September 30, |
|
|
December 31, |
|
December 31, |
|
|
|
2020 |
|
|
|
2020 |
|
|
|
2019 |
|
|
|
2020 |
|
|
|
2019 |
|
Operating activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss)
income |
|
$ |
(8,947 |
) |
|
$ |
(13,339 |
) |
|
$ |
9,559 |
|
|
$ |
37,790 |
|
|
$ |
74,086 |
|
Adjustments
to reconcile net (loss) income to net cash provided by operating
activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation, depletion, amortization and accretion |
|
|
26,547 |
|
|
|
25,127 |
|
|
|
37,818 |
|
|
|
120,284 |
|
|
|
148,498 |
|
Amortization of debt items and other items |
|
|
1,583 |
|
|
|
1,569 |
|
|
|
1,600 |
|
|
|
6,834 |
|
|
|
5,514 |
|
Share-based compensation |
|
|
817 |
|
|
|
1,075 |
|
|
|
1,261 |
|
|
|
3,959 |
|
|
|
3,690 |
|
Derivative loss (gain) |
|
|
11,529 |
|
|
|
11,161 |
|
|
|
18,659 |
|
|
|
(23,808 |
) |
|
|
59,887 |
|
Derivatives cash receipts (payments), net |
|
|
3,168 |
|
|
|
4,462 |
|
|
|
(3,642 |
) |
|
|
45,196 |
|
|
|
13,941 |
|
Gain on debt transactions |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(47,469 |
) |
|
|
- |
|
Deferred income taxes |
|
|
(6,880 |
) |
|
|
(21,200 |
) |
|
|
(8,338 |
) |
|
|
(30,287 |
) |
|
|
(64,102 |
) |
Changes in operating assets and liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Oil and natural gas receivables |
|
|
(17,423 |
) |
|
|
975 |
|
|
|
(5,741 |
) |
|
|
18,537 |
|
|
|
(9,563 |
) |
Joint interest receivables |
|
|
(479 |
) |
|
|
4,296 |
|
|
|
11,084 |
|
|
|
8,561 |
|
|
|
(4,766 |
) |
Prepaid expenses and other assets |
|
|
1,612 |
|
|
|
4,446 |
|
|
|
4,865 |
|
|
|
9,563 |
|
|
|
(9,346 |
) |
Income taxes |
|
|
22 |
|
|
|
(15 |
) |
|
|
35,049 |
|
|
|
2,014 |
|
|
|
52,214 |
|
Asset retirement obligation settlements |
|
|
(551 |
) |
|
|
(624 |
) |
|
|
(3,703 |
) |
|
|
(3,339 |
) |
|
|
(11,443 |
) |
Cash advances from JV partners |
|
|
(414 |
) |
|
|
(3,408 |
) |
|
|
(31,194 |
) |
|
|
2,028 |
|
|
|
(15,347 |
) |
Accounts payable, accrued liabilities and other |
|
|
(16,813 |
) |
|
|
6,735 |
|
|
|
(21,646 |
) |
|
|
(41,354 |
) |
|
|
(11,036 |
) |
Net cash (used in) provided by operating activities |
|
|
(6,229 |
) |
|
|
21,260 |
|
|
|
45,631 |
|
|
|
108,509 |
|
|
|
232,227 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investing activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment
in oil and natural gas properties and equipment |
|
|
(4,678 |
) |
|
|
1,184 |
|
|
|
(31,752 |
) |
|
|
(17,632 |
) |
|
|
(137,816 |
) |
Changes in operating assets and liabilities associated with
investing activities |
|
1,694 |
|
|
|
(2,418 |
) |
|
|
(472 |
) |
|
|
(26,535 |
) |
|
|
12,110 |
|
Acquisition
of property interests |
|
|
(2,463 |
) |
|
|
- |
|
|
|
(20,301 |
) |
|
|
(2,919 |
) |
|
|
(188,019 |
) |
Purchases of
furniture, fixtures and other |
|
|
(460 |
) |
|
|
- |
|
|
|
(69 |
) |
|
|
(530 |
) |
|
|
(89 |
) |
Net cash used in investing activities |
|
|
(5,907 |
) |
|
|
(1,234 |
) |
|
|
(52,594 |
) |
|
|
(47,616 |
) |
|
|
(313,814 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financing activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Borrowings
on credit facility |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
25,000 |
|
|
|
150,000 |
|
Repayments
on credit facility |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(50,000 |
) |
|
|
(66,000 |
) |
Purchase of
Senior Second Lien Notes |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(23,930 |
) |
|
|
- |
|
Debt
transactions costs and other |
|
|
(670 |
) |
|
|
- |
|
|
|
(2,345 |
) |
|
|
(670 |
) |
|
|
(3,273 |
) |
Net cash (used in) provided by financing activities |
|
|
(670 |
) |
|
|
- |
|
|
|
(2,345 |
) |
|
|
(49,600 |
) |
|
|
80,727 |
|
(Decrease) increase in cash and cash equivalents |
|
|
(12,806 |
) |
|
|
20,026 |
|
|
|
(9,308 |
) |
|
|
11,293 |
|
|
|
(860 |
) |
Cash and
cash equivalents, beginning of period |
|
|
56,532 |
|
|
|
36,506 |
|
|
|
41,741 |
|
|
|
32,433 |
|
|
|
33,293 |
|
Cash and
cash equivalents, end of period |
|
$ |
43,726 |
|
|
$ |
56,532 |
|
|
$ |
32,433 |
|
|
$ |
43,726 |
|
|
$ |
32,433 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
W&T
OFFSHORE, INC. AND SUBSIDIARIES |
|
Financial
Commodity Derivative Positions |
|
As of March
3, 2021 |
|
|
|
|
|
Production Period |
|
Instrument |
|
Avg. Daily Volumes |
Weighted Avg Swap Price |
Weighted Avg Put Price |
Weighted Avg Call Price |
|
|
Crude Oil - WTI NYMEX: |
|
|
|
|
(bbls) |
(per Bbl) |
(per Bbl) |
(per Bbl) |
|
|
Mar 2021 - Dec 2021 |
|
Swaps |
|
|
1,000 |
$41.00 |
|
|
|
|
Mar 2021 - Dec 2021 |
|
Swaps |
|
|
1,000 |
$42.05 |
|
|
|
|
Mar 2021 - Dec 2021 |
|
Swaps |
|
|
1,000 |
$42.18 |
|
|
|
|
Mar 2021 - Dec 2021 |
|
Swaps |
|
|
1,000 |
$43.00 |
|
|
|
|
Jan 2022 - Feb 2022 |
|
Swaps |
|
|
1,000 |
$42.75 |
|
|
|
|
Jan 2022 - Feb 2022 |
|
Swaps |
|
|
1,000 |
$42.80 |
|
|
|
|
Jan 2022 - Feb 2022 |
|
Swaps |
|
|
1,000 |
$43.40 |
|
|
|
|
Mar 2022 - May 2022 |
|
Swaps |
|
|
1,000 |
$41.90 |
|
|
|
|
Mar-22 |
|
Swaps |
|
|
1,076 |
$42.75 |
|
|
|
|
Apr-22 |
|
Swaps |
|
|
1,055 |
$42.75 |
|
|
|
|
May-22 |
|
Swaps |
|
|
1,000 |
$42.75 |
|
|
|
|
Mar 2021 - Dec 2021 |
|
Costless Collars |
200 |
|
$40.00 |
$54.90 |
|
|
Mar-21 |
|
Costless Collars |
2,382 |
|
$35.00 |
$50.00 |
|
|
Apr-21 |
|
Costless Collars |
2,362 |
|
$35.00 |
$50.00 |
|
|
May-21 |
|
Costless Collars |
1,944 |
|
$35.00 |
$50.00 |
|
|
Jun-21 |
|
Costless Collars |
1,924 |
|
$35.00 |
$50.00 |
|
|
Jul-21 |
|
Costless Collars |
1,525 |
|
$35.00 |
$50.00 |
|
|
Aug-21 |
|
Costless Collars |
1,346 |
|
$35.00 |
$50.00 |
|
|
Sep-21 |
|
Costless Collars |
1,350 |
|
$35.00 |
$50.00 |
|
|
Oct-21 |
|
Costless Collars |
1,012 |
|
$35.00 |
$50.00 |
|
|
Nov-21 |
|
Costless Collars |
948 |
|
$35.00 |
$50.00 |
|
|
Dec-21 |
|
Costless Collars |
625 |
|
$35.00 |
$50.00 |
|
|
Jan-22 |
|
Costless Collars |
1,473 |
|
$35.00 |
$50.00 |
|
|
Feb-22 |
|
Costless Collars |
1,790 |
|
$35.00 |
$50.00 |
|
|
Mar 2022 - May 2022 |
|
Costless Collars |
1,000 |
|
$35.00 |
$47.50 |
|
|
Mar 2022 - May 2022 |
|
Costless Collars |
1,000 |
|
$35.00 |
$49.50 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Production Period |
|
Instrument |
|
Avg. Daily Volumes |
Weighted Avg Swap Price |
Weighted Avg Put Price |
Weighted Avg Call Price |
|
|
Natural Gas - Henry Hub NYMEX: |
|
|
|
|
(MMBTU) |
(per MMBTU) |
(per MMBTU) |
(per MMBTU) |
|
|
Mar 2021 - Dec 2022 |
|
Calls (long) |
|
40,000 |
|
|
$3.00 |
|
|
Mar 2021 - Dec 2022 |
|
Costless Collars |
40,000 |
|
$1.83 |
$3.00 |
|
|
Mar 2021 - Dec 2021 |
|
Costless Collars |
20,000 |
|
$2.17 |
$3.00 |
|
|
Mar 2021 - Dec 2021 |
|
Swaps |
|
|
10,000 |
$2.62 |
|
|
|
|
Mar 2021 - Dec 2021 |
|
Costless Collars |
10,000 |
|
$2.20 |
$3.00 |
|
|
Jan 2022 - Feb 2022 |
|
Costless Collars |
30,000 |
|
$2.20 |
$4.50 |
|
|
Mar 2022 - May 2022 |
|
Costless Collars |
10,000 |
|
$2.25 |
$3.40 |
|
|
Jan-22 |
|
Swaps |
|
|
20,000 |
$2.79 |
|
|
|
|
Feb-22 |
|
Swaps |
|
|
30,000 |
$2.79 |
|
|
|
|
Mar-22 |
|
Swaps |
|
|
10,095 |
$2.69 |
|
|
|
|
Apr-22 |
|
Swaps |
|
|
11,571 |
$2.69 |
|
|
|
|
May-22 |
|
Swaps |
|
|
10,000 |
$2.69 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
W&T OFFSHORE, INC. AND
SUBSIDIARIESNon-GAAP Information
Certain financial information included in
W&T’s financial results are not measures of financial
performance recognized by accounting principles generally accepted
in the United States, or GAAP. These non-GAAP financial measures
are “Adjusted Net (Loss) Income”, “Adjusted EBITDA” and “Free Cash
Flow”. Management uses these non-GAAP financial measures in its
analysis of performance. In addition, Adjusted EBITDA is a key
metric used to determine the Company’s incentive compensation
awards. These disclosures may not be viewed as a substitute for
results determined in accordance with GAAP and are not necessarily
comparable to non-GAAP performance measures which may be reported
by other companies.
Reconciliation of Net (Loss) Income to
Adjusted Net (Loss) Income
Adjusted Net (Loss) Income does not include the
unrealized commodity derivative loss (gain), amortization of
derivative premium, bad debt reserve, deferred tax benefit, gain on
debt transactions, and litigation and other. Adjusted Net Income is
presented because the timing and amount of these items cannot be
reasonably estimated and affect the comparability of operating
results from period to period, and current periods to prior
periods.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended |
|
Twelve
Months Ended |
|
|
|
December 31, |
|
September 30, |
|
December 31, |
|
December 31, |
|
|
|
2020 |
|
|
2020 |
|
|
2019 |
|
|
|
2020 |
|
|
|
2019 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In
thousands, except per share amounts) |
|
|
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income |
|
$ |
(8,947 |
) |
|
$ |
(13,339 |
) |
|
$ |
9,559 |
|
|
$ |
37,790 |
|
|
$ |
74,086 |
|
Unrealized
commodity derivative loss |
|
|
11,456 |
|
|
|
13,112 |
|
|
|
18,052 |
|
|
|
10,040 |
|
|
|
59,002 |
|
Amortization
of derivative premium |
|
|
1,483 |
|
|
|
1,483 |
|
|
|
4,248 |
|
|
|
10,722 |
|
|
|
15,912 |
|
Bad debt
reserve |
|
|
(1,063 |
) |
|
|
(1 |
) |
|
|
13 |
|
|
|
(981 |
) |
|
|
206 |
|
Deferred tax
benefit |
|
|
(6,880 |
) |
|
|
(21,170 |
) |
|
|
(8,338 |
) |
|
|
(30,287 |
) |
|
|
(64,102 |
) |
Gain on debt
transactions |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(47,469 |
) |
|
|
- |
|
Litigation
and other |
|
|
(2,708 |
) |
|
|
- |
|
|
|
816 |
|
|
|
(2,708 |
) |
|
|
816 |
|
Adjusted Net
(Loss) Income |
|
$ |
(6,659 |
) |
|
$ |
(19,915 |
) |
|
$ |
24,350 |
|
|
$ |
(22,893 |
) |
|
$ |
85,920 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and
diluted adjusted (loss) earnings per common share |
|
$ |
(0.05 |
) |
|
$ |
(0.14 |
) |
|
$ |
0.17 |
|
|
$ |
(0.16 |
) |
|
$ |
0.60 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
Average Shares Outstanding |
|
|
141,721 |
|
|
|
141,624 |
|
|
|
140,769 |
|
|
|
141,622 |
|
|
|
140,583 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
W&T OFFSHORE, INC. AND
SUBSIDIARIESNon-GAAP Information
Adjusted EBITDA/ Free Cash Flow
Reconciliations
The Company also presents the non-GAAP financial
measures Adjusted EBITDA and Free Cash Flow. The Company defines
Adjusted EBITDA as net (loss) income plus income tax (benefit)
expense, net interest expense, and depreciation, depletion,
amortization and accretion, excluding the unrealized commodity
derivative gain or loss, amortization of derivative premium, bad
debt reserve, gain on debt transactions, and litigation and other.
Company management believes this presentation is relevant and
useful because it helps investors understand W&T’s operating
performance and makes it easier to compare its results with those
of other companies that have different financing, capital and tax
structures. Adjusted EBITDA should not be considered in isolation
from or as a substitute for net income, as an indication of
operating performance or cash flows from operating activities or as
a measure of liquidity. Adjusted EBITDA, as W&T calculates it,
may not be comparable to Adjusted EBITDA measures reported by other
companies. In addition, Adjusted EBITDA does not represent funds
available for discretionary use.
The Company defines Free Cash Flow as Adjusted
EBITDA (defined above), less capital expenditures, plugging and
abandonment costs and interest expense (all on an accrual basis).
For this purpose, the Company’s definition of capital expenditures
includes costs incurred related to oil and natural gas properties
(such as drilling and infrastructure costs and the lease
maintenance costs) and equipment, furniture and fixtures, but
excludes acquisition costs of oil and gas properties from third
parties that are not included in the Company’s capital expenditures
guidance provided to investors. Company management believes that
Free Cash Flow is an important financial performance measure for
use in evaluating the performance and efficiency of its current
operating activities after the impact of accrued capital
expenditures, plugging and abandonment costs and interest expense
and without being impacted by items such as changes associated with
working capital, which can vary substantially from one period to
another. There is no commonly accepted definition Free Cash Flow
within the industry. Accordingly, Free Cash Flow, as defined and
calculated by the Company, may not be comparable to Free Cash Flow
or other similarly named non-GAAP measures reported by other
companies. While the Company includes interest expense in the
calculation of Free Cash Flow, other mandatory debt service
requirements of future payments of principal at maturity (if such
debt is not refinanced) are excluded from the calculation of Free
Cash Flow. These and other non-discretionary expenditures that are
not deducted from Free Cash Flow would reduce cash available for
other uses.
The following tables present (i) a
reconciliation of cash flow from operating activities, a GAAP
measure, to Free Cash Flow, as defined by the Company and (ii) a
reconciliation of the Company’s net (loss) income, a GAAP measure,
to Adjusted EBITDA and Free Cash Flow, as such terms are defined by
the Company.
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended |
|
|
Twelve
Months Ended |
|
|
December 31, |
|
September 30, |
|
December 31, |
|
|
December
31, |
|
|
2020 |
|
|
2020 |
|
|
2019 |
|
|
|
2020 |
|
|
2019 |
|
|
|
(In
thousands) |
|
|
(In
thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
Net cash
(used in) provided by operating activities |
$ |
(6,229 |
) |
$ |
21,260 |
|
$ |
45,631 |
|
|
$ |
108,509 |
|
$ |
232,227 |
|
Bad debt
reserve |
|
(1,063 |
) |
|
(1 |
) |
|
13 |
|
|
|
(981 |
) |
|
206 |
|
Litigation
and other |
|
(2,708 |
) |
|
- |
|
|
816 |
|
|
|
(2,708 |
) |
|
816 |
|
Amortization
of debt items and other items |
|
(1,583 |
) |
|
(1,569 |
) |
|
(1,600 |
) |
|
|
(6,834 |
) |
|
(5,514 |
) |
Share-based
compensation |
|
(817 |
) |
|
(1,075 |
) |
|
(1,261 |
) |
|
|
(3,959 |
) |
|
(3,690 |
) |
Current tax
benefit (expense) (1) |
|
22 |
|
|
143 |
|
|
167 |
|
|
|
134 |
|
|
(11,092 |
) |
Changes in
derivatives receivable (payable) (1) |
|
(1,758 |
) |
|
(1,028 |
) |
|
7,283 |
|
|
|
(626 |
) |
|
1,086 |
|
Changes in operating assets and liabilities, excluding asset
retirement obligation settlements |
|
33,495 |
|
|
(13,029 |
) |
|
7,583 |
|
|
|
651 |
|
|
(2,156 |
) |
|
|
|
|
|
|
Investment
in oil and natural gas properties and equipment |
|
(4,678 |
) |
|
1,184 |
|
|
(31,752 |
) |
|
|
(17,632 |
) |
|
(137,816 |
) |
Purchases of
furniture, fixtures and other |
|
(460 |
) |
|
- |
|
|
(69 |
) |
|
|
(530 |
) |
|
(89 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
Free Cash
Flow |
$ |
14,221 |
|
$ |
5,885 |
|
$ |
26,811 |
|
|
$ |
76,024 |
|
$ |
73,978 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) A reconciliation of the adjustment used to calculate Free Cash
Flow to the Condensed Consolidated Financial Statements is included
below: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current tax
benefit: |
|
|
|
|
|
|
|
|
|
|
|
Income tax
benefit |
$ |
(6,858 |
) |
$ |
(21,057 |
) |
$ |
(8,171 |
) |
|
$ |
(30,153 |
) |
$ |
(75,194 |
) |
Less:
Deferred income taxes |
|
(6,880 |
) |
|
(21,200 |
) |
|
(8,338 |
) |
|
|
(30,287 |
) |
|
(64,102 |
) |
Current tax
benefit (expense) |
$ |
22 |
|
$ |
143 |
|
$ |
167 |
|
|
$ |
134 |
|
$ |
(11,092 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
Changes in
derivatives receivable: |
|
|
|
|
|
|
|
|
|
|
|
Derivatives
receivable, end of period |
$ |
(281 |
) |
$ |
1,477 |
|
$ |
345 |
|
|
$ |
(281 |
) |
$ |
345 |
|
Derivatives
receivable, beginning of period |
|
(1,477 |
) |
|
(2,505 |
) |
|
(1,186 |
) |
|
|
(345 |
) |
|
(7,383 |
) |
Derivative
premiums paid |
|
- |
|
|
- |
|
|
8,124 |
|
|
|
- |
|
|
8,124 |
|
Change in
derivatives receivable (payable) |
$ |
(1,758 |
) |
$ |
(1,028 |
) |
$ |
7,283 |
|
|
$ |
(626 |
) |
$ |
1,086 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
|
Twelve Months Ended |
|
|
|
December 31, |
|
|
September 30, |
|
|
December 31, |
|
|
|
December 31, |
|
|
|
2020 |
|
|
2020 |
|
|
2019 |
|
|
|
2020 |
|
|
|
2019 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In
thousands) |
|
|
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income |
|
$ |
(8,947) |
|
|
$ |
(13,339) |
|
|
$ |
9,559 |
|
|
$ |
37,790 |
|
|
$ |
74,086 |
Interest expense, net |
|
|
15,402 |
|
|
|
14,135 |
|
|
|
16,635 |
|
|
|
61,463 |
|
|
|
59,569 |
Income tax benefit |
|
|
(6,858) |
|
|
|
(21,057) |
|
|
|
(8,171) |
|
|
|
(30,153) |
|
|
|
(75,194) |
Depreciation, depletion, amortization and accretion |
|
|
26,547 |
|
|
|
25,127 |
|
|
|
37,818 |
|
|
|
120,284 |
|
|
|
148,498 |
Unrealized commodity derivative loss |
|
|
11,456 |
|
|
|
13,112 |
|
|
|
18,052 |
|
|
|
10,040 |
|
|
|
59,002 |
Amortization of derivative premium |
|
|
1,483 |
|
|
|
1,483 |
|
|
|
4,248 |
|
|
|
10,722 |
|
|
|
15,912 |
Bad debt reserve |
|
|
(1,063) |
|
|
|
(1) |
|
|
|
13 |
|
|
|
(981) |
|
|
|
206 |
Gain on debt transactions |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(47,469) |
|
|
|
- |
Litigation and other |
|
|
(2,708) |
|
|
|
- |
|
|
|
816 |
|
|
|
(2,708) |
|
|
|
816 |
Adjusted EBITDA |
|
$ |
35,312 |
|
|
$ |
19,460 |
|
|
$ |
78,970 |
|
|
$ |
158,988 |
|
|
$ |
282,895 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment in oil and natural
gas properties and equipment |
|
|
(4,678) |
|
|
|
1,184 |
|
|
|
(31,752) |
|
|
|
(17,632) |
|
|
|
(137,816) |
Purchases of furniture,
fixtures and other |
|
|
(460) |
|
|
|
- |
|
|
|
(69) |
|
|
|
(530) |
|
|
|
(89) |
Asset retirement obligation
settlements |
|
|
(551) |
|
|
|
(624) |
|
|
|
(3,703) |
|
|
|
(3,339) |
|
|
|
(11,443) |
Interest expense, net |
|
|
(15,402) |
|
|
|
(14,135) |
|
|
|
(16,635) |
|
|
|
(61,463) |
|
|
|
(59,569) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Free Cash Flow |
|
$ |
14,221 |
|
|
$ |
5,885 |
|
|
$ |
26,811 |
|
|
$ |
76,024 |
|
|
$ |
73,978 |
CONTACT: Al PetrieInvestor
Relations Coordinatorapetrie@wtoffshore.com713-297-8024
Janet YangEVP &
CFOinvestorrelations@wtoffshore.com713-624-7326
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