Release Date: November 08, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- W&T Offshore Inc (WTI, Financial) generated free cash flow of $54.9 million year-to-date, marking seven consecutive years of positive free cash flow.
- The company reported adjusted EBITDA of $122 million year-to-date, indicating strong financial performance.
- Lease operating expenses for the third quarter were $72.4 million, below the bottom end of the guidance range by 6%, showcasing effective cost management.
- Cash on hand increased to $126.5 million, and net debt was reduced to $266 million, strengthening the balance sheet.
- W&T Offshore Inc (WTI) continued to return cash to shareholders, paying a fourth consecutive quarterly dividend and announcing another for the fourth quarter of 2024.
Negative Points
- Production was impacted by an active hurricane season in the Gulf of Mexico, resulting in about 3,500 barrels of oil per day being shut in.
- Only four of the six fields acquired in Q1 2024 are currently online, with two fields still shut in due to technical and legal challenges.
- The company faces regulatory challenges in the Gulf of Mexico, including lawsuits related to drilling and operational restrictions.
- The acquisition market is in flux, with uncertainties around property valuations and regulatory impacts affecting potential deals.
- Production guidance for the fourth quarter is subject to potential disruptions from ongoing weather events in the Gulf of Mexico.
Q & A Highlights
Q: Can you provide some comments on the current state of the acquisition market given the lack of drilling activity?
A: Tracy Krohn, CEO, noted that the acquisition market is in flux, partly due to uncertainties surrounding the elections. Regulatory challenges in the Gulf of Mexico have also impacted drilling activities. The company is working on its budget and evaluating attractive acquisition and drilling opportunities for the future.
Q: What is the expected production contribution from the two fields still shut in from the Cox acquisition?
A: Tracy Krohn, CEO, stated that the two fields are expected to contribute several thousand barrels per day, primarily oil. One field faces technical challenges, while the other has legal issues. The company anticipates bringing one field back online within the next week or two.
Q: Does the election outcome help in forming a drilling partnership?
A: Tracy Krohn, CEO, expressed hope that the election outcome will resolve regulatory concerns, particularly those related to the rice's whale lawsuit and financial assurance requirements. These issues have created challenges for operations and partnerships in the Gulf of Mexico.
Q: How are regulatory issues affecting your operations in the Gulf of Mexico?
A: Tracy Krohn, CEO, explained that regulatory issues, such as restrictions related to the rice's whale and financial assurance requirements, have posed challenges. These regulations are seen as punitive and unnecessary, given the industry's track record of meeting abandonment obligations.
Q: What are your thoughts on the financial assurance requirements in the Gulf of Mexico?
A: Tracy Krohn, CEO, criticized the financial assurance requirements as a solution to a non-existent problem. The industry has consistently met its obligations, and the joint and several liability structure ensures that wells are properly abandoned without taxpayer expense.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
