W&T OFFSHORE INC Q4 FY2024 earnings call

• Proven strategy focuses on generating free cash flow, optimizing high-quality conventional assets, and capitalizing on accretive opportunities.
• In January 2024, invested $77 million to purchase 100% working interest in six shallow water Gulf of Mexico fields, adding 21.7 million barrels of oil equivalent of 2024 proved reserves. These properties are adjacent to existing operations for synergies.
• 2024 results: $154 million adjusted EBITDA, $45 million free cash flow, 33,300 barrels of oil equivalent per day production despite downtime.
• Balance sheet strengthened in early 2025 with debt refinancing, asset sale, and insurance settlement. Pro forma net debt would be $245 million with cash and cash equivalents at $350 million.
• Reserve performance: 21.7 million barrels of oil equivalent added from acquisitions and 5 million from positive performance revisions in 2024, partially offset by production.

For the full year 2024, W&T Offshore generated $154 million in adjusted EBITDA and $45 million in free cash flow. Total proved reserves at SEC pricing increased 3% year-over-year to 127 million barrels of oil equivalent, with oil reserves up 39%. Reserves breakdown: 51% were liquids (41% crude oil, 10% NGLs) and 49% were natural gas. Proved reserves were classified as 52% proved developed producing, 31% proved developed non-producing, and 17% proved undeveloped. The reserve replacement in 2024 was 219% of 2024 production.

• 2025 production midpoint: about 34,000 barrels of oil equivalent per day (6% higher than Q4 2024).
• 2025 CapEx projected $34-$42 million. Q1 2025 production midpoint around 29,000 barrels of oil equivalent per day.
• 2025 LOE, gathering, transportation, and G&A costs in line with 2024. First quarter LOE expected $72.5M-$80.5M, cash G&A $17.8M-$19.8M.

• Factors causing actual results to differ from forward-looking statements.
• Impact of pricing revisions on reserves (SEC natural gas pricing down 19% in 2023, oil pricing down ~3%).
• Potential delays or issues with asset acquisitions or drilling projects.
• Winter freezes causing unplanned downtime in Q1 2025.

Q: Good morning and congratulations on the nice results and the very nice proved reserve report. Well done. The midpoint of your full-year production guidance shows some nice growth. Is that all coming from restarting of well fields that were shut in in the first quarter and recompletions and workovers? I didn't see any mention of new drilling in the press release.

A: Yeah, you're correct, John. That doesn't include any new drilling. Doesn't mean we're not going to do any. We are faced with a quality dilemma. We're seeing assets come available in the market. We're contemplating and working on the asset acquisitions that we're seeing. And that may change our thought process with regards to additional drilling. This year, we still expect to be drilling in 2026, but it could defer something in 2025, late scheduled for late 2025, as opposed to chasing some acquisitions that we think would be a nice addition to our portfolio.

Q: Thank you. Tracy, to follow up on the drilling comments, can you provide or share an update on the drilling partnership that you spoke about in 2024?

A: Yeah, we're continuing to follow through on that. That still looks like the first well we would want to drill is at Holy Grail, which is our Magnolia Fields floating vessel out there. We'll have to put a platform rig on it. Fortunately, those are proved reserves that we would be chasing there. And then, we have another prospect lined up right after that, potentially with the same drilling rig. Fortunately, we have a choice on the second structure over at what we're calling our Payman prospect. So, yeah, we're still moving forward with a drilling program. The only thing that, again, as I just told John, that might change that is the potential for additional acquisitions. And that market seems to be getting a little bit looser, if you will.

Q: On the acquisition front, is your preference still that it adds immediate cash flow as you add producing properties rather than obviously running the risk of drilling and adding cash flow twelve to eighteen months or longer after you drilled a well?

A: Yeah, you bet, Jeff. Anytime we can substitute acquisitions for drilling, that's probably the better thing to do, primarily because you take so much of the risk out of it. There's a lot of good to be had with organic growth. There's also risk with it. We think that prices on oil are stabilizing around $70 over the long term. We think that gas has real potential for moving up, and we've made some hedges accordingly just recently as a result of that.

Q: On the operating expenses. How much progress did you all make in 2024 on the refurbishment on the Cox assets? How much is left to do in 2025? And can you provide some color around the range of $280 to $310 million for lease operating expenses in 2025?

A: Well, Jeff, just so happens I have the guys for that. Yeah, thanks, Tracy. Hey, good morning, Jeff. We made a huge dent in that from an LOE standpoint. We still got quite a few things to do in 2025 to get the platform to W&T standards. So they're still ongoing, but we should see a lot of that completed in 2025. On the two West Delta and the Main Pass fields that are scheduled to come on in the second quarter, do those facilities need much work, or have you already done whatever work is required there? We have Main Pass. The Main Pass stuff is actually something that got caught up in the Cox issue with the bankruptcy. We've already had work done there. Essentially, we're just waiting to get that back online once we get everything squared away. And as far as the West Delta 73, all of that is just maintenance and work we're getting done to get that field back online. So the majority of that is done.