W&T Offshore, Inc. Q2 FY2025 earnings call

• Tracy Krohn highlighted the company's 40+ years of operation in the Gulf of America and the 20th anniversary of going public by ringing the NYSE closing bell.
• The first half of 2025 delivered strong operational and financial results, with 9 low-cost, low-risk workovers positively impacting production and revenue.
• Adjusted EBITDA grew by 9% compared to the first quarter of 2025. Net debt was lowered and unrestricted cash increased.
• The midyear reserve report by Netherland, Sewell and Associates showed net positive revisions of 1.8 million barrels of oil equivalent.
• The company returned value to shareholders through quarterly dividends.
• Completed transactions like a $350 million offering of new second lien notes, a new $50 million revolving credit facility, sale of a noncore interest, and an insurance settlement.
• Took advantage of commodity price volatility to increase hedge position with costless collars for oil and natural gas.

In the second quarter of 2025, W&T Offshore achieved notable financial and operational results. Production increased by 10% quarter-over-quarter to 33,500 barrels of oil equivalent per day. Adjusted EBITDA grew by 9% to $35 million compared to the first quarter of 2025. The company lowered net debt by approximately $15 million to under $230 million and increased unrestricted cash to over $120 million. The midyear reserve report showed net positive revisions of 1.8 million barrels of oil equivalent, demonstrating the strength of the asset base. Total lease operating expenses were $77 million, within guidance.

• Third quarter 2025 production midpoint is expected to be around 35,000 barrels of oil equivalent per day, a nearly 5% increase from the second quarter.
• Third quarter cash operating costs are in line with the second quarter, with expectations of per BOE cost decreases due to increasing production.
• Full year capital expenditures are expected to be between $34 million and $42 million, not including potential acquisition opportunities.

• Surety and regulatory issues, including unjustified collateral demands from surety providers. There was a lawsuit related to sureties, but a settlement was reached in June 2025 and a court recommended denying other surety companies' motions for preliminary injunction.

Q: For my first question, I wanted to start on policy. With the administration looking for ways to support the industry further, can you share your thoughts on what actions the administration may be looking at in order to incentivize production in the Gulf of America?

A: Tracy Krohn mentioned the Department of Interior looking at lower royalties, rolling back regulations, and addressing the Idle Iron act, expressing hope for further supportive actions.

Q: Tracy, that's really encouraging. I'm shifting over to your operations. I implied 4Q production guidance seems very strong at the midpoint. In your prepared remarks, you talked about the increase you expected in Q3. Can you share maybe what's driving that further production ramp that you're expecting at the back half of the year?

A: William Williford stated that low-cost workovers, recompletions, and ramping up of acquired Cox fields are driving the production ramp.

Q: Tracy, does resolution of some of the surety and bonding issues for W&T have an impact on how you approach acquisitions? And then secondly, do they have an impact on anywhere on the balance sheet with respect to liquidity?

A: Tracy Krohn said resolution of surety issues will impact M&A activity, as it will change how assurance is handled and be part of the sales price, positively affecting liquidity.

Q: Tracy, do you think that resolving those issues will have an impact on M&A activity in the Gulf?

A: Tracy Krohn responded that it will definitely have an impact, with surety part undergoing change for the better, affecting how companies approach M&A.

Q: A question on your reserves of the 1.8 million BOE of positive revisions. Can you provide some color as to which properties contributed there? And was any of that related to performance on the Cox acquisitions versus how those properties had originally been booked?

A: William Williford and Tracy Krohn mentioned that some of the positive revisions were due to better performance of Cox assets and optimization projects on Mobile Bay asset.