W&T Offshore, Inc. Q3 FY2025 earnings call

• Throughout the first 9 months of 2025, the company delivered strong operational and financial results, increasing production every quarter in 2025. - Production in the third quarter was driven by successful integration of former Cox assets and high-return workovers/recompletions. - LOE was reduced by 8% quarter-over-quarter, reflecting disciplined cost management. - Adjusted EBITDA grew 11% quarter-over-quarter despite lower commodity prices. - The company generated cash from operations, grew unrestricted cash, lowered net debt, and paid consistent quarterly dividends for 2 years. - In 2025, the company lowered net debt by about $60 million, strengthened the balance sheet, and had around $125 million in unrestricted cash, an undrawn $50 million revolver, and $83 million available on the ATM program. - Highlighted production growth from former Cox assets and Mobile Bay through workovers/recompletions. - Capital expenditures for 2025 are expected to be around $60 million (excluding acquisitions), with strategic investments in midstream infrastructure. - Earlier 2025 transactions strengthened the balance sheet, including a $350 million note offering, new credit facility, sale of noncore interest, and insurance settlement.

In the third quarter, W&T Offshore increased production by 6% quarter-over-quarter to 35,600 barrels of oil equivalent per day, near the high end of guidance. LOE was reduced by 8% to around $23 per barrel oil equivalent with an absolute cost of $76.2 million, near the midpoint of guidance. Adjusted EBITDA grew by 11% quarter-over-quarter to $39 million. The company generated $26.5 million of cash from operating activities, had unrestricted cash of approximately $125 million, and net debt under $226 million. Revenue contribution details aren't explicitly broken down by product segment in the provided transcript, so focus is on the overall financial performance metrics mentioned.

• Fourth quarter 2025 production midpoint expected to be around 36,000 barrels of oil equivalent per day. - Fourth quarter cash operating costs (including LOE, gathering, transportation, and production taxes) in line with third quarter. - Full year 2025 gathering, transportation, and production taxes guidance lowered to $24 million to $26 million due to less reliance on third-party midstream infrastructure. - Full year 2025 DD&A guidance reduced to $11.50 to $12.50 per barrel of oil equivalent, a 15% decrease from prior guidance.

Q: For my first one, you're making a lot of infrastructure investments in the second half of this year to enhance production and lower costs. Once the new pipelines are fully online, could you help us frame how to think about operating costs and maintenance capital in the years ahead as you realize the benefits of these investments?

A: Sure. We'll first realize those investments in pipeline infrastructure also are accretive to earnings and cash flow and reserves going forward in existing reserves and reserves going forward. So that's the general plan of the company from day 1 is to make investments in reserve acquisitions, drilling and facility upgrades and workovers and recompletions that all enhance the short-term and long-term value of the corporation. So a very simple philosophy there, John. We work hard to make good acquisitions. We do look at what we can do to enhance the value with drill bit. We do a lot of workovers and recompletions and facility upgrades to enhance the production and reduce cost. So it's a lot of blocking and tackling as well that helps us continue to grow the company. That's why we've been here for over 40 years through all kinds of calamity and production upsets, price changes, wars, hurricanes everything you can think of and different administrations. So the formula works pretty good. It works better in sometimes than others, and that's usually a function of pricing. Prices are down right now, and the company is doing just fine. And I expect that we'll grow the company going forward.

Q: Terrific. I appreciate the color. For my follow-up, with nearly $125 million in cash, could you help characterize the current M&A environment in the Gulf of America and how you are weighing potential deals against organic projects?

A: Well, I love it. The Gulf of America is open for business again. And we're happy to see it. It's always good to have liquidity and don't forget that not only do we have cash, we have a little bit of credit from you guys, too, I think Texas Capital, and we got that $83 million ATM available to us as well. So over $0.25 billion in liquidity, if something comes up that makes sense to us.

Q: Congrats on an excellent quarter. I just wanted to chat a little bit about if you can give us any incremental color on the depth of recompletion and workover projects rolling into 2026 and how you think that could support the production base?

A: Well, you're fortunate. I also have our Chief Operating Officer, I think I'll turn it over to him and let him give you a little color. William Williford: Yes. So thank you for the question. Great question. If you look at what we've been able to do in 2025, a lot of the increase quarter-over-quarter, like Tracy mentioned before, we're able to increase our production without really adding any drilling wells during 2025. We have the same thought process going into 2026. Right now, we're working on our budget process right now. And we're feeling very, very good about the opportunities we have moving into 2026 and 2027. Tracy Krohn: Yes. In addition to that, I'm sure we'll have more to do at Mobile Bay and some of these former Cox properties as a function of budget process. It's a great question. We're just about a few weeks short of having all that sorted out with regard to our internal investigations about our budget. Christopher Degner: Your internal -- the natural budget cycle. Yes. Tracy Krohn: You bet.

Q: And then you mentioned you've been through hurricanes and all sorts of different calamities. Given the recent government shutdowns, has that had any -- have you guys seen any impact on permitting or any regulatory constraints that we should be aware of? Or does it look like kind of a...

A: There has been 0 impact. I think both have done a good job of maintaining the regulatory status and everybody seems to be at work. Christopher Degner: That's what it seems like. Tracy Krohn: Great. Thanks.