HOUSTON, Aug. 10 /PRNewswire-FirstCall/ -- W&T Offshore, Inc. (NYSE: WTI) announced today financial and operational results for the second quarter 2005.
- Cash flow from operations up 69% over second quarter 2004, and 74% over
first quarter 2005
- Production exceeded high-end of second quarter guidance by 7%
- Successful in five of six exploration wells, and one of one development
- Completed acquisition of all remaining working interest at East Cameron 321
Net Income: Net income for the three months ended June 30, 2005 was $45.8 million, or $0.69 per diluted share, on revenue of $149.8 million, compared to net income of $34.7 million, or $0.53 per diluted share, on revenue of $126.1 million for the second quarter of 2004. Net income for the six months ended June 30, 2005 was $85.1 million, or $1.29 per diluted share, on revenue of $278.9 million, compared to net income of $72.8 million or $1.10 per diluted share, on revenue of $249.3 million for 2004.
Cash Flow from Operations and EBITDA: Net cash provided by operating activities increased 69% to $126.1 million during the second quarter 2005 from $74.8 million during the prior year's second quarter. The increase in cash provided by operating activities was primarily attributable to higher realized prices on sales of oil and natural gas in the second quarter of this year as compared to last year. Second quarter 2005 EBITDA was $123.0 million, compared to $99.5 million during the prior year's second quarter. Net cash provided by operating activities for the six months ended June 30, 2005 increased 16% to $198.6 million from $171.8 million in the first half of 2004. EBITDA was $224.5 million for the six months ended June 30, 2005, compared to $198.2 million for the prior year period. Please refer to the attached schedule later in this release for a reconciliation of net income to EBITDA.
Production and Prices: Total production in the second quarter of 2005 was 13.3 billion cubic feet ("Bcf") of natural gas at an average price of $7.08 per thousand cubic feet ("Mcf") and 1.2 million barrels ("MMBbls") of oil at an average price of $45.22 per Bbl, or 20.7 billion cubic feet of natural gas equivalent ("Bcfe") at an average price of $7.24 per Mcfe. This compares to production of 13.4 Bcf of natural gas at an average price of $6.14 per Mcf and 1.3 MMBbls of oil at an average price of $33.86 per Bbl, or 21.0 Bcfe at an average price of $5.96 per Mcfe in the second quarter of 2004. As detailed in the outlook section of the release, production is expected to increase in the second half of the year as additional existing reserves projects come on-line. There were no hedges in place during the second quarter of 2005 or 2004.
For the six months ended June 30, 2005, total production was 25.6 Bcf of natural gas at an average price of $6.72 per Mcf and 2.4 MMBbls of oil at an average price of $44.47 per Bbl, or 40.0 Bcfe at an average price of $6.97 per Mcfe. This compares to 27.6 Bcf of natural gas at an average price of $5.93 per Mcf and 2.5 MMBbls of oil at an average price of $33.41 per Bbl, or 42.8 Bcfe at an average price of $5.80 per Mcfe for the same period in 2004.
Lease Operating Expenses ("LOE"): LOE for the second quarter of 2005 decreased to $17.9 million, or $0.86 per Mcfe, from $18.4 million, or $0.88 per Mcfe, in the second quarter of 2004. The decline in LOE was due to lower operating expenses at certain properties and increases in fees collected for processing third party production, partially offset by increased expenses for planned maintenance projects at certain facilities and increases in service costs. LOE for the six months ended June 30, 2005 was $34.0 million or $0.85 per Mcfe, compared to $35.8 million or $0.84 per Mcfe in 2004 with the increase in the first half of 2005 resulting from lower sales volumes.
Depreciation, depletion, amortization and accretion ("DD&A"): DD&A increased to $51.9 million, or $2.51 per Mcfe, in the second quarter of 2005 from $45.5 million, or $2.16 per Mcfe, in the same period of 2004. DD&A for the six months ended 2005 was $93.2 million or $2.33 per Mcfe, compared to DD&A of $85.1 million, or $1.99 per Mcfe, for the same period in 2004 because of our higher depletable costs associated with our increased drilling activities.
Capital Expenditures and Operations Update: During the second quarter of 2005, we participated in the drilling of six exploration wells (gross) in the Gulf of Mexico of which five were successful. We were successful drilling one development well during the period. During the second quarter of 2005, we spent $31.3 million for development, $44.5 million for exploration and $15.3 million for other capital items, including acquisitions. For the six months ended June 30, 2005, $61.6 million was spent on development, $69.7 million for exploration and $15.8 million on other capital items, including acquisitions.
We believe our capital expenditures budget for the reminder of 2005 will remain substantially consistent with our previously reported budget of $307 million. However, the mix of second half 2005 drilling projects has changed to include more shelf wells and fewer deepwater and deep shelf wells as we optimize our use of drilling rigs in a tight market.
Acquisition Update: We completed the acquisition of a 25% working interest in East Cameron 321 from Marathon Oil Company on June 28, 2005, with an effective date of May 1, 2005. We estimate the acquired reserves, at the effective date, to have been approximately 9.0 Bcfe. East Cameron 321 is currently producing approximately 1,300 barrels (gross) of oil and 6,000 Mcf (gross) natural gas per day. As a result of acquiring this remaining 25% working interest, W&T now owns 100% of the working interest and has become operator at East Cameron 321.
Drilling Highlights: In the second quarter of 2005, the Company participated in the drilling of seven wells, all in the Gulf of Mexico. Of the wells drilled in the second quarter of 2005, one was in deepwater and six were on the conventional shelf. One shelf well was unsuccessful.
Successful Wells: Block Name/Well Category Working Interest % Eugene Island 218 #D-5ST Exploration 100.0% Eugene Island 219 #E-8ST Exploration 100.0% Ewing Bank 949 #2ST3/4 Exploration 100.0% High Island A568 #A-19 Exploration 33.3% West Cameron 328 #2 Exploration 25.0% Eugene Island 53 #G-1ST Development 14.0% Unsuccessful Well: Block Name/Well Category Working Interest % Eugene Island 93 #14 Exploration 23.3%
In the second half of the year, the Company anticipates drilling 14 exploration wells on the conventional shelf, two in the deep shelf and three in the deepwater. Additionally, we have nine development wells scheduled for the second half of 2005.
Dividends: On June 28, 2005, the board of directors declared a cash dividend of $0.02 per common share, which was paid on August 1, 2005 to shareholders of record on July 15, 2005. On May 2, 2005, the Company paid a cash dividend of $0.02 per common share to shareholders of record on April 15, 2005.
"We enter the second half of 2005 having achieved exploration success with the drillbit and look forward to continuing our drilling success with our inventory of exploration projects. We believe our recent increase in production in the second quarter over the first quarter will continue with sequential quarterly production increases as a result of our exploration success," said Tracy W. Krohn, Chairman and Chief Executive Officer. "Our strategy of investing in high rate of return projects, while limiting our use of leverage and hedges, allows us to realize the benefits of record high commodity prices and position ourselves for continued success in the future."
Outlook: Certain factors affecting these forward-looking statements are listed in this news release. Guidance has been revised to reflect the updated mix of development projects, and the shift of costs from second half of 2005 to 2006. Guidance on performance for the third quarter, full year of 2005 and previous guidance are shown in the table below.
Estimated Daily Third Quarter Revised Estimate Prior Estimate Production 2005 for Full-Year 2005 for Full-Year 2005 Crude oil (MMBbls) 1.4 - 1.5 5.2 - 5.5 4.9 - 5.2 Natural gas (Bcf) 13.1 - 13.8 51.7 - 54.4 53.5 - 56.2 Total (Bcfe) 21.6 - 22.7 83.1 - 87.4 83.1 - 87.4 Operating Expenses Third Quarter Revised Estimate Prior Estimate ($ in millions, 2005 for Full-Year 2005 for Full-Year 2005 except as noted) Lease operating expenses $21.0 - $22.0 $75.0 - $78.0 $82.0 - $85.0 Gathering, transportation & production taxes $3.5 - $ 4.0 $15.0 - $16.0 $14.0 - $15.0 General and administrative $6.0 - $ 7.0 $26.0 - $30.0 $26.0 - $30.0 Income tax rate, % deferred 35.0%, 20% 35.0%, 20% 35.0%, 20%
Conference Call Information: W&T will hold a conference call to discuss financial and operational results on Wednesday, August 10, 2005 at 10:00 a.m. Eastern Time / 9:00 a.m. Central Time. To participate, dial (303) 262-2141 a few minutes before the call begins. The call will also be broadcast live over the Internet from the Company's website at http://www.wtoffshore.com. A replay of the conference call will be available approximately two hours after the end of the call until Wednesday, August 17, 2005, and may be accessed by calling (303) 590-3000 and using the pass code 11034458.
About W&T Offshore
Founded in 1983, W&T Offshore is an independent oil and natural gas company focused primarily in the Gulf of Mexico, including exploration in the deepwater, where it has developed significant technical expertise. W&T has grown through acquisition, exploitation and exploration and now holds working interests in over 100 fields in federal and state waters and a majority of its daily production is derived from wells it operates. For more information on W&T Offshore, please visit its Web site at http://www.wtoffshore.com
This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. 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 and other factors discussed in our Annual Report on 10-K for the year ended December 31, 2004 (www.sec.gov).
Manuel Mondragon, Assistant Vice President of Finance
Ken Dennard / firstname.lastname@example.org
Lisa Elliott / email@example.com
DRG&E / 713-529-6600
W&T OFFSHORE, INC. Consolidated Statements of Income (In thousands, except per share amounts) (Unaudited) Three Months Ended Six Months Ended June 30, June 30, 2005 2004 2005 2004 Revenues: Oil and natural gas $149,665 $125,409 $278,389 $248,527 Other 114 650 462 799 Total revenues 149,779 126,059 278,851 249,326 Expenses: Lease operating 17,874 18,441 34,027 35,809 Gathering, transportation costs and production taxes 3,139 3,704 7,635 6,558 Depreciation, depletion, and amortization 49,607 43,261 88,564 80,636 Asset retirement obligation accretion 2,314 2,257 4,626 4,485 General and administrative 5,754 4,446 12,663 8,764 Total operating expenses 78,688 72,109 147,515 136,252 Income from operations 71,091 53,950 131,336 113,074 Net interest income (expense) 108 (550) (113) (1,146) Income before income taxes 71,199 53,400 131,223 111,928 Income tax expense 25,417 18,690 46,159 39,175 Net income 45,782 34,710 85,064 72,753 Less: Preferred stock dividends - 300 - 300 Net income applicable to common and common equivalent shares $45,782 $34,410 $85,064 $72,453 Earnings per common share: Basic $0.69 $0.65 $1.33 $1.38 Diluted $0.69 $0.53 $1.29 $1.10 Weighted average shares outstanding: Basic 65,970 52,612 63,977 52,596 Diluted 65,970 65,950 65,967 65,934 Consolidated Cash Flow Information Net cash provided by operating activities $126,123 $74,778 $198,551 $171,787 Capital expenditures $91,070 $68,385 $147,110 $120,994 Other Financial Information EBITDA $123,012 $99,468 $224,526 $198,195 We define EBITDA as net income plus income tax expense, net interest expense, depreciation, depletion, amortization and accretion. Although not prescribed under GAAP, we believe the presentation of EBITDA is relevant and useful because it helps our investors understand our operating performance and makes it easier to compare our results with those of other companies that have different financing, capital or tax structures. 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. EBITDA, as we calculate it, may not be comparable to EBITDA measures reported by other companies. In addition, EBITDA does not represent funds available for discretionary use. The following table presents a reconciliation of our consolidated net income to consolidated EBITDA: Three Months Ended Six Months Ended June 30, June 30, 2005 2004 2005 2004 Net income $45,782 $34,710 $85,064 $72,753 Income tax expense 25,417 18,690 46,159 39,175 Net interest (income) expense (108) 550 113 1,146 Depreciation, depletion, amortization and accretion 51,921 45,518 93,190 85,121 EBITDA $123,012 $99,468 $224,526 $198,195 W&T OFFSHORE, INC. Operating Data (Unaudited) Three Months Six Month Ended Ended June 30, June 30, 2005 2004 2005 2004 Net sales: Natural gas (MMcf) 13,276 13,380 25,652 27,638 Oil (MBbls) 1,232 1,277 2,386 2,535 Total natural gas and oil (MMcfe) 20,667 21,041 39,966 42,847 Average daily equivalent sales (MMcfe/d) 227.1 231.2 220.8 235.4 Average realized sales price: Natural gas ($/Mcf) $7.08 $6.14 $6.72 $5.93 Oil ($/Bbl) 45.22 33.86 44.47 33.41 Natural gas equivalent ($Mcfe) 7.24 5.96 6.97 5.80 Average per Mcfe data ($/Mcfe): Lease operating expenses $0.86 $0.88 $0.85 $0.84 Gathering, transportation cost and production taxes 0.15 0.18 0.19 0.15 Depreciation, depletion, amortization and accretion 2.51 2.16 2.33 1.99 General and administrative 0.28 0.21 0.32 0.20 Net cash provided by operating activities 6.10 3.55 4.97 4.01 EBITDA 5.95 4.73 5.62 4.63 W&T OFFSHORE, INC. Consolidated Balance Sheets (In thousands) (Unaudited) June 30, December 31, 2005 2004 Assets Current assets: Cash $79,110 $64,975 Accounts receivable 60,896 71,714 Prepaid expenses and other 8,231 9,293 Total current assets 148,237 145,982 Property and equipment - at cost 1,296,194 1,147,367 Less accumulated depreciation, depletion and amortization 631,718 543,154 Net property and equipment 664,476 604,213 Other assets 11,401 10,589 Total assets $824,114 $760,784 Liabilities and Shareholders' Equity Current liabilities: Accounts payable $109,135 $107,220 Asset retirement obligations 25,296 27,489 Accrued liabilities and other 18,818 21,738 Total current liabilities 153,249 156,447 Long-term debt - 35,000 Asset retirement obligations, less current portion 114,941 114,937 Deferred income taxes 110,807 92,093 Other liabilities 2,429 2,429 Shareholders' equity: Preferred stock - 45,435 Common stock 1 - Additional paid-in capital 52,298 6,478 Retained earnings 390,389 307,965 Total shareholders' equity 442,688 359,878 Total liabilities and shareholders' equity $824,114 $760,784 W&T OFFSHORE, INC. Consolidated Statements of Cash Flows (In thousands) (Unaudited) Six Months Ended June 30, 2005 2004 Operating activities: Net income $85,064 $72,753 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation, depletion, amortization and accretion 93,190 85,121 Amortization of debt issuance costs 183 230 Share-based compensation 385 391 Deferred income taxes 18,714 10,751 Changes in operating assets and liabilities 1,015 2,541 Net cash provided by operating activities 198,551 171,787 Investing activities: Investment in oil and gas property and equipment (146,995) (120,777) Proceeds from sales of oil and gas property and equipment 10 119 Purchases of furniture, fixtures and other (115) (217) Change in restricted deposits (108) 28 Net cash used in investing activities (147,208) (120,847) Financing activities: Borrowings of long-term debt - 137,300 Repayments of borrowings of long-term debt (35,000) (179,300) Dividends to shareholders (1,319) (1,484) Equity offering costs - (806) Debt issuance costs (889) - Net cash used in financing activities (37,208) (44,290) Increase in cash and cash equivalents 14,135 6,650 Cash and cash equivalents, beginning of period 64,975 4,016 Cash and cash equivalents, end of period $79,110 $10,666
SOURCE W&T Offshore, Inc.
CONTACT: Manuel Mondragon, Assistant Vice President of Finance of W&T
Offshore, Inc., +1-713-297-8024, firstname.lastname@example.org; or Ken
Dennard, email@example.com, or Lisa Elliott, firstname.lastname@example.org, both of
DRG&E, +1-713-529-6600, for W&T Offshore, Inc.
Web site: http://www.wtoffshore.com