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|W&T Offshore Announces 2017 Capital Budget And Provides Production And Expense Guidance For 2017|
2017 Capital Program
W&T currently anticipates drilling six to eight wells during 2017 in the Gulf of
The 2017 capital plan includes completing the Ship Shoal 349 "Mahogany" A-18 well, which was drilled to total depth in late 2016 and put on production in mid-January, and the drilling and completion of three additional wells in the Mahogany field. Each of these projects is expected to achieve a rate of return in excess of 100%, with a relatively quick payback. The plan also includes the drilling and completion of two wells at the
Additionally, the 2017 plan includes performing between 20 and 25 recompletions at a cost of approximately
"Due to the recent improvement in commodity prices, combined with our continued success at reducing costs and optimizing our operations, we expect to realize higher adjusted EBITDA and better adjusted EBITDA margins in 2017 than what we experienced in 2015 and 2016. As a result, we are substantially increasing our capital spending in 2017 over 2016 levels; at the same time we expect to build cash on hand while maintaining the flexibility to adjust our spending plans as market conditions change. We intend to drill within our net cash flow generating capabilities, as well as maintain and build liquidity.
"Our 2017 capital program is focused on projects with an excellent probability of success and rates of return of between 80% to well over 100%. The projects are also located near existing infrastructure and can be brought on production quickly, offering immediate cash generation.
"Our Mahogany field is expected to be an important part of our capital program in 2017, with a substantial inventory of projects to choose from, including low-risk development drilling, exploration that could continue to extend the field's size, and quick payout projects such as recompletions and sidetrack drilling. We have multiple 'P' Sand, 'T' Sand and 'U' Sand targets in our Mahogany field, which will provide drilling opportunities into 2018 and beyond. The thick stacked pay sands that we are de-risking in the field also offer extensive recompletion opportunities as we exploit the proven non-producing zones in the field. To more precisely target the formations, we will be utilizing our recent analysis of our new WAZ seismic data over the field that has produced a much clearer image of the sub-salt formations. The vast majority of the value in the 2017 plan should be generated at Mahogany, so we feel confident that our capital will achieve above-average rates of return.
"The Gulf of
2017 Production and Expense Guidance
Our guidance for the first quarter 2017 and full year 2016 and 2017 is provided in the table below and represents the Company's best estimate of the range of likely future results. Guidance could be affected by the factors described below in "Forward-Looking Statements.
This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. 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, uncertainties and other factors discussed in
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