Print Page | Close Window

News Release

W&T Offshore Announces Year-End 2016 Proved Reserves, Production For 2016, An Update On The A-18 Well At Mahogany And An Extension Of The Appeal With IBLA Regarding BOEM Orders

HOUSTON, Feb. 3, 2017 /PRNewswire/ -- W&T Offshore, Inc. (NYSE: WTI) today reported its year-end 2016 proved reserves, production for the fourth quarter and full year of 2016, an update on the flow rate at SS 349 A-18 well at Mahogany and an extension on the appeal before the United States Department of Interior Board of Land Appeals ("IBLA") regarding Bureau of Ocean Energy Management (BOEM) orders. 

Year-End 2016 Proved Reserves

The Company's year-end 2016 SEC proved reserves were 74.0 million barrels of oil equivalent ("Boe"), or 444.0 billion cubic feet ("Bcfe"), with 55% comprised of liquids (44% crude oil and 11% natural gas liquids ("NGLs")) and 45% natural gas.  Approximately 64% of our 2016 proved reserves were classified as proved developed producing, 23% as proved developed non-producing and 13% as proved undeveloped.  Total production of approximately 15.4 million Boe in 2016 was substantially offset by upward revisions due to performance despite lower SEC average prices.  

The present value of our reported SEC proved reserves, discounted at 10% ("PV-10"), was $754.9 million.  The 2016 SEC PV-10 is based on an average crude oil price of $39.25 per barrel and average natural gas price of $2.48 per Mcf, both before adjustment for quality, transportation fees, energy content, and regional price differentials.  For 2015, the average crude oil price was $46.79 per barrel and $2.59 per Mcf and PV-10 was $965 million

For comparative purposes, utilizing the forward closing prices on the New York Mercantile Exchange (NYMEX) for crude oil and natural gas on December 30, 2016 (the last trading day of 2016), total proved reserves at December 31, 2016 would have been 77.6 million Boe, with a PV-10 value of $1.2 billion, an increase of $457.3 million over the SEC PV-10.  This would also have resulted in a reserve replacement rate of 102% in 2016 over 2015.   The NYMEX based PV-10 uses an un-weighted average crude oil price of $56.31 per barrel and $3.07 per Mcf for natural gas as shown in the table below. 

In the SEC case, positive revisions totaled 14.2 million Boe, primarily as a result of better than projected performance in several of our key fields, the addition of certain incremental proved drilling locations, as well as ongoing success in managing, and reducing lease operating expenses across the vast majority of our asset base, thereby extending field life.  Offsetting our positive technical reserves gains, was a 1.2 million Boe negative revision to proved reserves due to a 16% decline in the crude oil price and a 4% decline in the natural gas price (based on SEC rules and protocol), which are used to calculate 2016 proved reserves.

Proved Reserve Reconciliation

Year To Date 2016



Oil & NGLs








PV-10(1)



(MBbls)


GAS (MMcf)


MMcfe


MBoe


($ in thousands)

Balance, December 31, 2015


42,118


205,416


458,126


76,354


$          965,631

Revisions due to:




















   Pricing (2)


(852)


(2,300)


(7,411)


(1,235)



   Performance (3)


8,512


34,414


85,485


14,247



Production


(8,743)


(39,731)


(92,188)


(15,365)



Balance, December 31, 2016


41,036


197,798


444,011


74,002


$          754,933



(1)

PV-10 for this presentation excludes any provision for asset retirement obligations or income taxes.



(2)

In accordance with guidelines established by the SEC, our estimated proved reserves as of December 31, 2016 were determined to be economically producible under existing economic conditions, which requires the use of the 12-month average commodity price for each product, calculated as the unweighted arithmetic average of  the first-day-of-the-month price for the year end December 31, 2016.  The West Texas Intermediate posted price and the Henry Hub spot price were utilized as the referenced price and after adjusting for quality, transportation, fees, energy content and regional price differentials. In determining the estimated realized price for NGLs, a ratio was computed for each field of the NGLs realized price compared to the crude oil realized price.  Then, this ratio was applied to the crude oil price using SEC guidance.  Such prices were held constant throughout the estimated lives of the reserves.  Future production and development costs are based on year-end costs with no escalations.



(3)

Due to positive performance revisions and lease operating expense reductions.

 

The table below is a reconciliation of proved reserves calculated at SEC pricing compared to proved reserves at NYMEX on December 30, 2016. 



YE 2016 - SEC Pricing (1)


YE 2016 - NYMEX Strip Pricing (2)


NYMEX vs. SEC Variance






















Equiv


Equiv




Equiv


Equiv




Equiv


Equiv





MMcfe


MBoe


PV-10


MMcfe


MBoe


PV-10


MMcfe


MBoe


PV-10

PDP


283,881


47,314


$449,407


301,198


50,200


$   735,549


17,317


2,886


$286,142

PDNP


104,362


17,394


228,918


109,823


18,304


338,696


5,461


910


109,778

PUD


55,769


9,295


76,608


54,577


9,096


138,016


(1,192)


(199)


61,408




















Total Proved

444,011


74,002


$754,933


465,598


77,600


$1,212,261


21,587


3,598


$457,328




















PROB


234,212


39,035




238,235


39,706




4,022


670






















Total 2P


678,224


113,037




703,833


117,306




25,609


4,268










(1)   SEC pricing is based on $39.25 oil and $2.48 gas for all years.  
















(2)   NYMEX strip price is based on the following forward strip.










Year


Oil


Gas






2017


$     55.99


$    3.62






2018


56.59


3.14






2019


56.10


2.87






2020


56.05


2.88






2021


56.21


2.90






2022


56.51


2.93






2023+


56.77


3.12





Boe are determined using the ratio of six Mcf of natural gas to one Bbl of crude oil, condensate or NGLs (totals may not compute due to rounding).  NGLs are converted to barrels using a ratio of 42 gallons to one barrel.  The energy-equivalent ratios do not assume price equivalency, and the energy-equivalent prices for crude oil, NGLs, and natural gas may differ significantly.   

 

Tracy W. Krohn, W&T Offshore's Chairman and Chief Executive Officer, stated, "As a result of the prolific projects that we acquired and developed over the last few years and the exceptional reservoirs characteristics of the Gulf of Mexico, we almost replaced our entire 2016 production through performance revisions alone despite a 16.1% drop in crude oil prices and a 4.2% decrease in natural gas prices.  Several of our most important fields performed substantially better than previously predicted by our independent third party reservoir engineering auditors, primarily due to probable and possible reserve recovery and we believe that a number of our fields have further unrecognized upside."

"Despite our dramatically reduced capital budget in 2016 that included the completion of only one new well, we successfully held our SEC reserves steady from the prior year. This was also accomplished despite the negative impact of lower prices used in SEC reserve calculations.  When we evaluate our reserves based on the forward NYMEX strip price, not only do we see reserve growth, but the value of our proved reserves increases by $457.3 million," concluded Mr. Krohn. 

Fourth Quarter and Full Year 2016 Production

Production for the fourth quarter of 2016 was 3.7 million Boe (or 22.2 Bcfe), compared to the fourth quarter 2015 of 4.1 million Boe (or 24.7 Bcfe).  Fourth quarter 2016 production was comprised of 1.7 million barrels of oil, 0.4 million barrels of natural gas liquids (NGLs) and 10.0 Bcf of natural gas, at an average realized sales price of $30.83 per Boe or $5.14 per Mcfe.  Oil and NGLs production were 55% of total production in the fourth quarter of 2016 compared to 57% of total production in the fourth quarter of 2015.

For the full year 2016, production was 15.4 MMBoe (or 92.2 Bcfe), compared to 17.0 MMBoe (or 102.3 Bcfe) in 2015.  Total 2016 production was comprised of 7.2 million barrels of oil, 1.5 million barrels of NGLs and 39.7 Bcf, at an average realized sales price of $25.76 per Boe. 

SS 349 A-18 Flow Rate Update at Mahogany  

The recently completed Ship Shoal 349 (Mahogany) A-18 well recently reached a production rate of 5,217 Boe per day (4,032 barrels of oil per day and 7.1 MMcf per day).  

BOEM Update

In 2016, the Company received orders from the BOEM directing the Company to provide financial assurances in the form of additional security with respect to certain designated leases, rights of way and rights of use and easement.  Previously, we have filed appeals with the United States Department of Interior Board of Land Appeals ("IBLA") regarding these BOEM orders.  The IBLA, acknowledging that the BOEM and the Company were seeking to resolve the BOEM orders through settlement discussions, agreed to stay the effectiveness of the orders to May 31, 2017.

About W&T Offshore

W&T Offshore, Inc. is an independent oil and natural gas producer with operations offshore in the Gulf of Mexico and has grown through acquisitions, exploration and development.  The Company currently has working interests in approximately 52 fields in federal and state waters (50 producing and two fields capable of producing) and has under lease approximately 750,000 gross acres, including approximately 490,000 gross acres on the Gulf of Mexico Shelf and approximately 260,000 gross acres in the deepwater.  A majority of the Company's daily production is derived from wells it operates.  For more information on W&T Offshore, please visit the Company's website at www.wtoffshore.com.

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 W&T Offshore's Annual Report on Form 10-K for the year ended December 31, 2015 and subsequent Form 10-Q reports found at www.sec.gov or at our website at www.wtoffshore.com under the Investor Relations section. Investors are urged to consider closely the disclosures and risk factors in these reports.

CONTACT:

Lisa Elliott
Dennard Lascar Associates
lelliott@dennardlascar.com
713-529-6600

Danny Gibbons
SVP & CFO
investorrelations@wtoffshore.com
713-624-7326

 

To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/wt-offshore-announces-year-end-2016-proved-reserves-production-for-2016-an-update-on-the-a-18-well-at-mahogany-and-an-extension-of-the-appeal-with-ibla-regarding-boem-orders-300401823.html

SOURCE W&T Offshore, Inc.