- Completed two accretive acquisitions of producing properties for a total of
$99.4 million , or approximately$4.75 per barrel of oil equivalent (“Boe”);- Acquired six shallow water
Gulf of Mexico (“GOM”) fields inJanuary 2024 (“the Cox acquisition”), all of which are 100% working interest and located adjacent to existing W&T operations, for$72.0 million ; - Purchased working interests in eight shallow water GOM fields in
September 2023 for$27.4 million ; - Both acquisitions were funded with cash on hand, which increases proved reserves, production and Free Cash Flow per share;
- Acquired six shallow water
- Delivered strong production in full year 2023 of 34.9 thousand barrels of oil equivalent per day (“MBoe/d”) (51% liquids), or 12.7 million barrels of oil equivalent (“MMBoe”), at the midpoint of latest guidance;
- Production was 34.1 Mboe/d (49% liquids), or 3.1 MMBoe in the fourth quarter of 2023;
- Reported net income for full year 2023 of
$15.6 million , or$0.11 per diluted share and fourth quarter 2023 net loss of$0.4 million or ($0.00 ) per diluted share;- Adjusted Net Loss totaled
$21.7 million , or ($0.15 ) per share for full year 2023 and$8.7 million , or ($0.06 ) per share for the fourth quarter 2023, which excludes the net unrealized gain on outstanding derivative contracts, non-ARO plugging and abandonment (“P&A”) costs and non-recurring costs related to the Company’s IT services transition;
- Adjusted Net Loss totaled
- Generated solid Adjusted EBITDA in the fourth quarter 2023 of
$44.9 million and$183.2 million in full year 2023; - Produced net cash from operating activities of
$35.7 million and Free Cash Flow of$15.8 million in the fourth quarter 2023, marking the 24th consecutive quarter of positive Free Cash Flow;- In full year 2023, generated net cash from operating activities of
$115.3 million and$63.3 million of Free Cash Flow, further strengthening the balance sheet and allowing W&T to fund accretive acquisitions;
- In full year 2023, generated net cash from operating activities of
- Grew cash and cash equivalents to
$173.3 million atDecember 31, 2023 from$149.0 million atSeptember 30,2023 ; - Reported Net Debt of
$217.3 million as ofDecember 31, 2023 , compared with Net Debt of$232.1 million a year ago; - Continued to maintain a low leverage profile with Net Debt to trailing twelve months (“TTM”) Adjusted EBITDA of 1.2 times;
- Adopted a quarterly cash dividend policy in
November 2023 and paid initial dividend of$0.01 per common share onDecember 22, 2023 ;- Declared first quarter 2024 dividend of
$0.01 per share which will be payable onMarch 25, 2024 to stockholders of record onMarch 18, 2024 ; and
- Declared first quarter 2024 dividend of
- Announced 2024 guidance including a capital spending budget of
$35 to$45 million .
Production, Prices, and Revenue: Production for the fourth quarter of 2023 was 34.1 MBoe/d compared with 35.9 Mboe/d for the third quarter of 2023 and 38.6 MBoe/d for the corresponding period in 2022. The small decrease in production compared to the third quarter of 2023 was primarily driven by natural decline and some unplanned downtime, which was partially offset by production optimization and workovers. Fourth quarter 2023 production was comprised of 13.3 MBbl/d of oil (39%), 3.6 MBbl/d of natural gas liquids (“NGLs”) (10%), and 103.6 million cubic feet per day (“MMcf/d”) of natural gas (51%).
W&T’s average realized price per Boe before realized derivative settlements was
Revenues for the fourth quarter of 2023 were
Lease Operating Expense: Lease operating expense (“LOE”), which includes base lease operating expenses, insurance premiums, workovers and facilities maintenance, was
Gathering, Transportation Costs, and Production Taxes: Gathering, transportation costs and production taxes totaled
Depreciation, Depletion, Amortization and Accretion (“DD&A”): DD&A, including accretion expense related to asset retirement obligations (“ARO”), was
General & Administrative Expenses (“G&A”): G&A was
Derivative (Gain) Loss: In the fourth quarter of 2023, W&T recorded a net gain of
As of
A summary of the Company’s outstanding derivative positions is provided in the investor presentation posted on W&T’s website.
Interest Expense: Net interest expense in the fourth quarter of 2023 was
Other (Income) Expense, net: During 2021 and 2022, as a result of the declaration of bankruptcy by a third party that is the indirect successor in title to certain offshore interests that were previously divested by the Company, W&T recorded a contingent loss accrual related to anticipated ARO. During the fourth quarter of 2023, the Company reassessed the existing ARO, recording an additional
Income Tax: W&T recognized income tax expense of
Balance Sheet and Liquidity: As of
Capital Expenditures: Capital expenditures (excluding acquisitions and changes in working capital associated with investing activities) in the fourth quarter of 2023 were
Accretive Acquisitions of
In
- Adds significant proved reserves of 18.7 MMBoe1 (62% liquids) with a present value discounted at 10% (“PV-10”) value of
$250.4 million based on an independent engineering report prepared byNetherland Sewell and Associates (“NSAI”); - Based on the cash consideration paid of
$72 million , this equates to a price of$3.85 per Boe of proved reserves; - As it has done after prior acquisitions, W&T is assessing, inspecting and optimizing the newly acquired fields, which requires shutting in some of the fields in the near term;
- Field logistics are being examined to see if more cost-effective tie-ins and throughput can be done with existing W&T facilities adjacent to the newly acquired fields; and
- The Company believes that it will increase production on these properties through workovers, recompletions and facility upgrades.
In
____________________
1 Reserves as of
Full Year-End 2023 Financial Review
W&T reported net income for the full year 2023 of
Production for 2023 averaged 34.9 MBoe/d for a total of 12.7 MMBoe, comprised of 5.1 MMBbl of oil, 1.4 MMBbl of NGLs and 37.6 Bcf of natural gas. Full year 2022 production averaged 40.1 MBoe/d or 14.6 MMBoe in total and was comprised of 5.6 MMBbl of oil, 1.6 MMBbl of NGLs and 44.8 Bcf of natural gas.
For the full year 2023, W&T’s average realized sales price per barrel of crude oil was
For the full year 2023, LOE was
Gathering, transportation, and production taxes totaled
For the full year 2023, G&A was
OPERATIONS UPDATE
Well Recompletions and Workovers
During the fourth quarter of 2023, the Company performed four workovers and three recompletions that positively impacted production for the quarter. W&T plans to continue performing these low cost, short payout operations that impact both production and revenue.
Year-End 2023 Proved Reserves
The Company’s year-end 2023
The
Approximately 41% of year-end 2023 proved reserves were liquids (30% crude oil and 11% NGLs) and 59% natural gas. The reserves were classified as 67% proved developed producing, 17% proved developed non-producing, and 16% proved undeveloped. W&T’s reserve life ratio at year-end 2023, based on year-end 2023 proved reserves and 2023 production, was 9.7 years.
Summary Reconciliation of Proved Reserves | ||||||||||
Oil | NGL | Natural Gas | Equivalents | PV-101 | ||||||
MMBbl | MMBbl | Bcf | MMBoe | $MM | ||||||
Balance, | 40.6 | 18.9 | 634.6 | 165.3 | ||||||
Revisions of previous estimates | 3.1 | 0.5 | 2.4 | 4.0 | ||||||
Revisions due to | (3.1) | (4.6) | (171.2) | (36.2) | ||||||
Extensions & discoveries | -- | -- | -- | -- | ||||||
Purchases of minerals in place | 1.4 | 0.3 | 5.9 | 2.6 | ||||||
Sales of minerals in place | -- | -- | -- | -- | ||||||
Production | (5.1) | (1.4) | (37.6) | (12.7) | ||||||
Balance, | 37.0 | 13.7 | 434.0 | 123.0 | ||||||
(1) PV-10 for this presentation excludes any provision for asset retirement obligations or income taxes. | ||||||||||
In accordance with guidelines established by the
The standardized measure of future net cash flows was
Pro-forma Impact of Cox Acquisition
As noted above, the proved reserves added from the acquisition of six fields from Cox in
Oil | NGL | Natural Gas | Equivalents | PV-101 | ||
MMBbl | MMBbl | Bcf | MMBoe | $MM | ||
Balance, | 37.0 | 13.7 | 434.0 | 123.0 | ||
Proved reserves from Cox acquisition | 11.4 | 0.2 | 42.4 | 18.7 | ||
Pro forma reserve balance, | 48.4 | 13.9 | 476.4 | 141.7 | ||
Cash Dividend Policy
In the fourth quarter of 2023, the Board of Directors approved a quarterly cash dividend policy with the initial dividend of
First Quarter and Full Year 2024 Production and Expense Guidance
Looking ahead to 2024,
The guidance for the first quarter and full year 2024 in the table below represents the Company’s current expectations. Please refer to the section entitled “Forward-Looking and Cautionary Statements” below for risk factors that could impact guidance.
Production | First Quarter 2024 | Full Year 2024 |
Oil (MBbl) | 1,250 - 1,400 | 5,100 – 5,800 |
NGLs (MBbl) | 285 – 315 | 1,150 – 1,375 |
Natural gas (MMcf) | 8,500 – 9,500 | 37,000 – 44,500 |
Total equivalents (MBoe) | 2,952 – 3,298 | 12,417 – 14,592 |
Average daily equivalents (MBoe/d) | 32.4 – 36.2 | 33.9 – 39.9 |
Expenses | First Quarter 2024 | Full Year 2024 |
Lease operating expense ($MM) | 77.5 – 86.0 | 295.0 – 332.0 |
Gathering, transportation & production taxes ($MM) | 7.9 – 8.8 | 34.5 – 39.0 |
General & administrative – cash ($MM) | 15.0 – 17.0 | 59.0 – 66.5 |
General & administrative – non-cash ($MM) | 2.6 – 3.0 | 12.5 – 14.0 |
DD&A ($ per Boe) | 11.4 – 12.9 | |
W&T expects substantially all taxes in 2024 to be deferred.
2024 Capital Investment Program
W&T’s capital expenditure budget for 2024 is expected to be in the range of
Plugging and abandonment expenditures are expected to be in the range of
Conference Call Information: W&T will hold a conference call to discuss its financial and operational results on
About
Forward-Looking and Cautionary 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. All statements other than statements of historical facts included in this release regarding the Company’s financial position, operating and financial performance, business strategy, plans and objectives of management for future operations, projected costs, industry conditions, potential acquisitions, the impact of and integration of acquired assets, and indebtedness are forward-looking statements. When used in this release, forward-looking statements are generally accompanied by terms or phrases such as “estimate,” “project,” “predict,” “believe,” “expect,” “continue,” “anticipate,” “target,” “could,” “plan,” “intend,” “seek,” “goal,” “will,” “should,” “may” or other words and similar expressions that convey the uncertainty of future events or outcomes, although not all forward-looking statements contain such identifying words. Items contemplating or making assumptions about actual or potential future production and sales, prices, market size, and trends or operating results also constitute such forward-looking statements.
These forward-looking statements are based on the Company’s current expectations and assumptions about future events and speak only as of the date of this release. While management considers these expectations and assumptions to be reasonable, they are inherently subject to significant business, economic, competitive, regulatory and other risks, contingencies and uncertainties, most of which are difficult to predict and many of which are beyond the Company’s control. Accordingly, you are cautioned not to place undue reliance on these forward-looking statements, as results actually achieved may differ materially from expected results described in these statements. The Company does not undertake, and specifically disclaims, any obligation to update any forward-looking statements to reflect events or circumstances occurring after the date of such statements, unless required by law.
Forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially including, among other things, the regulatory environment, including availability or timing of, and conditions imposed on, obtaining and/or maintaining permits and approvals, including those necessary for drilling and/or development projects; the impact of current, pending and/or future laws and regulations, and of legislative and regulatory changes and other government activities, including those related to permitting, drilling, completion, well stimulation, operation, maintenance or abandonment of wells or facilities, managing energy, water, land, greenhouse gases or other emissions, protection of health, safety and the environment, or transportation, marketing and sale of the Company’s products; inflation levels; global economic trends, geopolitical risks and general economic and industry conditions, such as the global supply chain disruptions and the government interventions into the financial markets and economy in response to inflation levels and world health events; volatility of oil, NGL and natural gas prices; the global energy future, including the factors and trends that are expected to shape it, such as concerns about climate change and other air quality issues, the transition to a low-emission economy and the expected role of different energy sources; supply of and demand for oil, natural gas and NGLs, including due to the actions of foreign producers, importantly including
Consolidated Statements of Operations | ||||||||||||||||||||
(In thousands, except per share data) | ||||||||||||||||||||
(Unaudited) | ||||||||||||||||||||
Three Months Ended | Year Ended | |||||||||||||||||||
2023 | 2023 | 2022 | 2023 | 2022 | ||||||||||||||||
Revenues: | ||||||||||||||||||||
Oil | $ | 94,076 | $ | 100,331 | $ | 111,748 | $ | 381,389 | $ | 524,274 | ||||||||||
NGLs | 6,851 | 7,415 | 9,534 | 32,446 | 56,964 | |||||||||||||||
Natural gas | 29,401 | 32,515 | 66,379 | 110,158 | 323,831 | |||||||||||||||
Other | 2,012 | 2,150 | 2,039 | 8,663 | 15,928 | |||||||||||||||
Total revenues | 132,340 | 142,411 | 189,700 | 532,656 | 920,997 | |||||||||||||||
Operating expenses: | ||||||||||||||||||||
Lease operating expenses | 64,643 | 61,826 | 69,017 | 257,676 | 224,414 | |||||||||||||||
Gathering, transportation and production taxes | 6,620 | 6,692 | 8,481 | 26,250 | 35,128 | |||||||||||||||
Depreciation, depletion, and amortization | 33,658 | 30,218 | 27,274 | 114,677 | 107,122 | |||||||||||||||
Asset retirement obligations accretion | 7,377 | 6,414 | 6,972 | 29,018 | 26,508 | |||||||||||||||
General and administrative expenses | 18,251 | 19,978 | 21,957 | 75,541 | 73,747 | |||||||||||||||
Total operating expenses | 130,549 | 125,128 | 133,701 | 503,162 | 466,919 | |||||||||||||||
Operating income | 1,791 | 17,283 | 55,999 | 29,494 | 454,078 | |||||||||||||||
Interest expense, net | 9,729 | 9,925 | 14,526 | 44,689 | 69,441 | |||||||||||||||
Derivative (gain) loss, net | (13,199 | ) | (1,491 | ) | (24,359 | ) | (54,759 | ) | 85,533 | |||||||||||
Other expense, net | 3,772 | 1,927 | 15,524 | 5,621 | 14,295 | |||||||||||||||
Income before income taxes | 1,489 | 6,922 | 50,308 | 33,943 | 284,809 | |||||||||||||||
Income tax expense | 1,932 | 4,777 | 6,859 | 18,345 | 53,660 | |||||||||||||||
Net (loss) income | $ | (443 | ) | $ | 2,145 | $ | 43,449 | $ | 15,598 | $ | 231,149 | |||||||||
Basic | $ | — | $ | 0.01 | $ | 0.30 | $ | 0.11 | $ | 1.61 | ||||||||||
Diluted | — | 0.01 | 0.30 | 0.11 | 1.59 | |||||||||||||||
Weighted average common shares outstanding | ||||||||||||||||||||
Basic | 146,578 | 146,483 | 143,490 | 146,483 | 143,143 | |||||||||||||||
Diluted | 146,578 | 151,459 | 146,260 | 148,302 | 145,090 | |||||||||||||||
Condensed Operating Data | ||||||||||||||||
(Unaudited) | ||||||||||||||||
Three Months Ended | Year Ended | |||||||||||||||
2023 | 2023 | 2022 | 2023 | 2022 | ||||||||||||
Net sales volumes: | ||||||||||||||||
Oil (MBbls) | 1,219 | 1,227 | 1,375 | 5,050 | 5,602 | |||||||||||
NGLs (MBbls) | 329 | 348 | 371 | 1,415 | 1,554 | |||||||||||
Natural gas (MMcf) | 9,533 | 10,359 | 10,843 | 37,591 | 44,808 | |||||||||||
Total oil and natural gas (MBoe) (1) | 3,136 | 3,302 | 3,553 | 12,730 | 14,624 | |||||||||||
Average daily equivalent sales (MBoe/d) | 34.1 | 35.9 | 38.6 | 34.9 | 40.1 | |||||||||||
Average realized sales prices (before the impact of derivative settlements): | ||||||||||||||||
Oil ($/Bbl) | $ | 77.17 | $ | 81.77 | $ | 81.27 | $ | 75.52 | $ | 93.59 | ||||||
NGLs ($/Bbl) | 20.82 | 21.31 | 25.70 | 22.93 | 36.66 | |||||||||||
Natural gas ($/Mcf) | 3.08 | 3.14 | 6.12 | 2.93 | 7.23 | |||||||||||
Barrel of oil equivalent ($/Boe) | 41.55 | 42.48 | 52.82 | 41.16 | 61.89 | |||||||||||
Average operating expenses per Boe ($/Boe): | ||||||||||||||||
Lease operating expenses | $ | 20.61 | $ | 18.72 | $ | 19.42 | $ | 20.24 | $ | 15.35 | ||||||
Gathering, transportation and production taxes | 2.11 | 2.03 | 2.39 | 2.06 | 2.40 | |||||||||||
Depreciation, depletion, and amortization | 10.73 | 9.15 | 7.68 | 9.01 | 7.33 | |||||||||||
Asset retirement obligations accretion | 2.35 | 1.94 | 1.96 | 2.28 | 1.81 | |||||||||||
General and administrative expenses | 5.82 | 6.05 | 6.18 | 5.93 | 5.04 | |||||||||||
(1) MBoe is 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). The conversion ratio does not assume price equivalency and the price on an equivalent basis for oil, NGLs and natural gas may differ significantly. The realized prices presented above are volume-weighted for production in the respective period. | ||||||||||||||||
Consolidated Balance Sheets | |||||||||
(In thousands) | |||||||||
(Unaudited) | |||||||||
2023 | 2022 | ||||||||
Assets | |||||||||
Current assets: | |||||||||
Cash and cash equivalents | $ | 173,338 | $ | 461,357 | |||||
Restricted cash | 4,417 | 4,417 | |||||||
Receivables: | |||||||||
Oil and natural gas sales | 52,080 | 66,146 | |||||||
Joint interest, net | 15,480 | 14,000 | |||||||
Other | 2,218 | — | |||||||
Prepaid expenses and other assets | 17,447 | 24,343 | |||||||
Total current assets | 264,980 | 570,263 | |||||||
Oil and natural gas properties and other, net | 749,056 | 735,215 | |||||||
Restricted deposits for asset retirement obligations | 22,272 | 21,483 | |||||||
Deferred income taxes | 38,774 | 57,280 | |||||||
Other assets | 38,923 | 47,549 | |||||||
Total assets | $ | 1,114,005 | $ | 1,431,790 | |||||
Liabilities and Shareholders’ Equity | |||||||||
Current liabilities: | |||||||||
Accounts payable | $ | 78,857 | $ | 65,158 | |||||
Accrued liabilities | 31,879 | 74,041 | |||||||
Undistributed oil and natural gas proceeds | 42,134 | 41,934 | |||||||
Advances from joint interest partners | 2,962 | 3,181 | |||||||
Income tax payable | 99 | 412 | |||||||
Current portion of asset retirement obligation | 31,553 | 25,359 | |||||||
Current portion of long-term debt, net | 29,368 | 582,249 | |||||||
Total current liabilities | 216,852 | 792,334 | |||||||
Asset retirement obligations | 467,262 | 441,071 | |||||||
Long-term debt, net | 361,236 | 111,188 | |||||||
Deferred income taxes | 51 | 72 | |||||||
Other liabilities | 19,369 | 59,134 | |||||||
Commitments and contingencies | 18,043 | 20,357 | |||||||
Shareholders’ equity: | |||||||||
Preferred stock, | — | — | |||||||
Common stock, | 1 | 1 | |||||||
Additional paid-in capital | 586,014 | 576,588 | |||||||
Retained deficit | (530,656 | ) | (544,788 | ) | |||||
(24,167 | ) | (24,167 | ) | ||||||
Total shareholders’ equity | 31,192 | 7,634 | |||||||
Total liabilities and shareholders’ equity | $ | 1,114,005 | $ | 1,431,790 | |||||
Consolidated Statements of Cash Flows | |||||||||||||||||||||
(In thousands) | |||||||||||||||||||||
(Unaudited) | |||||||||||||||||||||
Three Months Ended | Year Ended | ||||||||||||||||||||
2023 | 2023 | 2022 | 2023 | 2022 | |||||||||||||||||
Operating activities: | |||||||||||||||||||||
Net (loss) income | $ | (443 | ) | $ | 2,145 | $ | 43,449 | $ | 15,598 | $ | 231,149 | ||||||||||
Adjustments to reconcile net (loss) income to net cash provided by operating activities: | |||||||||||||||||||||
Depreciation, depletion, amortization and accretion | 41,035 | 36,632 | 34,246 | 143,695 | 133,630 | ||||||||||||||||
Share-based compensation | 3,124 | 3,250 | 2,743 | 10,383 | 7,922 | ||||||||||||||||
Amortization and write off of debt issuance costs | 1,266 | 1,351 | 1,437 | 6,980 | 7,551 | ||||||||||||||||
Derivative (gain) loss | (13,199 | ) | (1,491 | ) | (24,359 | ) | (54,759 | ) | 85,533 | ||||||||||||
Derivative cash payments, net | (2,809 | ) | (1,696 | ) | (40,858 | ) | (8,932 | ) | (41,880 | ) | |||||||||||
Derivative cash premium payments | — | — | — | — | (46,111 | ) | |||||||||||||||
Deferred income taxes | 3,838 | 3,067 | 5,013 | 18,485 | 45,184 | ||||||||||||||||
Changes in operating assets and liabilities: | |||||||||||||||||||||
Oil and natural gas receivables | (3,558 | ) | (7,180 | ) | 23,049 | 14,066 | (11,227 | ) | |||||||||||||
Joint interest receivables | 569 | (2,174 | ) | 2,815 | (1,480 | ) | (4,255 | ) | |||||||||||||
Prepaid expenses and other current assets | (28,262 | ) | (1,442 | ) | 58,722 | (2,712 | ) | 31,906 | |||||||||||||
Accounts payable, accrued liabilities and other | 45,197 | 8,937 | (77,600 | ) | 10,722 | (12,034 | ) | ||||||||||||||
Cash advances from JV partners | (145 | ) | (3 | ) | 163 | (219 | ) | (11,892 | ) | ||||||||||||
Income taxes | (1,897 | ) | 1,711 | (1,201 | ) | (2,531 | ) | 279 | |||||||||||||
Asset retirement obligation settlements | (9,052 | ) | (13,077 | ) | (14,940 | ) | (33,970 | ) | (76,225 | ) | |||||||||||
Net cash provided by operating activities | 35,664 | 30,030 | 12,679 | 115,326 | 339,530 | ||||||||||||||||
Investing activities: | |||||||||||||||||||||
Investment in oil and natural gas properties and equipment | (10,319 | ) | (7,960 | ) | (11,666 | ) | (41,278 | ) | (41,632 | ) | |||||||||||
Changes in operatings assets and liabilities associated with investing activities | (1,820 | ) | 3,623 | 6,343 | (535 | ) | (1,894 | ) | |||||||||||||
Acquisition of property interests | 1,479 | (28,863 | ) | — | (27,384 | ) | (51,474 | ) | |||||||||||||
Deposit related to acquisition of property interests | 8,850 | (8,850 | ) | — | — | — | |||||||||||||||
Purchase of corporate aircraft | — | — | — | (8,983 | ) | — | |||||||||||||||
Purchases of furniture, fixtures and other | (347 | ) | (2,863 | ) | (80 | ) | (3,428 | ) | (80 | ) | |||||||||||
Net cash used in investing activities | (2,157 | ) | (44,913 | ) | (5,403 | ) | (81,608 | ) | (95,080 | ) | |||||||||||
Financing activities: | |||||||||||||||||||||
Repayment of 9.75% Senior Second Lien Notes due 2023 | — | — | (9,122 | ) | (552,460 | ) | — | ||||||||||||||
Repayment of Term Loan | (7,412 | ) | (7,148 | ) | — | (33,741 | ) | (42,959 | ) | ||||||||||||
Repayment of TVPX Loan | (275 | ) | (275 | ) | — | (733 | ) | — | |||||||||||||
Proceeds from issuance of 11.75% Senior Second Lien Notes due 2026 | — | — | — | 275,000 | — | ||||||||||||||||
Debt issuance costs | — | (128 | ) | 331 | (7,380 | ) | (1,675 | ) | |||||||||||||
Net proceeds from issuance of common stock | — | — | 16,458 | — | 16,458 | ||||||||||||||||
Payment of dividends | (1,466 | ) | — | — | (1,466 | ) | — | ||||||||||||||
Other | (9 | ) | (200 | ) | (716 | ) | (957 | ) | (716 | ) | |||||||||||
Net cash used in financing activities | (9,162 | ) | (7,751 | ) | 6,951 | (321,737 | ) | (28,892 | ) | ||||||||||||
Change in cash, cash equivalents and restricted cash | 24,345 | (22,634 | ) | 14,227 | (288,019 | ) | 215,558 | ||||||||||||||
Cash, cash equivalents and restricted cash, beginning of period | 153,410 | 176,044 | 451,547 | 465,774 | 250,216 | ||||||||||||||||
Cash, cash equivalents and restricted cash, end of period | $ | 177,755 | $ | 153,410 | $ | 465,774 | $ | 177,755 | $ | 465,774 | |||||||||||
Non-GAAP Information |
Certain financial information included in W&T’s financial results are not measures of financial performance recognized by accounting principles generally accepted in
We calculate Net Debt as total debt (current and long-term portions), less cash and cash equivalents. Management uses Net Debt to evaluate the Company’s financial position, including its ability to service its debt obligations.
Reconciliation of Net (Loss) Income to Adjusted Net (Loss) Income |
Adjusted Net (Loss) Income adjusts for certain items that the Company believes affect comparability of operating results, including items that are generally non-recurring in nature or whose timing and/or amount cannot be reasonably estimated. These items include unrealized commodity derivative (gain) loss net of derivative premiums, allowance for credit losses, write-off of debt issuance costs, non-recurring IT-transition costs, non-ARO plugging and abandonment costs, and other which are then tax effected using the Federal Statutory Rate.
Three Months Ended | Year Ended | ||||||||||||||||||||
2023 | 2023 | 2022 | 2023 | 2022 | |||||||||||||||||
(in thousands) | |||||||||||||||||||||
(Unaudited) | |||||||||||||||||||||
Net (loss) income | $ | (443 | ) | $ | 2,145 | $ | 43,449 | $ | 15,598 | $ | 231,149 | ||||||||||
Unrealized commodity derivative (gain) loss and effect of derivative premiums, net | (14,785 | ) | (3,462 | ) | (53,132 | ) | (58,846 | ) | 45,475 | ||||||||||||
Allowance for credit losses | 28 | 6 | 43 | 37 | (76 | ) | |||||||||||||||
Write-off debt issuance costs | — | — | — | 2,330 | — | ||||||||||||||||
Non-recurring costs related to IT services transition | 413 | 768 | 1,844 | 3,044 | 8,237 | ||||||||||||||||
Non-ARO P&A costs | 4,137 | 2,103 | 15,899 | 6,246 | 18,402 | ||||||||||||||||
Other | (240 | ) | 187 | (372 | ) | 31 | (4,104 | ) | |||||||||||||
Tax effect of selected items(1) | 2,194 | 84 | 7,501 | 9,903 | (14,266 | ) | |||||||||||||||
Adjusted net (loss) income | $ | (8,696 | ) | $ | 1,831 | $ | 15,232 | $ | (21,657 | ) | $ | 284,817 | |||||||||
Adjusted net (loss) income per common share: | |||||||||||||||||||||
Basic | $ | (0.06 | ) | $ | 0.01 | $ | 0.11 | $ | (0.15 | ) | $ | 1.99 | |||||||||
Diluted | $ | (0.06 | ) | $ | 0.01 | $ | 0.10 | $ | (0.15 | ) | $ | 1.96 | |||||||||
Weighted average shares outstanding: | |||||||||||||||||||||
Basic | 146,578 | 146,483 | 143,490 | 146,483 | 143,143 | ||||||||||||||||
Diluted | 146,578 | 151,459 | 146,260 | 146,483 | 145,090 | ||||||||||||||||
(1) Selected items were tax effected with the Federal Statutory Rate of 21% for each respective period. | |||||||||||||||||||||
Non-GAAP Information |
Adjusted EBITDA/ Free Cash Flow Reconciliations |
The Company also presents the non-GAAP financial measures Adjusted EBITDA and Free Cash Flow. The Company defines Adjusted EBITDA as net income (loss) plus net interest expense, income tax expense, depreciation, depletion and amortization, ARO accretion, excluding the unrealized commodity derivative (gain) loss net of derivative premiums, allowance for credit losses, non-cash incentive compensation, non-recurring IT-transition costs, non-ARO plugging and abandonment costs, and other. Company management believes this presentation is relevant and useful because it helps investors understand W&T’s operating performance and makes it easier to compare its results with those of other companies that have different financing, capital and tax structures. Adjusted 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. Adjusted EBITDA, as W&T calculates it, may not be comparable to Adjusted EBITDA measures reported by other companies. In addition, Adjusted EBITDA does not represent funds available for discretionary use.
The Company defines Free Cash Flow as Adjusted EBITDA (defined above), less capital expenditures, plugging and abandonment costs and net interest expense (all on an accrual basis). For this purpose, the Company’s definition of capital expenditures includes costs incurred related to oil and natural gas properties (such as drilling and infrastructure costs and the lease maintenance costs) and equipment, furniture and fixtures, but excludes acquisition costs of oil and gas properties from third parties that are not included in the Company’s capital expenditures guidance provided to investors. Company management believes that Free Cash Flow is an important financial performance measure for use in evaluating the performance and efficiency of its current operating activities after the impact of accrued capital expenditures, plugging and abandonment costs and net interest expense and without being impacted by items such as changes associated with working capital, which can vary substantially from one period to another. There is no commonly accepted definition of Free Cash Flow within the industry. Accordingly, Free Cash Flow, as defined and calculated by the Company, may not be comparable to Free Cash Flow or other similarly named non-GAAP measures reported by other companies. While the Company includes net interest expense in the calculation of Free Cash Flow, other mandatory debt service requirements of future payments of principal at maturity (if such debt is not refinanced) are excluded from the calculation of Free Cash Flow. These and other non-discretionary expenditures that are not deducted from Free Cash Flow would reduce cash available for other uses.
Three Months Ended | Year Ended | ||||||||||||||||||||
2023 | 2023 | 2022 | 2023 | 2022 | |||||||||||||||||
(in thousands) | |||||||||||||||||||||
(Unaudited) | |||||||||||||||||||||
Net (loss) income | $ | (443 | ) | $ | 2,145 | $ | 43,449 | $ | 15,598 | $ | 231,149 | ||||||||||
Interest expense, net | 9,729 | 9,924 | 14,526 | 44,689 | 69,441 | ||||||||||||||||
Income tax expense | 1,932 | 4,777 | 6,859 | 18,345 | 53,660 | ||||||||||||||||
Depreciation, depletion and amortization | 33,658 | 30,218 | 27,274 | 114,677 | 107,122 | ||||||||||||||||
Asset retirement obligations accretion | 7,377 | 6,414 | 6,972 | 29,018 | 26,508 | ||||||||||||||||
Unrealized commodity derivative (gain) loss and effect of derivative premiums, net | (14,785 | ) | (3,462 | ) | (53,132 | ) | (58,846 | ) | 45,475 | ||||||||||||
Allowance for credit losses | 28 | 6 | 43 | 37 | (76 | ) | |||||||||||||||
Non-cash incentive compensation | 3,124 | 3,250 | 2,743 | 10,383 | 7,922 | ||||||||||||||||
Non-recurring costs related to IT services transition | 413 | 768 | 1,844 | 3,044 | 8,237 | ||||||||||||||||
Non-ARO P&A costs | 4,137 | 2,103 | 15,899 | 6,246 | 18,402 | ||||||||||||||||
Other | (240 | ) | 205 | (372 | ) | 31 | (4,104 | ) | |||||||||||||
Adjusted EBITDA | $ | 44,930 | $ | 56,348 | $ | 66,105 | $ | 183,222 | $ | 563,736 | |||||||||||
Investment in oil and natural gas properties and equipment | (10,319 | ) | (7,960 | ) | (11,666 | ) | (41,278 | ) | (41,632 | ) | |||||||||||
Asset retirement obligation settlements | (9,052 | ) | (13,077 | ) | (14,940 | ) | (33,970 | ) | (76,225 | ) | |||||||||||
Interest expense, net | (9,729 | ) | (9,924 | ) | (14,526 | ) | (44,689 | ) | (69,441 | ) | |||||||||||
Free Cash Flow | $ | 15,830 | $ | 25,387 | $ | 24,973 | $ | 63,285 | $ | 376,438 | |||||||||||
The following tables present (i) a reconciliation of cash flow from operating activities, a GAAP measure, to Free Cash Flow, as defined by the Company and (ii) a reconciliation of the Company’s net income (loss), a GAAP measure, to Adjusted EBITDA and Free Cash Flow, as such terms are defined by the Company.
Three Months Ended | Year Ended | ||||||||||||||||||||
2023 | 2023 | 2022 | 2023 | 2022 | |||||||||||||||||
(in thousands) | |||||||||||||||||||||
(Unaudited) | |||||||||||||||||||||
Net cash provided by operating activities | $ | 35,664 | $ | 30,030 | $ | 12,679 | $ | 115,326 | $ | 339,530 | |||||||||||
Allowance for credit losses | 28 | 6 | 43 | 37 | (76 | ) | |||||||||||||||
Amortization of debt items and other items | (1,266 | ) | (1,351 | ) | (1,437 | ) | (6,980 | ) | (7,551 | ) | |||||||||||
Non-recurring costs related to IT services transition | 413 | 768 | 1,844 | 3,044 | 8,237 | ||||||||||||||||
Current tax (benefit) expense(1) | (1,906 | ) | 1,710 | 1,846 | (140 | ) | 8,476 | ||||||||||||||
Changes in derivatives receivable (payable)(1) | 1,223 | (275 | ) | 12,085 | 4,845 | 47,933 | |||||||||||||||
Non-ARO P&A costs | 4,137 | 2,103 | 15,899 | 6,246 | 18,402 | ||||||||||||||||
Changes in operating assets and liabilities, excluding asset retirement obligation settlements | (11,904 | ) | 151 | (5,948 | ) | (17,846 | ) | 7,223 | |||||||||||||
Investment in oil and natural gas properties, equipment and other | (10,319 | ) | (7,960 | ) | (11,666 | ) | (41,278 | ) | (41,632 | ) | |||||||||||
Allowance for credit losses | (240 | ) | 205 | (372 | ) | 31 | (4,104 | ) | |||||||||||||
Free Cash Flow | $ | 15,830 | $ | 25,387 | $ | 24,973 | $ | 63,285 | $ | 376,438 | |||||||||||
(1) A reconciliation of the adjustment used to calculate Free Cash Flow to the Condensed Consolidated Financial Statements is included below: | |||||||||||||||||||||
Current tax benefit: | |||||||||||||||||||||
Income tax expense | $ | 1,932 | $ | 4,777 | $ | 6,859 | $ | 18,345 | $ | 53,660 | |||||||||||
Less: Deferred income taxes | 3,838 | 3,067 | 5,013 | 18,485 | 45,184 | ||||||||||||||||
Current tax (benefit) expense | $ | (1,906 | ) | $ | 1,710 | $ | 1,846 | $ | (140 | ) | $ | 8,476 | |||||||||
Changes in derivatives receivable (payable) | |||||||||||||||||||||
Derivatives receivable (payable), end of period | $ | 271 | $ | (952 | ) | $ | (4,574 | ) | $ | 271 | $ | (4,574 | ) | ||||||||
Derivatives payable, beginning of period | 952 | 677 | 16,659 | 4,574 | 6,396 | ||||||||||||||||
Derivative premiums paid | — | — | — | — | 46,111 | ||||||||||||||||
Change in derivatives receivable (payable) | $ | 1,223 | $ | (275 | ) | $ | 12,085 | $ | 4,845 | $ | 47,933 | ||||||||||
Non-GAAP Information |
Reconciliation of PV-10 to Standardized Measure |
The Company also discloses PV-10, which is not a financial measure defined under GAAP. The standardized measure of discounted future net cash flows is the most directly comparable GAAP financial measure for proved reserves calculated using
The following table presents a reconciliation of the standardized measure of discounted future net cash flows relating to the Company’s estimated proved oil and natural gas reserves, a GAAP measure, to PV-10, as defined by the Company.
2023 | 2022 | |||||||
PV-10 | $ | 1,080.9 | $ | 3,128.6 | ||||
Future income taxes, discounted at 10% | (151.0 | ) | (594.1 | ) | ||||
PV-10 after ARO | 929.9 | 2,534.5 | ||||||
Present value of estimated ARO, discounted at 10% | (246.7 | ) | (271.5 | ) | ||||
Standardized measure | $ | 683.2 | $ | 2,263.0 | ||||
CONTACT: | Investor Relations Coordinator apetrie@wtoffshore.com 713-297-8024 | Executive VP and CFO sparasnis@wtoffshore.com 713-513-8654 |
Source:
2024 GlobeNewswire, Inc., source