W&T Offshore Closes Acquisition Of Offshore Blocks From Newfield Exploration
Company Provides Update on its Current Operations and 2012 Production Guidance
HOUSTON, Oct. 5, 2012
HOUSTON, Oct. 5, 2012 /PRNewswire/ --W&T Offshore, Inc. (NYSE: WTI) announced
today that it has closed its previously announced acquisition of exploration
and production properties in the Gulf of Mexico from Newfield Exploration
Company and its subsidiary, Newfield Exploration Gulf Coast LLC ("Newfield").
W&T is also providing an update of its current operations and 2012 production
W&T acquired 78 federal offshore lease blocks (two of which are held in escrow
subject to the exercise or expiration of preferential rights held by a third
party) on approximately 432,700 gross acres (416,000 gross acres excluding
overriding royalty interests), which includes 65 blocks in the deepwater, six
of which are producing;10 blocks on the conventional shelf, four of which are
producing; and an overriding royalty interest in threedeepwater blocks, two
of which are producing. W&T acquired total undeveloped leasehold acreage of
approximately 312,000 gross acres, 91% of which is in deepwater. As of the
closing date, the adjusted purchase price paid for theNewfield properties, as
reflected on the preliminary closing statement, was approximately $208
million, subject to further post-effective date adjustments and assumption of
asset retirement obligations associated with these properties. The
acquisition was funded from W&T's available cash on hand and revolving credit
Total proved and probable reserves acquired include 7.7 million barrels of oil
equivalent (MMBoe) and 1.2 MMBoe, respectively, per third-party engineers'
estimates as of July 1, 2012. During July, average production from these
properties was approximately 8,350 Boe per day net, of which 37% was oil and
approximately 75% was from the deepwater. W&T expects to take over operations
of approximately 90% of the production.
The producing deepwater blocks are in the Garden Banks, Mississippi Canyon and
Viosca Knoll areas. In addition to the production in those deepwater blocks,
we acquired exploration potential in each of those areas, as well as in the
Green Canyon and Atwater Valley areas. The producing conventional shelf
leases are in Ship Shoal, West Cameron, Vermilion, and West Delta.
Tracy W. Krohn, Chairman and Chief Executive Officer, commented, "This
acquisition adds production, reserves, cash flow and several hundred million
barrels of unrisked exploratory potential to our portfolio. With the addition
of these primarily deepwater properties, we have substantially expanded our
footprint in an area that offers significant upside potential."
Offshore, we are currently participating in three non-operated exploration
wells and one operated development well. At our Mahogany field (SS 349/359),
we are continuing our highly successful development drilling program and are
nearing total depth on our fifth well in this program. Three non-operated
offshore exploration wells are currently underway in the Gulf of Mexico,
including Mississippi Canyon 698 ("Big Bend"), a potentially, oil focused high
impact deepwater exploration well. Additionally, we have two exploration
wells drilling on the shelf, one at West Cameron 73 and one at Main Pass 163.
Onshore we have a very active drilling program in three key areas. In the
Permian Basin at our Yellow Rose field we currently have four operated rigs
drilling. Three of our rigs are continuing our vertical Spraberry development
program, while our fourth rig is drilling exploratory horizontal Wolfcamp
wells. We expect two horizontal wells will be fracture stimulated and on test
before year end. In Terry County, north of our Yellow Rose field, we also
have one rig drilling a two well exploratory horizontal Wolfcamp program,
which we also expect to be on test before year end. At our Star Prospect in
East Texas, we have one operated rig drilling a horizontal exploration well in
the James Lime, with another well to be drilled before the end of the year.
Those wells are also expected to be down and on test before year end.
Production Guidance Update
With the closing of the acquisition of the Newfield properties and a number of
events that impacted third quarter production, we are revising our 2012
production guidance. Our new production guidance includes the effect of
production deferral resulting from Hurricane Isaac, Tropical Storm Debbie and
third party pipeline outages, which combined, reduced total third quarter
production by approximately 0.8 MBoe. In the fourth quarter of 2012, we will
benefit from the contribution of the properties acquired from Newfield that
are expected to contribute between 3.4 and 4.4 Bcfe to our 2012 annual
guidance. Production in 2012 is also being reduced by approximately 1.8 Bcfe
for the sale of South Timbalier 41 field effective April 1, 2012 and the
sanding up of our A2 ST Mississippi Canyon 243 well. We expect to begin
drilling a sidetrack of the A2 well before the end of the year. With the
exception of South Timbalier 41, the deferral of production from these
unexpected shut-ins referred to above, should not impact total proved
We now expect our full-year 2012 production to be between 17.1 and 17.8 MMBoe
or 103 Bcfe and 107 Bcfe and are expecting to see a year end exit rate of
approximately 50,000 to 55,000 Boe per day or 300 to 330 MMcfe per day. We
expect that our full year estimate of lease operating and other expenses will
continue to be in line with our prior expense guidance.
About W&T Offshore
W&T Offshore, Inc. is an independent oil and natural gas producer focused
primarily in the Gulf of Mexico and Texas. We have grown through
acquisitions, exploration and development and currently hold working interests
in over 70 producing offshore fields in federal and state waters. During
2011, we expanded onshore into West Texas and East Texas where we are actively
pursuing exploration and development activities. A substantial majority of
our daily production is derived from wells we operate offshore. For more
information on W&T Offshore, please visit our website at 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, uncertainties and other factors discussed in W&T
Offshore's Annual Report on Form 10-K for the year ended December 31, 2011 and
subsequent Form 10-Q reports found at www.sec.gov or at our website at
www.wtoffshore.com under the Investor Relations section.
CONTACT: Mark Brewer Danny Gibbons
Investor Relations SVP & CFO
SOURCE W&T Offshore, Inc.
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