W&T Offshore Announces Year-End 2013 Reserves And Production, 2014 Capital Budget And Provides An Operations Update

  W&T Offshore Announces Year-End 2013 Reserves And Production, 2014 Capital
                   Budget And Provides An Operations Update

PR Newswire

HOUSTON, Feb. 14, 2014

HOUSTON, Feb. 14, 2014 /PRNewswire/ --W&T Offshore, Inc. (NYSE: WTI) reported
that the Company replaced in excess of 100% of 2013 production, that year-end
2013 SEC proved reserves^(1) were 117.7 million barrels of oil equivalent
("MMBoe"), and the pre-tax present value of these proved reserves discounted
at 10%^(1) ("PV-10") was $2.5 billion. In addition, it announced that its
Board of Directors has approved a 2014 capital expenditure budget of $450
million, excluding acquisitions. The Company has also provided production for
2013 and an operational update for the fourth quarter of 2013 and early 2014.

Tracy W. Krohn, W&T Offshore's Chairman and Chief Executive Officer, stated,
"As a result of our exploration success in the deepwater Gulf of Mexico and
our expansion onshore, many of our projects have become more long-term in
nature and provide additional visibility to our future. Our 2013 year-end
proved reserves don't fully reflect the success of our 2013 exploration
program; for example, we have currently booked less than a quarter of the
estimated reserves we believe could ultimately be recovered for our interest
in the discovery at Mississippi Canyon ("MC") 698 "Big Bend," since it is not
yet completed. Additionally, we have booked no reserves for our interest in
the MC 699 "Troubadour" or MC 738 "Dantzler" deepwater discoveries since
development has not yet been sanctioned by the operator. In 2014, we intend
to build on our success as we advance exploration projects that have been
greatly de-risked and are expected to add value to the Company for years to
come. Further, we are evaluating our substantial lease position in the Gulf
(of which 57% is held by production) utilizing best-in-class techniques
including Wide Azimuth (WAZ) 3D seismic to continue generating solid future
exploration opportunities such as our Mahogany project. We remain committed
to growth, both organically and through acquisitions."

   In accordance with guidelines established by the SEC, our proved reserves
   as of December 31, 2013 were determined to be economically producible under
   existing economic conditions, which requires the use of the unweighted
   arithmetic average of the first-day-of-the-month price for oil and gas for
   the period January 2013 through December 2013. Also note that the PV-10
1) value is a non-GAAP financial measure. See "Non-GAAP Financial Measure"
   below. For 2013, proved reserves and PV-10 were calculated using average
   prices of $99.65 per barrel for oil, $35.21 per barrel for natural gas
   liquids and $3.80 per Mcf for natural gas, as adjusted for energy content
   for natural gas, quality, transportation fees and regional price
   differentials.



Fourth Quarter and Full Year 2013 Production, Pricing, DD&A, LOE and Renewed
Credit Facility

Production for the fourth quarter of 2013 is estimated to have increased 16%
to 5.2 MMBoe (or 30.9 Bcfe), compared to the fourth quarter 2012. Fourth
quarter 2013 production was comprised of 1.8 million barrels of oil, 0.6
million barrels of natural gas liquids (NGLs) and 16.8 Bcf of natural gas at
an average realized sales price of $47.33 per Boe or $7.89 per Mcfe. Our
realized oil sales price for the fourth quarter of 2013 is expected to have
averaged approximately $94.11 per barrel.

Our focus on oil and NGL weighted projects resulted in a year-over-year
increase of 11.6% in total liquids production. Crude oil production in 2013
increased 16.3% to 7.0 million barrels compared to 6.0 million barrels in
2012.

For the year 2013, production is estimated to have increased 5% to 18.0 MMBoe
(or 107.9 Bcfe), over 2012 production levels. Total 2013 production was split
between 7.0 million barrels of oil, 2.1 million barrels of NGLs and 53.3 Bcf,
at an average realized sales price of $54.58 per Boe or $9.10 per Mcfe.

In January 2014, the Company identified that it had been receiving an
erroneous MMBtu conversion factor from a third party that had the effect of
understating natural gas production at our Viosca Knoll 783 field "Tahoe
Field". The incorrect conversion factor had been used on all natural gas
production from the field since we acquired it in 2011. The effect of using
this incorrect conversion factor did not affect revenues, operating cash flows
or royalty payments to the federal government but does impact reported natural
gas production and the calculation of depletion expense. We have determined
that the impact on earnings reported for prior annual periods was not material
to 2011 and 2012 results, thus the adjustment was recognized in 2013. As a
result, the fourth quarter of 2013 will reflect a one-time increase in
production of 2.6 Bcf (with no corresponding increase in revenue) by using the
correct conversion factor for the annual periods of 2011, 2012 and the first
three quarters of 2013. The volume impact understatement on 2011 was .9 Bcf,
on 2012 was 1.0 Bcf and on the first three quarters of 2013 was .7 Bcf.

Production for the fourth quarter of 2013 is estimated to have been 28.3 Bcfe
or 307.7 MMcfe per day, excluding the cumulative effect of the volume
adjustment, and our realized sales price would have been $8.62 per Mcfe.
Volumes are up 4.4 % over the fourth quarter of 2012 when production was 4.5
million Boe (or 27.1 Bcfe), consisting of 1.7 million barrels of oil, 0.5
million barrels of NGLs and 13.7 Bcf of natural gas. The average realized
sales price for the 2012 period was $52.51 per Boe or $8.75 per Mcfe. For the
full year of 2013, production is estimated to have been 106.0 Bcfe or 290.5
MMcfe per day, excluding the cumulative effect of the volume adjustment, and
our realized sales price would have been $9.26 per Mcfe. This represents a
3.1% increase over the year 2012 when production was 17.1 MMBoe (or 102.8
Bcfe), comprised of 6.0 million barrels of oil, 2.1 million barrels of NGLs,
and 53.8 Bcf of natural gas. The average realized sales price for the year
2012 was $50.93 per Boe or $8.49 per Mcfe.

DD&A expense for the fourth quarter of 2013 is expected to be higher than the
third quarter due to increased production volumes and a higher DD&A rate. We
expect the DD&A rate for the fourth quarter of 2013 to be approximately $4.48
per Mcfe as compared to the third quarter rate of $4.13 per Mcfe. The DD&A
rate has increased with higher future development cost associated with both
onshore and offshore operations. DD&A and accretion for the fourth quarter of
2013 is currently expected to be approximately $139.0 million and for the year
2013 to be $451.0 million.

During the fourth quarter of 2013, we conducted an unplanned workover on the
A-12 well at SS 349 Mahogany that we felt was necessary and prudent to resolve
a casing pressure issue. This workover resulted in additional lease operating
expense (LOE) in the fourth quarter of approximately $13.6 million. As a
result, we now expect our LOE for the fourth quarter to be approximately $76.0
million and for the full year of 2013 to be approximately $270.8 million.

Also during the fourth quarter of 2013 the Company renewed its revolving bank
credit facility with more favorable terms and extended the maturity date to
October of 2018. In connection with this renewal, the Company wrote off $3.7
million of deferred debt issue cost associated with the previous bank credit
facility.

The Company had positive earnings of $0.83 per share through the first three
quarters of 2013; however as a result of expensing the deferred debt issue
costs, the unplanned workover and the higher DD&A discussed above that
impacted the fourth quarter, the Company expects to report a net loss for the
fourth quarter of 2013, but positive earnings for the entire year.

Year-End 2013 Proved Reserves

Proved reserves as of December 31, 2013 were 117.7 MMBoe, or 705.9 Bcfe, with
63% comprised of liquids (49% crude oil and 14% NGLs) and 37% natural gas.
This represents a 5% increase in liquids content year-over-year. The oil and
NGL component as a percentage of total proved reserves increased from 60% at
the end of 2012 to 63% at the end of 2013. The PV-10 value of proved reserves
at year-end 2013 was $2.5 billion, excluding the effect of estimated asset
retirement obligations.

In 2013, we focused capital allocation towards deepwater exploration to
generate long-term organic growth and onshore, towards projects that have a
longer-life production profile and the potential for multi-year development
programs. We replaced over 100% of our production in 2013, moved substantial
oil reserves to PDP status and increased the ratio of oil and NGLs as a
percentage of our total proved reserves.

Our proved reserves are summarized below:



                As of December 31, 2013
                Total Equivalent Reserves
Classification                      Natural  Oil         Natural     % of
of Proved       Oil       NGLs      Gas      Equivalent  Gas         total     PV-10 (1)
Reserves      (MMBbls)  (MMBbls)  (Bcf)    (MMBoe)     Equivalent  reserves  (Millions)
                                                         (Bcfe)
Proved                                                                         $  
developed       27.8      8.1       148.5    60.6        363.8       51%       1,895.0
producing
Proved
developed       8.4       3.0       84.2     25.5        152.3       22%       482.0
non-producing
Total proved    36.2      11.1      232.7    86.1        516.1       73%       2,377.0
developed
Proved          22.3      4.8       27.2     31.6        189.8       27%       151.0
undeveloped
Total proved    58.5      15.9      259.9    117.7       705.9       100%      $  
                                                                               2,528.0



   In accordance with guidelines established by the SEC, our proved reserves
   as of December 31, 2013 were determined to be economically producible under
   existing economic conditions, which requires the use of the unweighted
   arithmetic average of the first-day-of-the-month price for oil and gas for
   the period January 2013 through December 2013. Also note that the PV-10
   value is a non-GAAP financial measure. See "Non-GAAP Financial Measure"
   below. For 2013, proved reserves and PV-10 were calculated using average
2) prices of $99.65 per barrel for oil, $35.21 per barrel for natural gas
   liquids and $3.80 per Mcf for natural gas, as adjusted for energy content
   for natural gas, quality, transportation fees and regional price
   differentials. The proved reserves and PV-10 for the 2012 period were
   calculated using average prices of $98.13 per barrel for oil, $47.46 per
   barrel for natural gas liquids and $2.77 per Mcf for natural gas, as
   adjusted for energy content for natural gas, quality, transportation fees
   and regional price differentials.
   One Bcfe and one MMBoe are determined using the ratio of six Mcf of natural
3) 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.



2014 Capital Budget and Operations Update

The 2014 capital budget is $450 million, not including any potential
acquisitions, and is in line with the 2013 capital budget we announced at the
beginning of that year. Due to our successful exploration programs in 2012
and 2013, we anticipate allocating more capital to deepwater development
programs in 2014 and beyond. Additionally, we expect to direct a higher
percentage of our capital program to our larger oil dominated projects such as
Ship Shoal 349 "Mahogany" development and field expansion and onshore oil
development at our Yellow Rose Field in West Texas. In 2014, we anticipate
approximately 52% of the budget will be allocated towards development, 42% to
exploration and 6% for seismic, leasehold, and other costs. We are allocating
approximately 68% of the 2014 budget to projects in the Gulf of Mexico, mostly
in the deepwater but also on the shelf and 32% of the budget will be allocated
to projects onshore in West Texas.

Offshore Operations Update: 

Offshore Well Activity in the Fourth Quarter 2013
 Block/Well    WI%  Type Location  Target              Comments
                                                       Discovery logged
                                                       roughly 120' of net pay
 MC 782 #1                         Reservoir in Lower  in two high quality
               20   EXPL Deepwater Miocene against     reservoirs which are
 (Dantzler)                        salt at ~19,000'    primarily crude oil.
                                                       Project moving towards
                                                       development approval.
Current Offshore Well Activity in the First Quarter
2014
 Block/Well    WI%  Type Location  Target              Comments
                                   Multiple            Well is currently
 SS 349 A-15                       exploratory oil     drilling through salt
               100  EXPL Shelf     targets (N, O, P,   layer with TD targeting
 (Mahogany)                        Q, Q5 sands) at     measured depth of
                                   13,000' to 15,500'  nearly 20,000'.
                                   TVD
                                                       Well completed and
 MC 243 A-5                        Target in "A" sand  brought online during
               100  EXPL Deepwater (producing          early January. Initial
 (Matterhorn)                      reservoir) at       production rate of
                                   ~6,800' TVD         ~1,200 Bopd and 1.5
                                                       MMcf per day net.
                                   Targeting new oil   Well is drilling and is
 EC 321 A-2 ST 100  EXPL Shelf     reserves in the     expected to reach TD
                                   Lentic 1 sand at    during the first
                                   ~8,500 ' TVD        quarter of 2014.
 MC 698 #1                         150 ft.of high
               20   EXPL Deepwater quality oil pay     Recently commenced
 (Big Bend)                        discovered at ~     completion operations.
                                   15,300 TVD



During December, the exploration well at Mississippi Canyon (MC) 782, Dantzler
reached total depth ("TD") and logged roughly 120 feet of high quality pay in
two lower Miocene sands which are primarily crude oil. At our 2012 discovery
MC 698, Big Bend, completion operations commenced during the first quarter as
a rig was brought on location. We continue to estimate first production to be
in late 2015. The operator of Dantzler and Big Bend, Noble Energy, has
recently presented point forward economics on both discoveries and based upon
their net estimates, the future value that W&T could potentially derive from
these two projects would be a combined PV-10 value of over $450 million.

At our Ship Shoal 349 Mahogany field, the A-12 was brought back on production
in December after the unplanned workover discussed above. The well came back
on at a rate of approximately 250 barrels of oil equivalent per day, net to
W&T, and has continued to hold that rate into February. The rig has since
resumed drilling the A-15 exploratory sub-salt oil well which is expected to
reach TD near the end of the first quarter of 2014. The lowest targeted sand
in this stacked pay exploration well is around 20,000 feet measured depth.
After drilling the A-15 well, the rig is scheduled to proceed with the
drilling of the A-16 well, which targets reserves in the M, N, O, and P sands
identified during the logging of the A-14 exploration well last year. An
additional exploration well, the A-17, is currently in the early planning
stages and is expected to spud near the end of the year. 

The Mississippi Canyon 243 A-5 well at our Matterhorn field was brought on
production during early January producing over 1,200 barrels of oil and 1.5
MMcf of natural gas per day net to W&T. Consistent with our reservoir
management plans, the A-5 will be produced for a short time period and then be
converted to water injection status to initiate our secondary recovery
operations and pressure maintenance program. Pending attractive results, we
will be looking to expand this oil project to the western portion of the
Matterhorn field in future years.

Drilling operations continue at our East Cameron 321 field, with the well
expected to reach TD during the first quarter. Initial production estimates
for the A-2 side track are approximately 850 barrels of oil equivalent per
day, net to W&T. EC 321 has historically been a significant crude oil
producing field for the company.

Onshore Operations Update:

Onshore Wells Completed in Fourth Quarter 2013
  Project & Area  WI% Type     # of   Target          Comments
                                Wells
Permian Basin
  Yellow Rose     100 DEV       1      Horizontal       1 well on flowback
  Horizontal                           Wolfcamp "B"
  Yellow Rose                          4,500' vertical  5 wells completed and
  80 Acre         100 DEV       5      section in the   producing
  Verticals                            Wolfberry
  Yellow Rose                          4,500' vertical  1 well completed and
  40 Acre         100 EXP       1      section in the   producing
  Verticals                            Wolfberry
Current Onshore Well Activity in the First Quarter 2014
  Project & Area  WI% Type     # of   Target          Comments
                                Wells
Permian Basin
  Yellow Rose                          4,500' vertical  2 wells completed and
  80 Acre         100 EXP & DEV 6      section in the   on flowback, 2 wells
  Verticals                            Wolfberry        awaiting completion,
                                                        2 wells drilling
  Yellow Rose                          4,500' vertical  2 wells awaiting
  40 Acre         100 EXP & DEV 2      section in the   completion
  Verticals                            Wolfberry
  Yellow Rose                                           1 non-operated joint
  Horizontal      33  EXP       1      Wolfcamp "B"     venture well which is
                                                        currently drilling
Star Prospect
  East Texas      97  EXP       1      Oil window of    1 well undergoing
  Horizontal                           James Lime       completion



Our first Wolfcamp B horizontal well was completed in early December 2013 with
an effective lateral length for the well of 5,905', in 22 stages using a
hybrid frac treatment. We are still in the early stages of flowback and the
well has exhibited good productivity with flow back rates in excess of 1,000
barrels of fluid per day We are in the process of installing a larger
capacity lift system to capitalize on the well's relatively high bottom hole
flowing pressures.

Consistent with our longer term development plans and drive to optimize our
acreage position and horizontal production, we have recently entered into a
joint operating agreement and well participation arrangement with an offset
partner to drill another horizontal Wolfcamp B well. Drilling commenced on
this well in early February and is expected to reach TD during the first
quarter. Joint ventures like this one allow us to more efficiently develop
and commercialize reserves on our acreage with longer horizontal lateral wells
in our Yellow Rose field.

We continue to run a two to three rig program in the Yellow Rose field and
are currently planning a second operated Wolfcamp B well on our acreage, which
should commence drilling near the end of the first quarter of 2014.

Mr. Krohn added, "We look forward to providing an additional operations update
and more details of our 2014 capital plan during our fourth quarter conference
call scheduled for March 7, 2014." 

W&T Offshore
W&T Offshore, Inc. is an independent oil and natural gas producer with
operations offshore in the Gulf of Mexico and onshore in both the Permian
Basin of West Texas and in East Texas. We have grown through acquisitions,
exploration and development and currently hold working interests in
approximately 67 offshore fields in federal and state waters (60 producing and
seven fields capable of producing). W&T currently has under lease
approximately 1.3 million gross acres, including approximately 0.6 million
gross acres on the Gulf of Mexico Shelf, approximately 0.5 million gross acres
in the deepwater and approximately 0.2 million gross acres onshore in Texas.
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.

Forward-Looking Statements
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, 2012 and
on Form 10-Q for the quarter ended September 30, 2013 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
         investorrelations@wtoffshore.com investorrelations@wtoffshore.com
         713-297-8024                     713-624-7326

SOURCE W&T Offshore, Inc.

Website: http://www.wtoffshore.com
 
Press spacebar to pause and continue. Press esc to stop.