Q3 2023 W&T Offshore Inc Earnings Call

Ladies and gentlemen, thank you for standing by.

Speaker 1: Ladies and gentlemen, thank you for standing by. Welcome to the W&T Offshore Third Quarter 2023 Conference Call. During today's call, all parties will be in a list and then we know.

Come to the W. E T offshore fourth quarter 2023 conference call.

During today's call are all part of it could be in a listen only mode.

Following the company's prepared comments the call.

Speaker 1: Following the company's prepared comments, the call will be opened for questions and answers.

Call will be opened for questions and answers.

Speaker 1: During the question and answer session, we ask that you limit your questions to one and a follow-up. You can always rejoin the queue.

The question and answer session. We ask that you limit your questions to one and a follow up.

You can always rejoin the queue.

Speaker 1: This conference is being recorded and a replay will be made available on the couple of weeks' website following the call.

This conference is being recorded and a replay will be made.

All right.

Following the call.

Speaker 1: I would now like to turn the conference over to our PTA Investor Relations Coordinator. Please go ahead.

I would now like to turn the conference over to help you through Investor Relations coordinator. Please go ahead.

Speaker 2: Thank you, Sarah. And on behalf of the management team, I'd like to welcome all of you to today's conference call to review W&T Offshore's third quarter 2023 financial and operational results. Before we begin, I would like to remind you that our comments may include forward-looking statements. It should be noted that a variety of factors could cause W&T's actual results to differ materially from the anticipated results or expectations expressed in these forward-looking statements.

Thank you Sarah and I being after the management team I'd like to welcome all of you to today's conference call to review WTO offshore is third quarter 2023 financial and operational results before we begin I would like to remind you.

<unk> may include forward looking statements.

Should be noted that a variety of factors could cause <unk> actual results to differ materially from the anticipated results or expectations expressed in these forward looking statements.

Speaker 2: Today's call may also contain certain non-GAAP financial measures. Please refer to the earnings release that we issued yesterday for disclosures on far-looking statements and reconciliations of non-GAAP financial measures. With that, I would like to turn the call over to Tracy Kroon, my chairman and CEO .

Today's call May also contain certain non-GAAP financial measures. Please refer to the earnings release that we issued yesterday, our disclosures on forward looking statements and reconciliations of non-GAAP financial measures with that I would like to turn the call over to Tracy Krohn, our chairman and CEO.

Speaker 2: Thanks, child. Good day, everyone. Thanks for joining us this morning. With me today, our William Wilford, our Executive BP and Chief Operating Officer, Samir Porosnis, our Executive BP and Chief Financial Officer, and Tray Hartman, our Chief Accounting Officer. They're all available to answer questions.

Thanks Al Good day, everyone and thanks for joining us this morning.

With me today are William Williford, our executive VP, and Chief operating officer, Sameer for Us as our executive VP, and Chief Financial Officer, and trade Hartman, our Chief Accounting Officer.

They're all available to answer questions later during the call.

Speaker 2: But before I get into the operational and financial results, I would like to begin by reviewing our longstanding and successful strategic rationale.

So before I get into the operational and financial results I would like to begin by reviewing our longstanding and successful strategic rationale.

Speaker 2: Our strategy has always been simple, generate free cash flow, maintain high quality, conventional production, and opportunistically capitalize on a creative opportunity to build shareholder value.

Our strategy has always been simple generate free cash flow maintain high quality conventional production.

And opportunistically capitalize on accretive opportunities to build shareholder value.

We've delivered 23 consecutive quarters of free cash flow, because we prioritize cash flow through our operational and cost controlling initiatives.

Speaker 2: We've delivered 23 consecutive quarters of free cash flow because we prioritize cash flow through our operational and cost-controlling initiatives.

Speaker 2: We have a prolific asset base that delivers strong production and generates meaningful EBITDA. We have generated positive free cash flow every quarter since the beginning of 2018. And in Q3 2023, we delivered over 25 million in free cash.

We have a prolific asset base to deliver strong production and generate meaningful EBITDA.

Have generated positive free cash flow every quarter since the beginning of 2018 and in Q3 2023, we delivered over 25 million of free cash flow.

Speaker 2: So by prioritizing cash flow, we built a strong balance sheet with ample cash to navigate our cyclical business, opportunistically acquire complimentary assets, and now be able to pay a quarterly cash dividend on our common stock.

So by prioritizing Castro, we built a strong balance sheet with ample cash to navigate our cyclical business.

For Tunis and acquire complementary assets and now be able to pay a quarterly cash dividend on our common stock.

Our board this week adopted a program to report two return a portion of our strong cash flow that we generate each quarter direct directly to our shareholders to enhance the return on their investment.

Speaker 2: I board this week adopted a program to return a portion of our strong cash flow. It would generate each quarter directly directly to our shareholders to enhance the return on their investment. Our first dividend, one simple share will be paid on December 22 to share holders of record on November 28th, 2023.

Our first dividend one cent per share will be paid on December 22, two.

To shareholders of record on November 28, 2023.

So we began 2023 by making a decision with regard to how we were going to manage our debt going forward.

Speaker 2: So we began 2023 by making a decision with regard to how we were going to manage our debt going forward. We had the ability to pay it all off, but we know that in times of uncertainty, maintaining liquidity is extremely important.

We had the ability to pay it all off but we know that in times of uncertainty maintaining liquidity is extremely important.

Speaker 2: So, we redeemed all of our existing second lien notes in the amount of $552 million and did a new issuance of $275 million due in 2026, thus significantly reducing our debt and interest payments going forward, while also strengthening our balance sheet.

So we redeemed all of our existing second lien notes in the amount of $552 million and did a new issuance of $275 million due in 2026, thus significantly reducing our debt and interest payments going forward, while also strengthening our balance sheet.

Speaker 2: We have a low leverage profile of 1.2 times net debt to trading month adjusted EBITDA, which coupled with the significant cash we have on hand, provides us with financial flexibility to act quickly should we see the right acquisition opportunity arrive.

We have a low leverage profile at 1.2 times net debt to 12 trailing months adjusted EBITDA, which coupled with the significant cash we have on hand provides us with financial flexibility to act quickly should we see the right acquisition opportunity arise.

Speaker 2: Over the years, we've created significant value by seamlessly integrating producing property acquisitions while maintaining strong operational excellence.

So over the years, we've created significant value by seamlessly integrating producing property acquisitions, while maintaining strong operational excellence and the third quarter. We were pleased to complete another accretive acquisition.

Speaker 2: In the third quarter, we were pleased to complete another acquisition.

In late September we finance, we finalized the purchase of a shallow water producing properties for $28 $9 million net of purchase price adjustments did immediately added free cash flow to WT at the closing date, while increasing our production and reserves. These properties are in our existing areas of operation in the central and eastern Gulf of Mexico.

Speaker 2: In late September , we finalized the purchase of eight shallow water producing properties for $28.9 million net of purchase price adjustment.

Speaker 2: that immediately added free cash flow to W&T after the closing date while increasing our production reserves.

Speaker 2: These properties are in our existing areas of operation in the Central and Eastern Gulf of Mexico and met our acquisition criteria of generating free cash flow, a solid base of approved reserves and left side potential, and the ability to reduce costs.

They met our acquisition criteria of generating free cash flow a solid base of proved reserves of upside potential and the ability to reduce costs.

Speaker 2: We funded the acquisition with cash on hand and still ended the quarter with nearly $150 million of cash. We have the experience and expertise to execute a tried and true acquisition strategy that allows us to grow value for our shareholders.

We funded the acquisition with cash on hand, and still ended the quarter with nearly $150 million of debt.

We have the experience and expertise to execute a tried and true acquisition strategy that allows us to grow value for our shareholders.

Now we believe that we are very well positioned to continue to make acquisitions, but we also feel that patience is important as we look for strategic value and free cash flow generation potential and all acquisition opportunities that we are continuously evaluating.

Speaker 2: Now, we believe that we are very well positioned to continue to make acquisitions, but we also feel that patience is important as we look for strategic value and free cash flow generation potential in all acquisition opportunities that we are continuously evaluating.

Speaker 2: So we can make acquisitions that add value, and we believe that there are numerous opportunities arising that will allow us to continue with that strategy.

Well, so we can make acquisitions that add value and we believe that there are numerous opportunities arise we will allow us to continue with that strategy.

Now turning to our outstanding third quarter results I'd like to point out some key highlights and accomplishments.

Speaker 2: Now turning to our outstanding third quarter results, I'd like to point out some key highlights and accomplishments.

We reported net income of $2 $1 million or one cent per diluted share in the third quarter of 2023 compared to a net loss of $12 million $12 $1 million in the second quarter of 2023.

Speaker 2: So we reported net income of $2.1 million or one cent per diluted share in the third quarter of 2023 compared to a net loss of $12.1 million in the second quarter of 2023.

We increased adjusted EBITDA by 45% quarter over quarter to $56 $3 million.

Speaker 2: We increased adjusted EBIT daily by 45% quarter over quarter to $56.3 million.

These increases were primarily driven by our ability to maintain production levels with highly economic workovers and cash flow associated with probable reserves that are not currently booked as proven reserves.

Speaker 2: These increases were primarily driven by our ability to maintain production levels with highly economic work overs and cash flow associated with probable reserves that are not currently booked as proven reserves.

Speaker 2: We also benefited in the quarter from increased realized oil and natural gas prices.

We also benefited in the quarter from increased realized oil and natural gas pricing.

Speaker 2: These factors help us generate $25.1 million of free cash flow, our 23rd consecutive quarter free cash flow.

These factors helped us generate 25 million of free cash flow, our 20 <unk> consecutive quarter of free cash flow.

Speaker 2: So, we adhered to our strategy to achieve sustainable and consistent results. I believe that our continued success is driven by the ability of both our operations and finance teams to execute at a high level and our outstanding asset base in the Gulf of Mexico.

So we adhere to our strategy to achieve sustainable and consistent results I believe that our continued success is driven by the ability of both our operations and finance teams to execute at a high level.

Our outstanding asset base in the Gulf of Mexico.

Speaker 2: Our ability to pay down debt and improve our balance sheet has put us in a favorable position today. And we remain focused on operational execution in 23.

Our pillar, our ability to pay down debt and improve our balance sheet has put us in a favorable position but.

And we remain focused on operable on operational execution in 'twenty three.

Speaker 2: and beyond to continue building on our already outstanding results.

And beyond to continue building on our already outstanding results.

Speaker 2: So in the third quarter of 2023, we reported strong production of nearly 36,000 barrels of oil equivalent per day.

So in the third quarter of 2023 reported strong production of nearly 36000 barrels of oil equivalent per day.

Speaker 2: Our production was above the midpoint of guidance, with 1.23 million barrels of oil, 348,000 barrels of NGLs, and 10.4 BCF of natural gas per quarter.

Production was above the midpoint of guidance was 1.23 million barrels of oil 348000 barrels of Ngls and two.

10.4 Bcf of natural gas for the quarter.

Speaker 2: We focused on acquisitions over the last few years rather than on drilling many new wells.

We've focused on acquisitions over the last few years, rather than on drilling many new wells for.

Speaker 2: For the fourth quarter of 2023, we expect production to be in the range of 34 and 38,000 barrels of oil equivalent per day.

For the fourth quarter of 2023, we expect production to be in the range of 34, and 38000 barrels of oil equivalent per day.

Speaker 2: This reflects the benefit of the acquisition we closed in late September that has helped mitigate the low natural production decline of our asset base, compared with much higher declines in unconventional onshore reservoirs.

This reflects the benefit of the acquisition we closed in late September that has helped mitigate the low natural production decline of our asset base compared with much higher declines in unconventional onshore reservoirs we.

We saw the benefit of six work Workover during the third quarter and will continue to focus on high returning work Goldman <unk> to help mitigate production declines going forward.

On the cost side.

Speaker 2: On the cost side, while we continue to see inflationary pressures in the industry, our third quarter results were very encouraging as we lowered our lease operating expense on an absolute basis and on a per share basis quarter over quarter.

While we continue to see inflationary pressures in the industry.

Our third quarter results were very encouraging as we lowered our lease operating expense on an absolute basis and on a per share basis quarter over quarter.

Speaker 2: Our per barrel equivalent LOE declined from $19.60 in Q2 2023 to $18.72 in Q3 2023.

Our per barrel equivalent alaouite declined from $19.60 in Q2 2023 to $18 70, 72 cents in Q3 2023.

Speaker 2: We remain focused on cost control and margin expansion despite the current inflationary environment.

We remain focused on cost control and margin expansion. Despite the current inflationary environment.

Speaker 2: For the fourth quarter, our guidance for lease operating expenses expect to be between $60.5 million and $67 million.

For the fourth quarter, our guidance for lease operating expense is expected to be between $65 million and $67 million.

So we also continue to control our G&A costs in the third quarter moved towards cash G&A of $16 $7 million, which was within our guidance range.

Speaker 2: So we also continue to control our DNA costs. In the third quarter, we reported a cast DNA of $16.7 million, which was within our guidance range.

Speaker 2: For the fourth quarter, we expect cash G&A to be similar within a range of $15.4 million to $17 million.

In the fourth quarter, we expect cash G&A to be similar with it within a range of $15 4 million to $17 million.

So turning to our balance sheet. During 2023, we've reduced total debt by almost $300 million from year end 2022.

Speaker 2: So turning to our balance sheet during 2023, we've reduced total debt by almost $300 million from year-end 2022.

Speaker 2: At the end of the third quarter, we had net debt of $248.2 million, which was total debt of $397.2 million, net of cash and cash equivalents of $149.0 million.

At the end of the third quarter, we had net debt of $248 $2 million, which was total debt of $397 $2 million net of cash and cash equivalents of 149.0 million.

Speaker 2: So as I mentioned previously, the large reduction in total debt was driven by issuing new 2026 senior secured lien notes.

So as I mentioned previously these large reduction and told them that was driven by issuing new 'twenty 'twenty six senior secured lien notes.

Speaker 2: uh, in, in January , 2023, those are issued at par totaling $275 million in a private offering.

In January 2023, those ratios at par totaling $275 million in a private offering.

Speaker 2: and using the process along with the portion of our considerable cash position to retire all of our outstanding 2023 senior second lane note

And using the proceeds along with a portion of our considerable cash position to retire all of our outstanding 2023 senior second lien notes.

Speaker 2: We continue to have the flexibility and drive powder to make additional acquisitions, continue to build cash and all the while for the paying down debt.

We continue to have the flexibility and dry powder to make additional acquisitions continue to build cash and all the while further paying down debt.

Speaker 2: Now in quarter three, 2023, we spent $8 million in CapEx and have invested $31 million for the first nine months of this year. As I mentioned in our second quarter call, we lowered our CapEx range for 2023 by about $40 million to be in a range of $50 million and $70 million. Included in this range are planned expenditures related to long-lead drilling-related items, capital costs for facilities, leaseholds, seismic, and recompletion.

In quarter, three 2023, we spent $8 million in Capex and have invested $31 million for the first nine months of this year.

Mentioned in our second quarter call, we lowered our capex range for 'twenty to 'twenty three are about $40 million to be in a range of $50 million and $70 million included in this range. Our planned expenditures related to long lead drilling related items capital costs for facilities leasehold seismic and re completions, we expect to continue generating.

Meaningful free cash flow, which provides us flexibility to execute on accretive opportunities very quickly.

So as we look to next year, we plan to begin drilling again, we will provide additional details on our 2024 capital investment plan during our year end call in early March.

Speaker 2: So as we look to next year, we plan to begin drilling again. We'll provide additional details on our 2024 capital investment plan during our year-end call in early March.

Speaker 2: In the meantime, we plan to spot our deep water holy grail prospect of Magnolia in the first quarter of 2024. We have the rig under contract. We expect the weld to take around six to eight months to drill and complete.

In the meantime, we plan to spud, our deepwater Holy Grail prospect that make nowhere in the first quarter of 2024, we have the rig under contract and expect the well to take around six to eight months to drill and complete.

Speaker 2: It will be drilled off the Magnolia platform, which will allow the well to be placed on production soon after drilling.

It will be drilled Austin, Magnolia platform, which will allow the world to be placed on production soon after drilling.

We identified this proved undeveloped opportunity after we acquired Magnolia in December 2019.

Speaker 2: We identified this proved undeveloped opportunity after we acquired Magnolia in December 2019. We believe it's a low-risk opportunity with large production potential for us since we are the sole leaseholder.

We believe it's a low risk opportunity with large production potential for us since we are the sole leaseholder.

We are hoping to further advance our outstanding results through the recent recent acquisition.

Speaker 2: We are hoping to further advance our outstanding results to the recent acquisition.

Oh significant depth and breadth to our leadership team.

Speaker 2: of significant depth and breadth to our leadership team.

Speaker 2: Over the past several months, we've appointed or promoted several members to our leadership team, and I believe will be great additions to help maintain W&T's successful efforts into the future.

Over the past several months, we've appointed or promoted several members to our leadership team that I believe will be great additions to help me maintain.

Maintain WT successful efforts into the future.

So as I mentioned on the last call in early July we appointed Samir for US. This is our new Chief Financial Officer.

Speaker 2: So as I mentioned on the last call in early July , we appointed Samir Prossnus as our new chief financial officer and welcome Tim to our senior leadership team.

Welcomed him to our senior leadership team.

Speaker 2: And early September , we've promoted four Peters to Vice President of land. In early October , we appointed John Poole as our new Vice President of HSE and R. John's experiment experience will be particularly important toward enhancing our commitment to sustainability. Before I close the call, I'd like to tell you about our 2022 ESC report that we issued in mid-August.

In early September we promoted four Peters Vice President of land in early October we appointed John Poole as our new Vice President of HSE and our.

John's experiment experience will be particularly.

Important toward.

Enhancing our commitment to sustainability.

So before I close the call I'd like to tell you about 2022 ESG report that we issued in mid August.

Yeah.

Deputies culture of success and sustainability is built on environmental stewardship sound corporate governance, and contributing positively to our employees and the communities, where we work and operate.

Speaker 2: W&T's culture of success and sustainability is built on environmental stewardship, sound corporate governance, and contributing positively to our employees and the communities where we work and operate.

Ongoing commitment to ESG includes making concerted effort, reaching out to our major shareholders for feedback.

Speaker 2: ongoing commitment to ESG includes making a concerted effort in reaching out to our major shareholders for feedback, and addressing their concerns while continuously improving our ESG metrics and transparency. To assist with development, implementation, and monitoring of ESG initiatives and policies, we've established an ESG committee with our newest Board Member, Dr. Nancy Chang, as the chair of the committee.

Dressing their concerns while continuously improving our ESG metrics and transparency.

Assist with development implementation and monitoring of ESG initiatives and policies. We've established an ESG committee with our newest board member Dr. Nancy Chang isn't chair of the committee.

We believe the docs Shang will help guide our continuous improvement and assist us in our commitment to the highest standards of ESG and corporate governance.

Speaker 2: We believe that Dr. Chang will help guide our continuous improvement and assess this in our commitment to the highest standards of ESG and corporate governance.

Speaker 2: So since our inaugural 2019 report, we've seen our total scope won, GHG emissions decreased by 20%. Our onshore facility air emissions have also decreased over that same period with sulfur dioxide emissions down 54%. In addition to improvements in our reportable emissions.

So since our inaugural 2019 report we've seen our total scope one G H D emissions decreased by 20%.

Our onshore facility air emissions have also decreased over that same period.

Sulfur dioxide emissions down 54% in addition to improvements in our reportable emissions. We've also implemented new procedures that allow us to estimate and track waste is recycled injected or sent to landfills.

So reaching out to our shareholders to elicit feedback on say on pay performance alignment and ESG initiatives.

Speaker 2: In 2023, we've enacted additional substantive changes to compensation programs based on this feedback and plan to continue to engage with our major shareholders to ensure alignment.

In 2023, we've enacted additional substantive changes to compensation program based on this feedback and plan to continue to engage with our major shareholders to ensure alignment.

Speaker 2: So in closing, we're very pleased with how well we perform thus far in 2023, both operationally and financially. I'd like to thank our team at Devon Tee as I believe we're well positioned to continue success in the future.

So in closing, we're very pleased with how well we performed thus far in 2023, both operationally and financially I'd like to thank our team at Devon T. As I believe we are well positioned for continued success in the future.

Speaker 2: A strong financial position provides us with optionality and flexibility moving forward. Our liquidity and cash position now enables us to continue to evaluate growth opportunities both organically and inorganically.

Our strong financial position.

I just want the optionality and flexibility moving forward.

Our liquidity and cash position now enables us to continue to evaluate growth opportunities both organically and inorganically.

Speaker 2: And we're posed to boys to to execute on a green drop of tunes that meet our longstanding and proving criteria. We believe the Gulf of Mexico is and will continue to be a world-class basin strong producing asset.

And we're posed to poised to.

Executing on accretive opportunities that meet our long standing and proven criteria.

We believe the Gulf of Mexico is and will continue to be world class basin strong producing assets.

Speaker 2: Quickly evaluating an XKRQing on opportunities within our focus area is a color of our success.

Quickly evaluating and executing on opportunities within our focus area is a pillar of our success.

Speaker 2: We have a premier portfolio of both shallow water, deep water properties in the Gulf of Mexico that have low decline rates and significant upside.

The portfolio of both shallow water and deepwater properties in the Gulf of Mexico that have low decline rates and significant upside.

Our management team's interests are highly aligned with those of our shareholders.

Speaker 2: Imagination team's interest is highly aligned with those of our shareholders giving our 34% stake in W&D's equity, which is one of the highest of any public E&D companies.

34% stake in W. Twos equity, which is one of the highest of any public E&P company.

Speaker 2: We welcome the positive mood and improved outlook for our industry. I believe WNT will continue to build value for shareholders as we execute our strategy.

We welcomed a positive mood and improved outlook for our industry and believe that mean team will continue to build value for shareholders as we execute our strategy.

Speaker 2: we're happy to be returning value again to shareholders in cash. With that operating, we can open.

We're happy to be returning value again to shareholders in cash.

Operator, we can open the lines for questions.

Speaker 1: Thank you. We will now begin the question and answer session.

We will now begin the question and answer session.

Speaker 1: You ask a question, you may press star then one on your touch, then

Ask a question you May press Star then one on your Touchtone phone.

Okay.

Please pickup your handset before pressing.

Sure.

Your question please.

Speaker 1: At this time, we will pause momentarily to assemble our rafts.

At this time.

Entirely to assemble our roster.

Speaker 1: The first question comes from Nate Pendleton, where do you both go?

Our first question comes from Hamilton.

Please go ahead.

Good morning, Al Congrats on another strong quarter in the new dividend.

Speaker 3: Good morning all. Congrats on another strong quarter and the new dividend.

Thanks Nate.

My first question with your continued success in the M&A market I wanted to get your thoughts on the opportunity set and the size of the packages you are seeing on the market today.

Speaker 3: My first question, with your continued success in the M&A market, I wanted to get your thoughts on the opportunity set and the size of the packages you are seeing on the market today.

Speaker 2: The opportunity is always good. It's used to be a matter of pricing and timing, as the price of oil and natural gas float up and down. It makes it difficult for people to make decisions about how they want to move forward. We recognize that. We're patient. We just, we adhere to the principles that we've established over time, and that carries this through. And what it does require some patience.

Yeah.

The opportunity set is always good its.

A matter of pricing and timing.

As the price of oil and natural.

Natural gas float up and down it makes it difficult for people to make decisions about how they want to move forward.

We recognize that we're patient we just.

We adhere to the principles that we've established over time and that carries us through and but it does require some patience.

Speaker 2: I think that the company is well positioned going forward to either

I think that the company is well positioned.

Going forward to either.

Speaker 2: make half positions or drills. And we'll have a little bit more on that later on in the year.

Make acquisitions of other groups and we will we'll have a little bit more on that later on in the year.

Speaker 3: Thanks. And given your ability to optimize production and use workovers to mitigate the climates in the quarter, can you provide us any details on what you are able to do from an optimization perspective and how much more running room you have for further initiatives?

And given your ability to optimize production and use workovers to mitigate decline rates in the quarter can you provide us any details on what you are able to do from an optimization perspective, and how much more running room you have for further initiatives.

Yeah. This is William Williford, our I'll answer that essentially we we we kind of base it on.

Speaker 4: Yeah, this is William Woolford out of the out here so that you know, essentially we, we kind of base it on projects that we can think we can turn cash flow around pretty quickly and get the production associated with it. That's why you can see us from a strong cash flow position, you don't see a lot of expenses going out versus the cash we have going in. We kind of plan it out accordingly. So that's kind of how we fed up so it can be officially spend our cash effectively.

So we can think we can turn cash flow around pretty quickly.

And the production associated with it that's why you can see is from a strong cash flow position, you'll see a lot of.

Expenses going out versus the cash we have going in and kind of playing it out accordingly, so that's kind of how we said it absolutely can be efficiently spin.

It's been a cash effectively.

Got it thanks for taking my questions.

Speaker 1: Your next question comes from Jeff Robertson with Watertower Research, please go ahead.

Our next question comes from Jeff Robertson with Watertown.

Please go ahead.

Thank you good morning, Tracey can you provide any update on the tox situation and the the acquisition that you all talked about that I think it's just tied up in court.

Speaker 5: Thank you, good morning. Tracy, can you provide any update on the Cox situation in the acquisition that you all talked about that I think is just tied up in court?

Yeah, Yeah. Good morning, Jeff Yeah. So that's a very good question.

Speaker 2: Yeah, yeah, good morning, Jeff. Yeah, that's a very good question. The bankruptcy process is a particularly difficult one. There's a lot of emotion. There's a lot of debts that haven't been paid. Otherwise, it wouldn't be there. So, you know, the process is...

The bankruptcy processes.

A particularly difficult one theres a lot of emotion.

Emotion Theres a lot of Oh depths that haven't been paid otherwise they wouldn't be there.

So no we are.

The process is.

Speaker 2: at best, variable as to how it proceeds. You know, we were the.

At best variable as to.

Proceeds.

Well, we weren't we were the.

Speaker 2: the high bidder at the auction. And since then, and we'd actually gotten the point where we signed a PSA with the debtor.

The high bidder at the at the auction.

Since then and we would actually gotten to the point, where we we signed the PSA.

With the with the better.

Speaker 2: However, there are other interests that weren't interested in it because I didn't rely a particularly good return to them, but it's really a hard situation for everyone. Nobody's happy. Everybody's

However, there are other interested are they weren't interested in because it didn't.

Well I, particularly good return to them.

But.

It's really a hard situation for everyone Nobody's happy everybody's.

Usually no.

Speaker 2: In a position where they're losing money, and nobody likes to lose.

In a position, where they're losing money and nobody likes to lose.

Speaker 2: I think it just will require more patience. I can't tell you that I fully understand the process. I'm not sure if anyone fully understands the process. We've been in this position before, looking for properties and through bankruptcy courts. It's a difficult.

I think it just will require more patience I can't tell you that I do not.

Well, we understand the process I'm not sure if anyone totally understands the process we've been in this.

Our position before.

Looking for properties and through bankruptcy courts.

It's it's a.

Difficult.

Speaker 2: situation for all and the best thing to do is to be patient and see what develops because there's going to be there's going to be changes all along the way. So I think it's going to take a little while longer to sort of out. We don't know how to present if this is something that will happen favorably toward us or how it will end up in the next several weeks.

Situation for all in.

The best thing to do is just be patient and see what develops because.

There's going to be there's going to be changes all along the way so.

I think it's going to take a little while longer to get you sorted out.

No 100% if this is something that will happen.

Favorably towards this arms or how it will end up.

And the next step.

Several weeks.

Speaker 5: Okay, so the acquisition that you did close in the third quarter, can you talk about what impact if any that has on W and T's overall corporate decline?

Tracey the acquisition that you did close in the third quarter can you talk about what impact if any that has on Wm Ts overall corporate decline.

Yes, so essentially if you looked at the press release, we put out there I think we said it was around 2400.

Speaker 4: Yeah, essentially, if you look at the press release, we put out there. I think we stayed around 2400 barrel dissociated with quarter north once we had it.

Barreled associated with quarter North once we had it.

For a full production.

Speaker 4: production. I think when we first got the asset under our roof, we actually kind of look at it and see what we can do as far as fishing things. Then we get more efficient, optimize production and that sort of thing. Sometimes we've got to look at some of the facilities and do some spin some costs there to kind of look at a future and then maintain production over time. And with that increase, that kind of helps maintain our overall decline for the company.

I think when we first got the asset under a roof, we actually kind of look at it and see what we can do as far as efficient things, then we get more efficient and optimize production and that sort of thing sometimes.

Look at some of the facilities and do some some us spend some costs there to kind of look at our future and then maintaining production over time and with that increase that kind of helps maintain overall decline for the company.

Speaker 2: I'll add to that just a little bit, Jeff, and that very often when we first make these acquisitions, the seller isn't spending a lot of money on maintenance and the other things they would normally spend money on.

Oh, I'll add to that just a little bit Jeff.

And that.

Very often when we when we first make these acquisitions the seller isn't a spend a lot of money on maintenance.

And.

The other things that they would normally spend money on.

Speaker 5: And lastly, Tracy, you will end to share an ASE for Holy Grail.

Lastly, Tracy are you willing to share on AFC for Holy Grail.

Speaker 2: I don't think I have those total dollar amounts yet. We're still working on some of the longer lead items that we need to resolve. The rig will be coming from the bank to get offshore. So I'll probably be able to give you the more clarity on that after the first year.

Oh I don't I don't think I have those are those those total dollar amounts yet we're still.

Working on some of the longer lead items that we need to resolve the the rig will.

It will be coming from the bank to get offshore so.

I'll, probably be up and give you a little more clarity on that.

After the first year.

Thanks and to be clear the longer lead items are the some of the items that would allow you to tie this in pretty quickly right.

Speaker 5: And to be clear, the longer lead items are the some of the items that would allow you to tie this in pretty quickly, right?

Yes.

Thank you.

Thank you Sir.

Speaker 1: Again, if you'd like to have a good question, please press star then one at the...

Again, if you'd like to ask a question. Please press Star then one at this time.

So no further questions I would like to turn the conference back to Chris.

Speaker 1: So no further questions, I would like to turn the conference back over to Tracy Grant for any closing.

Closing remark.

Speaker 2: Thank you, operator. But thanks for joining us this quarter. We're happy that we're on a really good track for this year and also very happy to be returning dividends again to shareholders. So we look forward to that for a long time. And we appreciate your attendance and we'll talk to you very soon. Thank you.

Thank you operator, but thanks for joining us this quarter were happy that are that were we're on a really good track for this year and Oh, so very happy to be returning our dividends again to.

Shareholders. So.

We look forward to that for a long time and we appreciate your attendance and we'll talk to you very soon thank you.

The conference has now concluded. Thank you for attending today's presentation you may now disconnect.

Speaker 1: The conference has now concluded. Thank you for attending today's presentation. See me now, disconnect.