Q4 2024 W&T Offshore Inc Earnings Call
Ladies and gentlemen, thank you for standing by welcome to the W. N T offshore fourth quarter and full year 2024 conference call.
Operator: Ladies and gentlemen, thank you for standing by. Welcome to the W&T Offshore fourth quarter and full year 2024 conference. During today's call, all parties will be in a listen-only mode following the company's prepared comments.
Today's call all parties will be in a listen only mode.
Following the company's prepared comments the call will be opened for questions and answers.
Operator: The call will be open for questions and answers. During the question and answer session, we ask that you omit your questions to one and a follow-up. You can always rejoin the queue.
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.
Operator: This conference is being recorded and a replay will be made available on the company's website following the call.
This conference is being recorded and a replay will be made available on the company's website. Following the call I would now like to turn the conference over to Al Petrie Investor Relations coordinator. Please go ahead.
Al Petrie: I would now like to turn the conference over to Al Petrie, Investor Relations Coordinator. Please go ahead. Thank you, Wyatt.
Thank you Wyatt and on behalf of the management team I'd like to welcome all of you to today's conference call to review Wnet offshore its fourth quarter and full year 2024 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.
Al Petrie: 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 fourth quarter and full year 2024 financial and operational results. Before we begin, I would like to remind you that our comments may include far-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 far-looking statements.
Could cause <unk> actual results to differ materially from the anticipated results or expectations expressed in these forward looking statements. 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.
Al Petrie: 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 measures.
Tracy Krohn: With that, I'd like to turn the call over to Tracy Krohn, our Chairman and CEO. Thanks, Al. Good morning, everyone, and welcome to our year-end 2024 conference call. So with me today are William Williford, our Executive Vice President and Chief Operating Officer, Sameer Parasnis, our Executive Vice President and Chief Financial Officer, and Trey Hartman, our Vice President and Chief Accounting Officer. They're available to answer questions later during the call.
Speaker Change: non-GAAP metrics with that I'd like to turn the call over to Tracy Krohn, our chairman and CEO.
Speaker Change: Thanks Al.
Speaker Change: Everyone and welcome to our year end 'twenty 'twenty four conference call.
Al Petrie: With me today are William Wilford, our executive Vice President and Chief operating Officer Sameer for US. This is our executive Vice President and Chief Financial Officer, and Troy Hartman, Our Vice President and Chief Accounting Officer.
Speaker Change: We are available to answer questions later during the call.
Speaker Change: So our proven strategy is simple and effective we focus on generating free cash flow.
Tracy Krohn: So our approving strategy is simple and effective. We focus on generating free cash flow. maintaining and optimizing our high quality conventional assets, and opportunistically capitalize on accretive opportunities to build shareholder value. We have a strong balance sheet and further enhanced it in early 2025. We built a sustainable business with a long term vision that's committed to profitability, operational execution, returning value to our stakeholders and ensuring the safety of our employees and contractors.
Speaker Change: Maintaining an optimized optimizing our high quality conventional assets.
Speaker Change: And opportunistically capitalize on accretive opportunities to build shareholder back.
Speaker Change: We have a strong balance sheet further enhanced it in early 2025, we built a sustainable business for the long term vision thats committed to profitability operational execution, returning value to our stakeholders and ensuring the safety of our employees and contractors.
Tracy Krohn: Our ability to deliver low-decline production, meaningful EBITDA, and integrate accretive property acquisitions has helped W&T grow during our four-year-plus history.
Speaker Change: Our ability to deliver low decline production.
Speaker Change: Meaningful EBITDA and.
Speaker Change: Integrate accretive property acquisitions.
Speaker Change: WT grow during our 40 year plus history.
Tracy Krohn: Over the past year, we've accomplished many things that I'd like to highlight now. In January 2024, we invested about $77 million of cash to purchase 100% working interest in six shallow water Gulf of America fields from Cox, which added 21.7 million barrels oil equivalent of 2024 approved reserves. This equates to a price of about $3.38 per barrel oil equivalent. booked when accounting for 2024 production from these fields. Those properties are adjacent to our existing operations, which provides the ability for us to capture synergies regarding personnel, well optimization, gathering, and transportation. While this helped us by adding about 3,500 barrels of oil equivalent per day to production in 2024, several fields were offline for most of 2024.
Speaker Change: Over the past year, we've accomplished many things I'd like to highlight that.
Speaker Change: In January 2024, and we invested about $77 million of jazz to purchase 100, 100% working interest in six shallow water Gulf of Mexico, excuse me Gulf of America fields.
Speaker Change: Costs, which added 21 7 million barrels oil equivalent of 'twenty 'twenty four proved reserves.
Speaker Change: This equates to a price of about $3.38 per barrel oil equivalent.
Speaker Change: Booked when a chaotic for 'twenty 'twenty four production from these fields those properties are adjacent to our existing operations, which provides the ability for us to capture synergies regarding personnel well optimization.
Speaker Change: Gathering and transportation.
Speaker Change: While this helped us by adding about 3500 barrels of oil equivalent per day to production towards 24, several fields, where all flying for most of the 'twenty 'twenty four is weird.
Tracy Krohn: As we announced in January, we expect to return the remaining three fields to production in the second quarter of 2025. Benefit of that production increase is included in our guidance for fiscal year 2025.
Speaker Change: In January we expect to return the remaining three fields production in the second quarter 2025.
Speaker Change: Benefit of that production increase is included in our guidance for fiscal year 'twenty 'twenty five.
Tracy Krohn: So while we're busy integrating our acquisition, we also continue to execute operations. So for the full year 2024, we generated $150 million, $154 million in adjusted EBITDA, and $45 million in pre-cash. We deliver production of 33,300 barrels of oil equivalent per day despite impact from hurricanes and other downtime related to the COX acquisition. We've paid five quarters of cash dividends since initiating the dividend policy in late 2023 and announced the first quarter 2025 payment that will occur later this month.
Speaker Change: So while we were busy integrating our acquisition. We also continued to execute operationally.
Speaker Change: So for the full year 'twenty 'twenty, four we generated $150 million.
Speaker Change: <unk> hundred 54 million.
Speaker Change: Adjusted EBITDA and 45 billion free cash flow.
Speaker Change: We can live with production of 33300 barrels of oil equivalent per day, despite impact from Hurricanes and other downtime related to the cost of acquisition.
Speaker Change: We paid five Florida, the cash dividends since initiating the dividend policy in late 2023.
Speaker Change: That's the first.
Speaker Change: The first quarter, a 2025 payment that will occur later this month.
Speaker Change: Well, we carry this momentum into 2025 and started this year with several transactions that are striking and simplified our balance sheet added material cash to the bottom line and improved our credit ratings from S&P and Moody's.
Tracy Krohn: We carried this momentum into 2025 and started this year with several transactions that have strengthened and simplified our balance sheet, added material cash to the bottom line, and improved our credit ratings from S&P and Moody's. So in January, we closed $350 million in new second lien notes that decreased our interest rate by 100 basis points and allowed us to the term loan provided by Munich Re. This also reduced debt by $39 million. We entered into a new credit agreement for a $50 million revolving credit facility, which matures in July 2028 that's undrawn, and replaces the previous credit facility provided by Calculus Lending.
So in January we closed $350 million of new second lien notes that decreased our interest rate by 100 basis points.
Speaker Change: As to redeem our outstanding 275 million of second lien notes and pay off the 214 million outstanding under the term loading.
Speaker Change: The term loan provided by Munich re.
Speaker Change: This also reduced debt by $39 million.
Speaker Change: We entered into a new credit agreement for a 50 million revolving credit facility, which matures in July 2028, that's undrawn.
Speaker Change: It replaces the previous credit facility provided by calculus lately.
Speaker Change: Additionally in January 2025, we sold a non core interest in garden banks bought 385, and 386, which was about 200 barrels oil equivalent per day or $12 million or over $60000 per flowing barrel.
Tracy Krohn: Additionally, in January 2025, we sold a non-core interest in Garden Banks Block 385 and 386, which was about 200 barrels of oil equivalent per day, for $12 million, or over $60,000 per flowing barrel. In early 2025, we also received $58.5 million in cash for an insurance settlement related to the Mobile Bay 78-11. Lastly, to take advantage of the uptick in natural gas prices, we recently added costless collars for $50 million. per day from March to December that helps us lock in a favorable price range for our natural gas.
Speaker Change: In early 2025, we also received $58.5 million in cash for an insurance settlement related to the mobile Bay 78 Dash one well.
Speaker Change: Lastly to take advantage of the uptick in natural gas prices.
Speaker Change: Recently added Costless collars for $50 million.
Speaker Change: Per day from a <unk>.
Speaker Change: March to December that helps is locked at a favorable price range for natural gas.
Speaker Change: So our ability to execute our strategy has delivered very positive results and have improved our balance sheet expanded our asset base.
Tracy Krohn: Our ability to execute our strategy has delivered very positive results that have improved our balance sheet, expanded our asset base, and positioned us for success in 2025 and beyond.
Speaker Change: <unk> disk for success in 2025 and beyond.
Tracy Krohn: Turning to our year-end reserve results, I'd like to point out that we continue to see positive performance in technical revisions, which demonstrates the strength of our world-class conventional Gulf of America assets. While total product reserves at SEC pricing increased 3% year-over-year. to 127 million barrels of oil equivalent. Our oil reserves increased by 39 percent. This was driven by the oil weighted cost acquisition and positive performance revision. For 2024, our reserves increased by 21.7 million barrels oil equivalent due to acquisition. $3.5 million barrels oil equivalent from positive performance revisions, which were partially offset by 12.2 million barrels of oil equivalent of production in 2024.
Speaker Change: Turning to our year end reserve results.
Speaker Change: Like to point out that we continue to see positive performance and technical revisions.
Speaker Change: This demonstrates the strength of our World class Conventual Gulf of America assets.
Speaker Change: While total proved reserves at SEC pricing increased 3% year over year.
227 million barrels of oil equivalent.
Speaker Change: Our oil reserves increased by 39%.
Speaker Change: This was driven by the oil weighted Tokbox acquisition and positive performance revisions.
Speaker Change: For 2024, our reserves increased by 21.7 million barrels oil equivalent due to acquisitions.
Speaker Change: 5 million barrels of oil equivalent from positive performance revisions, which were partially offset by $12 2 million barrels of oil equivalent of production in 2020 for.
Tracy Krohn: This translates to a reserve replacement. of 219% of 2024 production. Devante's Reserve Life Ratio at Year End 24. based on year 24 approved reserves and 24 production was 10.4 years. So while we had strong performance from the factors that we can control, we did see a decrease of 10.5 million barrels of oil equivalent due to pricing revisions as we saw SEC natural gas pricing decrease by 19% from 2023 and SEC oil pricing decline by about 3%. As a result, the majority of the price revisions impacted our natural gas reserve. So because the pricing impact was weighted more toward natural gas, our overall PB10 value wasn't impacted as much.
Speaker Change: This translates to a reserve replacement.
Speaker Change: Of 219% 2024 production.
Speaker Change: Seventies reserve life ratio at year end 'twenty four base.
Speaker Change: Based on your 24 proved reserves and 24 production was 10.4 years.
Speaker Change: So while we had strong performance from the factors the factories that we can control we did see a decrease of 10 and a half million barrels of oil equivalent due to pricing and revisions as we saw FCC natural gas pricing decreased by 19% 2023, and the FCC oil prices declined by about three P.
Speaker Change: Sure.
Speaker Change: As a result, the majority of the price revisions impacted our natural gas from sharp.
Speaker Change: So because the pricing impact was weighted more toward natural gas overall, PV 10 value wasn't it wasn't impacted as much plus we benefited from a meaningful.
Tracy Krohn: Plus we benefited from a meaningful increase in oil reserves. We're pleased that the PB10 value of our SEC approved reserves at year-end 2024 increased by almost $150 million, or 14%, to $1.2 billion, despite the lower SEC prices. to approximately 51% of year-end 2024 SEC-approved reserves were liquids with 41% crude oil and 10% NGLs, and we had 49% natural gas. The reserves were classified as 52% approved developed producing, 31% approved developed non-producing, and 17% approved undeveloped.
Speaker Change: <unk> oil reserves.
Speaker Change: We're pleased that the PV 10 value by SEC proved reserves at year.
Speaker Change: Year end 2024 increased by almost $150 million or 14% to $1.2 billion. Despite the lower SEC pricing.
Speaker Change: So approximately 51% of beer in 'twenty 'twenty four S. SEC proved reserves were liquids with 41% crude oil and 10% Ngls and we had 49% natural gas reserves were classified as 52% proved developed producing.
Speaker Change: 31% proved developed non producing and 17% proved undeveloped.
Speaker Change: So over the years, we've consistently created significant value by methodically integrating producing property acquisitions. After we close any acquisition, we take time to assess and inspect the newly acquired fields, which potentially requires refurbishing some of the fields in the process.
Tracy Krohn: So over the years, we've consistently created significant value by methodically integrating producing property acquisitions. After we close any acquisition, we take time to assess and inspect the newly acquired fields, which potentially requires refurbishing some of the fields in the process. We have a large footprint across the Gulf of America, so we look for ways to optimize operations, increase production, and utilize that large footprint where we can to reduce costs and maximize value. Our focus on cost control and capturing synergies associated with our asset acquisitions contributed to our lease operating expense coming in at the low end of our reduced guidance range.
Speaker Change: We have a large footprint across the Gulf of America. So we look for ways to optimize operations increased production and utilize that large footprint, where we can to reduce costs and maximize value.
Speaker Change: Our focus on cost control and capturing synergies associated with our asset acquisitions contribute to our lease operating expense coming in at the low end of our reduced guidance range. In addition, we're expecting further production uplift associated with the remaining fields from the <unk> acquisition coming online in the second.
Tracy Krohn: In addition, we're expecting further production uplift associated with the remaining fields from the COTSAX acquisition coming online in the second quarter of 2025 that were previously shut in.
Speaker Change: 20 to 25 that were previously shut in.
Speaker Change: Yes.
Speaker Change: So as I've mentioned previously in early 'twenty 'twenty, five we strengthened and simplified our balance sheet by closing the new senior second lien notes offering and entering into a new revolving credit facility I'd like to thank our bags.
Tracy Krohn: So as I mentioned previously, in early 2025, we strengthened and simplified our balance sheet by closing the new senior second lien notes offering and entering into a new revolving credit facility. I'd like to thank our banks. for running such a smooth process. TCB is leading that facility. The new senior second lean notes, which reduced, improved, which were, excuse me. The new second lien notes, which received improved credit ratings from S&P and Moody had a broad distribution. We were oversubscribed. This included international investors and was significantly oversubscribed, further demonstrating the investment community's confidence in W&T's underlying asset base.
Speaker Change: Such a smooth process T C b as a leading that that facility the new senior second lien notes, which reduced improves with Truman excuse me.
Speaker Change: The new second lien notes, which.
Speaker Change: Which received improved credit ratings from S&P and Moody's.
At a broad distribution, we were oversubscribed. This included international investors and was significantly oversubscribed further demonstrating the investment community's confidence indemnities underlying asset base.
Tracy Krohn: We likewise are pleased to now have access to the bank revolving market again.
Speaker Change: We likewise are pleased to now have access to the bank with volatile marketed yet at year end 'twenty 'twenty four company had total debt of $393 million and net debt of $284 million with liquidity of $159 million, assuming the debt refinance asset sale in insurance.
Tracy Krohn: At year-end 2024, the company had total debt of $393 million and net debt of $284 million with liquidity of $159 million. Assuming the debt refinance, asset sale, and insurance settlement had occurred on December 31, 2024, on a pro forma basis, our cash and cash equivalents would have been about $350 million and net debt would have been about $245 million, which reflects the improvements made to our balance sheet.
Scott: Scott what had occurred on December 31, 24, 24 on a pro forma basis, our cash and cash equivalents would've been about $350 million and net debt would have been about 245 billion, which reflects the improvements made to our balance sheet.
Speaker Change: Okay.
Speaker Change: Yesterday, we also provided our detailed guidance for 2025.
Tracy Krohn: Yesterday, we also provided our detailed guidance for 2025. In the first quarter of 2025, we had several planned facility and pipeline maintenance projects as well as unplanned downtime at several fields due to multiple winter freezes that have temporarily reduced our production budget. We're predicting the midpoint of Q1 2025 production to be around 29,000 barrels of oil equivalent per day. But with the expected restarting of fields in the second quarter of 2025 related to the COC acquisition, as well as additional work over facility upgrades, our full year 2025 production midpoint is about 34,000 barrels of oil equivalent per day, which is about 6% higher than our Q4 2024 production.
Speaker Change: So in the first quarter 'twenty 'twenty five we had several planned facility and pipeline.
Speaker Change: <unk> projects as well as unplanned downtime at several fields due to multiple winter freezes temporary that reduced our production volumes.
Speaker Change: Predicting the mid point of Q1, 'twenty twenty-five production to be around 29000 barrels oil equivalent per day, but with the expected restarting of fields in the second quarter of 2025 related to the Cognex <unk> acquisition as well as additional Workover and facility upgrades are full year 'twenty 'twenty four.
Speaker Change: <unk> production midpoint.
Speaker Change: 34000 barrels of oil equivalent.
Speaker Change: Per day, which is about 6% higher than our Q4 'twenty 'twenty four production.
Speaker Change: Despite projecting spend only about $34 million to $42 million in capex in 'twenty to 'twenty five we believe the additional fields coming online prototypes acquisitions will help us offset natural declines and grow production this year.
Tracy Krohn: Despite projecting to spend only about $34 to $42 million in CapEx in 2025, we believe the additional fields coming online from the COPS acquisitions will help us offset natural decline and grow production this year.
Tracy Krohn: We've focused more on acquisitions over the last few years rather than on drilling many new wells. Our ability to maintain low decline production is a testament to our culture of operational excellence and the strength of our 2P reserves, which are manifested by cash flow and future 1P reserves that do not require additional CapEx. So turning to our costs, our guidance for 2025 LOE, gathering, transportation, and production taxes and G&A costs are in line with 2024. We see some additions to LOE, but believe that overall we can offset some of those increases with lower G&A and G&T expenses, so gathering and transportation.
Speaker Change: We we focus more on acquisitions over the last few years, rather than all drilling many new wells our ability to maintain low decline production is a testament to our culture of operational excellence and the strength of our two P reserves, which are manifested by cash flow and future would be reserves that do not require additional.
Speaker Change: <unk> Capex.
Speaker Change: So turning to our costs our guidance for 'twenty 'twenty five alloy gathering transportation and production taxes and G&A costs are in line with 20 to 44.
Speaker Change: We see some additions to L O E, but believe that overall, we can offset some of those increases were lower G&A and G. N T expenses, so gathering and transportation with that said, we do believe that there are more opportunities to reduce our operating costs and find synergies drive costs, lower and lower and we are in the long term.
Tracy Krohn: With that said, we do believe that there are more opportunities to reduce our operating costs and find synergies to drive costs lower in the long term. So we're always working hard to reduce costs without impacting safety or deferring asset integrity work.
So we're always working hard to reduce costs without impacting safety or deferred asset integrity work.
Tracy Krohn: I also want to congratulate our folks offshore for achieving zero accidents in 2024. Well done, everyone. Our first quarter LOA is expected to be between $72.5 million and $80.5 million, which reflects some of the increased maintenance and repair costs, as well as additional facilities upgrade work. First quarter cash G&A costs are expected to be between $17.8 million and $19.8 million.
Speaker Change: So want to congratulate our folks offshore for achieving zero accidents, and 'twenty 'twenty four well done everyone.
Speaker Change: First quarter L. O you would expected to be between 72, and a half million dollars and $85 million, which reflect some of the increased maintenance and repair costs as well as additional facilities upgrade work.
Speaker Change: First quarter cash G&A costs are expected to be between $17 8 million and $19 $8 million.
Speaker Change: But what I sincerely. Thank our team at Degnan T is we're well positioned to add value in 2025, we have a solid cash position and good liquidity. Good about that enables us to evaluate growth opportunities both organically and inorganically, we have a long long track record of successfully integrating <unk>.
Tracy Krohn: I want to sincerely thank our team at W&T as we're well-positioned to add value in 2025. We have a solid cash position and good liquidity that enables us to evaluate growth opportunities both organically and inorganically. We have a long track record of successfully integrating assets into our portfolio. and we continue to believe that the Gulf of America is and will continue to be a world-class base. We will maintain our focus on operational excellence and maximizing the cash flow potential of our asset base.
Speaker Change: Assets into our portfolio.
Speaker Change: And we continue to believe that the Gulf of America is and will continue to be a world class basin. We.
Speaker Change: We will maintain our focus on operational excellence and maximizing cash flow potential of our asset base.
Tracy Krohn: As the company's largest shareholder, I believe W&T is very well positioned to succeed in 2025 and beyond. Our entire management team's interests are highly aligned with those of our shareholders given our 34% stake in W&T's equity, which is one of the highest of any public E&P company.
Speaker Change: As the company's largest shareholder I believe W. T is very well positioned to succeed in 2020 five and beyond our entire management teams interests are highly aligned with those of our shareholders given our 34% stake in W. Twos equity, which is one of the highest of any public E&P company.
Tracy Krohn: So with that, operator, we can now open the lines for questions. Thank you.
Speaker Change: So with that operator, we can now lives for questions.
Speaker Change: Thank you we will now begin the question and answer session.
Operator: We will now begin the question and answer session. To ask a question, you may press star, then 1 on your touchtone. If you are using a speakerphone, please pick up your handset before pressing the key. To withdraw your question, please press star, then. And again, please limit yourself to one question and one follow-up. If you have further questions, you may re-enter the question.
Speaker Change: Ask a question you May press Star then one on your Touchtone phone.
Speaker Change: If youre using a speakerphone please pick up your handset before pressing the keys.
Speaker Change: To withdraw your question. Please press Star then two.
Speaker Change: And again, please limit yourself to one question and one follow up if you have further questions you may reenter the question queue.
Operator: At this time, we will pause momentarily to assemble our roster.
Speaker Change: At this time, we will pause momentarily to assemble our roster.
Speaker Change: And the first question will come from John White with Roth Capital. Please go ahead.
John White: And the first question will come from John White with Ross Capital. Please go ahead. Good morning, and uh... Congratulations on the nice results and uh... The very nice approved reserve report. Thanks, John. Good morning. The midpoint of your full year production guidance shows some nice growth. Is that all coming from restarting of wells, of fields that were shut in in the first quarter and recompletions and workovers? I didn't see any mention of new drilling in the press. Yeah, you're correct, John. That doesn't include any new drilling. Doesn't mean we're not going to do any. We are faced with a quality dilemma.
Good morning, and.
Speaker Change: Congratulations on the nice results and.
Speaker Change: Very nice reserve proved reserve report.
Speaker Change: Well done.
Speaker Change: Thanks, John.
Speaker Change: Morning.
Speaker Change: Good morning, the midpoint of your full year production guidance shows some nice growth.
Speaker Change:
Speaker Change: Is that all coming from restarting of well fields that were shut in in the first quarter.
Speaker Change: And re completions and Workovers.
Speaker Change: I didn't see any mention of new new drilling in the press release.
Speaker Change: Yeah, Youre correct John that doesn't include any new drilling doesn't mean, we're not going to do any.
Speaker Change: We are we are.
Speaker Change: Faced with a quality dilemma.
Tracy Krohn: We're seeing assets come available in the market. We're contemplating working on the asset acquisitions. that we're seeing and that may change our thought process with regards to additional drilling this year. We still expect to be drilling in 2026, but it could defer something in 2025, scheduled for late 2025, as opposed to chasing some acquisitions that we think would be a nice addition to our portfolio. Okay, thanks for that detail and good luck with your transactions.
Speaker Change: Where we're seeing assets come on come available in the market, where we're contemplating.
Speaker Change: We are working all the asset acquisitions.
Speaker Change: But we're seeing.
Speaker Change: And that May that may change, our thought process with regards to additional drilling. This year are we still expect to be drilling in 'twenty 'twenty six but it could differ or something in 'twenty to 'twenty five late late.
Speaker Change: Scheduled for late 2025.
Speaker Change: As opposed to chasing some acquisitions that we think would be a nice addition to our portfolio.
Speaker Change: Yeah.
Speaker Change: Oh, great. Thanks for that detail and good luck with your transactions I'll turn it back I'll turn it back to the operator.
John White: I'll turn it back to the Thanks, John.
Speaker Change: Thanks Scott.
Speaker Change: The next question will come from Jeff Robertson with water Tower Research. Please go ahead.
Jeff Robertson: The next question will come from Jeff Robertson with Water Tower Research. Please go ahead. Thank you. Tracy, to follow up on the drilling comment. Can you provide a or can you share an update on the drilling partnership that you spoke about in 2024? Yeah, we're continuing to follow through on that. It still looks like the first well we would want to drill is at Holy Grail, which is our magnolia field. It's floating Floating Vessel out there, we'll have to put a platform rig on it. Fortunately, that's those approved reserves that we would be chasing there.
Jeff Robertson: Thank you Tracy just to follow up on their drilling comments can you provide any or can you share an update on the drilling partnership that you spoke about it in 2024.
Jeff Robertson: Yeah, we're we're continuing to follow through on that it still looks like our first well, where we would want to drill is it a holy Grail, which is our our magnolia fields floating.
Jeff Robertson:
Jeff Robertson: Floating vessel out there will have to put a platform rig on it.
Jeff Robertson: Fortunately that's that's those are proved reserves that we would be chasing there and then Oh, we have another prospect are lined up right after that with the potentially with the same drilling rig.
Tracy Krohn: And then we have another prospect lined up right after that with the potentially with the same drilling rig. Fortunately, we have a choice on the second structure. over at what we're calling our Cayman Prospect. So, yeah, we're still... Moving forward with a drilling program, the only thing that, again, as I just told John, that might change that is the potential for additional acquisitions. And that market seems to be getting a little bit looser, if you will.
Jeff Robertson: Fortunately, we have a choice on the on the second structure.
Jeff Robertson: Oh great.
Jeff Robertson: We're calling our Cayman prospect.
Jeff Robertson: So so yeah, we're we're still we're still.
Jeff Robertson: Moving forward with their with the drilling program.
John White: The only thing that again as I just told John.
John White: That might change that is the potential for additional acquisitions.
John White: And ER and that market seems to be getting a little bit.
John White: Looser if you will.
John White: Yeah.
John White:
Tracy Krohn: On the acquisition front, is your preference still that that adds immediate cash flow as you add producing properties rather than obviously running the risk of drilling and adding? cash flow 12 to 18 months or longer after you've drilled a well. Yeah, you bet, Jeff. I mean, anytime we can, we can substitute acquisitions for drilling, that's probably the better thing to do, primarily because you take so much of the risk out of it. We're There's a lot of good to be had with organic growth. There's also risk with it. We think that prices on oil are stabilizing around $70 over the long term.
Speaker Change: On the acquisition front that is your preference still that that adds immediate cash flow as you add producing properties, rather than obviously running the risk of drilling and adding.
Speaker Change: Cash flow 12 to 18 months or longer after you drilled after you build well.
Yeah, you bet, Jeff I mean anytime we can.
Speaker Change: We can substitute acquisitions for drilling that's probably the better thing to do primarily because you take so much of the risk out of it.
Speaker Change: Where were.
There's there's a lot of good to be had with organic growth. It was also a risk with it.
Speaker Change: We think that our.
Speaker Change: Prices on oil or stabilizing around $70 over the long term, we think that our.
Jeff Robertson: We think that gas has real potential for moving up. And we've made some hedges accordingly just recently as a result of that. Thank you. No further questions. Thank you.
Speaker Change: Gas has real potential for moving out.
Speaker Change: And we've we've made some hedges accordingly, just recently as a result of that.
Speaker Change: Okay.
Speaker Change: Thank you.
No further questions. This concludes our question and answer session I would like to turn the conference back over to Tracy Krumme, and chairman and CEO for any closing remarks.
Operator: This concludes our question and answer session.
Tracy Krohn: I would like to turn the conference back over to Tracy Krohn and Chairman and CEO for any closing remarks. Yeah, it looks like we have one more question operator from Jeff Robertson. Jeff Robertson, you may go ahead. Thanks, Tracy.
Speaker Change: Yeah. It looks like we have one more question operator from Jeff.
Sounds good Robertson.
Speaker Change: Robinson you May go ahead.
Speaker Change: Tracy a question on the operating expenses, how much progress did you all make in 'twenty 'twenty four on the refurbishment on the Cox assets. How much is left to do in 2025 and can you provide some color around a range of $280 million to $310 million for lease operating expenses in 2025.
Jeff Robertson: A question on the operating expenses. How much progress did you all make in 2024 on the refurbishment on the Cox assets? How much is left to do in 2025? And can you provide some color around the range of 280 to $310 million dollars for lease operating expenses in 2025? Well, Jeff, just so happens I have the guys responsible for that to help me answer that question.
Jeff Robertson: Well, Jeff just so happens I had the guy that's responsible for that they help you answer that question William Wilford, Our Chief operating officer.
William Williford: William Williford, our Chief Operating Officer. Yeah, thanks, Tracy. Good morning, Jeff. We made a huge dent in that from an LOE standpoint. We still got quite a few things to do in 2025 to get these platforms up to W&T standards. So it's still ongoing, but we should see a lot of that completed in 2025. That's a good question.
William Wilford: Thanks Rice.
Speaker Change: We made a huge dent in that from the L. O E standpoint, we still got quite a few things.
To do it.
Speaker Change: 1.5 to get the platforms up to <unk> standards. So it is still ongoing but we should see a lot of that completed in 2025 Thats a good question.
William Williford: On the two, West Delta and the main pass fields that are scheduled to come on in the second quarter, do those facilities need much work, or have you all already done whatever work is required there? We have, the main path stuff is actually something that got caught up in the cost issue with the bankruptcy. We've already had work done there. Essentially, we're just waiting to get that back online once we get everything squared away with the benefit. As far as the 73, all of that is just maintenance and work we're getting done to get that field back online.
Speaker Change: On the two west Delta and main pass meals that are scheduled to come on in the second quarter is to those facilities need much work or have you already done whatever works required there.
Speaker Change: We have made the main pass up is actually a stop and got caught up in it.
Speaker Change: Cost issue with the bankruptcy, we already have work done near essentially were just waiting to get that back online once we get everything squared away with.
Speaker Change: With the <unk>.
Speaker Change: Sure.
Speaker Change: And as far as the backed up to 73 all of that is just maintenance work, we get them done to get that field back online. So majority of that is done.
Jeff Robertson: So the majority of that is done. Okay, thank you. Thank you, sir.
Speaker Change: Okay. Thank you.
Speaker Change: Thank you Sir.
Speaker Change: And now with no further questions. This concludes our question and answer session I would like to turn the conference back over to Tracy Krumme, Chairman and CEO for any closing remarks.
Operator: And now with no further questions, this concludes our question and answer session.
Tracy Krohn: I would like to turn the conference back over to Tracy Krohn, Chairman and CEO, for any closing remarks. Thanks, operator. Last but not least, we spent several years repaying all the debt the company had. and managing that in spite of a lot of changes in our business and changes throughout the world with regard to fossil fuels and the philosophy around usage of same and also the fact that we've had some change in leadership in the country and a lot of random things that We couldn't have predicted. The good news is that we've managed to get that debt down in spite of all that.
Speaker Change: Thanks, operator.
Speaker Change: Last but not least.
Speaker Change: We spent several years repaying all of the debt the company had.
Speaker Change: And managing that in spite of a a lot of.
Speaker Change: Changes in our in our business and Oh changes throughout the world with regard to fossil fuels and philosophy around the usage of same and it also the.
Speaker Change: The fact that we've had some some.
Speaker Change: Change in.
Speaker Change: Leadership in the country and.
Speaker Change: And a lot of Oh.
Speaker Change: Random things that are there.
Speaker Change: We couldn't have predicted the good news is that we've managed to get that debt down in spite of all that.
Tracy Krohn: And we've refinanced the remainder, which is in pretty good shape now. So the company is poised to turn that corner. In fact, we are turning that corner and moving forward in 2025 as a growth entity. So now we think that we'll be able to start carrying on more as usual with regard to making acquisitions, dispositions, and drilling wells in the Gulf of America.
Speaker Change: We refinanced the remainder which is which is in.
Speaker Change: Good shape now so the company is poised to turn that corner. In fact, we are turning that corner and moving forward in 'twenty, but 'twenty 'twenty five as growth entity. So now.
We think that will will be able to start carryout business more as usual with a with regard to making acquisitions dispositions and are drilling wells in the Gulf of America.
Speaker Change: With that we'll we'll will terminate.
Tracy Krohn: And with that, we'll terminate this call today, but look forward to hearing from us again in the very near future. Thanks so much. Bye-bye.
Speaker Change: This call today, but look forward to hearing from US again, the very near future. Thanks, So much bye bye.
Speaker Change: The conference has now concluded. Thank you for attending today's presentation you may now disconnect.
Operator: The conference is now concluded. Thank you for attending today's presentation.
Operator: You may now disconnect.
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