Q1 2025 W&T Offshore Inc Earnings Call
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Yeah.
Operator: Ladies and gentlemen, thank you for standing by.
Ladies and gentlemen, thank you for standing by.
Operator: Welcome to the W&T Offshore first quarter 2025 conference call. During today's call, all parties will be in listen-only mode. Following the company's prepared comments, the call will be opened for questions and answers. 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.
Welcome to the W. M P offshore first quarter 'twenty 'twenty five conference call.
During today's call all parties will be in listen only mode.
Following the company's prepared comments the call will be opened for question and answers.
During the question and answer session. We ask that you limit your questions to one and a follow up.
Could 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. Thank you, Cindy.
This conference is being recorded.
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.
Speaker Change: Thank you Sandy and on behalf of the management team I would like to welcome all of you to today's conference call to review W. T offshore as first quarter 2025 financial and operational results before we begin I'd like to remind you that our comments may include forward looking statements. It should be noted that a variety of.
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 first quarter 2025 financial and operational results. Before we begin, I'd 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.
Speaker Change: Factors 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 for disclosures on forward looking.
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 forward-looking statements and reconciliations of non-GAAP measures.
Speaker Change: And reconciliations of non-GAAP measures.
Al Petrie: With that, I'd like to turn the call over to Tracy Krohn, our Chairman and CEO. Thank you, Al.
Speaker Change: I'd like to turn the call over to Tracy Krohn, our chairman and CEO.
Speaker Change: Thank you al Good morning, everyone and welcome to our first quarter Conference call for 2025 with me today are William Wilford, Our executive VP and Chief operating Officer, Sameer process, our executive VP, and Chief Financial Officer, and Troy Hartman, Our Vice President and Chief Accounting Officer.
Tracy Krohn: Good morning, everyone, and welcome to our first quarter conference call for 2025.
Tracy Krohn: With me today are William Williford, our Executive VP and Chief Operating Officer, Sameer Parasnis, our Executive VP and Chief Financial Officer, and Trey Hartman, our Vice President and Chief Accounting Officer. They're all available to answer questions later during the call. So with strong operational and financial results, we started 2025 on a positive note, meeting or exceeding guidance and multiple metrics. We built W&T using a proven and successful strategy that is committed to profitability, operational execution, returning value to our stakeholders, and ensuring the safety of our employees and contractors. Our ability to deliver low-decline production, meaningful EBITDA, and seamlessly integrate accretive-producing property acquisitions has helped W&T grow during our 40-plus-year history.
Speaker Change: They're all available to answer questions later during the call.
Speaker Change: So it was strong operational and financial results. We started 2025 on a positive note meeting or exceeding guidance and multiple metrics.
Speaker Change: We've built W. T using a proven and successful strategy that is committed to profitability operational execution.
Speaker Change: Returning value to our stakeholders and ensuring the safety of our employees and contractors.
Speaker Change: Ability to deliver low decline production meaningful EBITDA.
Speaker Change: And seamlessly integrate accretive producing property acquisitions has helped W. N T Rowe during our 40 plus year history.
Tracy Krohn: Now before I talk about our first quarter highlights, I'd like to address an important regulatory development.
Speaker Change: Now before I talk about our first quarter highlights.
Speaker Change: I'd like to address an important regulatory development.
Tracy Krohn: In early April 2025, pursuant to directives from the Trump administration, the Department of Interior indicated that it will not seek supplemental financial assurance in the Gulf of America, except in the case of sole liability properties. and certain non-sold liability properties that do not have a financially strong co-owner or predecessor in title and meet other conditions. This is a very positive development for W&T.
Speaker Change: In early 'twenty and in early April 2025, we are pursuing two directives from the Trump administration. The department of interior indicated that it will not seek supplemental financial assurance in the Gulf of America, except in the case of sole liability properties.
Speaker Change: And certain non sole liability properties that do not have a big for nationally strong co owner or predecessor, entitle and meet other conditions.
Speaker Change: This is a very positive development for W. T. Now will go into more details later on the call, but this should alleviate some of the uncertainty that has pushed down our stock price. Despite some positive results.
Tracy Krohn: Now, we'll go into more details later in the call, but this should alleviate some of the uncertainty that has pushed down our stock price despite some positive results.
Tracy Krohn: Some of our first quarter highlights include the following. We deliver production of 30,500 barrels oil equivalent per day near the top end of our guidance range despite freezing weather in January that temporarily drove some unplanned downtime. Also, lease operating expenses came in below the low end of guidance at $71 million. We generated $32.2 million in adjusted EVDA, an increase of 2% compared to the fourth quarter 2024. We also produce $10.5 million in free cash flow. So we accomplished all of this while also returning value to our shareholders through our quarterly dividend. We have paid six quarterly cash dividends since initiating the dividend policy in late 2023 and announced the second quarter 2025 payment that will occur later this month.
Speaker Change: Some of our first quarter highlights include the following.
Speaker Change: We delivered production of 30500 barrels oil equivalent per day.
Speaker Change: The top end of our guidance range. Despite freezing weather in January the temporarily drove some unplanned downtime.
Speaker Change: Oh, so lease operating expenses came in below the low end of guidance at $71 million.
Speaker Change: We generated $32 $2 million in adjusted EBITDA, an increase of 2% compared to the fourth quarter 'twenty 'twenty four.
Speaker Change: We also produced 10 and a half million dollars in free cash flow.
Speaker Change: So we accomplished all this while also returning value to our shareholders through our quarterly dividend, we have paid six quarterly cash dividends since initiating the dividend policy in late 2023 and announced the second quarter 'twenty 25 payment that will occur later this month.
Tracy Krohn: Additionally, in the first quarter of this year, we had several transactions that strengthened and simplified our balance sheet, adding material cash to the bottom line and improving our credit ratings from S&P and Moody's. So in January, we successfully closed an offering of $350 million in new second lien notes due 2029 that decreased our interest rate on second lien notes by 100 basis points and allowed us to redeem our outstanding $275 million of second lien notes and pay off the $114 million outstanding under the term loan provided by Munich Re. This transaction reduced our total debt by $39 million.
Speaker Change: Additionally, in the first quarter of this year, we had several transactions that strengthened and simplified our balance sheet, adding material cash to the bottom line and improving our credit ratings from S&P and Moody's.
Speaker Change: So in January we successfully closed an offering of $350 million of new second lien notes due 2029 that decreased our interest rate on our second lien notes by 100 basis points and allowed us to return to redeem our outstanding $275 million of second lien notes.
Speaker Change: And pay off the $114 million outstanding under the term loan provided by immune agree this transaction reduced our total debt by $39 million.
Tracy Krohn: Now, this meaningfully enhanced 2025 and future years liquidity by eliminating principal payments under the Munich REIT term loan of $28 million in 2025, $25 million in 2026, $23 million in 2027, and $38 million in 2028. We also entered into a new $50 million revolving credit facility, which matures in July 2028, that is undrawn and replaces the previous $50 million credit facility provided by Calculus Lending. Additionally, in January 2025, we sold a non-core interest in Garden Banks blocks 385 and 386, which was about 200 barrels of oil equivalent per day for $12 million or over $60,000 per flowing barrel.
Speaker Change: Now this meaningfully enhanced 2025 in future years liquidity by eliminating principal payments out of the Munich re term loan of $28 million in 2025 $25 million in 2020 $623 million in tornado 87 and $38 million.
Speaker Change: 2028.
Speaker Change: We also entered into a new $50 million revolving credit facility, which matures in July 2028 that is undrawn and replaces the previous 50 million credit facility provided by a calculus lending.
Speaker Change: Additionally in January 2025, we sold a noncore interest in garden banks box 385, and 386, which was about 200 barrels oil equivalent per day for $12 million or over $60000 per flowing barrel.
Tracy Krohn: Now, in early 2025, we also received $58.5 million in cash for an insurance settlement related to the Mobile Bay 78-1 well.
Now in early 'twenty 'twenty five we also received 58 and a half million dollars in cash for an insurance settlement related to the mobile Bay 78 Dash one well.
Tracy Krohn: All of these actions have allowed us to enhance liquidity and improve our financial flexibility. Lastly, to take advantage of the strengthening we saw in natural gas prices, we added costless collars for 50,000 MMBTUs per day for March 2025 and 70,000 million BTUs per day from April to December of this year. This helps us lock in a favorable price range for our natural gas for the remainder of 2025.
Speaker Change: All of these actions have allowed us to enhance liquidity and improve our financial flexibility.
Speaker Change: Lastly to take advantage of the strengthening we saw in natural gas prices. We added costless collars for 50000 M. N V to use per day for March 2025, and 70000 million Btu per day from April to December of this year. This helps us lock in a favorable price range for our natural gas.
Speaker Change: The remainder of 2025.
Tracy Krohn: So our ability to execute our strategy has delivered very positive results to start off 2025, including an improved balance sheet, enhanced liquidity, and has positioned us for success in 2025 and beyond. At year-end 2024, the company had total debt of $393 million and net debt of $284 million. At the end of the first quarter of 2025, our total debt and net debt were significantly reduced to $350 million and $244 million, respectively. Our liquidity at March 31 was approximately $156 million. Capital expenditures in the first quarter of 2025 were $8.5 million, and asset retirement costs totaled $3.8 million.
Speaker Change: So our ability to execute our strategy has delivered very positive results to start off 2025, including an improved balance sheet enhance liquidity and has positioned us for success in 'twenty to 'twenty five and beyond at year end 'twenty 'twenty four the company had total debt of 393.
Speaker Change: Million dollars and net debt of $284 million at the end of the first quarter 'twenty to 'twenty five our total debt and net debt were significantly reduced to $350 million and $244 million respectively are.
Speaker Change: Our liquidity at March 31 was approximately $156 million.
Speaker Change: Capital expenditures in the first quarter, 'twenty, 'twenty, five or eight and a half million dollars in asset retirement costs totaled $3 $8 million. We continue to expect our full year capital expenditures to be between 34 million and $42 million, which does not include potential.
Tracy Krohn: We continue to expect our full-year capital expenditures to be between $34 million and $42 million, which does not include potential acquisition opportunities.
Speaker Change: Acquisition opportunities.
Tracy Krohn: We will remain focused on accretive, low-risk acquisitions of producing properties, rather than higher-risk drilling in the current uncertain commodity price environment. These acquisitions must meet our stringent criteria of generating free cash flow, providing a solid base of approved reserves with upside potential, and offer the ability for our experience team to reduce costs. Now, over the years, we have consistently created significant value by methodically integrating producing property acquisitions. The assets we acquired last year added meaningful reserves and an attractive price. We are now seeing additional production uplift from two fields that were previously shut in. The West Delta 73 and Main Pass 108 slash 98 fields were placed into production towards the end of March and into early April.
Speaker Change: We will remain focused on accretive low risk acquisitions of producing properties rather than higher risk drilling in the current uncertain commodity price environment.
Speaker Change: These acquisitions must meet our stringent criteria of generating free cash flow, providing a solid base of proved reserves with upside potential and offer the ability for our experienced team to reduce costs.
Speaker Change: Now over the years, we have consistently created significant value by methodically integrating producing property acquisitions, yes, that's where we acquired last year added meaningful reserves and an attractive price. We are now seeing additional production up lease uplift from two fields that were previously shut in.
Speaker Change: The West Delta 73, and main pass one Oh wait slashed 98 feels well placed and put into production towards the end of March and into early April we are ramping up production over the course of the second quarter 2025, and expect it to make a sizable impact to our production a role which is indicated.
Tracy Krohn: We are ramping up production over the course of the second quarter of 2025 and expect it to make a sizable impact to our production overall, which is indicated in our second quarter guidance.
Speaker Change: Our second quarter guidance.
Tracy Krohn: Yesterday, we provided our detailed guidance for second quarter 2025 and reiterated our full year guidance. In the second quarter of 2025, with the new fields ramping up, we are predicting the midpoint of Q2 2025 production to be around 34,500 barrels oil equivalent per day. This is an increase of 13% compared to the first quarter of 2025.
Yesterday, we provided our detailed guidance for second quarter 'twenty to 'twenty, five and reiterated our full year guidance in the second quarter of 2025 with the new fields ramping up we are predicting the midpoint of Q2, 'twenty 'twenty five production to be around 34500 barrels oil equivalent per day this isn't it.
Speaker Change: Increase of 13% compared to the first quarter of 2025.
Tracy Krohn: So, turning to our costs, our guidance for second quarter 2025 LOE, gathering, transportation, and production taxes costs are slightly higher than the first quarter of 2025. We see some additions to LOE due to the higher production, but believe that overall, we can offset some of those increases, and on a per BOE basis, we should see decreases.
Speaker Change: So turning to our costs our guidance for second quarter 'twenty four 'twenty five L. O E gathering transportation and production taxes costs are slightly higher than the first quarter of 'twenty to 'twenty five we see some additions to <unk> due to the higher production, but believe that overall, we can offset some of those increases.
Speaker Change: And on a per B O E basis, we should see decreases.
Tracy Krohn: We also believe that there are more opportunities to reduce our operating costs and find synergies to drive costs lower in the long term. We're always working hard to reduce costs without impacting safety or deferring asset integrity work.
Speaker Change: We also believe that there are more opportunities to reduce our operating costs and find synergies to drive costs lower in the long term.
Speaker Change: He is working hard to reduce costs without impacting safety or differing asset integrity work.
Tracy Krohn: Now, before closing, I'd like to discuss some regulatory updates in more detail. The change of presidential administration has provided promising developments in the oil and natural gas regulatory environment. Since his inauguration, President Trump has issued two energy related executive orders, the first of which directed heads of agencies to review existing regulations to identify agency actions that impose an undue burden on the identification, development, or use of domestic energy resources. The second executive order stated that the United States insufficient energy production, transportation, refining, and generation constituted an unusual and extraordinary threat to the nation's economy, national security, and foreign policy.
Speaker Change: Now before closing I'd like to discuss some regulatory updates in more detail the.
Speaker Change: The change of presidential administration has provided promising developments in the oil and natural gas regulatory environment. Since she is an inauguration president Trump has issued two energy related executive orders, the first of which directed hedge of agencies to review existing regulations to identify agents.
Speaker Change: See actions did impose an undue burden on the identification development or use of domestic energy resources.
Speaker Change: Second Executive Board has stated that the United States insufficient energy production.
Speaker Change: Transportation refining and generation constituted.
Speaker Change: Unusual and extraordinary threat to the nation's economy national security and foreign policy.
Tracy Krohn: In early February, Secretary Burgum issued a secretarial order that directed agency officials to prepare an action plan that will include steps to suspend, revise, or rescind certain regulations. In addition, the Trump administration has issued a number of executive orders aimed at streamlining regulations and reducing the regulatory burden on oil and natural gas companies, increasing federal oil and natural gas leasing, including in the Gulf of Mexico, excuse me, America, and expediting U.S. natural resource development. We are very pleased with these actions that we expect will positively impact W&T and the offshore energy industry.
Speaker Change: Early February Secretary Bergum issued a secretarial order the direct and agency officials to prepare an action plan that will include steps to suspend revise or rescind certain regulations.
Speaker Change: In addition, the Trump administration has issued a number of executive orders aimed at streamlining regulations and reducing the regulatory burden on oil and natural gas companies, increasing federal oil and natural gas leasing, including in the Gulf of Mexico, Excuse Me America and expect an X.
Speaker Change: Regarding U S. Natural resource development, we're very pleased with these actions that we expect will positively impact W. T in the offshore energy industry.
Tracy Krohn: So in closing, I'd like to thank our team at W&T, as we are well positioned to add value in 2025. We have a solid cash position and good liquidity that enables us to continue 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 a world-class basin that supports value creation. We will maintain our focus on operational excellence and maximizing the cash flow potential of our asset base.
Speaker Change: So in closing I'd like to thank our team at Debian T. As we are well positioned to add value in 2020 five.
Speaker Change: Have a solid cash position and good liquidity is it enables us to continue 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 a world class basin that supports.
Speaker Change: Value creation.
Speaker Change: We will maintain our focus on operational excellence and maximizing cash flow potential of our asset base with that operator, we can now open the lines for questions.
Operator: With that, operator, we can now open the lines for questions. Please press star then 1 on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star then 1 on your telephone keypad.
Speaker Change: We will now begin the question and answer session.
Speaker Change: To ask a question you May press Star then one on your telephone keypad.
Speaker Change: If youre using a speakerphone please pick up your handset before pressing the keys.
Speaker Change: So with all your question. Please press Star then two.
Speaker Change: At this time, we will pause momentarily to assemble our roster.
Speaker Change: Our first question comes from John White of Roth Capital Go ahead. Please.
John White: Hey, good morning and congratulations on getting the Cox assets fully online. has a nice impact on your production guidance. Well, good morning and thanks, John. Yeah, sure, sure.
Speaker Change: Hey, good morning, and.
Speaker Change: Congratulations on getting the Cox our assets are fully online.
Speaker Change: Nike impact on on.
Speaker Change: On your production guidance.
Speaker Change:
Speaker Change: Well good morning, and thanks John.
Speaker Change: Yeah sure sure.
Tracy Krohn: From reading the press release, it looks like you're going to continue to focus on recompletions and workovers, and there's no plans to drill new grassroots wells. Can you confirm that? Yeah, that's that's our current strategy. A little bit of just a little bit too much volatility to us with regard to oil and gas prices. But but but oil is is the the more critical factor for us. We are we are still not not hedged on oil. Sounds like a good approach.
Speaker Change: From a reading the press release, it looks like Youre going to continue to focus on re completions and workovers and and.
Speaker Change: And there's no no plans to drill a new grassroots.
Speaker Change: Grassroots wells can you confirm that.
Speaker Change: Yeah, that's a that's our current strategy a little bit of a well just a little bit too much volatility to us with regard to oil and gas prices, but but but oil is as they are the more critical factor for us. We are we are still.
Speaker Change: Not not hedged.
Speaker Change: Laura.
Speaker Change: And if I could approach I'll pass it back to the operator. Thank you.
John White: I'll pass it back to the operator. Thank you. Thanks, John.
John White: Thanks, John.
Speaker Change: Our next question comes from.
John White: Derrick Whitfield of Stifel go ahead. Please.
Dick: And good morning on great update today. Thanks, Dick.
John White: Good morning, Great update today.
Speaker Change: Thanks Derek.
Tracy Krohn: With the April 8th announcement from the Department of the Interior, I wanted to ask if you could elaborate on the financial impact of this announcement to W&T. Yeah, I can. Clearly, it means we'll have less costs for financial assurance and, of course, less cost in having to manage around that. We don't have any sole liability properties at this point in time, so we're looking for a pretty dramatic reduction in those FAA costs, if you the aggravation and overhang on our credit facilities. That should be a positive for them as well. Great, that makes sense.
Speaker Change: With the April 8th announcement from the Department of Interior I wanted to ask if you could elaborate on the financial impact of this announcement to W. N T.
Speaker Change: Yeah, I I can clearly it means we will have less cost for financial assurance.
Speaker Change: And it of course less cost in and having having to manage around that are we don't have any sole liability properties. At this point in time. So we're we're we're looking for a pretty dramatic reduction in those very.
Speaker Change: Of course.
Speaker Change: If you will so that that'll have an impact on us plus the the the aggravation and overhang on our credit facilities.
That should be a positive for them as well.
Speaker Change: Great that makes sense and then regarding your full year 2025 guidance.
Derek: And then regarding your full year 2025 guidance. On production, the midpoint of your guidance implies an average second half oil production of 15,400 barrels. Did you offer some color on the production cadence across the quarters? Speak out your cue too, but just kind of see where things speak out in cue 3 or cue 4. Yeah, surely I can do that, Derek. Well, in the first quarter, we had some weather incidents and things like that, and West Delta 73 and Main Pass 108 were not back online as a result of some of the actions promulgated by the bankruptcy of that entity.
Speaker Change: On production the midpoint of your guidance imply an average second half oil production of 15000 Warner Errol's could.
Speaker Change: Could you offer some color on the production cadence across the quarters.
Speaker Change: Q2, but just wanted to see kind of where I think we got in Q.
Speaker Change: For your Q4.
Speaker Change: Yeah sure.
Speaker Change: I can do that Derek are well in the first quarter, we had some weather incidents and things like that and West Delta 73, and main pass one away we're not back online as a result of some of the actions.
Speaker Change: Promulgated by the bankruptcy of of that entity.
Tracy Krohn: We see the production coming up at West Delta 73 and Main Pass 108, and we continue to work to optimize that. We think there's more track room left in that endeavor as well. And we've got some ongoing work over and acidizing and work overs and things that we intend to get done, you know, during the better weather part of the year, which really is about now. So through now and the end of the summer, we'll be working out with equipment offshore to help enhance that. So we're fairly confident that we'll see good results in that leading into third quarter and early fourth quarter.
Speaker Change: We we see the the production coming up at West Delta 73, and main pass one of weight and we continue to work to optimize that we think theres more track room left in that endeavor as well.
Speaker Change: And we've got some some ongoing workover and Oh, Bastardize ing and Workovers and things that we are we intend to get done during.
Speaker Change: During the the better weather part of the year, which really is about now.
Speaker Change: Through now and the end of the summer, we'll we'll we'll be working out.
Speaker Change:
Speaker Change: With equipment offshore too to help enhance that so we're fairly confident that we'll see good results in that our leading into Oh.
Speaker Change: Third quarter and early fourth quarter.
Yeah.
Derek: Great.
Speaker Change: Great one last one if I could regarding the noncore interest and garden banks blocks 385, and 36 that you guys sold earlier this year the sales price on that was quite accretive your valuation I guess bigger picture are there other opportunities across your portfolio that you could pursue.
Tracy Krohn: Last one, if I could, regarding the non-core interest in Garden Bank's Blocks 385 and 386 that you guys sold earlier this year, the sales price on that was quite a creepier valuation. I guess bigger picture, are there other opportunities across your portfolio that you could pursue? That's a really good question. Yeah, clearly there are. You know, it just becomes a matter of price on that aspect of it. That was a royalty interest. And we do have other royalty interests that are kind of free-floating out there that we could sell. It's not necessarily a focal point, but it does raise the awareness on that as well.
Speaker Change: Well, it's a really good question, yeah, clearly there there are.
Speaker Change: No. It just becomes a matter of price Oh, I'm bad aspect of it but that was a royalty interest and we do have other royalty interests that are kind of free floating out there that that we could we could sell it's not a necessarily a focal point, but it does raise the awareness on that as well.
Tracy Krohn: I'll turn it back to the operator. Thank you.
Speaker Change: Sure, Greg I'll turn it back to the operator.
Speaker Change: Thank you.
Operator: The next question comes from Jeff Robertson of Water Tower Research go ahead. Please.
Tracy Krohn: Thank you, Tracy.
Speaker Change: Thank you Tracy.
Jeff: You've had the four producing fields from Cox on for roughly a year or so now and with the two new ones, can you talk a little bit about how the performance on those fields is tracking versus your expectations before you made the acquisition? You know what I'm going to do?
Speaker Change: <unk> had the four producing fields from Cox on for roughly a year or so now and with the two new ones can you talk a little bit about how the performance on those deals is tracking versus your expectations before you made the acquisition.
Jeff: No what I'm going to do I'm going to turn that over to our chief operating officer, because he's more intimately familiar with that yeah, just the morning, Jeff.
William Williford: I'm going to turn that over to our Chief Operating Officer, because he's more intimately familiar with that. Good morning, Jeff. That's a great question. They are definitely performing, actually. We're looking at – we've seen opportunities to increase production in some of those fields, but as you know, when you're going in and buying stuff out of bankruptcy, there's still some operational things that we have to look at to make sure we're able to operate as efficiently as possible. So, yeah, to answer your question directly, yes, we are seeing what we expect to see, plus we see an uplift potential as well.
Speaker Change: That's a great question that they are definitely performing actually were looking it up we've seen opportunities to increase production.
Speaker Change: Somebody else feels but as you know when you're going in and buying stuff out of a bankruptcy theres still some operational things that we have to look at to make sure we're able to operate as efficiently as possible. So yeah.
Speaker Change: Answer your question directly yes, we are seeing what we expect to see plus we see an uplift potential as well.
William Williford: William, are most of the costs that you would have taken on to bring those assets up to W&T standards behind you at this point? Now, this is always ongoing, but majority of it is behind us. As you know, when you're trying to buy an asset, some opportunities to enhance it up to our standards, you know, it takes a little bit more time to really understand what you're dealing with. So we're pretty much there. Probably got a little bit more left to spend to get it all the way up to our standards, but it's going in the right direction.
Speaker Change: Well you have most of the costs that you would have taken on to bring those assets up to W. T standards are behind you at this point.
Speaker Change: Now this is always ongoing but majority of it is behind us as.
Speaker Change: As you know when you're trying to buy an asset some some some opportunities to enhance it up to our standards no. It takes a little bit more time to really understand what youre dealing with so we're pretty much there probably got a little bit more left to spend to get it all the way up to our standards, but it's going into right direction.
William Williford: I'll elaborate on that just a little bit.
Speaker Change: I'll elaborate on that just a little bit I'll be a little bit less political in the form of Arden didn't spend a whole lot of money on maintenance and didn't really in my opinion give a damn about is personnel.
William Williford: I'll be a little bit less political. The former owner didn't spend a whole lot of money on maintenance and didn't really, in my opinion, give a damn about his personnel.
Speaker Change: [laughter].
Tracy Krohn: Tracy, then following up on the question around the financial assurance, does that free up any liquidity on your balance sheet or how you're Credit facilities work and what impact does that have on how you can think about acquisitions, if any? Yeah, I mean, for us, the question is always, gee, whether we risk more in drilling it than any time we had the opportunity to make acquisitions, as opposed to drilling it, it seems to always make more sense to acquire. You know, there's not just operational risk on drilling, there's reserve risk as well. So those are always things that I get concerned about.
Speaker Change: Tracey and then following up on that question around the.
Speaker Change: Financial assurance does that free up any liquidity on your balance sheet or how you are.
Speaker Change: Credit facilities work and what impact does that have on how you can think about acquisitions if any.
Speaker Change: Yeah, I mean, the thrust of the question was always gene, whether we whether we risked more in drilling it and anytime we have the opportunity to to make acquisitions as opposed to drilling it seems to always make more sense to to acquire.
Speaker Change: You know, there's there's not just.
Speaker Change: Operational risk on on drilling there's there's there's reserve risk as well. So those are always things that are that I get concerned about I mean theres.
Tracy Krohn: I mean, there's, it's more exciting to drill wells and make discoveries and bring new production online. But there's usually a lot less risk with just going ahead and finding something that makes sense and meets our criteria. And we've been doing that for decades now. So we know the formula works. And, you know, having said that, we've also made some really good discoveries as well. So it's always a balance for us. And, but most of the time, we would opt to acquire as opposed to drill.
Speaker Change: It is more exciting to drill wells and make discoveries in and bring new production online.
Speaker Change: But there's usually a lot less risk with that we're just going ahead, and finding something that makes sense and meets our criteria and we've we've been doing that for decades now so we know the formula works.
Speaker Change: And now having said that we've also made some pretty good discoveries as well so it's always a balance for us and but most of the time, we we would opt to acquire as opposed to drill.
Speaker Change: Thank you.
Tracy Krohn: Thank you. Thank you, sir. Thank you, operator.
Speaker Change: Thank you Sir.
Speaker Change: There are no additional questions at this time.
Speaker Change: This concludes our question and answer session.
Speaker Change: Like to turn the conference back over to Tracy Krumme, Chairman and CEO for any closing remarks.
Tracy Krumme: Thank you operator are things rolling along pretty well this quarter, we look forward to the remainder of the year and hopefully we'll find some more reserves to buy.
Tracy Krohn: Things rolled along pretty well this quarter. We look forward to the remainder of the year, and hopefully we'll find some more reserves to buy in the not too distant future.
Tracy Krumme: In the not too distant future. Thanks, so much and we'll talk to you again soon.
Tracy Krohn: Thanks so much, and we'll talk to you again soon.
Speaker Change: The conference has now concluded.
Tracy Krumme: You for attending today's presentation you may now disconnect.