W&T Offshore, Inc.

Good day and welcome to the W&T Offshore First Quarter 2022 Earnings Conference Call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star and then one on your telephone keypad. To withdraw your question, please press star and then two. Please note this event is being recorded. At this time, I'd like to turn the conference over to Brent Collins, Director of Investor Relations. Please go ahead.

Thank you, operator. 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 2022 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. 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. With that, I'd like to turn the call over to Tracy Crone, our chairman and CEO.

Thanks, Brent. Good day to everyone. And thanks for joining us for our first quarter 2022 conference call. So with me today are Janet Yang, our Executive Vice President and Chief Financial Officer, William Williford, our Executive Vice President and Chief Operating Officer, and Steve Schrader, our Senior Vice President and Chief Technical Officer. You're all available to answer questions later on during the call. So I'm pleased with the very strong operational financial results in the first quarter, which provided a solid foundation for an exciting year. Our strategy is simple, generate free cash flow, maintain high-quality conventional production, and capitalize on accretive opportunities to build shareholder value. So here are all the things we delivered in the quarter. One, our production was at the high end of guidance. Two, our LOE costs were below the low end of guidance. Three, we grew adjusted EBITDA by 37%. $89.7 million and more than doubled our free cash flow to $46.9 million compared to the fourth quarter. So I would note that this marks the 17th consecutive quarter that W&T has generated free cash flow. And fourth, we paid down $10.6 million in debt. Fifth, we brought Dakota well at East Cameron Online at a gross production rate of 2,600 barrels of oil equivalent per day. And last, we closed an accretive acquisition of producing properties in February and then bought the remaining interest in those properties very shortly after the end of the first quarter. So as you can see, our operations and finance team executed at an exceptionally high level, and we believe that the rest of the year can be even better. In the first quarter, we also experienced sustained higher pricing for all three commodities on a sequential basis. Our production was up 2% over the prior quarter to almost 38,000 barrels of oil equivalent per day, and our average realized price per barrel of oil equivalent before the impact of edges increased by 16% to $55.29, up from $47.70 in the fourth quarter. We also did a good job managing our key costs during the quarter, coming in below the low end of our LOE guidance and below the midpoint of the range for G&A. The combination of strong production, favorable pricing, and cost control resulted in a 37% increase in adjusted EBITDA and allowed us to more than double our free cash flow compared to the fourth quarter of 2021. So we're clearly in a much stronger financial position today, and we remain focused on operational execution to build on these solid first quarter results. So earlier this week, we announced a memorandum of understanding with Korea National Oil Corporation that formalizes the intention for the two entities to work together to pursue various opportunities in upstream oil and gas in North America. And this could include other opportunities as well. So I'm very excited about this agreement for a couple of reasons. First, K&OC is a highly respected company in our industry. And this agreement allows us to consider opportunities that we likely wouldn't on our own due to the scale. Second, it allows us to look at opportunities and methodology that can be made even more successful by combining our respective technical strengths and working together. These projects could range from carbon capture projects to drilling opportunities and acquisitions. I'm really confident that this MOU will be mutually beneficial to both companies' respective shareholders. So a large part of our fast success and integral to our strategy is to continue to evaluate complementary and accretive acquisitions, then closing those selected opportunities quickly. In February, we closed the ANCOR acquisition, which included shallow water producing properties, providing a solid base of approved reserves, and strong free cash flow, both of which are key factors when we consider any acquisition opportunity. So in April, we purchased the remaining working interest in those properties for approximately $17.5 million, which brings W&T's total working interest in the assets to 100%. So assuming strip pricing as of April 18, 2022, we estimate year-end 2021 approved and 2P reserves for W&T's 100% working interest in the properties to be approximately 6.7 million barrels of oil equivalent with 70% oil and 9.5 million barrels of oil equivalent with 75% oil, respectively. So net production to W&T's interest at quarter end was approximately 4,500 barrels of oil equivalent per day. We believe these assets are highly accreted to W&T, and we can use our operational expertise as well as our existing infrastructure and scale to drive down costs and make these assets even more economical. So moving on to operations. The Kona well that we drilled successfully in 2020 at East Cameron 338, 349 was completed and recently turned to sales in early March. The well is performing very well with current gross production of about 2,600 barrels of oil equivalent per day. So as a reminder, we encountered approximately 100 net feet of oil pay during drilling. We have an additional 30% working interest in the well. But our interest can increase to 38.4% once certain performance thresholds are met. During the first quarter of 2022, we performed two recompletions that positively impacted production in the quarter. We plan to continue to perform workovers and recompletions in 2022 that meet economic thresholds. And with that, I'll turn the call over to Janet.