W&T Offshore, Inc.

Thank you for joining us. So before closing, I'd like to address surety and regulatory updates. In June 2025, we were pleased with a settlement agreement that we reached with two of our largest surety providers, which called for the dismissal of a previously filed lawsuit. This outcome is very positive for W&T overall, as we will not acquiesce to unjustified collateral demands made by the applicable sureties, and we have locked in our historical premium rates through the end of 2026. We believe that entry into this settlement agreement vindicates our resolve to stand up to surety providers' unjustified demands on independent oil and gas operators, such as W&T. As the surety lawsuits continue to progress, we are working with damages experts to quantify W&T's claims. While the results of the surety lawsuits remain uncertain and there can be no assurance of the end result, management believes, based in part on the preliminary report of the damages expert, that W&T, assuming we prevail in litigation, would possibly have claims against the sureties that could reach hundreds of millions of dollars. Additionally, assuming W&T wins on its antitrust claims, those damages would be statutorily trebled. These estimates reflect management's current assessment and may change as the damages analysis and litigation proceeds. So in closing, I'd like to thank our team at W&T for all their efforts. We have delivered positive results the first half of the year, and we are ready and able to add significant value in the second half of 2026. W&T has been an active, responsible, and profitable operator in the Gulf of Mexico since 1983. We have a long track record of successfully integrating assets into our portfolio, and we continue to believe the Gulf of America is a world-class basin that supports value creation. We have a solid cash position and strong liquidity that enables us to continue to evaluate growth opportunities while continuing to generate strong free cash flow and adjusted EBITDA. So with consistent production, increased realized pricing, and continued cost control, we believe that we are well positioned operationally and financially to deliver robust results in 2026 and beyond. We will maintain our focus on operational excellence, and maximizing the cash flow potential of our asset base to continue to add and return value to our shareholders. And with that operator, we can now open the lines for questions.

We will now begin the question and answer session. To ask a question, you may press star then one on your telephone keypad. If you're using a speakerphone, please pick up your hands up before pressing the keys. To withdraw your question, please press star then two. The first question comes from Nate Pendleton from Nate Pendleton. It was a private investor. Please go ahead.

Hey, good morning. Nate Pendleton, Texas Capital. Thanks for taking my questions, guys. Thanks, Nate. I wanted to start on the surety lawsuits. Now that you've quantified the potential damages in the hundreds of millions, what is the potential timeline in Pat Ford from here. And perhaps, how do you think about capital allocation from a potential recovery of this magnitude for WNT?

Well, we've estimated that it's a number that's going to be sizable according to our damage experts. And when we talk about that, we're talking about hundreds of millions of dollars. and, you know, assuming we're successful, that judgment is automatically trebled in a case like this, which is focusing on the collusion of surety providers. So I see it as very positive. I think that the evidence that we've seen so far has been very comforting in seeing some of the things that we've seen. And we continue to... marched forward with getting additional data from these companies, which has been difficult, but we're getting there.

Understood. Just a quick clarification. Is there any timeline that you expect as far as how this plays out?

Yeah, I expect within the next two years.

Got it. I appreciate that. And then shifting gears a bit, with the strong cash flow and your view on the valuation that you laid out in your prepared remarks, Could there be a situation where you look at starting a buyback to take advantage of some of that disconnect while you guys await the right deal?

Yes, we've done that before. We've also endeavored to pay out dividends. I think that in the current situation, we're more likely to pay out dividends. But again, this is subject to some of the things that we do along with acquisitions and drilling.

Got it. Thanks, Tracy.

Thank you, sir.

The next question comes from Neil Dingman from William Blair. Please go ahead.

Hey, this is Bert filling in. First question is around M&A. Specifically, you know, are you going to continue to look at offshore packages, or do you prefer shallow water or any other areas? And then how has the recent oil price volatility impacted the bid-ask spread in those areas?

Hey, Bert, the first thing that we focus on is whether it's going to make money. I don't care whether it's in shallow water or deep water. It makes no difference. We're in operations in all of those categories. As far as path forward, I mean, we look at the reserves, we look at the cash flow, we look at what the P&A obligations are, and then we make our determinations of what those values are.

Got it. And did the bid-ask spread, has it widened or moved recently?

Yeah, it really hasn't moved very much. I think we have a pretty good idea what it is. We're looking at a lot of things on our plate right now. So nothing has really changed with regard to company procedure on making acquisitions. We have a number of wells that we want to drill as well. But right now, I think we prefer to focus more on acquisitions.

Perfect. And then the second question on the surety lawsuit, that's a great disclosure this morning. I know you can't comment on specifics, but I just wanted to make sure I understood the framing of the lawsuit outcomes. Is the discussion mainly on the Great point. Thank you. Thank you.

The next question comes from Nicholas Pope from Roth Capital. Please go ahead.

The production side, you highlighted a slight uptick in workovers, recompletions in the second half of the year. I was just curious about the inventory that you all have in hand and I guess that's replenished over time. Just curious what the, you know, you look at the current rate of activity and, you know, it's been a focus of kind of production optimization. Just curious what that inventory looks like and how it might progress over the near term.

Sure. Let me make that perfectly clear for you with regard to our inventory. What we have had estimated as 1P reserves over the last 10 to 15 years has approximated half of what we've actually produced. So what I'm telling you is we're vastly undervalued. Our actual reserves are far greater than what are being estimated. And I've been telling people this for 40 years. So it's not new, but the results we've been keeping have been pretty accurate in adding up what was actually predicted as 1P reserves. and what we actually produce from that one fee reserve schedule. So it's about 50, in fact, it's less than 50% of what we've actually produced.

And if you, I mean, I guess year to date, 1Q, 2Q, you'll have seen four, you'll have highlighted four workovers. What does that look like in the second half of the year?

Well, we've What I told you is we would be in excess of 35,000 barrels of oil equivalent per day.

Great. Looking at the Retirement Obligations. I know you included a slide in the past about kind of the book value of the ARO. Looks like it creeped up a little bit. I'm curious if there's any progress on maybe how you're booking your retirement obligations and what that might look like over the next year.

Because I think it was $450

48 million this quarter. Just curious if you'll expect things to go up, down, or if there's any changes to kind of how that's regulated and accounted for going forward.

Yeah, we indicate to folks that we're normally between about $35 and $45 million a year on decommissioning. We look at that as a function of our total decommissioning What we think those costs are. We managed through that judiciously by arranging supply routes, personnel, equipment, all at the same time. We've looked at this also in terms of when we do the work. We always prefer to do as much work as we can at one point in time as opposed to breaking up into what Bessie and Boehm now MMA, referred to as decommissioning costs and, gee, what are you going to do to accelerate that via their so-called idle iron program? We vehemently object to this term idle iron. There's no idle iron. We have leases with more than one platform on it. But what we found out through the years is that as we go through time with better data, and more understanding of the area, we generally find more reserves. And that plays into our catalog of the longevity of the company as we've proceeded through the decades.

Got it. Specifically, looking at some of these deepwater facilities, Maybe like Matterhorn, I think, seems to be reaching a point where maybe it could be decommissioned at some point. Just look at where production is, or maybe I'm incorrect in that. But curious, as you kind of look at that, maybe the more expensive facilities in the deep water, if that's something that could be reaching kind of the end of its life and when that kind of spend might show up.

Well, first of all, you're incorrect about your term of its end of life. We have more work to do at Matterhorn. We have more things to do in that area. This is not unusual for us. Again, that's a floating facility, but yeah, we have more work to do there. And our methodology for disposing of these things in the future may be a little bit different than other people's methodology. We've also done more abandonment work as a company than anybody in the Gulf. And that's well in excess of a billion dollars.

Got it. That's all I have. I appreciate the time, Tracy. Thank you.

Sure. Thanks. As a reminder, if you have a question, please press star one. The next question comes from Richard Tolis from Water Tower Research. Please go ahead.

Hey, good morning, everyone. I'm sitting in for Jeff Robertson. Tracy, just continue. Good to hear you, Tracy. You know, continuing with the acquisition theme there, and I know that's, you know, been a long time focus of the company. Tracy, how do you look at funding future acquisitions, kind of where we sit now, with the cash on hand that you've built up versus debt versus equity that, you know, you feel is undervalued?

Yeah, that's a great question, Richard. We segregate that also by the value of the property that we're trying to purchase. What we are seeing is more money coming into this basin from different providers. There were a lot of people 10 years ago that wouldn't dare get into this basin. But over time, they start to realize, oh, well, there is good cash flow out there. It does pay out, and maybe we want to do business with people that have been there for a while. So we're enjoying some of that opportunity, mainly because we have been there for a while. And we've been there through various different things, various administrations who either liked us or hated us. And we've succeeded in all cases, so I don't see that changing. and I certainly continue to see bigger opportunity in this basin. This is the largest basin in the US. It is the second largest producing basin. And obviously higher degree of operating costs and things that you have to do in this basin that you wouldn't have to do anywhere else.

Thank you for that. And just last for me, looking at hedges, I know everyone has seen the volatility in the oil prices. Are you inclined to layer in any more hedges into 2027 as maybe beyond, say, the first quarter of 2027?

I don't really have any designs to do that at the moment. We'll see what pricing does and what we need to do and what we need to finance. And we'll make short order concerns on that. Fortunately, we do have the ability to go ahead and do that with our production base. As I told everyone before, I mean, we've produced Well, actually less than half of, excuse me, we produced almost double what we predicted to have in 1P reserves, a little bit more than that. So that's very encouraging to us. And it's what I've been telling people for decades. This basin is very rock property positive, meaning that we have great permeability. We have great porosity. We have great advantage of Mother Nature helping us move that oil to the wellboard. Yeah.

Well, thanks, Tracy. I appreciate it.

Thank you, sir. Appreciate it.

This concludes our question and answer session. I would like to turn the conference back over to Tracy Krohn for closing remarks.

Well, thanks, everybody. Good quarter for us. We're looking forward to a better year. Going from this point through 26 and forward after that. So thanks for listening. We'll be back with you again soon.

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