SEC Filings


10-Q
W&T OFFSHORE INC filed this Form 10-Q on 05/04/2017
Entire Document
 

 

 

Completed Wells

During the three months ended March 31, 2017, we completed two offshore wells and during the three months ended March 31, 2016, we completed one offshore well.  All three wells were productive.  

Three Months Ended March 31, 2017 Compared to the Three Months Ended March 31, 2016

Revenues.  Total revenues increased $46.7 million, or 60.1%, to $124.4 million for the first quarter of 2017 as compared to the first quarter of 2016.  Oil revenues increased $34.0 million, or 66.8%, NGLs revenues increased $3.7 million, or 75.0%, natural gas revenues increased $9.5 million, or 46.8% and other revenues decreased $0.6 million.  The increase in oil revenues was attributable to a 76.1% increase in the average realized sales price to $47.06 per barrel for the first quarter of 2017 from $26.73 per barrel for the first quarter of 2016, partially offset by a decrease of sales volumes of 5.3%.  The increase in NGLs revenues was attributable to a 67.2% increase in the average realized sales price to $23.34 per barrel for the first quarter of 2017 from $13.96 per barrel for the first quarter of 2016 and sales volumes increased 4.5%.  The increase in natural gas revenues resulted from a 48.3% increase in the average realized natural gas sales price to $2.98 per Mcf for the first quarter of 2017 from $2.01 per Mcf for the first quarter of 2016, partially offset by a decrease of 0.9% in sales volumes.  Overall, production declined 0.1 MMBoe (2.5%).  The largest production increases for the first quarter of 2017 compared to the first quarter of 2016 were at the Ewing Bank 910, Viosco Knoll 823 (“Virgo”), East Cameron 321, Garden Banks 302 (“Powerplay”) and Main Pass 108 fields.  Offsetting were production decreases primarily due to natural production declines.  

Revenues from oil and liquids as a percent of our total revenues were 75.3% for the first quarter of 2017 compared to 72.0% for the first quarter of 2016.  Our average realized NGLs sales price as a percent of our average realized oil sales price decreased to 49.6% for the first quarter of 2017 compared to 52.2% for the first quarter of 2016.   

Lease operating expenses.  Lease operating expenses, which include base lease operating expenses, insurance, workovers, and facilities maintenance, decreased $4.3 million, or 9.7%, to $40.2 million in the first quarter 2017 compared to the first quarter of 2016.  On a per Boe basis, lease operating expenses decreased to $10.45 per Boe during the first quarter of 2017 compared to $11.28 per Boe during the first quarter of 2016.  On a component basis, base lease operating expenses decreased $4.7 million and insurance premiums decreased $2.3 million, partially offset by increases in workover expenses of $2.6 million and facilities maintenance expense increases of $0.1 million.  Base lease operating expenses decreased primarily due to lower costs from service providers.  Insurance premium reductions are primarily due to revisions in our insurance policies related to named windstorms, which became effective in June 2016.    The increase in workover costs was primarily due to increases at the Ship Shoal 349 (“Mahogany”) field.

Production taxes.  Production taxes were basically flat for the first quarter of 2017 compared to the first quarter of 2016.  Most of our production is from federal waters where no production taxes are imposed.  Our Fairway field, which is in state waters, is subject to production taxes.  

Gathering and transportation.  Gathering and transportation increased $1.1 million to $6.2 million for the first quarter of 2017 compared to the first quarter of 2016 primarily due to increases at the Virgo and Atwater Valley 575 fields.  

Depreciation, depletion, amortization and accretion (“DD&A”). DD&A, which includes accretion for ARO, decreased to $10.40 per Boe for the first quarter of 2017 from $16.17 per Boe for the first quarter of 2016.  On a nominal basis, DD&A decreased to $40.0 million, (37.3%), for the first quarter of 2017 from $63.7 million for the first quarter of 2016.  DD&A on a per Boe and nominal basis decreased primarily due to the ceiling test write-downs recorded during 2016 and lower capital expenditures in relation to DD&A expense during 2016, which lowers the full-cost pool subject to DD&A.  Other factors affecting the DD&A rate are changes in future development costs on remaining reserves and changes in proved reserves volumes.    

Ceiling test write-down of oil and natural gas properties. For the first quarter of 2016, we recorded a non-cash ceiling test write-down of $116.6 million as the book value of our oil and natural gas properties exceeded the ceiling test limitation.  The write-down was primarily the result of lower prices on all commodities for our proved reserves.  See our Annual Report on Form 10-K for the year ended December 31, 2016, Item 8, Financial Statements and Supplementary Data for additional information on the ceiling test.

36