W&T Offshore, Inc. today reported its second quarter 2018 operational and financial results and third quarter and full year 2018 production and expense guidance. Some of the key highlights for the second quarter included:

• Mid-Year 2018 SEC proved reserves were 78.0 million Boe, up 5% from year-end 2017 SEC proved reserves, primarily due to upward revisions of previous estimates of 12.7 million Boe. The increase in proved reserves was more than sufficient to replace production and a conveyance of proved undeveloped reserves.
• The present value of our reported SEC proved reserves, discounted at 10% ("PV-10"), was $1.3 billion, a 30% increase from year-end 2017, primarily due to upward revisions of previous estimates and higher average prices.
• Production for the second quarter of 2018 averaged 37,571 barrels of oil equivalent ("Boe") per day (or 3.4 million Boe for the quarter), 60.1% of which was oil and natural gas liquids ("NGLs"). Production was impacted by well maintenance, weather, pipeline outages and platform maintenance that collectively resulted in deferred production of approximately 4,600 Boe per day. Our second quarter production was 2.7% higher than first quarter of 2018.
• Revenues for the second quarter of 2018 were $149.6 million, up $26.3 million, or 21.3% compared to the second quarter of 2017. Oil and NGLs sales made up 83.8% of revenues, compared to 75.1% in the second quarter of 2017. Our realized crude oil price was $67.09 per barrel, up 50.6% from second quarter 2017.
• Operating income for the second quarter of 2018 was $48.5 million, an increase of 47.4% or $15.6 million, over the second quarter of 2017.
• Net income for the second quarter of 2018 was $36.1 million, or $0.25 per share compared to net income of $33.3 million, or $0.23 per share in the second quarter of 2017. Net income for the second quarter of 2018 included $0.1 million of income tax expense, whereas net income for the second quarter of 2017 included an income tax benefit of $9.0 million. Excluding special items, adjusted net income for the second quarter of 2018 was $41.9 million and earnings were $0.29 per share.
• Cash flow from operating activities for the first six months of 2018 was $115.2 million, increasing over 75% from the first six months of 2017. Adjusted EBITDA for the second quarter of 2018 was $93.3 million, up $20.7 million, or 28.5% compared to the second quarter of 2017. Our Adjusted EBITDA margin was 62% for the second quarter of 2018, up from 59% in second quarter of 2017. For the first six months of 2018 our Adjusted EBITDA was $170.5 million, up $32.1 million or 23.2% over the same period in 2017. (See definitions and reconciliations of non-GAAP measures to GAAP measures at the end of this news release.)
• Closed on the previously announced joint venture drilling program with private investors ("the JV Drilling Program"), in June 2018 through Monza Energy LLC. In total, the JV Drilling Program raised $361.4 million of equity from outside investors and W&T for the development of 14 pre-identified projects in the GOM, four of which are underway, or on production.
• Acquired a 9.375% non-operated working interest in the Heidelberg Field, as previously announced.

Tracy W. Krohn, W&T Offshore's Chairman and Chief Executive Officer, stated, 
"We had an excellent second quarter, with a high level of cash flow generation and continued drilling success.  During the quarter our production volumes, which came in at the mid-range of our guidance, benefited from a 39.5% increase in our realized sales price, while our lease operating costs were significantly lower than anticipated, driving a 47.4% increase in operating income compared to the same period last year.

"Our Mahogany and Virgo Fields continue to add substantial value with additional successful wells in both fields this year.  Earlier in the year we completed and began producing the A-17 well at Mahogany and just recently completed and brought on line the A-5 sidetrack well that tested at about 2,700 Boe per day gross.  At our Virgo Field we completed and brought on line the A-10 ST well and are currently drilling the A-12 well.  At our Ewing Bank 910 field, we are currently drilling the ST320 A-2 well and expect to reach total depth this quarter and if successful, commence completion operations shortly thereafter.  Each of these fields has existing infrastructure that allow for quick cash flow generation, which substantially shortens our payback and accordingly increases our rates of return.

"Funding for the JV Drilling Program was closed in June which raised $361.4 million from outside investors and W&T, which is expected to cover the cost to drill and complete 14 identified projects.  The program is off to an excellent start with three successful wells drilled so far and two wells currently underway.  The JV Drilling Program is helping us maximize our liquidity, while increasing our cash flow.  Our capital expenditures for the first six months of 2018 were $31.8 million and our Adjusted EBITDA was $170.5 million.  The JV Drilling Program was a key aspect of our strategy to increase our free cash flow, strengthen our balance sheet and put ourselves in an excellent position to manage our debt obligations as well as end the year with a much improved financial position," concluded Mr. Krohn. 

Production, Prices and Revenues

Production for the second quarter of 2018 was 3.4 million Boe, compared to the second quarter 2017 of 3.9 million Boe.  Second quarter 2018 production was comprised of 1.7 million barrels of oil, 0.3 million barrels of NGLs and 8.2 billion cubic feet ("Bcf") of natural gas.  Oil and NGLs production comprised 60.1% of total production in the second quarter of 2018 compared to 58.0% of total production in the second quarter of 2017.  

Production for the second quarter of 2018 was below the 2017 level partially due to natural production decline, as well as, well maintenance, weather, pipeline outages, and platform maintenance that collectively resulted in deferred production of approximately 4,600 Boe per day, compared to 3,400 Boe per day in the second quarter of 2017. 

For the second quarter of 2018, production increases came from our newly acquired 9.375% non-operated working interest in the Heidelberg field, our Ship Shoal 300 field (with the completion of the SS300 B-5ST in November 2017), our Mahogany field and our Virgo field.  These gains were offset by production decreases primarily due to natural production declines and production deferrals discussed above.

For the second quarter of 2018, our realized crude oil sales price was $67.09 per barrel (a 50.6% increase over the second quarter of 2017), our realized NGL sales price was $27.61 per barrel and our realized natural gas sales price was $2.81 per Mcf.  Our combined average realized sales price was $43.38 per Boe, which represents a 39.5% increase over the $31.10 per Boe sales price that we realized in the second quarter of 2017. 

Revenues for the second quarter of 2018 increased 21.3% to $149.6 million compared to $123.3 million in the second quarter of 2017.  The increase was due to a 39.5% increase in our realized commodity sales price per Boe, partially offset by a 12.8% decrease in production volumes.  We sold 37,571 Boe per day at an average realized sales price of $43.38 per Boe compared to 43,084 Boe per day at an average realized sales price of $31.10 per Boe in the second quarter of 2017.