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W&T Offshore Inc.

Mon, 15 Dec 2008|



Good morning. I'm -- Gibbons of WT offshore. Seventy offshore is ongoing gas producer operating exclusively in the Gulf of Mexico. We've been in business 45 years -- went public in January of 2005. If you look at the company highlights here on this page you can see that -- got a few little under 300 employees. Market cap clients of a few minutes ago was right -- -- billion dollars. Insider ownership is at 58% to this company was founded by Tracy chrome. -- Syria's petroleum engineer our -- don't shoot sort of the company and when we talk about the insider ownership and we talk about looking for the shareholders. No one is more focused on shareholder value then the folks at WNC. And I think that you'll see that's a little bit different from some of the companies that use the -- Key financials a little over a billion dollars of revenue in 2007. Through the first nine months of this year we've generated one point one billion dollars of revenue. And 862 million dollars. Even. Proved reserves at the end of 2007. We're 649. -- and that's before considering. A sixty pleased that we bought. When we bought the remaining interest -- -- shall 34 inoperable cancer. You can see that hour or -- all the liquids or about 48%. Sources on natural gas it 52%. Those people think of the Gulf of Mexico was primarily natural gas. As you see these numbers this is not that much different than what you look if if you see your competitors. There's a lot more open Gulf of -- than people realize especially as they've gone deeper and they -- deeper we found what. We have one point seven million acres gross in the Gulf of Mexico we are considered the total orders -- -- holder in the conventional shelf. Behind Chevron and Apache. We have 73% of our production. Suddenly 3% -- -- -- held by production. Which is a good thing we you don't have to worry about leases expiring if you can't get around to going to prosper. Our production prior to the 310 million dying. You can see that it was -- a little bit. 55 fortified liquids -- natural gas. And then post storm. You can see we've been of 159. I've seen it up -- 180. And it's more natural gas -- historically been. WT strategy is -- -- its cash and cash returns we've operated in the Gulf of Mexico and there's a reason for them. Because of the -- and probability of the rock and Gulf of Mexico with to foreign reserves. Would normally get the cash back very quick the priority is always going to generate cash. We think about reserves -- have a more balanced approach than others we don't care how we get reserves we don't care we acquire or withdrawal of and we've been very successful -- doing -- to focus obviously is continued on the Gulf of Mexico. If you see the conventional shelf our definition of conventional shelf -- water depths up to 500 feet. The deep shelf is water depths up to 500 feet in 151000 feet in the ground. And anything deeper than 500 -- as -- move -- Tuesday war. Those definitions are not universal in our industry and but that's -- definition. We show our acquisition opportunities again we have grown throughout positioned to show you here a minute we think there's a lot of opportunities that still exist there. And obviously it which will be -- Give an update on -- hurricane. -- -- Good stuff -- -- -- on August 27. We've barely got people back channel platforms. The Hurricane Ike and the 14 September. We lost -- operated platforms as a result of Hurricane Ike. 70 the platforms that we have been working interest non operator. We're also lost and -- we lost two platforms that we have no working interest in whatsoever. But -- host of our production. About seven million a day is shut in as a result of this toppled platforms. We think about 310 million a day versus obviously it's not significant 12% of production. The reason we're not up is because of the -- pipelines and processing facilities. If you look at though we got here on the chore. Four -- pipelines. Hi how's the -- Robin you know our discovery were still shut down. On he's -- 321 we're we're dependent on both attack a line in the marathon -- on itself. That line. Is still down. We hear various things people will be -- -- two weeks or so forth in the stock was slowly coming back on. If you remember right after the storm we were like -- seven million so -- are coming back on -- slowly. Then -- hopefully get to. Increase levels here through the rest of this year and early next year. In fact if you look at the operated drilling rigs. We were doing -- completion that -- shall T 32. And because of the changes to part through the sea floor they actually had to change -- -- went from Matt Campbell River to. And the -- like Jack just -- -- Reserves and production historic if you go back for many years couple looks the same. Will battle for -- for the third split between proved developed. -- behind pipe in proved undeveloped. We're about 51% of our production reserves or in the central gulf and about 75%. On the convention -- We had a long history of reserve growth this is over a year period you can see it's a 23% compound annual growth -- Reserves. In 2006. When we bought Kerr McGee's conventional shelf package. Billion dollar transaction. You can see that was pretty -- what their own 20062007. We didn't grow along wells. In 2000 -- when we were focused on getting. Were organized. On the Kerr McGee package Kerr McGee was the same size we will -- -- a million acres real anchors. -- trying to get your hands around an acquisition or for company divorce laws. It takes some doing. -- we expect reserves to continue to grow. In the future it's. Production growth looks very similar. You see flips and -- five and six those -- related to hurricanes Katrina and Rita. But you could see it's basically up into the right. If you look at 2008. We were clicking along at about 31 -- a quarter. Our current guidance had been authority 31 piece for the -- quarter and see it turned out to be almost twenty. And again that as a result of hurricanes August off him like. The guidance for the fourth quarter is the -- 12129. To 156. Units of production this year. Looks like it'll be less than 2000 self and once we have something dramatic happen between now on him here. Acquisitions. This is a strategy that we have that's worked ever single time. If it meets these four criteria it's it's usually going to be a winner looking for cash flow. We're looking for -- ability all of our positions have been bank finance. In banks -- historically. Pretty conservative I'll help Poland and doing an acquisition so the banks to finance -- that's usually a pretty good so I'm. The other two things to me kind of go hand in hand is prospect civilian -- as -- -- about the Kerr McGee acquisition. Kerr McGee had a lot of acreage that they continue to -- but they were trolling. So you have crossed activity and I think about as neglect because if you have overlooked assets old world. Minimal capital which they have done very -- -- that we're just keeping these properties going. It creates opportunities for us and this -- kind of things look for over the years and stuff that we've been successful core. To look at the middle part of this table. It shows you -- the acquisitions that we've gone from 99 to 2000 and February of 2002. From hostile to ConocoPhillips. -- you can see that walk 343 b.s. Several years later we're still -- 270 duties and the reason that is is because probable and possible to come until the world war. Ability to acquire exploit properties we drove 93 wells and these properties. And done cumulative production through that time frame is almost half -- So again ability to acquire export these properties and then you could see Kerr McGee in the purchase transaction and turning those oil reserves and the dollars we've spent a 188 million almost transactions part of Kerr McGee. They've generated a billion to in cash and this is after transaction cost him the capital moments. It's a 1000000000 into the -- morning. And still have PV ten point -- billion rubles billions. You can see would -- drove 93 exploration and mobile wells. And at the end of 2007 was almost. Billion dollars problem calls -- there. If we look at Kerr McGee. We -- again. Through the end of 2007 and only drove -- rules. So you go properly size its biggest company was before we -- -- was acquisitions were you drove -- through walls. On these properties and only drove -- well obviously you've got busy on them 2008. There's a lot of prospects look to -- draw -- -- -- -- say we spent a billion dollars and uncle McGee. It's generated about 750 million cash minus capital expenditures so we've got a net cash flow to us about four and five million of you period. Was still on PB two and so a lot to do out here if you -- prospect of drilling ever view we've been sixteen for twenty this year so forward and the expiration slide -- -- -- -- on the development side. But if you look over a period of almost nine years you can see the development successes might want -- -- And on the exploration -- -- 79%. And again several long period of time the other thing about this chart is if you look at those little green. -- those little green arrows. What that this signifies is that from the time we do an acquisition -- the time where drilling is a Texas couple years. And it's you know look at it seismic look at it how do you get organized. And on the -- -- that's been true as well again go from drove twelve rules from October 6 through -- -- -- Drawn to -- twenty plus -- in 2000. Broken out a different way. On the conventional shelf 84% success rate again this is almost everyone I -- period. Our success and -- war 57%. Which is pretty typical of the industry. Seismic. One of the things that we're not afraid to do is spend money on seismic target farmers are without spending money on seismic we don't do -- oral -- -- -- We have a very large database of seismic. What strategy code PG it's a C and others you can see we spent seven million dollars in seismic just in the last three years. We've got access to this library. We get interest and and particularly it would go out and you -- processing. You can see it it's -- -- 349 for instance and Italian bank intends. Talk about -- -- -- 349. We slowly have acquired an interest in this and -- -- workforce 2000 they were now 100%. We bought patches interest we went -- 59200%. On January 1 2000. Sixty -- is effectively what we ended up with that a 117. Million dollars. So we got that was a nice deal for us it's 83%. Of the reserves -- -- world war. She optional 349. Is the first commercially successful sub salt don't -- and Gulf of Mexico. He was this particular field that change people's views of the Gulf of Mexico. This was the first sub -- Now yields read some stuff and people start talking about pretty small and Tracy I -- that depends on if you're looking down -- -- salt if you're looking from the bottom up its results depends on. On your point of view. We refer to and -- sub salt. People believed before. This was drilled that there were no hydrocarbons -- -- And what they found out was up assault later actually activist I and overburdened being. It's got like if you walk in the doorway what holds up the structural problems. Is the being. And what they found was that -- -- -- through this -- -- the pressure to court and when the pressure declined it'll the root servers that were found to be bigger. And if there were bigger and under less pressure they found -- war. You know and it's it was this particular field change people's view and that's why you've seen people go out drilling deeper and deeper water because of overblown or who lost. And anyway this is this is our largest feel. And we've done a lot of work out there we go along with the fact if you look at those. The a twelve well to the -- It is in process. Would next year. We're also gonna drill we think we need the deep well maybe the 24 point 5000 foot range. We're still in the process of design and development and always things when you drove it deep there's obviously -- -- to consider. The end of the others in the world so as we speak which you concede that this this particular field was produced. 120 million barrels of world and fortified piece of America so it's it's been very prolific. And again just keep on going down people and the size pictures and there's there's more more prospect of -- Green -- 646 -- open. This is what we're -- one -- developments on this as well drilled several years ago you see we have 24 -- proved -- again book several years ago. This is at 4200 feet water. It is well then again -- -- -- some time ago we -- sanctioned -- this year we've now done the completion out there of the world. The subsidy trees with the locals and all that stuff is and what we expect to have that own production second. Next year I'm hoping -- be done sooner than that. But this ought to be -- nice nice well force. Which takes time and in this deep water development is coming to an agreement with somebody to host the production and we were able to -- deal with. With Murphy from -- and that's where production -- ago. Another deep water play his steely green canyon 82 we've drilled three wells out there. And we drilled well -- from work towards the end of those seven we continued on into 2008. Didn't book any additional reserves were found -- moral probably isn't possible soccer fact we found. Four additional prospects -- of -- would be of drilling won't before. We're in the process of doing so a lot of 2000 they doing feet and flow analysis and -- insurance. To try to figure out what is the best way to develop this field. You can see a couple of options under review -- the EPS which is an early production system. And then he subsidy type accidents that you demonstrable. Couple of these other places. Well a lot of work still have to do morning -- 2008 drawing program. -- I had this chart to have a bunch of bubbles and we've drilled so many wells this year was better put it and and type in -- format against sixteen of twenty on the extortion side. Two of two on the development side. And you can see that. Lot of things that we focus on 2008. Drawn our infrastructure so that if you did find something you -- get an on line very quickly. And you can see a lot of that stuff in fact was drilled and is on line. There's other stuff you can see that to be completed and -- online this year. The only one that's on the list right there of the not on line this year is the Ohio and 8376 world. She should be at -- -- time for schools 2000. But that gives you the rest of the drawing program which is forty -- for this year. This is -- cartoon we showed Gulf of Mexico production is a little bit different than what you see -- We don't drill delineation wells in the Gulf of Mexico it's just too expensive. And so what you end up from the Gulf of Mexico is trying to -- well in an -- take point. Without consideration of what the rivers are -- be booked and SEC definition. What happens in this particular case we're allowed to book between those two middle green lines. Through the -- -- down lowest known contact. But depending on the drive mechanism in this particular case we're short water contact down below. Depending on the drive mechanism you'll be able produced a probable as possible for this from the -- war. Without drilling additional well doesn't look pretty good it doesn't look very good all approved. Proved -- places and let me show -- real life example of exactly and talk about. This is Mississippi canyon 718 Pluto well if you look at the -- Pink or orange depending on your point of view right -- down of that first green lines per -- You can see from the pressures down those are actually. This is -- -- Trace. And these lines coming out of that's actually trough coming back the other way so you know although -- eagle Trace down there all the way down that second green line. Or the problem -- and cost us. We're -- what happened on the small. This is a top down view looking at the bright spot where the well or came in contact with the bright -- You can see the first white line without most wireline against the proved reserves. And second while line gives you the problems and possible look what's happened. The -- -- -- it was initially droll and book was only two point nine these -- -- you -- the cumulative productions and tonight. So again and you end up with positive revisions but from a proved -- standpoint in the Gulf of Mexico you get a little bit different picture. What you -- issue. From financial -- our capital expenditure program -- -- 611 million you can see the split between exploration and development. We also spent on it again 170 million -- patches interest and social through -- -- -- -- And obviously all of this will be funded with internally generated cash. This slide is different than what shall see in most companies because -- historically been able to draw within cash. And you haven't seen that in any of the -- resources ways. And in most other companies are not been able to draw the cash for -- because the Gulf of Mexico if you find something that comes back after -- quick. You've got reinvestment risk and this is what you need to be able do is to again. Quark -- workers are we've been doing -- -- -- -- very good again or exploring reserves. If you look at 2008. Those kind of funny showed there. 862 -- cash for nine months we'll -- all of the capital for the whole year. This is another slide that saw a little bit different even don't margins. Are you -- -- have been 75 to 80% for as long as we -- to go back and do this computation. And it's regardless realized prices if you look at 2002 the realized price was three dollars and fifty cents. If you go look at 2000 they realized prices thirteen dollars and 56 cents but the markings about the side. And again it's cash flow it's keeping costs under control -- and you end up with this kind of situation which it's just fantastic. -- commodity hedging. Doesn't she probably had the fewest -- of anybody on 2008. All of this part of forty dollar reprisal that we took advantage of -- out. These are the positions that we have left on everything as far as the and 2008 we have nothing went through 2000. Liquidity. Reorient a prime position here we had -- -- 500 million dollars of cash in November 4. We had a 500 million undrawn revolver that was reform by the banks on October 24. So we've got an enormous -- liquidity. We -- a couple special dividends. We paid thirty million -- -- special -- beginning of 2008. We declared a and other special dividend last board meeting payable December 22. So special dividends or one of the things -- look obviously there's all kinds of opportunities and we think that those companies. They get into trouble. As prices have -- come down it. Provides an excellent opportunity for our company to take advantage of these -- keeping our options open and fortunately we have people that you do. If you think has been closing cash and cash return just what we continue to focus on. We have great liquidity would got a proven right track record of records when she moved. -- -- -- -- -- Those who have. Thank you --

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