W&T Offshore Inc., Houston, will acquire the remaining 25% working interest in Magnolia field in early 2020, adding to the 75% interest it acquired in the oil-weighted field in the central region of the deepwater Gulf of Mexico from ConocoPhillips in December 2019 (OGJ Online, Dec 12, 2019).
News of the deal—expected to close Mar. 31—came as part of the company’s fourth quarter and full year financial and operating report.
The company set its preliminary 2020 capital spending guidance at $50-100 million with production guidance of 47,100-52,100 boe/d for the year, an increase of 16-28% compared to the full year 2019. Cash flow from operating activities was $232.2 million in full year 2019.
The company’s 2020 budget is expected to maximize financial flexibility, generate free cash flow to reduce debt, and potentially fund additional opportunities,” said Tracy W. Krohn, W&T's chairman and chief executive officer. The company can adjust spending “in either direction at any time since we have no long-term rig contract commitments or drilling obligations,” he said.
In fourth quarter 2019, the company produced 52,773 boe/d (45% liquids), above the company’s midpoint guidance range, a 51% increase year-over-year, and a 28% increase from third-quarter 2019. Total fourth quarter production was 1.8 million bbl of oil, 400,000 bbl of natural gas liquids, and 16.0 bcf of natural gas.
Net income for the year was $74.1 million with adjusted net income of $85.9 million. Net income for the fourth quarter was $9.6 million with adjusted net income of $24.4 million in the fourth quarter.
W&T also acquired interests in and operatorship of oil and gas producing properties in the eastern region of the Gulf of Mexico offshore Alabama and related onshore processing facilities from ExxonMobil (OGJ Online, Jul 1, 2019). The two acquisitions increased reserves to over 157 million boe. In addition, the company achieved 100% success rate on six wells drilled in 2019 and added nine new shallow water and eight new deepwater leases in Gulf of Mexico federal lease sales.