Offshore exploration suits independent oil and natural gas acquisition, exploration, and production company W&T Offshore to a T. Focusing on exploiting assets in the Gulf of Mexico, in 2011 the company reported proved reserves of 701 billion cu. ft. of natural gas equivalent. It holds 900,000 gross acres in the Gulf of Mexico and has working interests in more than 70 fields. The company hopes to parlay its successful track record in the Gulf to generate capital for more expensive projects in deepwater (water depths in excess of 500 feet) and deep shelf (well depths in excess of 15,000 feet) areas of the Gulf of Mexico. Hedging its bets, it also holds onshore fields in a handful of Gulf Coast states.
The company has two fields of major significance (having proved reserves which comprise 15% or more of the company's total proved reserves): The Ship Shoal 349 field on the conventional shelf in the Gulf of Mexico, and the Spraberry field in the Permian Basin in West Texas.
W&T Offshore's revenues grew by 38% in 2011 thanks to a 37% increase in oil prices and a 28% increase in NGL prices. The jump in sales volume for oil and NGLs was primarily attributable to increases associated with properties acquired in 2011 and 2010 whereas the increase in natural gas revenues resulted from a 20% growth in sales volumes, partially offset by a 9.5% decrease in the average realized natural gas sales price.
Net income increased by 47% in 2011 thanks to higher revenues offset by the increase in lease operating expenses, depreciation, depletion and amortization, and general and administrative expenses. The growth in lease operating expenses was associated with the properties acquired in 2011 and 2010, higher costs at various non-operated properties and increased processing fees associated with Daniel Boone field production in the Gulf of Mexico.
Growing its Gulf of Mexico asset base, in 2012 W&T Offshore agreed to buy 78 federal offshore lease blocks (432,700 gross acres) from Newfield Exploration for $228 million. In 2010 it acquired stakes in three federal offshore lease blocks located in the Gulf from TOTAL for $150 million. It also acquired four blocks from Royal Dutch Shell for about $193 million.
The company is pursuing acquisitions and onshore opportunities in addition to exploration and development operations in the Gulf. Given the relatively short production life of its Gulf wells, the company is constantly seeking new acreage in order to maintain its reserves and replenish its production.
Boosting its onshore holdings, in 2011 W&T Offshore acquired 21,900 gross leasehold acres in the West Texas Permian Basin for $366 million.
Chairman and CEO Tracy Krohn controls the company with a 53% voting block. – less