W&T Offshore Inc. had planned to drill one well in the deepwater Gulf of Mexico this year, but those plans have been put on hold while the company waits for the end of the federal government’s drilling moratorium and to see what new regulations might apply, CEO Tracy W. Krohn told financial analysts Tuesday.
Aside from that, the company’s operations have been largely unaffected by what is now considered to be the world’s worst accidental oil spill, which was caused by BP plc’s Macondo well rupture April 20. A static kill operation to seal the well was expected to take place as early as Tuesday.
“Despite the oil spill and related impact on oil and gas projects in the Gulf of Mexico, W&T continues to run its operations on a relatively normal basis,” said Krohn. “We are mindful that turmoil and challenges often create opportunities and we are working to maintain the flexibility to move quickly should the right opportunities arise. W&T has an excellent safety record in the Gulf of Mexico and a culture to insure that we continue to operate in a prudent and responsible manner.”
W&T net income for the second quarter was $27.9 million (37 cents/share) on revenues of $179.7 million, compared to a net loss for the same quarter of 2009 of $6 million (minus 8 cents/share), on revenues of $150.4 million. Included in second quarter 2010 results is approximately $20.1 million related to the recoupment of royalties paid to the Bureau of Ocean Energy Management in prior periods that were found to not be owed under the royalty relief granted under the Outer Continental Shelf Deepwater Royalty Relief Act of 1995. Volumes associated with this adjustment were 2.5 Bcfe.
Analysts had expected W&T to earn 12 cents/share on revenue of $155.7 million, according to Thomson Reuters I/B/E/S.
W&T sold 22.8 Bcfe at an average price of $7.87/Mcfe in the second quarter, of which 46% was from oil and natural gas liquids, compared to 24.8 Bcfe sold at an average price of $6.06/Mcfe in the second quarter of 2009, of which 46% was from oil and natural gas liquids. Included in sales volumes for the three months ended June 30 is 2.5 Bcfe related to the recoupment of royalties paid to the federal government, of which 22% was oil and natural gas liquids.
The company said it expects to produce 17.4-21.3 Bcfe in the third quarter.
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