Shares of W&T Offshore Inc. closed more than 15% higher Wednesday after the company reported first quarter adjusted earnings per share that beat expectations and CEO Tracy W. Krohn said during an earnings conference call that W&T is marketing a “sizeable” package of Gulf of Mexico (GOM) Continental Shelf properties.

Details on what’s for sale were scant.

“I just believe that right now is a good time to be selling properties,” Krohn said. “We’re also in the buying mode as well. So I don’t see it as really a different strategy from what we’ve used in the past…[W]e really hadn’t sold anything of size in several years now, and I think sometimes you look at the tree and you need to prune it.

“…[W]e’ve just sent the package out, and without giving too much detail, because it’s not like we’re sending it out to the entire world here, I will tell you that it’s a pretty sizeable package in the Gulf of Mexico. I don’t want to commit myself to what it should be worth or what that production is but expect it to come in as a pretty large number.”

W&T reported net income of $26.6 million (35 cents/share) compared to $3.2 million (4 cents) for the same period in 2012. Adjusted net income was $26.4 million (35 cents/share) compared to $30.8 million (40 cents) for the year-ago quarter. The Street was looking for adjusted earnings per share of 27 cents while analysts at BMO Capital Markets were expecting 33 cents. Revenues for the first quarter were $259.2 million compared to $235.9 million in the first quarter of 2012.

W&T shares closed at $14.71 (up $1.96) after a day of heavy trading Wednesday. W&T was among the top percentage gainers on the New York Stock Exchange.

“Between the increases in our onshore production and the contribution from our Mahogany [offshore] drilling program, we saw a 20% growth in oil production compared to the first quarter of 2012,” Krohn said. “Our net cash provided by operating activities was up 33% to $169.8 million. Strong cash flow continues to fund our exploratory and development drilling programs and drive organic growth. The recent increase in our borrowing base to $800 million, up from $725 million, further improves our liquidity and provides us with significant capital to take on new opportunities or pursue acquisitions as we find opportunities that meet our criteria.”

During the first quarter the company had four rigs running in the Gulf of Mexico. Two were drilling exploratory targets at the company’s Ship Shoal 349 Mahogany field and at its Main Pass 108 field. The other two were targeting development projects at the Mississippi Canyon 243 Matterhorn field and the High Island 22 field. “All four wells have made significant progress and we expect to finish the completions in the next few months,” Krohn said.

Onshore in the Permian Basin in West Texas, W&T is continuing a two-rig program at its Yellow Rose project. The company completed 14 wells (three horizontal and 11 vertical) during the first quarter. Four additional wells have been completed since the end of the quarter.

Current production at Yellow Rose is about 3,775 net boe/d. Third-party pipeline pressure issues are necessitating some gas flaring. The company’s initial 40-acre down-spacing tests have been successful and will lead to additional reserve bookings, the company said. Twenty-acre down-spacing could be tested later this year. “We also believe the field holds the potential for several hundred horizontal wells between the upper Wolfcamp and additional benches,” W&T said. “Our recent vertical wells have seen notable improvement in the 30-day initial production rates, reflecting the favorable impact of our change in completion technique. We have also seen an upward trend in the vertical EURs [estimated ultimate recoveries] over the past few months and are now projecting an average gross EUR of 130,000 boe (oil and unprocessed gas).”

In East Texas at its Star Project, W&T is monitoring its four initial wells and has begun planning a fifth horizontal well, which is expected to spud during the third quarter.

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