HOUSTON, Feb. 3, 2017 /PRNewswire/ -- W&T Offshore, Inc. (NYSE: WTI) today reported its year-end 2016 proved reserves, production for the fourth quarter and full year of 2016, an update on the flow rate at SS 349 A-18 well at Mahogany and an extension on the appeal before the United States Department of Interior Board of Land Appeals ("IBLA") regarding Bureau of Ocean Energy Management (BOEM) orders. 

Year-End 2016 Proved Reserves

The Company's year-end 2016 SEC proved reserves were 74.0 million barrels of oil equivalent ("Boe"), or 444.0 billion cubic feet ("Bcfe"), with 55% comprised of liquids (44% crude oil and 11% natural gas liquids ("NGLs")) and 45% natural gas.  Approximately 64% of our 2016 proved reserves were classified as proved developed producing, 23% as proved developed non-producing and 13% as proved undeveloped.  Total production of approximately 15.4 million Boe in 2016 was substantially offset by upward revisions due to performance despite lower SEC average prices.  

The present value of our reported SEC proved reserves, discounted at 10% ("PV-10"), was $754.9 million.  The 2016 SEC PV-10 is based on an average crude oil price of $39.25 per barrel and average natural gas price of $2.48 per Mcf, both before adjustment for quality, transportation fees, energy content, and regional price differentials.  For 2015, the average crude oil price was $46.79 per barrel and $2.59 per Mcf and PV-10 was $965 million. 

For comparative purposes, utilizing the forward closing prices on the New York Mercantile Exchange (NYMEX) for crude oil and natural gas on December 30, 2016 (the last trading day of 2016), total proved reserves at December 31, 2016 would have been 77.6 million Boe, with a PV-10 value of $1.2 billion, an increase of $457.3 million over the SEC PV-10.  This would also have resulted in a reserve replacement rate of 102% in 2016 over 2015.   The NYMEX based PV-10 uses an un-weighted average crude oil price of $56.31 per barrel and $3.07 per Mcf for natural gas as shown in the table below. 

In the SEC case, positive revisions totaled 14.2 million Boe, primarily as a result of better than projected performance in several of our key fields, the addition of certain incremental proved drilling locations, as well as ongoing success in managing, and reducing lease operating expenses across the vast majority of our asset base, thereby extending field life.  Offsetting our positive technical reserves gains, was a 1.2 million Boe negative revision to proved reserves due to a 16% decline in the crude oil price and a 4% decline in the natural gas price (based on SEC rules and protocol), which are used to calculate 2016 proved reserves.

The table below is a reconciliation of proved reserves calculated at SEC pricing compared to proved reserves at NYMEX on December 30, 2016. 

Tracy W. Krohn, W&T Offshore's Chairman and Chief Executive Officer, stated, "As a result of the prolific projects that we acquired and developed over the last few years and the exceptional reservoirs characteristics of the Gulf of Mexico, we almost replaced our entire 2016 production through performance revisions alone despite a 16.1% drop in crude oil prices and a 4.2% decrease in natural gas prices.  Several of our most important fields performed substantially better than previously predicted by our independent third party reservoir engineering auditors, primarily due to probable and possible reserve recovery and we believe that a number of our fields have further unrecognized upside."

"Despite our dramatically reduced capital budget in 2016 that included the completion of only one new well, we successfully held our SEC reserves steady from the prior year. This was also accomplished despite the negative impact of lower prices used in SEC reserve calculations.  When we evaluate our reserves based on the forward NYMEX strip price, not only do we see reserve growth, but the value of our proved reserves increases by $457.3 million," concluded Mr. Krohn. 

Fourth Quarter and Full Year 2016 Production

Production for the fourth quarter of 2016 was 3.7 million Boe (or 22.2 Bcfe), compared to the fourth quarter 2015 of 4.1 million Boe (or 24.7 Bcfe).  Fourth quarter 2016 production was comprised of 1.7 million barrels of oil, 0.4 million barrels of natural gas liquids (NGLs) and 10.0 Bcf of natural gas, at an average realized sales price of $30.83 per Boe or $5.14 per Mcfe.  Oil and NGLs production were 55% of total production in the fourth quarter of 2016 compared to 57% of total production in the fourth quarter of 2015.

For the full year 2016, production was 15.4 MMBoe (or 92.2 Bcfe), compared to 17.0 MMBoe (or 102.3 Bcfe) in 2015.  Total 2016 production was comprised of 7.2 million barrels of oil, 1.5 million barrels of NGLs and 39.7 Bcf, at an average realized sales price of $25.76 per Boe. 

SS 349 A-18 Flow Rate Update at Mahogany  

The recently completed Ship Shoal 349 (Mahogany) A-18 well recently reached a production rate of 5,217 Boe per day (4,032 barrels of oil per day and 7.1 MMcf per day).  

BOEM Update

In 2016, the Company received orders from the BOEM directing the Company to provide financial assurances in the form of additional security with respect to certain designated leases, rights of way and rights of use and easement.  Previously, we have filed appeals with the United States Department of Interior Board of Land Appeals ("IBLA") regarding these BOEM orders.  The IBLA, acknowledging that the BOEM and the Company were seeking to resolve the BOEM orders through settlement discussions, agreed to stay the effectiveness of the orders to May 31, 2017.

About W&T Offshore

W&T Offshore, Inc. is an independent oil and natural gas producer with operations offshore in the Gulf of Mexico and has grown through acquisitions, exploration and development.  The Company currently has working interests in approximately 52 fields in federal and state waters (50 producing and two fields capable of producing) and has under lease approximately 750,000 gross acres, including approximately 490,000 gross acres on the Gulf of Mexico Shelf and approximately 260,000 gross acres in the deepwater.  A majority of the Company's daily production is derived from wells it operates.  For more information on W&T Offshore, please visit the Company's website at www.wtoffshore.com.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements reflect our current views with respect to future events, based on what we believe are reasonable assumptions. No assurance can be given, however, that these events will occur. These statements are subject to risks and uncertainties that could cause actual results to differ materially including, among other things, market conditions, oil and gas price volatility, uncertainties inherent in oil and gas production operations and estimating reserves, unexpected future capital expenditures, competition, the success of our risk management activities, governmental regulations, uncertainties and other factors discussed in W&T Offshore's Annual Report on Form 10-K for the year ended December 31, 2015 and subsequent Form 10-Q reports found at www.sec.gov or at our website at www.wtoffshore.com under the Investor Relations section. Investors are urged to consider closely the disclosures and risk factors in these reports.

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SOURCE W&T Offshore, Inc.