W&T Offshore's rangebound oil, gas output may climb after early-2022 acquisitions

W&T's oil and gas production, which has mostly bobbed up and down within the 30,000-40,000 b/d of oil equivalent band for several years, may be ready to climb out of the range, the US-based company said in a statement released late May 3.

The company's production averaged 37,800 boe/d in the first quarter of 2022, up 2% sequentially from the fourth quarter of 2021, but down 5% compared to Q1 2021, W&T, which closed acquisitions earlier this year, said.

W&T's production for the second quarter of 2022 is estimated at 38,100 boe/d to as high as 42,100 boe/d, while full-year 2022 production is estimated to be 38,200 boe/d to potentially 42,200 boe/d.

"We remain active in our search for complementary and accretive acquisitions, and were pleased ... when we closed the Ankor acquisition in February," W&T CEO Tracy Krohn said.

Acquired three fields

The $30.2 million acquisition of producing properties in federal shallow waters offshore Louisiana at Ship Shoal 230, South Marsh Island Block 73 and South Marsh Island 27/Vermilion 191, added 3,400 boe/d of production, 5.5 million barrels of proved reserves and 7.6 million boe of proved and probable reserves.

The properties, purchased from privately held Ankor E&P Holdings and KOA Energy, also added over 50 gross producing wells across the three shallow water fields, W&T said at the time.

"These shallow water producing properties have a solid base of proved reserves and strong free cash flow, both of which are key factors when we consider any acquisition opportunities and shape our strategic vision," Krohn said. "We initiated recompletion activity on those assets in the first quarter and we'll continue to find ways to maximize the value of this acquisition."

Shortly after announcing that acquisition, W&T bought the remaining working interests in those properties from an undisclosed private seller for about $17.5 million, bringing W&T's total working interest in the assets to 100%.

Assuming strip pricing as of April 18, 2022, Krohn estimated year-end 2021 proved and probable reserves for W&T's 100% working interest in the properties were respectively 6.7 million boe, with 70% oil, and 9.5 million boe, with 75% oil.

Net production to W&T's interests at the end of Q1 was around 4,500 boe/d, Krohn said.

Ankor Energy was created in 2008 to operate assets purchased that same year by the Korea National Oil Company, or KNOC, USA and Samsung Oil and Gas from small independent upstream company Taylor Energy. Ankor is owned 80% owned by KNOC and 20% by Samsung Oil and Gas.

Since the initial acquisition of those assets, Ankor and its Korean partners bought more assets in the US Gulf and onshore Alabama. KNOC USA changed its name to In 2010 to Ankor E & P Holdings.

MOU with KNOC

Krohn noted that on May 2, W&T announced a memorandum of understanding with KNOC that formalized the desire of the companies to pursue opportunities in upstream oil and gas in North America, as well as other potential joint venture opportunities along the North American energy value chain such as energy transition-related and carbon emissions-reduction projects.

"KNOC is a highly respected company in our industry and this MOU will allow us to look at opportunities that can be made even more successful by combining our strengths and working together," he said.

In early March 2022, W&T placed the Cota shallow-water well at East Cameron Blocks 338/349 online. It is currently producing about 2,600 boe/d gross.

The well, which is sited in more than 290 feet of water, was drilled to a total depth of 6,000 feet, encountered roughly 100 feet of net oil pay. W&T has an initial 30% stake in the well that can jump to 38.4% if it satisfies certain performance provisions, the company said.