Good morning ladies and gentlemen, and thank you for standing by. And welcome to the W&T Offshore Third Quarter Conference Call. At this time, all participants are in listen-in mode, and following the formal presentation, instructions will be given for the question and answer session. (Operator instructions) And as a reminder, this call is being recorded today, Wednesday November 7, 2007. At this time, I would now like to turn the conference over to our host, Mr. Manuel Mondragon, who is the Vice President of Finance. Sir, you may now begin the call.

Thank you operator, and good morning to everyone. We appreciate you joining us for W&T Offshore’s conference call, to review the third quarter, 2007 results. Before I turn the call over, I have a few items to go over. If you would like to be on the company’s email distribution list to receive future news releases, or you experience a technical problem and didn’t receive yours, please call DRG&E office, at 713-529-6600, and someone will be glad to help you. If you wish to listen to the replay of today’s call, it will be available in a few hours, via webcast, by going to investor relations section of the company’s website at www.wtoffshore.com.

(Operator Instructions) Ladies and Gentlemen, we do apologize for the delays in today’s call, but at this time, we will now be continuing the conference call. You may go ahead.

Thank you operator, and sorry about that. As I was saying, today’s conference is going to discuss certain topics which contain forward-looking information, which is based on (inaudible), as well as assumptions made by, and information currently available to management. Forward-looking information includes statements regarding expected production and expenses for 2007. Although management believes that expectations reflected in such forward-looking statements are reasonable, they can give no insurances that these expectations will prove to be correct. Such statements are subject to certain risks, uncertainties and assumptions, including, among other things, market conditions, fall in gas price volatilities, uncertainties in [herrigant] oil and gas production operations and estimated reserves, unexpected future capital expenditures, competition, the success of risk management activities, governmental regulations, and other factors described in the company’s most recent annual report on Form 10-K filed with the Securities and Exchange Commission. Should one or more of these risks materialize, or should underlying assumptions prove incorrect, actual results may differ materially from those expected. Please also note that this conference call contains references to non-GAAP financial measures. You can find reconciliation to these non-GAAP financial measures to GAAP measures in the Form 8-K filed by the company today, as well as in this morning’s press release. Now I’d like to turn the call over to Tracy Krohn.

Hi Manny, and good morning everyone. Hopefully the phone lines will stay up and we’ll continue through this conference call. Again, thanks for joining us for our third quarter 2007 conference call. This morning I’m going to discuss the events that took place in the third quarter of 2007. With me is our team; Danny Gibbons, our CFO, who is going to review financial results for the third quarter 2007; and Stephen Schroeder, our Chief Operating Officer, who will discuss production operations, third quarter drilling projects, lease operating expense, and also give fourth quarter guidance. And then he’ll turn it over to Jeff Durrant, our Senior VP of Exploration and Geoscience. Jeff’s going to review our current drilling program and our drilling program going through 2008. Following the formal presentation, we will also have a Q&A session. So let’s begin. Our third quarter adjusted earnings per share were $0.53, beating the street estimate of $0.31. Many factors can explain the differences, such as the fact that we hit the mid-point of our production guidance, that the street had perhaps anticipated slightly lower production and had a lower realized price than what we actually realized. The market tends to believe Gulf of Mexico company’s are gas oriented and tends to forget that we, W&T, are about 45% liquids in the ground, and 42% liquids production, because W&T’s mix of oil and liquids is higher than most Gulf of Mexico E&P companies, our overall realized price was likely higher than anticipated by the street. Our adjusted EPDA market in the third quarter was 73%, and moving back in line with our historic average, in the 78% to 80% range. Many in the investment community look favorably on plays with repeatable results, such as resource plays, but they don’t really think of the…

Thanks, Tracy. Let’s begin with revenue. Revenue increased $41.8 million, or 20% to $255.2 million in the third quarter this year due in large part to an increase in production from the properties acquired by merger from Kerr-McGee. For the third quarter of 2007, our realized natural gas price averaged $6.45 per MCFE. The crude oil and condensate average, $72.72 per barrel. For an all in average realized price of $8.83 per MCFE. This is $0.69 per MCFE higher than the third quarter of 2006. In addition, the average realized price we received in the third quarter of 2007 of $8.83 per NTFE was higher than last quarter of $8.74 per MCFE. Net income for the third quarter of 2007 was $36.3 million. Earnings for the 2007 period reflect the impact of a $6.4 million unrealized derivative loss, or $4.2 million after tax. The 2006 period included an unrealized derivative gain of $22.7 million. Excluding the unrealized gains and losses from both periods, earnings per share for the third quarter 2007 would have been $0.53 per share, compared to $0.71 per share for 2006 third quarter. Moving on to lease operating expense. Lease operating expense for the third quarter 2007 was $51.6 million; this is versus $35.2 million in third quarter of last year. LOE per MCFE in the third quarter was $1.79, compared to $1.34 in 2006. The increase of $16.4 million is attributable to increases in operating costs of $13.2 million, major maintenance expenses of $2.5 million; $1.8 million of that is related to hurricane remediation. Then we have $1.4 million in higher insurance premiums. This is all partially offset by a decrease in work-over expenditures of 700,000. Approximately $7.8 million in the increases in operating costs are associated with properties acquired by merger in the Kerr-McGee transaction.…

Thanks, Danny. In the last conference call we discussed our expected build-up in the late third and fourth quarter. That build-up has occurred, and here’s an update on the status of several key products. In August, our Pluto-2 well was shifted to a new completion remotely, using smartwell technology. The well peaked at approximately 40 million cubic feet equivilant per day gross, or 18 million cubic feet equikvilant per day net to W&T’s interest. At our Bay Junip prospect, we received the necessary permits and installed all equipment. In October, we initiated production and are currently producing 13 million cubic feet per day net. At our two Highland 24L discoveries, the main processing structure was set and all pions were completed. Initial production began in October, and the wells are currently ramping up. Our current production is approximately 9 million cubic feet equivilant per day net. All the final tie-ins and commissioning work was completed at the [Third Carty] processing platform in October, for our South Timbalier 299 project. We have been ramping up production from the four completions, and are producing over 600 barrels of oil per day, and 20 million cubic feet per day gross, or 9 million cubic feet equivilant per day net to W&T’s interest. In the third quarter, production averaged 314 million cubic feet equivilant per day. Current productio is ranging between 320 and 330 million cubic feet equivilant per day. We’ve been extremely busy with our recomplete and workover programs. During the third quarter we performed 20 recompletes and workovers with (inaudible) of the operations adding production. Twelve of the projects were in former Kerr-McGee properties as we begin to exploit unutilized well bores. Of the aforementioned projects, W&T engineers and geologists generated two-thirds of the recompletes. While the explorationists have been developing our…

Well, thanks Steve, and good morning to everyone. During Q3, we successfully completed the drilling on one exploration well, the B-3 Sidetracked in South Timbalier 41 field, and thus far through Q3 in 2007, we were successful in all three exploration wells, two development wells, and the deepening of the Healey #3. As I will discuss in a moment, so far in Q4, we have had an initial indication of gas in our first Ship Shoal 300 well, but unfortunately we’ve also drilled an uneconomic well in Main Pass 162. Turning to the B-3 Sidetracked deep shelf discovery well in South Timbalier 41, we found 70 feet of oil and gas in five stands. We cased off this section of the hole and drilled the end to test deeper, exploratory objectives, to a total measured depth of 18,814 feet, which is about 17,000 feet of a true vertical depth. We then completed two of the well’s main objectives, the Q-8 stand. This zone came on at a growth rate of 18 million cubic feet of gas per day, and 1,900 barrels of oil per day; or about 6 million cubic feet of gas per day, 630 barrels of oil per day, and that is net to W&T. Now let me update you on our current exploration drilling program activity and give you an early look at our plans for the first part of 2008. In the deepwater, we have positioned the lower (inaudible), the semi-submersible, and re-entered the Healey four-cross specs in Green Canyon 82. You might recall that eddy currents forced us to move off location in June, but not before we had set 22-inch casing at 3,920 feet. This depth is approximately 600 feet above the first of four independent exploratory objectives in the well. Well’s planned to…

Thanks Jeff. During Q3 and thus far into the fourth, we refocused on the basics, getting production on line, cost containment, and preparing and re-giving our upcoming drilling program. Some of our much anticipated production is now on line, Bay Junip, High Island 24L, South Tim 299, Cap Rock and others. Now production is up. I’m happy to see that we have two rigs working, including one that will finish drilling our Green Canyon 82 Healey deep water well. With the layer of long-term depth now in our capital structure it’s freed us from focusing on short-term dept repayment to focus on a longer-term strategy of drilling and production, which is clearly a much better use of capital and time. We’re in the middle of our budgeting process, and our team is putting together a program that I’m sure both you and I will be pleased about. I’m anticipating an announcement just after the new year. We’ve executed our strategy of reducing and restructuring debt, getting our arms around the Kerr-McGee transaction, and assimilating the necessary geological, geophysical and engineering data to explore and exploit, not only the Kerr-McGee properties, but by virtue of newer vintage seismic data, also to better explore and exploit legacy properties. Corporate liquidity has never been better, and although we expect to manage our drilling program within cash flow, we’re seeking additional reserves to acquisition where we see good value. More specifically, when we find good value in acquisitions, we intend to take advantage of those opportunities as we always have, but we have the luxury, through good planning, of being able to be very patient and continue to execute our drilling program into the future. And with that, I’ll start to take questions. Operator, please open the phone lines for Q&A.

Thank you very much. Ladies and gentlemen, at this time we will now begin the question and answer session. (Operator Instructions) Our first question comes from the line of Neal Dingmann with Dahlman Rose. Please go ahead at this time.

Good morning, this is Jason Wangler for Neal. Just wondering, you kind of laid out a pretty good activity as far as well drilling going into ‘08. Are you looking to get any more rigs during that time, or are you pretty set as far as your rig count right now?

Good morning Neal. The short answer is yes, we are looking to get more rigs, primarily the jack-up rigs and platform rigs.

Okay, and then just one other question is just, your costs kind of starting to move down a little bit now that Kerr-McGee is behind you. Do you see that going forward a little bit more, or is that kind of all the way through, and will we see it pretty much stabilize where it’s at?

Well, that’s really a tough question to answer. I think that, intuitively, I think yes, but again, that’s going to be a function of commodity pricing going forward, and rig availability. And again, the driver in that market is always drilling rig cost, day rate cost, and also how many workovers that we’ll end up doing, not only from our own account, but that come to us from outside operated events.

Thank you. And last question is, do you have enough infrastructure already for the next 50 wells going into ‘08, or is there going to have to be more built up?

Short answer to that is yes.

Short answer is yes. Okay great, I’ll turn it back.

And our next question comes from the line of John White with Bleichroeder. Please go ahead at this time.

Good morning everybody. I understood you’ll drill 50 wells between now and the end of 2008. Could you tell me again, how many you plan to have drilled by the end of ‘07. I missed that.

Actually, what I said John, was from the date of our last announcement, which was our last earnings conference call. It just really is a function of how quick we can get wells and rigs on location. But I expect we’ll have about 10, either drilled or drilling, additional to what we’ve drilled so far, by the end of the year.

Okay, thank you. And on the B-3 well at South Tim 41, I missed the net, your net share of the production?

The well was making around 18 million cubic feet a day net, and several hundred barrels of liquids a day net. I don’t have that net number right in front of me, I’m sure we’ll get it, hold on just a minute. I’m sorry, about 7.8 million cubic feet a day net.

Okay, well, that’s a really nice well. And really nice results. I appreciate you taking the questions.

Thank you sir.

And our next question comes from the line of Richard Tullis with Capital One Southcoast.

Hey good morning, congratulations on a real nice quarter. Two quick questions for you Tracy. I know a nice percentage of your total production was oil in this quarter. How do you see that going into Q4 and into the first half of ‘08. Do you see similar percentages, 40-45%?

With regards to liquids?

Yes.

Our reserve, Richard, is about 45% liquids.

Excellent. Did I hear you correctly? You could have four to seven rigs working by year-end ‘07.

You did, that’s correct.

Okay, good, good. And I guess the last question would be, what sort of un-risked reserves are you targeting for Q4 with your drills?

That’s an excellent question. I don’t necessarily have that right at my fingertips, Richard. I know that in our previous announcement, un-risk for that 50 well program, we were looking at about 850 million cubic feet or so, un-risked.

Okay, that’s fine. I’ll touch back another time. And that’s it for me today. I appreciate it, thanks a bunch.

Thank you sir.

And our next question comes from the line of Brian Kuzma with J.P. Morgan.

Good morning guys.

Good morning Brian.

My first question was on the CapEx side. You guys recently raised the CapEx budget. Are you going to keep that target going forward for 2007? Can you maybe give us some color as to what that means for your spending rate going forward?

I don’t really have an accurate number on that yet; I mean obviously we’re going to be drilling more wells. We had a lot of development expense at the beginning of this year associated with some of our deepwater stuff; most of our activity is going to be on the shelf. I don’t really have what I would consider to be a good handle one on CapEx expense gong for next year, and [intuitively], you would think that because your drilling more wells that it would be higher, but I’m not sure that that’s necessarily the case because we’re drilling more wells on the shelf and also the cost of goods and services is going down. So I don’t have a great handle on that yet, but I just, it’s just a little bit premature. We’ll have some better answers for you just after the first part of the year, but certainly if rate prices keep going down, cost of goods and services keep going down that’s going to be favorable to us on our total well number and CapEx number going forward. Brian Kuzma – JP Morgan: And then so the 50 wells you talked about drilling over that 18-month period, how many of those are going to be deepwater wells?

Two, one of them at Healey and one of them at another location that we haven’t released yet. Brian Kuzma – JP Morgan: Okay. And is that Blackbird well? Is that off the table now? What ever happened to that?

No comment. Brian Kuzma – JP Morgan: Okay, thanks guys.

Thanks

(Operator instructions) And our next question comes from the line of Kevin Wenck with Polynesia Capital Management; please go ahead at this time. Kevin Wenck – Polynous Capital Management: Well I’m glad to know that I’m in Polynesia at this point. Good morning Tracy, Danny and Manny.

Good morning Kevin. Kevin Wenck – Polynous Capital Management : The oil production for the quarter dropped about 5% from Q2, if you look at the guidance for Q4, it looks like it could drop another, depending on where you end up in that range, it could drop another 10% to 30%, so what caused the drop in Q3 and then some more color on the wide range in Q4 for oil?

First of all I need to confirm your numbers, Kevin, so give me a moment here and I’ll do that. Intuitively it doesn’t seem to me like it’s that large a drop, if it’s dropping at all. Our production seems to be going up, so there is a, I don’t know that our oil production is dropping. I think what you may see is a relative drop as opposed to production of gas, since our production is going up. Those mixes may change, but I don’t necessarily see where oil production is dropping. There’s a fraction of total production, yeah that could be true, but I think total production is up. Kevin Wenck – Polynous Capital Management: The, sorry it takes me a minute to look through the various parts of the press release, but it’s 2 million barrels in Q3 and a range of 1.5 to 1.9 in Q4, and if I have numbers right in my model, it’s 2.1 million in Q2. So it’s a slight drop from Q3 and Q3, the 2.1 to 2, and then the range that you’ve given us for guidance in Q4 is 15 to 1.9.

Okay. The total production is not dropping; oil is a function of total production is dropping somewhat. Probably more in like with the fact that we’re bringing on projects at Bay Junop and High Island 24L where we have a larger gas component. I don’t know how to predict that for you necessarily because we will be drilling some wells in the Q4, platform drilling they come on fairly quickly, and going also into the Q1. So rather than try and predict with a great deal of certainly, because there is none, going into last quarter and Q1 of 2008, I think that’ll be largely a function of what we actually put on line before the end of the year and into Q1. Kevin Wenck – Polynous Capital Management: Well that’s one of the reasons I’m asking the question. Because from the comments you’ve made on the call I can’t see oil production dropping at all unless there’s some other information that hasn’t been shared with us.

Well Kevin’s that’s a possibility, I don’t know what kind of results we’re going to have yet. We’ve stated that we don’t really have an expiration wedge built into it, but that’s a possibility, but because I can’t predict it I really can’t build it into the models. Kevin Wenck – Polynous Capital Management: Okay, because you know, if you end up at the low end of the range, 1.5, that’s a 25% drop from what you just did in Q3. But I haven’t heard any other color as to why you’re going to have a 25% drop. We’ll move on to another thing, the credit line increasing is kind of interesting given your cash flows. Because you probably should be able to come close to paying off the credit line sometime in the next quarter or two, and so is there enough stuff out there to potentially acquire, that would cause you to increase the credit line at his point?

Well Kevin we did increase the credit line. We certainly could pay off some debt, I’m not sure that that’s the post effective use of capital. It is, there are a lot of assets on the market right now, and we are in a very good liquidity position to take advantage of that. I told the market that we are a predator, and that we intend to be in that market for a long time. So that’s very astute and yeah you can draw from that that we’re out beating the bushes looking for value. Kevin Wenck – Polynous Capital Management: Oh and congratulations on the projected increase in gas production for Q4, that’s pretty impressive looking at this point. One other follow-up question. For October, what was the realized price for oil?

I don’t know that I have an October realized price for oil yet. I don’t think I’ll have that for you for another several days. I don’t think that we’d probably normally release that. It’s reasonable to assume that average realized prices are going up as a function of liquids production and increase in price of oil. Kevin Wenck – Polynous Capital Management: Sorry to catch you at a weak moment.

Good try. Kevin Wenck – Polynous Capital Management: Okay, thanks for your help.

And our next question is a follow-up question from the line of John White with Natexis Bleichroeder. John White – Natexis Bleichroeder : Following a little bit on that last question on the MNA activity, how would you characterize the supply demand situation in the Gulf of Mexico relative to second quarter? Do you think there’s more properties on the market or less or how would you describe it?

Well clearly there are more. Without a doubt there are more. This wasn’t anything that caught us by surprise. We’ve tried to position the company, we’ve put ourselves in the, to have the ability take advantage of that. Again, we’ve very patient John, we’re not going to go out and buy something just because we feel like we need to do a deal. We don’t, we have a very balanced approach, we have a lot of properties to drill up, we have done what we have always done, and we will do what we have always done and that is make value acquisitions that create a lot of cash flow, and that’s the point. John White – Natexis Bleichroeder : Thanks, is it fair to say that a lot of the over supply or a lot of the supply is dominated by PDP, properties with a very high PDP ratio?

Well I don’t know if it’s dominated, there’s certainly one or two of them out there that have those kinds of characteristics and that’s okay. We like to see upside in things. It doesn’t mean necessarily that there is an upside just because there’s a lot of PDP or per (inaudible), however as a criterion we certainly like to see upside in the form of drilling additional prospects. John White – Natexis Bleichroeder : Okay thanks a lot, I appreciate that.

And our next question comes from the line of Gary Stromberg with Lehman brothers. Chris Gault – Lehman Brothers : Hi guys, this is actually Chris Gault. As kind of a follow up to the earlier question concerning cash and potential acquisitions, would any of that cash be used for possible share buybacks? I know in the past you all have said that was not part of your strategy, but I just wanted to get an update on that.

You know, I was waiting for somebody to ask me that. The truth is that, we certainly could do that, that’s not a high priority on my list. One of the issues we’ve had with this company, because insiders own so much of the shares is float, we see plenty of opportunity out there, and you’ve seen a couple of examples recently with companies, tier group type companies, have repurchased shares and the results have been mixed. I guess that the best thing I saw was about a 20 to 25% pop as a result of a share buyback. To me, we just got a lot more opportunity, we think that a 20% rate of return is, if an engineer brought me a project with a 20% rate of return I’d probably fire him. So that’s not high on our priority list. I’ve learned in this business to never say never. I never thought we’d go public, but here we are. But certainly that’s not high on our priority list; there are plenty of acquisitions out there. It doesn’t mean that that wouldn’t be something we would ever do, but certainly as we look at it right now that’s not the highest thing on our priority list. Chris Gault – Lehman Brothers : Alright, thank you.

Thank you sir.

And our next question comes from the line of [John Malloy] with [Sound Energy].

Tracy, can you hear me?

I can hear you just fine John, thanks.

Alright, Cap Rock, did that come online in October?

It did.

It did, what did that come on at?

About 18 million a day, and about 1,900 barrels of oil a day, gross.

And what’s your working interest there?

About 40%.

And Danny, what was deferred taxes for the Q3?

We have about $92,000 for the whole year.

$92,000 for the whole year?

For tax expense, obviously we’ve got $240 million on the balance sheet, but deferred tax expense there’s just very little as you can see from the statement cash flow.

Yeah.

We screwed up and made too much money.

Yeah, you guys need to quit that. Okay great, thanks guys.

And our next question is a follow up question from Brian Kuzma with JP Morgan. Brian Kuzma – JP Morgan: It was actually just a follow up on the deferred taxes. With you guys ramping up your program, your CapEx program going into the first half of next year. I saw that you guided Q4 deferred taxes to about 10%, but I’m just thinking about more long term, do you think you’ll go back to that 80% level based off of increased spending?

Brian that’s a really good question, I don’t have a really great answer for you. It’s, hopefully, in my ideal scheme of things we would just find so much production we’d be making too much money to worry about it. But the truth is I don’t really have an accurate answer for you. We will be drilling more, so you might assume that you have a higher deferred tax rate. But a lot of these things, if they’re successful will come online fairly quickly. Brian Kuzma – JP Morgan:

But I don’t really have a good accurate way to estimate that for you for any kind of model you might be building. Brian Kuzma – JP Morgan: Okay, and then when you look at CapEx?

Actually we’ll have a little bit of a handle on that after we figure out what our budget is going to be for next year as well. Brian Kuzma – JP Morgan: Okay, when you look at Cap Rock, I didn’t quite understand, are you producing from a zone below the 70 feet that you initially found? Or is it just the lower most zone of that 70 feet?

I think it’s a lower zone in that 70 feet, Q-8 stand I believe is what it is. It’s a field play. Brian Kuzma – JP Morgan: So are there plans to maybe follow up with additional wells out there, or possibly even to win some of the other stands?

You know I think there’s some more drilling to do out there, but it would be premature to comment on that at this time. Brian Kuzma – JP Morgan: Okay. Thanks.

Thank you sir.

And our next question is a follow up question from Kevin Wenck with Polynesia Capital Management. Kevin Wenck – Polynous Capital Management: With day rates dropping and with the type of wells you’re currently drilling what’s a rough range for cost per well at this point? I know you have a lot of different types of projects.

I think, Kevin, it’s easier to look at rather than cost per well, at a range of reserves. I know we’ve discussed this in the past, I don’t really have an average cost per well for you because some of them are off platforms, some of them are open water. At least one of them is a deepwater well coming up this year, in fact we’re on it now in Grand Canyon 82, so I tend to think of it in kind of minimal reserve targets, open water shelf. Gulf of Mexico, about the last 20 years has been about 6 BCF, it’s the kind of a target that we look at. You put a rig on a platform if you’re going to drill more than one well, about 3 BCF as a kind of a minimal target, and then it can get lower than that depending on how many wells you’re going to drill and how far you’re going to drill and whether your going to side track out of an existing well bore. I think you’re continuing to see a weakness in the jack-up drilling market, so I think that as you continue to ramp down it again that’s going to be very weather dependent. If we have a warm winter then I think you’ll see gas prices lowering, if you have a cold one then I think you’ll see them going up. It’s still the same as it’s been ever since I’ve been in this business. If you have a seasonal change in weather characteristics in the winter it really affects it, bigger over recent years is the fact that the summer cooling season has much more of an effect on it than it used to. Kevin Wenck – Polynous Capital Management: Okay thanks.

Thank you sir.

Gentlemen, at this time there are no further questions. Please continue with any comments that you may have.

Okay. Well that’s great then. We appreciate your interest and participation this morning and we’ll talk to you the next time. Thanks so much.

Ladies and gentleman, this does conclude the W&T Offshore Q3 earnings conference