Ladies and gentlemen, thank you for standing by. Welcome to the W&T Offshore First Quarter 2025 Conference Call. During today's call, all parties will be in a listen-only mode. Following the company's prepared comments, the call will be opened for questions-and-answers. [Operator Instructions] This conference is being recorded, and a replay will be made available on the company's website following the call. I would now like to turn the conference over to Al Petrie, Investor Relations Coordinator. Please go ahead.

Thank you, Cindy, and on behalf of the management team, I'd like to welcome all of you to today's conference call to review W&T Offshore's first quarter 2025 financial and operational results. Before we begin, I would like to remind you that, our comments may include forward-looking statements. It should be noted that, a variety of factors could cause W&T's actual results to differ materially from the anticipated results or expectations expressed in these forward-looking statements. Today's call may also contain certain non-GAAP financial measures. Please refer to the earnings release that we issued yesterday for disclosures on forward-looking statements and reconciliations of non-GAAP measures. With that, I'd like to turn the call over to Tracy Krohn, our Chairman & CEO.

Thanks, Al. Good morning, everyone, and welcome to our first quarter conference call for 2025. With me today are William Williford, our Executive Vice President and Chief Operating Officer; Sameer Parasnis, our Executive Vice President and Chief Financial Officer; and Trey Hartman, our Vice President and Chief Accounting Officer. They're all available to answer questions later during the call. So with strong operational and financial results, we started 2025 on a positive note, meeting or exceeding guidance in multiple metrics. We built W&T using a proven and successful strategy that is committed to profitability, operational execution, returning value to our stakeholders and ensuring the safety of our employees and contractors. Our ability to deliver low-decline production, meaningful EBITDA and seamlessly integrate accretive producing property acquisitions has helped W&T grow during our 40 plus year history. Now before I talk about our first quarter highlights, I'd like to address an important regulatory development. In early April 2025, pursuant to directives from the Trump administration. The Department of Interior indicated that it will not seek supplemental financial assurance in the Gulf of America, except in the case of sole liability properties and certain non-sole liability properties that do not have a financially strong co-owner or predecessor in title and meet other conditions. This is a very positive development for W&T. Now we'll go into more details later in the call, but this should alleviate some of the uncertainty that has pushed down our stock price despite some positive results. Some of our first quarter highlights include the following. We delivered production of 30,500 barrels oil equivalent per day, near the top-end of our guidance range, despite freezing weather in January that temporarily drove some unplanned downtime. Also lease operating expenses came in below the low-end of guidance at $71 million. We generated…

[Operator Instructions] Our first question comes from John White of ROTH Capital. Go ahead please.

Good morning and congratulations on getting the Cox assets fully online. It has a nice impact on your production guidance.

Good morning and thanks John.

From reading the press release, it looks like you're going to continue to focus on recompletions and workovers and there's no plans to drill a new grassroots wells. Can you confirm that?

Yes, that's our current strategy. A little bit of -- just a little bit too much volatility to us with regard to oil and gas prices, but oil is the more critical factor for us. We are still not hedged on oil.

And if I could approach, I'll pass it back to the operator.

Our next question comes from Derrick Whitfield of Stifel. Go ahead please.

Good morning, all. Great update today. With the April 8th announcement from the Department of Interior, I wanted to ask if you could elaborate on the financial impact of this announcement to W&T.

Yes, I can. Clearly, it means we'll have less cost for financial assurance. And, of course, less cost in having to manage around that. We don't have any sole liability properties at this point in time. So we're looking for a pretty dramatic reduction in those FA costs, if you will. So that will have an impact on us, plus the aggravation and overhang on our credit facilities, that should be a positive for them as well.

Great. That makes sense. And then, regarding your full year 2025 guidance, on production, the midpoint of your guidance implies an average second half oil production of 15,400 barrels. Could you offer some color on the production cadence across the quarters? You've got your Q2, but just wanted to see kind of where things peak out in Q3 or Q4?

Yes. Surely, I can do that, Derrick. In the first quarter, we had some weather incidents and things like that. And West Delta 73 and Main Pass 108 were not back online as a result of some of the actions promulgated by the bankruptcy of that entity. We see the production coming up at West Delta 73 and Main Pass 108 and we continue to work to optimize that. We think, there's more track room left in that endeavor as well. And we've got some ongoing work-over and acidizing and work-overs and things that we intend to get done during the better weather part of the year, which really is about now. So through now and end of the summer, we'll be working out with equipment offshore to help enhance that. So, we're fairly confident that, we'll see good results in that leading into third quarter and early fourth quarter.

Great. Last one, if I could. Regarding the non-core interest in Garden Bank's blocks 385 and 386 that you guys sold earlier this year. The sales price on that was quite accretive to your valuation. I guess bigger picture, are there other opportunities across your portfolio that you could pursue?

No, that's a really good question. Yes, clearly there are. It just becomes a matter of price on that aspect of it. That was a royalty interest, and we do have other royalty interest that are kind of free floating out there that we could sell. It's not necessarily a focal point, but it does raise the awareness on that as well.

The next question comes from Jeff Robertson of Water Tower Research. Go ahead please.

Thank you. Tracy, you've had the four producing fuels from Cox on for roughly a year or so now and with the two new ones, can you talk a little bit about how the performance on those fields is tracking versus your expectations before you made the acquisition?

What I'm going to do, I'm going to turn that over to our Chief Operating Officer because he's more intimately familiar with that.

Yes. Good morning, Jeff. That's a great question. They are definitely performing. Actually, we're looking at our -- we've seen opportunities to increase production in some of those fields. But as you know, when you're going in and buying stuff out of, bankruptcy, there's still some operational things that we have to look at to make sure we're able to operate as efficiently as possible. So, yes, to answer your question directly, we are seeing what we expect to see, plus we see an uplift potential as well.

William, are most of the costs that you would have taken on to bring those assets up to W&T standards behind you at this point?

No, it's always ongoing, but majority of it is behind us. As you know, when you're trying to buy an asset, some opportunities to enhance it up to our standards takes a little bit more time to really understand what you're dealing with. So we're pretty much there. Probably got a little bit more left to spend to get all the way up to our standards, but it's going in the right direction.

I'll elaborate on that just a little bit. I'll be a little bit less political. And the former owner didn't spend a whole lot of money on maintenance and didn't really, in my opinion, give a damn about his personnel.

Tracy, then following up on the question around the financial assurance. Does that free-up any liquidity on your balance sheet or how your credit facilities work? And what impact does that have on how you can think about acquisitions, if any?

Yes. I mean, the for us, the question is always, gee, whether we risk more in drilling it than any time we have the opportunity to make acquisitions, as opposed to drilling. It seems to always make more sense to acquire. There's not just operational risk on drilling, there's reserve risk as well. So those are always things that I get concerned about. I mean, it's more exciting to drill wells and make discoveries and bring new production online. But there's usually a lot less risk with just going ahead and finding something that makes sense and meets our criteria. And we've been doing that for decades now. So we know the formula works. And having said that, we've also made some really good discoveries as well. So, it's always a balance for us, but most of the time, we would opt to acquire as opposed to drill.

There are no additional questions at this time. This concludes our question-and-answer session. I would like to turn the the conference back over to Tracy Krohn, Chairman and CEO, for any closing remarks.

Thank you, operator. Things rolled along pretty well this quarter. We look forward to the remainder of the year, and hopefully, we'll find some more reserves to buy in the not too distant future. Thanks so much, and we'll talk to you again soon.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.