W&T Offshore Inc (WTI) 2009 Q2 法說會逐字稿

Good morning, ladies and gentlemen. Thank you for standing by, and welcome to the W&T Offshore second quarter earnings conference call. (Operator Instructions). I would now like to turn the conference over to Manny Mondragon, Vice President of Finance. Please go ahead.

Thank you, operator, and good morning to everyone. We appreciate you joining us for W&T Offshore's conference call to review the second quarter 2009 results. Before I turn the call over, I have a few items to go over. If you'd like to be on the Company's e-mail distribution list to receive future news releases, or you experienced a technical program and didn't receive yours, please call DRG&E's office at 713-529-6600, and someone will be glad to help you. If you wish to listen to a replay of today's call, it'll be available in a few hours via webcast by going to the Investor Relations section of the Company's website at www.wtoffshore.com, or via a recorded replay until August 11th, 2009. To use the replay feature, call 303-590-3030, and dial the passcode 4112103. Information recorded on this call speaks only as of today, August 4th, 2009, and therefore time-sensitive information may no longer be accurate as of the date of any replay. Today, management is going to discuss certain topics that contain forward-looking information which is based on management's belief, as well as assumptions made by and information currently available to management.

Forward-looking information includes statements regarding expected production and expenses for 2009. Although management believes that the expectations reflected in such forward-looking statements are reasonable, they can give no assurance that such expectations will prove to be correct. Such statements are subject to certain risks, uncertainties and assumptions, including, among other things, market conditions, oil and gas volatility, uncertainties in inherent 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 and subsequent filings with the Securities and Exchange Commission. Should one or more of these risks materialize or should underlying assumptions prove incorrect, actual results may vary materially from those expected. Please also note that the conference call contains references to non-GAAP financial measures. You can find reconciliations of these non-GAAP financial measures to GAAP financial measures in the Form 8-K filed by the Company earlier today, as well as in the morning's press release. Now I'd like to turn over the call to Mr. Tracy Krohn.

Thanks, Manny. Just so everybody knows, we actually make him memorize that. Good morning, everyone, and thanks for joining us for our second quarter 2009 conference call. On the agenda this morning, we're going to review significant events that took place in the second quarter 2009 and we're going to provide you with an update on how the Company's looking for the rest of the year. With me today are Danny Gibbons, our Chief Financial Officer; Steve Schroeder, our Chief Operating Officer; Reid Lea, our Executive Vice President and Manager of Corporate Development; and Jamie Vazquez, our President; and Jeff Durrant, our Senior Vice President of Exploration/Geoscience, are all here for the Q&A session. Talking about CapEx a bit. Our CapEx -- 2009 CapEx program is almost complete. To date, we were successful at seven out of ten wells. It also appears that we'll stay within our capital budget range of up to $270 million. We spent $240 million in the first half of the year and have approximately 30 million remaining in our original budget.

Overall, the program has been successful for a couple reasons. One, we increased the oil and natural gas liquids component of our production mix during the period of low natural gas prices; and we drilled off of existing infrastructure which allowed us to benefit from an immediate production in cash flow, as well as lower costs. Other positive measures we've taken during the first half of the year include selling some non-core assets and reducing costs; and we'll talk about that a little bit more in this presentation later on. We expect to accumulate cash in the second half of the year due to our front-end loaded CapEx budget. Anticipated lower -- lowering lease operating expense costs and strong sales volumes at our nearly half oil production in the second half of the year.

(Inaudible) important is the result of the continuing strength in oil prices, the successful cost reduction efforts put in place by the Company increased production due to our drilling program and pipelines returning to production post Hurricane Ike; the Company returned to profitability in June. I'm extremely optimistic that our cash flows from operations would be increasing for the remainder of the year. Having said that, now here's Danny Gibbons to expand further on our financials.

Thanks, Tracy and good morning, everyone. I'll start by discussing income statement highlights, our cash balance and liquidity, and cover movements in our P&A liabilities. Given the vast differences between this year and last year in terms of commodity prices and the overall economy, I thought it might be more meaningful to look at our performance relative to the first quarter, rather than just a year-ago which is outlined already in the earnings release. Compared to the first quarter of 2009, revenue increased over 28% to $150.4 million, driven by higher production as well as higher average realized sales price per Mcfe. Production increased 16% to 24.8 Bcfe from 21.4 Bcfe in the first quarter. This is a result of our drilling successes from the first half of 2009 and the latter part of 2008, and from wells coming back on line that were previously shut in from hurricane damage to third party pipelines and processing facilities.

Higher oil prices, combined with a production profile that was approximately 46% oil and liquids compared to 41% during the first quarter contributed to the higher realized sales price per Mcfe. (Inaudible) EBITDA increased 42% to $80 million from $56 million in the first quarter. This sequential growth in EBITDA was largely attributable to growth in revenues; and to some extent, the downward trend in operating cost compared to those in 2008. Furthermore, adjusted EBITDA increased 259% from the fourth quarter of 2008 to the second quarter of 2009 based on the same reasons. But if you'd keep in mind that operating costs are still being affected by hurricane remediation costs that were either not yet recovered from insurance underwriters or are not covered by our insurance policies. I'd like to point out that even though we reported a loss in the second quarter, we did have positive earnings in net income in June.

Based on the full (inaudible) for the rest of the year, and as had Tracy mentioned, I'm extremely optimistic that our cash flow from operations will increase in the first half of the year. Talk about cash for a moment and liquidity. Our cash balance at June 30th was $100.7 million; that's down $150.3 million since the end of the first quarter of 2009, as we spent $111.3 million on capital expenditures, $63.2 million to reduce long-term debt, $45.4 million in accounts payable reductions and other working capital changes, $23.1 million of P&A expenditures, and $2.3 million for dividends. These reductions were partially offset by cash flow from operations -- before changes of working capital, that is, of $85.7 million and $8.4 million of proceeds from the sale of our non-core asset that we saw in (Inaudible) Field. Today, our cash balance is approximately $71 million in undrawn capacity under a revolving credit facility that's currently $262 million.

I can also report that we are in compliance with all of our bank covenants. As Tracy just mentioned, our capital expenditure budget is front-end loaded with only $30 million to be spent for the remainder of the year. And as we have been saying all year long, we expect that the cash balances would decline through the first half of the year and then rebuild later in the second half of the year. We still believe that'll be the case, especially with upward shift in oil prices and some of the benefits we're seeing from lower service costs. You probably know that we don't typically hedge our production except in conjunction with a large transaction or to preserve our budget or borrowing banks. We still don't have any hedges in place, nor do we have any immediate plans to hedge. But as we focus on building our liquidity, we will continue to analyze the pros and cons of hedging.

Move on to asset retirement obligations, or what we refer to as ARO, for the first half of 2009, we increased our short-term ARO by $33.5 million, primarily to reflect goods received and revised estimates for the dismantlement and removal of our two operated platforms that were toppled during Hurricane Ike. However, we believe that this is covered under our insurance policy and probable of collection, and therefore we've recorded a receivable for this work. As a result of the sale of certain assets during the quarter and other items discussed above our total ARO liability actually declined during the quarter by $41.7 million. Moving on to insurance and claims and talking about those for a moment; remember, we don't budget hurricane expense or insurance reimbursements in our guidance, therefore making our LOE a little lumpier than expected and more difficult to forecast. That being said, including lease operating expenses for the second quarter and first six months of 2009, are 5 million and 15.2 million, respectively, of hurricane remediation costs related to Hurricanes Ike and Gustav that were either not yet recovered from our insurance underwriters, or were not covered by insurance.

We anticipate the lease operating expenses will be offset in a future period to the extent that these costs will be covered on under our insurance policies. Let me move on to income taxes to close. We recorded an income tax benefit of 10.5 million in the second quarter of 2009. This resulted from a pretax loss of $16.5 million, only a portion of which is expected to be available to be carried back to 2007, which is the only open tax year that's currently available. Our annualized effective tax benefit for the quarter ended June 30th 2009 was approximately 63.8% and primarily reflects adjustments to our forecasted annual tax rate. We are currently projecting an effective tax rate benefit for 2009 to be approximately 13.8%, reflecting a valuation allowance against deferred tax assets and hence not realized in the full tax benefit of the loss of the 35% statutory rate. And with that, I'll turn the call over to Steve Schroeder. Steve?

Thanks, Danny. Let me start with an update on our drilling program. During the second quarter, we drilled four successful wells, three exploratory and one development. Two additional wells were drilled, were uneconomic, one of which -- the B-2 sidetrack in South Marsh Island 39 -- was temporarily suspended when the operator encountered drilling problems prior to reaching the objective section. Combined with our first quarter drilling, we've now drilled ten wells through the first half of 2009, seven of which were successful and are on line producing. In the Main Pass area, we continued to have success in the Main Pass 283 field drilling program, with the Main Pass 279 A-5 sidetrack our third successful exploratory well out of four in the program. This well is the second [Discorbis] 12 discovery well in the program.

We also continued to have success in our other Main Pass area exploration well, the E-2 at Main Pass 108. Combined, the two Main Pass area drilling programs have added a gross 4,350 barrels of oil per day and 74 million cubic feet per day, or more than 62 million cubic feet equivalent per day net since mobilizing the rigs in 2008. Two additional second quarter wells were drilled in the field redevelop redevelopment program in our South Timbalier 314 field. Our first well, the A-4 exploration well, was drilled to test an amplitude with a 6 million barrel of oil potential, but found its objectives to be uneconomic. Fortunately, we followed this disappointment with a successful well on the South Timbalier 315 lease, which is currently flowing at a net rate of 6.6 million cubic feet of gas equivalent per day. The rig then performed a successful oil recomplete in the A-1 well. We are now drilling our last well in the program, the A-6 development well, to an attic oil objective in the field's main reservoir.

With success in the A-6, we anticipate achieving a net increase of 1,750 barrels of oil per day and 9.6 million cubic feet of gas per day, or 20.1 million cubic feet equivalent per day net to W&T from our capital program in this field. Also in the third quarter, we drilled the Ship Shoal 349 A-12 sidetrack development well that is producing at a net rate of 700 barrels of oil per day and 1.5 million cubic feet of gas per day, or 5.7 million cubic feet equivalent per day net. As Tracy mentioned, our CapEx program is nearly complete, with just a couple of projects left to finish, including Daniel Boone, South Tim 316 A-6 and some ongoing recompletion work. Our Daniel Boone project is nearly completed, with approximately $7 million net left to spend. In late May and June, we completed the subsea work and are now completing the topside work on the Front Runner Spar. We anticipate first production in late September or early October, and on budget. Currently, we're producing about 280 million cubic feet equivalent per day. Additional production during the second half of the year will come from several sources. While we do not know the exact production rate at Daniel Boone, we're building facilities to handle 10,000 barrels of oil per day.

This is a significant source of our second half of 2009 production build-up, and it is primarily oil. W&T has a 60% working interest in this project. Another source of build-up is our current drilling and our successful drilling in the past six months. We're drilling in the South Tim 316 A-6 and completing last year's successful exploration well at Highland A-376. We anticipate production from these wells to come on line late in September or early October at a net rate of approximately 9 million cubic feet equivalent per day. In addition, several of the wells drilled earlier this year are performing better than previously forecasted. As such, they will have a positive impact on our production performance in the second half of 2009. Another focus area for us during the second quarter and into the second half of this year is our workover and recomplete programs. Our area teams are actively identifying and pursuing workover and recompletion opportunities. We started the third quarter production with build-up of 16.5 million cubic feet equivalent per day net from several recently successful recompletes.

We have also had good success in our Well Stimulation Program, where we increased the total rate by 6.5 million cubic feet equivalent per day in two wells. We're reviewing several additional candidates for well stimulations, as this type of production build-up can be realized with minimal costs. Lastly, approximately 21 million cubic feet equivalent per day remains shut-in from the 2008 hurricanes. However, within the next month, we anticipate repair of two third party sales lines and the return of production of approximately 8.5 million cubic feet equivalent per day. However, it now looks like it'll be 2010 before everything returns to service. For the third quarter of 2009 production guidance, the Company anticipates production to be between 1.5 and 1.9 million barrels of oil and 12.1 and 14.4 billion cubic feet of natural gas, or a total of between 21.1 and 25.8 billion cubic feet of gas equivalent. During the second quarter, oil and natural gas liquids represented 46% of total production, and we believe that oil and natural gas liquids will represent approximately 44 to 48% of the total production for the rest of the year.

Our third quarter production guidance includes an estimate of downtime associated with potential shut-ins due to hurricanes. For the full year, we haven't changed our production guidance. Moving onto LOE, lease operating expenses for the second quarter of 2009 were $54.1 million. Excluding hurricane repair costs, lease operating expenses for the second quarter was $49.1 million, which was just below the low end of guidance. The lower cost is a function of workovers and facility expenses which were about $4 million under projections. There were no large workover or facility expense projects, operated or non-operated, during the second quarter. From our point of view, it appears that many of our partners are deferring non-essential projects wherever possible as we have done.

In the last conference call, we announced the launching of a profitability initiative throughout the Company which refocused staff to review facility optimization, well performance reviews, utilization analysis and overall reduction of costs. As you can tell from our results, this initiative is beginning to show meaningful results in reducing costs. We see improvements in our transportation costs mainly related to boats. We have eliminated three boats and have optimized routes. Additionally, day rates for boats have declined 45 to 50% since January, while fuel costs have also come down 50% since last summer. Further, we've increased profitability by reducing personnel at some platforms. The sale of (Inaudible) 20, a non-core asset, has lowered lease operating expenses by $800,000 per month going forward. As a result of this sale and planned 2009 P&A work, we expect to reduce the number of our structures by 136 by the end of 2009, which again reduces our operating costs.

As a result of these changes related to lease operating expenses, our third quarter 2009 lease operating expenses are expected to be 48 -- to be between 48 and $59 million. We are revising the upper end of our guidance downward, and our new full year guidance is between 205 and $235 million. We are confident in lowering the high side of guidance by $10 million based on the trends we're seeing in boats, labor costs, fewer OBO workovers and less than forecasted expenses to date. Remember, this does not include any allowance for hurricane-related expenses. Gathering transportation and production taxes for the second quarter were $4.3 million, or about $700,000 under guidance. The primary reason was lower production and lower revenues in state waters. In the third quarter, we anticipate between 4 and $5 million, due mostly to the same reason. Now let me turn it over to Reid, who will discuss our M&A strategy. Reid?

Thanks. One of the most discussed topics that comes up with investors is our acquisition strategy, so I'd like to walk through that with you now. I can best describe our strategy by breaking it into three different types or geographic areas where we're seeking acquisitions, and those are the Gulf of Mexico, other offshore production, and onshore production. First, in the Gulf, I believe that W&T remains the logical consolidator of choice for Gulf of Mexico assets based upon our 28 years of proven operating expertise. We're continuing to evaluate and make offers for certain assets or companies, and have been very selective based on price, future P&A liabilities and upside potential, either from drilling or performance. We've increased our efforts to acquire reserves in the Deepwater Gulf of Mexico; but we're currently limiting our bids to those packages supported by current production.

We do not plan to bid on the Deepwater exploration packages currently available in the market. Moving on to other offshore acquisitions, if given the right opportunity, we would expand into other offshore areas outside the Gulf of Mexico. Our goal is to leverage our extensive operational expertise in other offshore areas, both domestic and foreign. This could include offshore US other than the Gulf, Trinidad, the Mediterranean and perhaps the UK sector of the North Sea. Rule of law is an important factor for us in any situation, and it's unlikely that our strategy would include Africa, Southeast Asia, or China. As with our basic acquisition strategy, cash flow is the single most important criteria for this type of acquisition, although we're particularly interested in projects that require development capital expenditures. We wouldn't target a Wildcat exploration project without existing cash flow and infrastructure.

Finally, at present, our onshore acquisition efforts are limited to the continental United States. We're not seeking to acquire exploration acreage in the unconventional resource plays, except in cases where existing production and cash flow can be acquired simultaneously. Furthermore, our goal is to seek a joint venture or a corporate acquisition to gain technical expertise. In the optimal situation, we would acquire production for the seller's capital needs could be met by a combination of the sale of production and a joint venture with W&T to provide development drilling funds. With that said, I'll turn it back over to Tracy.

Thanks, Reid. We firmly believe more opportunities will become available as hedges roll off and more companies find themselves looking for partners. In the first half, we fulfilled our drilling obligations such that we had the ability to be flexible about our future drilling program. Projects in our prospect inventory are a combination of high potential exploration and exploitation wells in both the Gulf of Mexico and Gulf Coast areas. Furthermore, we're keeping watchful eyes on goods and services costs and commodity price trends to determine the right time to commence any additional drilling. We are taking advantage of the second half of the year to continue to find ways to further optimize our operations and attempt to divest of other non-core assets.

As you've heard, operationally we had a solid first half. We responded immediately to the drop in commodity prices, and our efforts have returned us to profitability. Our expectation is that in the second half, we'll maintain strong production, benefit from lower base LOE, operate in a better pricing environment and have minimal capital expenditures, and that's going to allow us to build our liquidity. This positions us to be pretty flexible, and so we can best concentrate on M&A opportunities that we'd outline. In a nutshell, production is up, costs are down, and we're beginning to accumulate cash. Last, as we've been saying all year, we will remain flexible and patient as we build cash. We're diligently looking for opportunities, and we expect to strike when the right opportunities present themselves.

It's nice to be in a position of liquidity. We intend to take advantage of that. Now that concludes our prepared remarks. We're ready to take your questions. Operator, if you would, please, open the phones for our Q&A.

(Operator Instructions). And our first question comes from the line of Phil McPherson with Global Hunter Securities. Please go ahead.

Good morning, gentlemen. Congrats on a great quarter.

Thanks, Phil.

The production came in really surprisingly great, and I was wondering if you could maybe tell us how much of that was pipeline and how much was well performance?

Well, I'll tell you, a lot of it was the fact that we were able to get thee wells online pretty quick as a result of drilling from existing infrastructures. As Steve pointed out earlier, every well that we've drilled so far this year, we have got on production now. So it really wasn't so much pipelines downstream that we're covering online, it was the fact that we were able to produce to existing infrastructure.

Great. And on the production side, to Steve, with the Daniel Boone, everybody waiting for it -- you said the 10,000 barrel capacity is what you're building it for. Can you give us an idea what it should start up at, and when it will kind of peak from a timing standpoint?

Yes, I tried to give the market an indication. We don't really have an exact number. We don't know exactly what this well is going to float, because we've never floated it at full stream. We're estimated between 5,000 and 10,000, and we don't really have an exact number for you. We have designed it for a 10,000 max facility, though.

Okay, great. I'll queue back in and let somebody else get on. Thanks, guys.

Thanks, Phil.

Thank you. Our next question is from the line of Neal Dingmann with Wunderlich Securities. Please go ahead.

Good morning, guys.

Good morning, Neal.

Say, Tracy, with the improved cash position, is there a point -- obviously, costs are dropping pretty nicely for you as called it. Is there a point where if costs hit a certain level you'd revisit and maybe become a bit more active, even latter part of this year than originally thought?

Certainly; but it's not just cost, it's also commodity prices as well. So, yes, if the right opportunity presented itself, then the answer to that would be yes.

Okay, and then just a follow-up. What about -- I know you're always looking for these accretive acquisitions. If nothing sort of shows up that you deem is quite positive, is there a certain point also -- maybe before end of the year -- would you get with Danny, would you think about maybe at some point using some of this cash and paying down even more debt than originally thought, or even buying back more shares? Thanks.

Yes, I think the priority is going to be hiring more production and drilling more wells, that would be first. Second or third, not necessarily in that order, would be shares or reducing debt. Right now, I think our debt is at a fairly acceptable level. It's not a big drag on the Company. The good part about this kind of economic times is that we get to see some really good opportunities. A lot of the opportunities that we've seen so far isn't quite fitting what we think is appropriate for the times. And some of that's being masked by the fact that a lot of producers had hedges on and they haven't begun to roll off yet. We see a lot of them rolling off the third and fourth quarters of this year, and we think that that market will begin to open up.

Perfect, thanks.

Thank you, sir.

Thank you, and our next question is from the line of Kristal Choy with Raymond James. Please go ahead.

Good morning.

Good morning, Kristal.

Just a follow-up. This is a really broad question, and you kind of touched on it a little bit; but as we wind down activity in the second half of the year, do you have any preliminary thoughts of what you want to do for 2010?

I'm sorry, I'm not quite sure I heard your question.

I was wondering if you'd give any thoughts as to the plan for 2010, preliminarily?

Yes, we're working on that budget right now. I don't have a solid answer for you on that, but I expect we'll be drilling some wells, and hopefully we'll be making some more acquisitions. Again, we think that as a result of these hedges rolling off that producers are going to look at things differently in the third and fourth quarter, because they'll be forced to. And we're starting to see what I consider to be some higher quality drilling projects roll into our shop that I don't think we'd normally see in a higher priced commodity environment.

Okay, and at the Mahogany well -- I'm not sure -- can you refresh my memory on when that was brought on line and how much it's currently producing? And a general update on what's going on at the field?

I'll turn that one over to Steve.

Yes, that well came on, I think, late first quarter, early second quarter; and essentially right, now it's producing 700 barrels of oil per day net and 1,500 Mcf per day.

All right, thanks.

Thank you.

(Operator Instructions). And our next question is from the line of Gary Stromberg with Barclays Capital. Please go ahead.

Hi, good morning.

Good morning, Gary.

A question on your acquisition strategy. How do you think about credit metrics when you are looking at acquisitions. Do you look for acquisitions that may be cash financed, or do you look to improve your credit ratings and put some equity in the financing mix.

In an ideal world, Gary, what we would do is we would look at cash flow, make sure that the thing has cash flow first; and then second, as to how we would finance it, first preference would be bank financing since that's our cheapest form of financing. In the past in these kind of downturns, we've seen things that were actually accretive to our borrowing base. And absolutely, that would a priority for us if we were able to achieve that. But I think the priority would be bank financing, some other kind of financing equity.

Okay. And then I guess my second question is related to the borrowing base. Can you give us an update on when the next redetermination is and what your expectations are?

I think our next redetermination is in September. And I can't really answer the expectations until we get closer to that point, because it's going to be very dependent upon commodity prices.

And are prices up from the last redetermination? I can't remember when it was.

Prices -- oil price is up and gas price is down.

Okay.

But we're producing more oil than we were before.

Okay, and then I guess final question, is Daniel Boone -- will you book more proved reserves this year, and will that flow into the borrowing base redetermination in September?

No. Yes, the short answer is we won't book more proved reserves on that one this year, probably because the short production profile we'll have on it before the production comes up for annual report. We could, if we have some sort of superlative performance. But I don't know how to gauge that now, so I'll just give you a more conservative answer that yes, we probably won't book additional reserves there before the end of the year.

Okay. Thank you very much

Thank you, sir.

Thank you. And our next question is from the line of Phil McPherson with Global Hunter Securities. Please go ahead.

Just a quick follow-up, Tracy, more housekeeping. Can you talk -- or maybe Danny talk -- about the big drop in the DD&A rate in the quarter and how we should look at that going forward?

Yes, well, costs are going down. We've sold some properties at (Inaudible) and Eloise going down. I mean, it's certainly a function of what costs are doing more than anything else, I think, that is driving that. And the combination with the sale of some of our properties reduced AROs, so that has an effect on it as well.

And what was the property you sold and the amount? He had mentioned it, but it was kind of fast.

[Brett & Sound]. The amount was $8.4 million.

Great. Thanks, guys, appreciate it.

Thank you, sir.

(Operator Instructions). And we do have a question from the line of Duane Grubert with CRT Capital. Please go ahead.

Yes, Tracy, I was curious if you could give us a little insight in the M&A strategy that was articulated. You said you had looked at other domestic places offshore, and the only places I can come up with would be Alaska and California. Do you have any particular bias for or against either of those places?

Well, that's a pretty general question, Duane. Do I have a bias? Well, no, there's no bias. It's really an economic issue whether we can do something off the coast of the US. And you're assuming that it might be California or Alaska. That's not necessarily the case. There's Gulf of Mexico, there's East Coast, there's further east in the Gulf of Mexico as well.

Okay, I just wanted to see if you had your eye on anything that you wanted to exclude. Separate from that, when I look at your PDNPs, I'm curious if you guys have been able to push on any of the completion styles, the way that some of the onshore players lately have been doing some dramatic, really pretty aggressive completions with frac work and so forth. Is there anything going on that's exciting for you guys in terms of recompletion work that's new, versus the way you might have done it a couple of years ago?

Well, I think one of the big chest changes in our completion style is that we are fracking wells in the Gulf, and we're gravel packing them at the same time. We call it a frac-pack, and it is a reasonably new technology. It's not brand new, but it continues to progress and it continues to be at a lesser cost, particularly in this environment.

Okay, that's very helpful. Thank you.

Yes, sir

Thank you, and there are no further questions in the queue. I'd like to turn the call back to Mr. Krohn for any closing remarks at this time.

Okay, well I think that wraps it up. A good quarter for us, and we'll be looking forward to talking to you next quarter. Thanks so much.

Thank you. Ladies and gentlemen, this concludes the W&T Offshore second quarter earnings conference call. If you would like to listen to a replay of today's call, you can dial 303-590-3030 and enter access code 4112103 followed by the pound sign. We thank you for your participation. You may now disconnect.