W&T Offshore, Inc. announced that it has increased its 2013 capital budget to $550 million, excluding potential acquisitions.
The revised budget includes increased deepwater activity, completion costs on the company’s successful exploration wells, additional onshore drilling at its Yellow Rose field, along with additional seismic and leasehold cost. The revised budget is split 60% for exploration and 40% for development and allocated 65% to offshore and 35% to onshore.
As part of the expanded deepwater activity, the company has acquired a 20% working interest in the “Dantzler” prospect in the Gulf of Mexico at Mississippi Canyon 738/782 blocks, operated by Noble Energy, Inc. The operator has estimated a prospect resource potential of 50-220 million barrels of oil equivalent (“Boe”). The well is currently drilling and W&T Offshore expects to reach total depth and evaluate the well by year end.
Tracy W. Krohn, W&T Offshore’s Chairman and Chief Executive Officer, stated, “Of the 39 wells we have drilled thus far in 2013, only one well was non-commercial for a 97% overall success rate. The increase in this year’s capital budget is a result of our 2013 drilling success and our commitment to pursue additional opportunities in the deepwater Gulf of Mexico and onshore in our Yellow Rose field.”
Third quarter production through August averaged 44,600 Boe per day with a production mix that is 42% crude oil, 11% natural gas liquids and 47% natural gas. W&t Offshore estimates that September production has averaged approximately 47,000 Boe per day through the first 15 days of the month.
Offshore, the company’s Main Pass 108 B-1 discovery well is producing at approximately 950 Boe per day net to W&T after royalties. At the High Island 21 A-1 well, completion operations have concluded and production is expected to start in early October. The target initial production rate is approximately 1,500 Boe per day net to W&T after royalties. This successful well also encountered additional up-hole completion targets anticipated to add additional reserves and future value at this field. At the Mississippi Canyon 243 “Matterhorn” field the company expects to mobilize a rig in early October and start completion operations on the A-5 well. First production from this well is now expected to be in the middle of November. At the Ship Shoal 349 “Mahogany” field, the company has recompleted the A-4 well to within the “P” sand and increased this well’s production to 1,000 Boe, up 400% from its pre-recompletion rate. The A-14 well at Mahogany that began producing on July 20th is currently producing 3,330 Boe per day net to W&T after royalties and has had cumulative production of 204,100 Boe thus far. Also at Mahogany, the company started drilling the A-15, a sub-salt, deep shelf exploratory well. After setting surface casing, W&T Offshore skidded the rig to the A-12 well to conduct a workover which should take approximately one month. The A-15 well is now expected to reach total depth during the first quarter of 2014. The rig for the East Cameron 321 A-2 exploration well is mobilizing to the field and is expected to begin drilling during the first half of October.
Onshore, at the Yellow Rose field in the Permian Basin, the company recently spud its first Wolfcamp “B” horizontal well and expect results before year end. In its vertical program, the company is continuing to see improving results, with initial production rates from its last three wells averaging approximately 165 Boe per day net to W&T after royalties. The increased budget will add approximately six additional vertical wells and one horizontal well to the existing rig schedule in 2013.
September 30, 2013