W&T Offshore swung to a fourth quarter 2016 profit as its revenues grew by 11 pct due to higher oil price despite reduced production.
The oil company on Wednesday reported net income for the fourth quarter 2016 of $16.5 million. This compares to a fourth quarter of 2015 reported net loss of $51.6 million.
Revenues for the fourth quarter of 2016 increased 11% to $115.2 million compared to $104.1 million in the fourth quarter of 2015. The increase was primarily due to a 24% increase in realized commodity prices, partially offset by a 10% decrease in production.
Total production was 3.7 million barrels of oil equivalent (MMBoe) in the fourth quarter of 2016, down 10% from the fourth quarter of 2015 due to natural production declines, well performance, pipeline outages along with field and platform maintenance. This was partially offset by new oil production from the development of certain deepwater fields within the last year (Big Bend, Dantzler and EW 910).
The company’s capital expenditures on an accrual basis for the full year of 2016 were $48.6 million compared to $230.2 million for the full year of 2015. During 2016, capital expenditures were directed at drilling and the beginning of completion operations at the Ship Shoal 349 “Mahogany” A-18 well, completion activities of the Ewing Bank 954 A-8 well, recompletions at Virgo (VK 823) and Main Pass 69 and a new pipeline at East Cameron 321.
For 2017, capital expenditures are currently estimated at $125 million. The company’s plug and abandonment activities for 2017 are currently estimated to total $78.3 million and are expected to be funded with cash on hand and cash flow from operating activities.
Tracy W. Krohn, W&T Offshore’s Chairman and Chief Executive Officer, stated, “We are entering 2017 with a lower cost structure and a capital program of profitable projects that should allow us to build cash. We expect to benefit from improved seismic technologies, lower operating costs and less competition in the Gulf.
“Assuming commodity prices continue to remain steady, our 2017 capital plan allocates approximately $125 million to projects that we believe provide a low-risk and high return in producing fields. These projects should yield moderate production growth in 2017 over 2016.”