Welcome to the W&T Offshore third quarter Earnings Call. During today's presentation, all parties will be in a listen-only mode. Following the presentation, the conference will be open for questions. (Operator Instructions). As a reminder, this conference is being recorded today on Tuesday, the 4th of November 2008. I'll now turn the conference over to Mr. Manny Mondragon, Vice President of Finance. Please go ahead, sir.

Thank you, Operator, and good morning everyone. We appreciate you joining us for W&T Offshore's conference call to review the third quarter 2008 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 e-mail distribution list and to receive future news releases or you experienced a technical problem and didn't receive yours this morning, please call DRG&E's office at 713-529-6600 and somebody will be glad to help you. If you wish to listen to a replay of today's call, it will be available in a few hours via webcast or via recorded replay, until November 11, 2008. You can also find the access instructions in today's press release. Information recorded on this call speaks only as of today, November 4, 2008, 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 beliefs, as well as assumptions made by and information currently available to management. Forward-looking information includes statements regarding expected production and expenses for 2008 and 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, which are described in this morning's press release and 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 this 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 this morning's press release. Now, I would like to turn the call over to Mr. Tracy Krohn.

Thanks, Manny, and good morning everyone. I would like to thank you all for joining us for our third quarter 2008 conference call. Again, I'm Tracy Krohn, this morning; I will review key events that took place in the third quarter of 2008. With me today are Danny Gibbons, our Chief Financial Officer, Danny is going to review the company's liquidity and capital resources; Steve Schroeder, our Chief Operating Officer, Steve is going to talk to about our operations; and Jeff Durrant, our Senior VP of Exploration and Geoscience will update you on our 2008 drilling successes and preview next quarter's drilling plans. Also in the room today is Jamie Vazquez, our newly appointed President. Jamie is taking over the position of President. I will maintain the role of Chairman and CEO. Jamie is going to be focused on the day-to-day business, which includes the budgeting process, and all the other aspects of daily operations. That's going to allow me to focus on strategy and drilling areas that I have extensive background in and that I like doing. Following our formal presentation, we will also have a Q&A session. Talk a little bit about earnings per share and EBITDA. As this morning's press release stated, we had earnings per share, EPS of $1.03. Our adjusted EPS of $0.79 was an increase of 49% over third quarter 2007 adjusted EPS. Primary driver for the differences in EPS and adjusted EPS was a large unrealized derivative gains we recorded in the third quarter as a result of the sharp drop in commodity prices towards the end of the quarter. Third quarter EBITDA was $236 million and adjusted EBITDA was $208 million, again the difference being the unrealized derivative gains. Let's address the current production and hurricane update. As you are aware, the…

Thank you, Tracy. Instead of focusing on information that you've already received, seen in this morning's press release, I want to concentrate a minute on liquidity. At September 30, 2008, we had positive working capital of $282.1 million, which includes a cash balance of 685.3 million. Working capital decreased $54.7 million from June 30, 2008 due to higher capital expenditures and decreased cash flow associated with decreased production volumes resulting from the hurricanes. At September 30, 2008, our current maturities of long-term debt totaled $3 million, and we have $500 million of undrawn capacity available under the revolving portion of the credit agreement. Total assets were over $3.5 billion, and total debt was $654 million. Our debt-to-total book capitalization ratio stood at 31%, but our net debt-to-book capitalization ratio was actually less than zero. Our adjusted EBITDA-to-interest coverage was over 21 times interest expense. Our primary liquidity needs are to fund capital expenditures to allow us to replace oil and natural gas reserves. We pay outstanding borrowings and make related interest payments and to fund strategic property acquisitions. Historically, we have funded our capital expenditures including acquisitions with cash on hand, cash provided by operations, equity offerings, borrowings under the credit agreement and other long-term debt. These sources of liquidity have historically been sufficient to fund our ongoing cash requirements. Although there have been significant disruptions in the US and global capital markets, our company has prepared for these disruptions and is in a positive liquidity position. The company has historically been able to drill and develop properties and still generated excess cash and we believe we will be continue to be able to do so going forward. We believe that our customers remain creditworthy, and we have continued to pay their bills as they become due. We have a significant amount of cash on hand, and $500 million of capacity available under our revolving loan facility that matures in 2012. Effective October 24, 2008, our borrowing base is reaffirmed, allowing for continuation of our revolver at the $500 million level. 16 lenders participated in our revolving loan facility, and we do not anticipate any of them being unable to satisfy their obligations under the credit agreement. We have traditionally utilized bank financing as our foundation for financial success, and we believe that this credit lines will serve us well in this cycle. And with that, I'll turn the call over to Steve Schroeder. Steve?

Thanks, Danny. Let me start with an update on the effect of the storms on production and our remediation status. As of September 30, 2008, we have expensed $1.3 million toward the retention and expect to expense the remaining $8. 7 million in the fourth quarter to meet our $10 million retention for Hurricane Ike. We also realized $0.5 million of expenses for Hurricane Gustav but will not meet the $10 million retention for that storm. At this time, we are still assessing the damage and are estimating the full cost of repairs. As Tracy and Danny have mentioned though, we have sufficient insurance and liquidity to satisfy our needs. As Tracy said, we are currently producing approximately 159 million cubic feet equivalent per day. Now, let me give you some details related to production and what we currently believe are the leading factors for our buildup and production through the fourth quarter 2008 and into 2009. First, we have been in close contact with the pipeline companies and the operators of our jointly owned damaged platforms. We have approximately 55 million cubic feet equivalent per day of production deferred as a result of damage to gas pipelines, primarily HIOS, Sea Robin, ANR and Discovery. We have two major production facilities, East Cameron 321 and Ship Shoal 154, where both the oil and gas pipelines are under repair. At East Cameron 321, the damaged gas pipeline is the TETCO western lateral, and the damaged oil export line has portions operated by Marathon and Exxon. The other facility is Ship Shoal 154 where the gas pipeline shut in is the Tennessee 500 system and the oil pipeline is White Cap. In total, production deferred for platforms having damage to both oil and gas pipelines is 30 million cubic feet equivalent per…

Thanks, Steve, and good morning, everyone. As Tracy and Steve have just discussed, we continue to enjoy drilling success in 2008. Despite losing approximately a month of drilling time, W&T completed drilling six wells during the quarter, four of which were successful. Of the five exploration wells we drilled, three were successful, including one deep shelf well. For all of 2008 through the end of the third quarter, we've achieved an excellent success rate of 78%, with completions taken or planned in 14 out of 18 wells. Both of our development wells this year have also been successful, including one this quarter, which makes our drilling program 16 out of 20, for an overall 80% success rate through the third quarter. But more importantly, however, the production from these wells continues to build. Combined, these wells are currently capable of producing at a net rate of 4400 barrels of oil per day, about 28 million cubic feet of gas per day, or around 24 million cubic feet equivalent per day, net to W&T. Approximately 50% or 25 million a day is still shut in from the recent hurricanes. Of the 13 wells producing or capable of producing, seven are from former Kerr-McGee properties. Now, let's take a look at the specifics of our third quarter conventional shelf drill program. The Main Pass area yielded to highly successful wells, the 75% working interest Main Pass 283 A-1 sidetrack and the 75% working interest Main Pass 108 D-3. Main pass 283 well found 30 feet of gas/condensate in the secondary target and is now producing on a gross rate of 7.6 million cubic feet of gas per day, along with 500 barrels of oil per day for a net rate of 6.7 million cubic feet equivalent per day, net to W&T. This…

Thanks, Jeff. We expect to be very busy in the acquisition area. We've taken great care to manage our liquidity and operate within our cash flow for years. We note from experience that managing for cash has always been our strength. As the world liquidity crisis has deepened, we've been looking very closely at all of our options including acquisition, M&A and drilling. The operative part of that previous statement is that we do have options. How cool is that? Really cool part of that is we can move very quickly on any of those options or change those options very quickly as well. If it makes more economic sense to acquire, we will do so. If it makes more sense to grow through the drill-bit, we'll do that. We still continue to manage for cash and you can spell that opportunity. With that, that concludes our prepared remarks and we're ready to take your questions. Operator, please open the phone lines for Q&A.

(Operator Instructions) Our first question comes from the line of Neal Dingmann with Dahlman Rose. Please go ahead

Good morning.

Good morning, Neal.

Hi, Tracy, just wondering with the great liquidity position that you all have and nice cash that you have, what do you look as far as opportunities go, number one, paying debt down, are you comfortable there versus looking at additional leases versus looking at acquisition, just wondering how you balance all that?

The last list would be paying debt down right now. I think we have got a very comfortable level of debt. It is long- term, for the most part, and we feel like there are opportunities in acquisitions and drilling, it does not necessarily mean that we just do acquisitions. It could also mean M&A. It could also mean that we find a bunch of other wells that we think that our prospects that we think deserve being drilled. We expect to see some deflationary pressure on rig rates and bulk rates and whatnot that will drive the cost of goods and services, at lease operating expenses down in the future.

Okay. Then the change here in the near-term, you can say politically, does that give you any concern as far as the changes potentially as far as holding leases and just what is going on in the gulf?

No, I do not think so. Whatever the political landscape is going to be, we will deal with it accordingly as we always have.

Okay. Thanks.

We will take our next question from the line of Phil McPherson with Global Hunter Securities. Please go ahead.

Hi, good morning. Congrats on a great quarter, considering the difficult situation out in the Gulf. Hey, Tracy, if I do back-of-the-envelope math, are we looking at exiting the year at pretty close to 700 Bs, and I get to that by taking your unrisked pre-drill estimates on the deep shelf of 115 Bs, and you went 2 for 3, so is about 75 Bs. Is that the way to think of it?

I do not know how to think of looking at our reserves at this point in time. I am not going to respond to that. We still got some wells to drill before the end of the year.

Is my assumptions on the deep shelf wells in a ballpark range or?

I do not know.

Okay. One question for Danny on the financial side. It looked like your payables had jumped up pretty high in this quarter, so your net cash position looks like it is actually like 445? Is there something there reason your payables were higher than previous quarters there?

As I pointed out, working capital decreased about $55 million between June and September. We were doing a lot of projects and accruing for the capital expenditures and we saw some of that get paid off in the months of October, so it was just accruals for capital projects.

Great. I will let somebody else get on and I will queue back in. Thanks.

(Operator Instructions) Noel Parks with Ladenburg Thalmann & Co. Please go ahead with your question. Noel Parks - Ladenburg Thalmann & Co.: Good morning.

Good morning, Noel. Noel Parks - Ladenburg Thalmann & Co.: I just wanted to get a sense the guidance as you look into the rest of the year and then maybe in the first quarter of '09. Being in the situation again which is typical after a hurricane where you have infrastructure that needs to come back online and damage repaired. I mean how much variability would you say there is as you assess the timing of, when things are going to come online and when are you going to be able to get recent successes online? I mean do you think it is very difficult to say exactly when things are going to come back? Or do you feel like you have a good handle on the timing?

No, it is really hard to give you a definitive answer on that. I will qualify that by telling you that as we move further into the remainder of the year, we will get better information and I will give you an example of that. We had one pipeline that was down, a gas pipeline that is adjacent to our Ship Shoal 349 Field and we were told it was going to be down for some period of time. We looked into it a little bit further, and realized that the operator of the pipeline just simply did not have a boat available for saturation dive. We had one on hand that we could utilize and we were able to work with them to get the pipeline on production much quicker. In fact it is online now; so it accelerated that by a couple of months. I do not know if that exists elsewhere. We have another field that apparently has a valve that needs to be shut, again similar situation with the operator and we are working to resolve that. My sense is that the production, the vast majority of it will be back online before the end of the year, barring anything that we may not be aware of at this point in time. I think that as we sit now, we are fairly comfortable that 2009 will look much better than 2008. Noel Parks - Ladenburg Thalmann & Co.: Okay, great. Maybe you would talk a little bit more about at Mahogany; I understand that I think it was early next year you thought you would be able to have that deeper test out there. Just maybe a little bit more about timing, and also you mentioned that the torrential find is on trend, and any other thoughts you had about how bad it impacts your view of the risking or the geology there?

I will give you a little flavor on that. Actually, it may have been a little bit confusing. We have got a rig, actually the Gorilla IV that will be on location shortly. It is finishing up the Blackbeard well there, and then it will come to our location. We have got a well, the A-12 sidetrack to drill. That is actually a PUD location with a deeper extension that is exploratory for another block in the field. We are going to drill about another thousand feet deeper there. So, that is the first thing that we are going to do at Mahogany. The 25000-foot well is s scheduled, or as soon as we can get all of the design done or we have not yet completed the design. We have been telling the market second half of 2009 that will be a function of, again, how quickly we can get equipment to drill this well. We have just now chosen a target depth, so now we are working from a target depth of 25,000 feet, we are considering up to 30,000 feet, but we have decided to back off of that just a bit. So now we are planning on that, and we will have some more information on that as soon as I get a little better handle on what the exactly our planning is, and I will be looking at that personally. So, I hope that gives you a little more color. Noel Parks - Ladenburg Thalmann & Co.: Great, thanks.

Thank you. Our next question is from the line of Nicholas Pope with JPMorgan. Please go ahead.

Good morning.

Hi, Nick.

I was hoping, could you help me out in terms of like lease operating cost. I mean I was trying to get an idea of like how much of that cost is variable and how much is based on currents energy costs versus some of the fixed costs you have out there? Do you have a breakout of that?

I do not have a breakdown of variable versus fixed. I would tell you that normally in the fourth quarter, your variability goes down because you are not doing platform maintenance, platform planning and that things. We try to get that done during this summer. So you will see a little lower variability with costs on random things from other operators. Similarly, you will see workover and whatnot decrease during the fourth quarter, again weather related. We tend to try to get work done in the summer. So, it is a little bit lumpy on costs, but I do not really do a fixed versus variable calculation on our LOE. We have guided the market here. We are telling that we expect LOEs to remain about the same in fourth quarter and some of that is driven by the fact that we are still assessing damage from the hurricanes and still doing work and whatnot that we are precipitated by the storms.

Okay. That makes sense. A little more about the opportunities you are looking at. I mean is there anything in particular that you are targeting? I mean, are you looking at more buying production reserves? Or are you looking at maybe reloading the inventory, and buying prospects. How do you all think about that?

The answer is yes.

Okay.

We are looking at both. This is a really good time for us. We took great care in 2007 and 2008 to harbor our cash, husband our cash, if you will, and put ourselves in a position of basically net debt of zero. That is going to be key for us going forward. Plus the fact we have very good liquidity with our credit lines of $0.5 billion undrawn, so it does give us the opportunity to go out and make acquisitions. It does not preclude us from making corporate acquisitions as well. That is also within the realm of possibility. It is not my preferred method, but it is a possibility. It is always more difficult to do that than it is straight acquisition. As far as drilling other wells, you will see that people that were overleveraged and they have had those issues going into a time of liquidity crisis, does not mean they do not have good prospects. It just means they do not have enough money to get them drilled and their expectations of promoting the wells and whatnot could come down. So it is just our properties that we are looking at, it is other peoples as well.

Is onshore potential in the realm of possibility?

Well, yes, of course it is. It is just regular return. I have told the market for years, it does not really matter whether we are onshore or offshore. I mean you can drill and complete in 4000 feet of water in the Gulf of Mexico, you can probably drill and complete a well in Appalachia, if we needed to. It does not preclude us from going onshore. There may well be some good things to look at onshore or other basins or other parts of the world, but again it is a rate of return calculation that we think about and where we think we will get the best bang for our buck.

All right. Thanks a lot. That is all I have. Thanks Tracy.

Thank you.

(Operator Instructions) We do have a follow-up from Phil McPherson. Please go ahead.

Hey Tracy. Just on the Daniel Boone, you talked about first production in the second half of '09, what capacity are you planning for that?

No, I did not say first production. I said we may start the well second half of '09 the deep well. I am sorry, Daniel Boone, excuse me.

Would you comment on the capacity of the facility?

Daniel Boone, yes. We have designed the facility for 10,000 barrels of oil a day.

Okay, great. Thanks.

Hopefully that is the target that we will get to.

Okay, I appreciate. Thank you.

Yes.

Okay, thank you. Management, there are no further questions at this time. Please continue with any closing comments.

Okay. Well, I think that pretty much wraps it up, Operator.

Thank you ladies and gentlemen. This does conclude the W&T Offshore third quarter earnings conference call. If you would like to listen to a replay of today's conference in its entirety, you can do so by dialing 303-590-3000 and put the access code 11121166. Again, dial 303-590-3000 and put the access code 11121166. ACT would like to thank you very much for your participation. You may now disconnect. Have a very pleasant rest of your day.