Good morning, ladies and gentlemen. Thank you for standing by. Welcome to the W&T Offshore's Second Quarter Earnings Conference Call. [Operator Instructions] This conference is being recorded today, Thursday, August 7, 2014. I'd now like to turn the conference over to Ms. Lisa Elliott. Please go ahead, ma'am.

Thank you, operator, and good morning, everyone. We appreciate you joining us for W&T Offshore's conference call to review the results of the second quarter of 2014. And before I turn the call over to management, I have a few items I'd like to point out. If you wish to listen to a replay of today's call, it will 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 recorded replay until August 14. You can use the replay feature by calling (719) 457-0820, and dial the passcode 3356171. Information recorded on this call speaks only as of today, August 7, 2014, and therefore, time-sensitive information may no longer be accurate as of the date of any replay. Please refer to our second quarter 2014 earnings release for a disclosure on forward-looking statements. At this time, I'd like to turn the call over to Mr. Tracy Krohn, W&T's Chairman and CEO.

Thanks, Lisa. Good morning, all. Thanks for attending our second quarter 2014 earnings conference call. Joining me this morning are Jamie Vazquez, our President; Danny Gibbons, our Chief Financial Officer; Tom Murphy, our Chief Operations Officer; and Steve Schroeder, our Chief Technical Officer. Yesterday afternoon, we announced our second quarter results in a detailed news release, so this morning we'll focus on some of the key items in that announcement and take your questions. We had a strong quarter, and I'd like to point out a few highlights. Production was 48,300 barrels of oil equivalent per day, and 3% above our midpoint of guidance and 6.6% over the second quarter last year. Despite the deferred production that we encountered in the second quarter -- that's about 3.39 Bcf equivalent, or 564,000 barrels of oil equivalent, that we had in downtime, that we'll talk about later on. Revenues were $263 million, up $27.6 million over the second quarter of 2013. Operating expenses declined 9.5% compared to last year, and were 8.5% below the midpoint of our guidance. Earnings per share of $0.24 and adjusted EBITDA of $175.7 million were both well above second quarter 2013 results. So to that point, higher production and higher oil realized prices, coupled with lower operating expenses, led to our increase in adjusted EBITDA. EBITDA margins improved from 66% -- excuse me, from 60% to 67% in the second quarter of 2014, compared to the second quarter of 2013. So far, this year, adjusted EBITDA has increased to $343.7 million, which has allowed us to fund our capital program within cash flow. End of May, we announced that the U.S. Department of the Interior Bureau of Ocean Energy Management, or BOEM, informed us that W&T continues to qualify for a waiver of certain supplemental bonding requirements…

Yes, thank you. As Tracy mentioned, the company has increased its 2014 capital budget to $635 million. The additional $185 million is dedicated to additional exploration wells, which accounts for about $127 million; and acquisitions that have been completed so far in 2014, estimated about $58 million. All the additional projects support our reserve and production growth, as we maintain our criteria, drilling within cash flow. These additional projects strengthen our production outlook for 2015, as they start to fill a production gap that was created from our successful deepwater exploration program. All of these exploration wells, assuming success, will commence production within relatively short periods of time, ranging from about 2 months from now up to about 18 months. The revised budget is allocated 66% to the offshore, 25% to the onshore and about 9% of that for acquisitions that were made so far this year. This budget does not include any additional acquisitions that the company may compete in the remainder of the year. Now we'd like to provide you with some of the details of these high-impact exploration projects. We've added about 3, maybe even 4, deepwater wells to the budget and 1 well on the shelf, being East Cam 321, A-2 side track. First, we're currently drilling the Neptune SB 03 well, which is targeting 2 main field pays at a target debt of approximately 18,200 feet of total vertical depth. Estimated total well costs to drill is about $160 million gross or $32 million net, to our 20% working interest. The operator, BHP, estimates the reserves associated with this well could range between 4.1 and 8.1 million barrels of oil equivalent gross. With success, we expect to see first production from this well later this year. Also, additional projects include a second well in our…

Thanks, Jamie. We've just outlined numerous projects with substantial opportunity to add reserves and significant production volumes in the near term and in the future. Our deepwater program, in particular, continues to expand. We've just -- for several decades, most of our growth has come from acquiring quality-producing properties that offer upside potential, and then further exploring and developing them to realize that potential. This is not a new concept for us. We've been doing it this way for several decades. In our earlier days, this was primarily done on the shelf, but now we're doing that in a big way in the deepwater. We have a good reputation as an accomplished shelf player, but through acquisitions and the lease sales, we now have almost half of our lease acreage in the deepwater. We think that the strong economics of our successful deepwater program far outweigh large upfront costs, because we believe there are ultimately larger reserves. In summary, our successful exploration programs and acquisitions, both onshore and offshore, should provide the company with a solid growth pattern for years to come. And with that, operator, I'll take on questions.

[Operator Instructions] Our first question comes from Neal Dingmann with SunTrust.

Tracy, a question on -- it sounds like you're going to increase the program a little bit on the Permian. And just want to -- based on that, would that take any capital away from the offshore?

Not at this time, Neal. Right now we're still working on the premise that we've got a certain number of wells to drill horizontally there, before we advance into a full-fledged development program that would include pad drilling, line drive-type pad drilling. So, no, at this point in time, no change in budget percentages.

Okay. And then looking offshore, it seems like you've got a number of wells coming. How many -- Tracy, is it fair to say, how many additional deepwater projects are you adding late this year or beginning next year? It looked like quite a number to me.

Well, we've -- it looks like 4 total, so far.

Okay. And then remind me how many will be coming online? Are you starting to shift [ph] Big Bend or am I missing [indiscernible]? Is there another one coming online in the second half?

We're working on Big Bend and Dantzler. That timing may change just a little bit in our favor. We're not quite sure yet. We've spent some dollars on long lead items ahead of time even before sanctioning, we haven't sanctioned Dantzler at this time.

Okay. And then lastly given, obviously, a great capital that you have and your liquidity, are you looking for additional acquisitions like the Woodside at this time?

We're always looking for additional acquisitions, Neal. That's part and parcel of core activity for us.

We'll go next to Noel Parks with Ladenburgn Thalmann. Noel A. Parks - Ladenburg Thalmann & Co. Inc., Research Division: Just a couple of things. At Neptune, it was mentioned that you had -- I think it was a 1.1 million barrels of probable. I was wondering are those reserved in the probable category just because of 5-year SEC rule of capital allocation? And also, is the well that's being drilled, was that considered something that comes from a pud inventory or a probable?

To answer your first question, yes, we think we've taken a fairly conservative approach on the classification of those reserves. Those are the reserves we're targeting at this point in time. Noel A. Parks - Ladenburg Thalmann & Co. Inc., Research Division: Great. And the current drilling, an example of sort of project that you will be doing going forward under the operator?

Well, actually, the way we've looked at it, Gail [ph], is we think that in exploration, pure exploration plays, it behooves us not to take more than about 20%, we might go a little above or below that. But in general, around 20%. For instance, at Dantzler, we took 20% of Big Bend, we took 20% -- those were pure exploration plays. On anything that we do, of course, with regards to an acquisition, that would be a function of what our acquisition percentage is. It's already on production, so we're -- the normal process is we -- if we make an acquisition, we do it with an eye toward exploitation and exploration in the future. That's one of the things that motivates us, as opposed to just pure discounted cash flow. But I think that, in general, you'll see us on exploration plays at about 20%, plus or minus a little bit, and then on acquisitions, it will be a function of whatever we can acquire. Noel A. Parks - Ladenburg Thalmann & Co. Inc., Research Division: Okay. And just thinking about the balance sheet, it sounds like several deepwater projects are getting teed up beginning of this year and next. And so plenty to do in the Permian. Thinking of your leverage potentially heading off a bit from here?

Yes, that's a possibility. I mean, the point is we don't lever up to do exploration. We will lever -- we're still going to drill within cash flow. We will lever up to do acquisitions and development. And we think that's a good reason to lever up.

[Operator Instructions] We'll go next to Gail Nicholson with KLR Group.

I was curious, looking at Mahogany, that feels as though it's a field that keeps on giving. What's the plan proposed to A-17 well?

We'll take a look at that once we drill the A-17 well. It seems, Gail, that -- and I'm sorry, I must have gotten the name wrong there, I guess that was Noel before. Sorry, Noel. Anyway, I think, Gail, what we will do is we'll take a look at it at that point in time and we'll decide where we're going to go after that. We've gotten new loss data coming, latter part of this year, early part of 2015. So we will have a chance to examine and review that as well. We have still not gotten to the bottom of the hydrocarbon column at Mahogany. So every time we get new data, we find new wells to drill, and it's been like that ever since we've owned it.

Great. And then on -- do you guys plan to draw any additional horizons outside of the -- you're doing the Lower Spraberry, but you're going to do a Wolfcamp B or can anything else? Or are you just thinking about one additional horizon in B?

The short answer to that would be, yes, we do. We're just going to see where we'd come with each different horizon and keep a close watch on our neighbors and what they're doing. I think we probably won't lead on that, we'll be more likely to follow because there's a lot of activity around this. No reason to spend extra money wildcatting on some of these different ventures, there's so many of them. It's probably better for us to sit back and wait and see what everybody else is doing before coming up with a more comprehensive plan. But in the interim, I mean, we are looking at better ways to complete what we already have, and we are getting better at it. But also, we mentioned that we are targeting the Spraberry, which several of our offset operators have done very successfully. So we have high hopes for that as well.

And also in the release, you mentioned that you're doing 2 different frac designs on the Chablis 13H and 10H. Could you expound upon what different designs you're testing on those 2 wells?

Sure. I could, but then I'd have to shoot you. No, I'm -- seriously I can't. I mean, that is fairly proprietary.

With no further questions in the queue, I'd like to turn the call back over to management.

All right, operator, I think we're done. We appreciate it. We'll talk to you next quarter, if not before.