Greetings and welcome to the W&T Offshore, Incorporated First Quarter Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Lisa Elliott with Dennard Lascar, Investor Relations. Please go ahead.

Thank you, Operator and good morning everyone. We are glad to have you join us on W&T Offshore's conference call to review financial and operational results for the first quarter of 2018. Before I turn the call over to Company, I would like to remind you that information reported on this call speaks only as of today, May 3, 2018 and therefore, time-sensitive information may no longer be accurate as of the date of any replay. Also, please refer to the first quarter 2018 financial and operational results announcement that W&T released yesterday for a discussion on forward-looking statements and reconciliations of non-GAAP measures. At this time, I would like to turn the call over to Mr. Tracy Krohn, W&T's Chairman and CEO.

Thanks, Lisa. So, good morning, everyone and thanks for joining us today. With me this morning are Tom Murphy, our Chief Operations Officer; Danny Gibbons, our Chief Financial Officer; Steve Schroeder, our Chief Technical Officer; and Janet Yang, our Vice President of Business and Corporate Development. They are going to be available to answer questions later during this call. So it’s been a busy last couple of months since our fourth quarter call. On March 12, we entered into various agreements with initial investors, drilled up to 14 specified projects in Gulf of Mexico over the next three years. I would refer to this as a joint venture joint program. The transaction is structured such that we initially received 80% of the revenue contributing 20% of the cost in each project cost associated leases and combining access to the available infrastructure. While investors received certain threshold, we received about 38% of the economics on a world-by-world basis. The leading investor in the JV drilling program is an entity own controlled by funds managed by Heidelberg partners of Boston based every fund sponsor with over 40 billion of assets under management. The other initial investors are W&T in minority investment planning, the own and controlled by myself. The Krohn entity team invested on the same terms and conditions as the [indiscernible] 4% of total invested capital to our partners. Since the initial closing, we had a second closing with buying additional investors including Baker Hughes GE and we expect to have a third closing of relatively new future. W&T contributed 88.94% of its working interest in 14 different projects to Monza Energy LLC which is the newly created partnership the whole contributed interest. W&T retained an 11.06% working interest in each project contributed. The joint venture drilling program allows us to…

[Operator Instructions] Our first question is from John White with ROTH Capital. Please state your question.

Your press release mentioned you got wells drilling at Ewing Bank 910, Mahogany and Virgo. Could you talk a little bit about the timing of reaching total depth and bringing those wells on?

The Mahogany well A-5 sidetrack probably within the next couple of weeks will be at PV-10. Virgo again probably about the same kind of time frame, South Tim 311 is going to take a little bit longer with probably 45 days or so maybe 60 days to get the TD in 75…

And are all three of those wells in the drilling joint venture program?

They are.

Our next question comes from Jon Evans with SG Capital Management. Please state your question.

I know you have been frustrated by the maintenance and the pipeline now that is et cetera. You talked about it was 4200 in Q1. Do you see those outages in the platform maintenance getting better as you go into Q2 and Q3?

We do. We think that most of that's behind us, some of it was scheduled so we knew that ahead of time. Some of it was unscheduled. Some of these pipes have gotten a little bit older in a developed maintenance issues that had to deal with. Some of them are actually on platforms what we had to do some redesign around existing pipe connections. Some of them were sense surface. And also we do take into account that we have regular maintenance in our platforms. We take a little bit of extra care I think to make sure that even during these downtimes, I have done enough for these things and unfortunately 6, 7 in my carrier, all we have these downward pricing cycles, but I found it makes sense to invest money in maintenance now, while prices are lower, to save money later on when the prices are high and cost of goods and services are higher. It just seems to be a better option and similarly we’re doing the same thing with our targeted operation over use. In a last couple of years, we’ve had a pretty robust P&A program similar kind of worries raising prices are lower and we can get more work done. Now, we’re feeling the benefit as we reduced that capital program going into higher pricing cycles. So it seems to works out better for the longer term plan.

So, if you think I mean I know you can’t control of the platform goes down et cetera, but If you think about the acquisition et cetera, and where you're producing, are you producing roughly kind of in that 42 to 44 range. I mean if you just add that 7 back a day, 4200 from the outage and then you get about 3 from the acquisition. Is that a fair number now whether you’re going to bring that to market is different because you can't control the product line et cetera, but does that fair do you think?

The answer to that is yes. Yes, the production capacity is there, that’s why we can measure, yes.

And then the other question I have for you is, we haven’t been hedged in the past this kind of struck me uniquely, you put these in. So could you go into some kind of detail of your thought process, does it also change your strategy or it’s just because you and you got the debt maturities you want to make get some assurance on the cash flow and what you’re trying to do?

Yes, it’s a little bit but it’s not quite true that we haven’t been hedging in the past we have. It’s just not a normal of course the business for us as if not an automatic that what we hedge. We hedge to protect our budget. We hedge to manage different kinds of acquisitions and that sort of things. So that’s fair to reinforce. Hedging this year helps us to ensure that we are able to meet our debt obligations and helps to ensure our continuing acquisition efforts.

And then just a last question, because of where kind of WTI is et cetera and really light sweet, are you getting any benefit from that sliding scale that you had in Yellow Rose when you guys did that deal et cetera or no?

Short answer to that is yes.

So does that just comes through - it doesn’t come through in barrels it just comes through as revenue or is it going to be below the line or how do I see that will be identified in the Q?

It’s not - I don’t know it is necessary specifically identified in Q. Since this not worry that material to the company at this point. It comes through is just revenue. So I don’t - I would break that out, but yes, I mean they are continuing to make progress out there.

[Operator Instructions] Our next question comes from Dustin Tillman with Wells Fargo. Please state your question.

Can you talk about your revolver in the 10-K you had said that the banks were unwilling to extend the revolver. What does it take to get them to extend or reap, then what are the conversations then like with, other potential revolver lenders.

I am sorry, you cut out there a little bit Mr. Tillman, would you please repeat question?

Yes, in the 10-K, it said that the revolver banks were unwilling to extend under the current cap structure. So what is it take to get them to extend or what have conversations been like with other revolver lenders for potential replacement facility.

Yes, since Wells Fargo was in that revolver, I would think you guys have a pretty good idea which only convince, but I would tell you that, you first have to find that along the lines to the fact that, in fact amended restage their credit agreement expires it about November of this year, by its own terms. So, we didn’t see any need to go in and perhaps another agreement at this point in time with our banks, I think what we’ll see is a pretty much business as usual type of approach here. So I don’t anticipate any issues with that at all. I do anticipate that we will refinance in one way shape or another, the entire corporate structure, debt structure and credit facility, and fair short orders, so that’s not - revolver is not my top priority. It’s undrawn so it doesn’t quite, in order to change with drawn, so then we will get hold out retention.

What is having the ability to have a revolver do in terms of your wiliness to go buyouts assets. It looks like a lot of the deals that are taking place today include relatively large letter of credit or bonding type of facilities in terms of taking care of P&A?

Well, our revolver is our cheapest form of capital. So that’s our dry powder for things in which we feel like we would need to move fairly quickly. Our financial insurance is something that we do is regular course of our business in any events. And we always deal double of that over the last 35 years. So, it’s kind of hard to say we’ll, there is a cookie cover approach to how you manage all this, but it’s always nice to have an undrawn facility in the support of 20 different banks.

One more question and maybe more of a strategic question, now that you’re starting to generate a reasonable amount of free cash flow. When you saw about the joint venture, how did you decide what goes into the JV and what doesn’t and what is the balance of using free cash flow on high IRR opportunities versus effectively selling down a large part of that interest into the joint venture?

It’s a pretty complex question, it's not simple, the answer to that it’s taking a look at our portfolio and determine what’s going to be best for all parties concern, since I sit on both sides of that transaction. I think it is structured as a very fair type of investment for all the investors and for W&T as well. I think that’s major part of the attractions of the program. I have got a lot of my own capital involved in and the company does as well and will be operator, promotes them.

We do have another question and that comes from Hassan Ahmad with Serengeti. Please go ahead with your question.

Quick question for you. On looking at your guidance, I am just trying to figure out, does that include the Heidelberg acquisitions or is that, is the guidance, production guidance separate from that?

No, it does include Heidelberg, yes.

And so we guess, the second question, I have to offer that is you know if I am looking that production guidance is sort of year-over-year was still kind of, JVs guiding to, maybe down a little bit year-over-year. So I guess what do you think is going to take to kind of get your production backup as you work the way in the sort of this refi wall coming up in the next couple of years. You know obviously, the oil has helped out, but then you need to try to get production back as low I would imagine. So how do you sort of think about your production over the next year or two given that terminal loans something that?

That’s a great question. Some of the issue as I try to explain, as far as we try to explain in the earning release and in this conference call this morning has to do with production this offline for various reasons that, that we can really control. There is of course, these schedule maintenance but that’s generally with the pipeline companies, I think that they have to do to ensure integrity of the transport system. And some of which unscheduled which was completely unexpected. But we had a pretty tough weather cycle this, over the last six to seven months, probably worsened than anything other. So, we talked a lot about hurricanes, we now talk about normal winter weather type of activities, we get big winds in seas and it's hard to get equipment and supplies to locations, even sometimes back over the capital. So we had a good bit of that this winter and early spring. Normally activities pickup late spring, early December that’s sort of thing. And then they start to go a little bit slower toward the winter months. So, we have experienced some of that as far as how we’re going to replace production, well that’s always part of what we have is our incentive compensation goes. So that’s one of the things that surge the activity. We have to do with a reasonable approach, and lot of that is done by acquisition. So this company doesn’t just live and die by drill bit. We make acquisitions, we think that market is pretty good. We don’t budget because we don’t know how to predict it, but we’re - I fully expect to have more acquisitions this year. I fully expect to have pretty good success with the drill bit. Mahogany by the way is excluded from our JV drilling program. We have a specified member of prospects in our portfolio. We’re going to make sure that we manage our debt issues first, as well, because that’s eminent within the next 12 months. So we’re to the point where now, we will manage that as well and we wanted to be able to have enough cash flow to pay off the first $289 million of debt we will be able to do that with cash. So we’re lowering our net debt. I wanted to be able to do that whether we actually paid off immediately we paid off through a reasonable time period in refi. It just gives us a lot more options. And it also pleases up capital to do acquisitions and replace production. So I think we’ll come up with a pretty solid way of doing business to not only continue to grow the company, grow production but to reduce our debt.

Our next question comes from Jon Evans with SG Capital. Please state your question.

In your SG&A this quarter did you have expenses from the joint venture deal or from the Heidelberg transaction on a Boe it jumped up pretty big in just an absolute dollars it was a big increase and you guys have been pretty tight on that?

The answer to that is no, on the expenses for the JV Drilling program, that pretty minimal in regard to size of facility. The expenses will jump up as a result of Heidelberg much more expensive field to operate, but also pretty good revenue increase. So, we’re keeping eye on both of those figures because revenues jumping up as well.

And then just with Heidelberg, is there any like offset wells or any opportunities to increase that production overtime or do you keep it or is it just, producing assets that we’re just going to see the flows over?

Whenever, we buy fields we look at three things. We look at cash flow, we look at upside drilling, and we look at whatever we can do for our workovers rig completes and facilities upgrades that can increase throughput. We’re not the operator there, however, we do take a pretty serious look at all the data we have, we’re still continuing to examine the data from the field. So, we’re afraid to capture the all times up in future that will be work facility.

And then, Nobel today has some pretty positive comments on their call just about the jack-up market in general, the harsh environment. I know that’s not really in the Gulf where you are but can you just give us your thought process on kind of expenses in the Gulf and what you are seeing there. Are you started to see any kind of inflation or no?

Yes, we generally - the short answer is no and it’s not a lot. We generally see some seasonal adjustment. We get a little busier this time of the year because weather is better. And then we get less busy toward the end of the year, because the weather isn’t pretty good. So, but I am not seeing any really predictable long-term cost to goods and services.

Thank you. And there are no further questions at this time. I’ll turn the call back to Tracy Krohn for closing remarks. Thank you.

Thanks Operator. We appreciate and we will do this again next quarter and hopefully we will have some other good news in [June]. Thank you so much.

Thank you. This concludes today's conference. All parties can disconnect. Have a great day.