Ladies and gentlemen, thank you for standing by. Welcome to the W&T Offshore Fourth Quarter and Full Year 2019 Conference Call. During today's call, all parties will be in a listen-only mode. Following the company's prepared comments, the call will be open for questions and answers. During the question-and-answer session, we ask that you limit your questions to one and a follow-up. You can always rejoin the queue. This conference is being recorded and a replay will be made available on the company's website following the call. [Operator Instructions] I would now like to turn the conference over to Al Petrie, Investor Relations coordinator.

Thank you, operator. And on behalf of the management team, I would like to welcome all of you to today's conference call to review W&T Offshore's fourth quarter and full year 2019 financial and operating results. Before we begin, I would like to remind you that our comments may include forward-looking statements. It should be noted that a variety of factors could cause W&T's actual results to differ materially from the anticipated results or expectations expressed in these forward-looking statements. Today's call may also contain certain non-GAAP financial measures. Please refer to the fourth quarter 2019 earnings release that we issued yesterday for a disclosure on forward-looking statements and reconciliations of non-GAAP measures. At this time, I would like to turn the call over to Tracy Krohn, W&T's Chairman and CEO.

Thank you, Al. Good morning, everyone, and thank you for joining us for our 2019 year-end conference call. With me today are Janet Yang, our Executive Vice President and Chief Financial Officer; William Wilford, our Executive Vice President and General Manager Gulf of Mexico; Steve Schroeder; our Chief Technical Officer; and Jim Hersch our Vice President Geosciences, who are all available to answer questions later during the call. Over the past 36 years, we've grown W&T through the right combination of attractive property acquisitions, methodical integration and exploitation of those acquisitions and successful development and exploratory drilling on our legacy fields, all while maintaining our focus on generating strong free cash flow. We completed two great acquisitions in 2019 for approximately $188 million that added meaningful production, significant reserves and future drilling locations. In addition, we added nine new shallow water and eight new deepwater leases in Gulf of Mexico federal lease sales. Financially, we generated adjusted EBITDA of $283 million, reported positive adjusted net income for every quarter, generated about $106 million in free cash flow excluding acquisitions and lowered per BOE operating and overhead costs. Thus, we increased reserves, increased production and cut costs. So before we discuss our strong fourth quarter earnings and provide an operations update, I'd like to review some of these important 2019 major achievements in a bit more detail. So at the beginning of 2019 I told you that we were looking closely at acquisition opportunities. And in the second half of 2019, we executed some very good transactions that met all of our stringent investment criteria. We look for properties with existing good cash flow, upside that we can achieve with the drill bit and the potential to increase near-term cash flow through workovers, recompletions and/or facility upgrades. We primarily use the…

[Operator Instructions]. The first question comes from John White of ROTH Capital. Please go ahead.

Good morning and congratulations. It's not every year that you're able to double proved reserves.

Thanks John.

So could you talk in general about the 2020 drilling and development program since CapEx has been greatly reduced which I think is a prudent move, given the size of the CapEx that rule out any deepwater wells. Or are you going to focus on workovers? Could you just give us a little color?

Yes we do have a reduced program from last year of course because we've reduced our budget. We've got a well that we're drilling now. We've got plans a little bit later on in the year for another well in -- what I would call deeper water at -- higher than 380. And also we've got plans for another well at Ship Shoal 14. We've got the Mississippi Canyon 800 side -- Subsea one sidetrack that we did as an invention work over in 2019. We're looking at some other activities around one of our fields that hasn't really come to the forefront yet for announcement purposes but that's going to be South Tim 316. So -- and we expect that we'll have other opportunities as we work through the data at Mobile Bay and other places where we're doing more reprocessing in our shops now. Expect to see the results of that kind of -- production increase probably later on in the year in early 2021.

Okay. Well thanks a lot. And given your production profile, you've got a lot of flexibility to cut CapEx like that. And congratulations on the progress of paying down the debt.

Thanks John. Yes, if we could just get prices up we'll do some more drilling too.

I appreciate you talking my question.

Thank you, John.

[Operator Instructions] The next question comes from Richard Tullis of Capital One Securities. Please go ahead.

Thanks. Good morning, Tracy and everyone over there. Quick questions for you. You talked about the acquisition landscape. And, of course, the reduced budget for this year. What's the outlook for possibly pulling together additional drilling type JVs similar to Monza to maybe do a little bit of work in 2020 with some outside funding as well?

Yeah, that's certainly a possibility. We do have more wells to drill. I'm really more inclined to focus on acquisitions at this point. And of course as we do the acquisition that generates more prospects.

Understood. And as you look at the 2020 budget the $50 million to $100 million in total. You outlined the guidance for this year in production and talked a little bit about the impact on production later in the year. What outlook would you see production-wise say the first half of 2020 as a result of this year's spending in broad terms?

I'm not sure I have a response for that Richard. I don't see real dramatic increases or decreases throughout the year. I think we've outlined guidance kind of as a front well -- not kind of but as a function of the budget that we proposed. Clearly if we spend more money, we'll expect to see an increase in the budget. We did tell you that down to a very minimal budget of around $20 million that we would expect to see only about a 1% decrease in production level.

Okay. And just as a quick follow-up. Could you do the same sort of production impact in 2021 with another $20 million type budget in 2021?

It's a little bit far-reaching right now. I think what we would expect to see is increases in production as a function of the work that we're doing. The more impact that we would see would be later on in the year in early 2021, so a complete blowdown of our reserves. We did no work -- is typical in the Gulf of Mexico where we're seeing around 15 or so percent. I mean, the good news is that our production profile has -- our R/P is increased over eight, about 8.7.

Okay. That’s helpful, Tracy. Thank you.

Sure. Thank you.

The next question comes from Richard Dearnley of Longport. Please go ahead.

Good morning. Your comment about the price effect on reserves was 10 million barrels or $0.5 billion. Was that largely in the oil part of your reserves? Or was that spread across the three?

No, it was more on the gas side of it.

Okay. And then to follow-up on the prior -- one of the prior questions. If in a -- your CapEx of $20 million keeping production down 1%, how much of the -- or what would the decline rate be for your assets pre-last year's acquisitions?

Pre-last year's acquisitions. Well, pre-last year we had an R/P of around 5.5 to six. And currently it's around 8.7. So I think that should make up for most of it.

I'm not at very faso [ph] with those numbers.

Okay, sir.

The -- since you have a bunch of production coming from 2019 acquisitions.

Right.

Yeah. The -- that's masking or it's offsetting the base decline rate.

No, it doesn't offset at all. It increases it. The base decline rate gets longer because we've added reserves that are long-lived reserves.

Okay. And the long-lived reserves increased the decline rate?

They decrease the decline right.

Yeah, they decrease the decline. Okay.

That's correct.

Okay. So I'll just say not available.

I don't know what you mean by that.

So the -- of -- the answer is -- I'm still murky on the answer. Now it could be…

I don't know how many different ways I need to answer it for you sir. The R/P profile has increased. And reserves have increased. The only logical answer is of course that the production profile is better. We're producing more and we've added more reserve and we've cut costs.

Okay.

Okay. Thank you.

[Operator Instructions] This concludes our question-and-answer session. I would like to turn the conference back over to Tracy Krohn, President and CEO for any closing remarks.

Thank you sir. We look forward to more good news in the not too distant future and we'll talk to you again soon. Thanks so much.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.