Ladies and gentlemen, thank you for standing by. Welcome to the W&T Offshore Second Quarter 2021 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. [Operator Instructions] This conference is being recorded and a replay will be made available on the company's website following the call. I would now like to turn the conference over to Al Petrie, Investor Relations Coordinator.

Thank you, Drew. 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 second quarter 2021 financial and operational results. Before we begin, I'd 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 second quarter 2021 earnings release that we issued yesterday for disclosures on forward-looking statements and reconciliations of non-GAAP measures. At this time, I would like to turn the call over to Tracy Krohn, our Chairman and CEO.

Thanks, Al. Good day to everyone and thanks for joining us for our second quarter 2021 conference call. So I have with me today, Janet Yang, our Executive Vice President and Chief Financial Officer; William Williford, our Executive Vice President and General Manager of Gulf of Mexico; Steve Schroeder, our Senior Vice President and Chief Technical Officer; and Stuart Obkirchner, our Director of Geosciences. They're all available to answer questions today later during the call. So we continued to deliver strong operational and financial results in the second quarter and believe that the improved commodity price environment and our commitment to expanding margins will lead to a very good second half of 2021. We continue to generate stronger adjusted EBITDA and have reported $58.7 million of free cash flow thus far in 2021. Operationally, we performed quite well and production was above the midpoint of guidance and increase quarter-over-quarter even without any newly drilled wells coming online. We're very pleased with higher commodity prices, but our focus remains on operational excellence and free cash flow generation. We have an outstanding asset base and we will continue to maximize the value of our assets. So looking at our Midyear 2020 Reserve Report prepared by Netherland, Sewell, those are independent reserve engineering consultants. W&T's reserves and PV-10 value increased meaningfully. SEC approved reserves as of June 30 2021 totaled to 158.9 million barrels of oil equivalent, compared with 144.4 million barrels of oil equivalent at year-end '20. About 36% of midyear reserves were liquids, and the balance was natural gas. Approximately 87% were classified is proved developed producing. Strong positive revisions of previous estimates from field performance of 6.5 million barrels of oil equivalent in the first six months of 2021 nearly offset year-to-date 2021 production of 7.3 million barrels of oil…

Thank you. We will now begin the question-and-answer session. [Operator Instructions] The first question comes from John White with ROTH Capital. Please go ahead.

Good morning. Thanks for taking my question. It's really nice to see all the free cash flow. So congratulations on that. Looks like you're really focused on.

Thanks, John.

Are you seeing - with these higher crude prices, are you seeing any oil service cost pressure starting to build?

Yeah, we're seeing that in transportation, boats, helicopters at this point. There is of course, some seasonal creep in the prices because this is the time of year when we get the most amount of work done second and third quarters. So it's a little bit hard to discern that, but I see prices going up more on the transportation side at this point.

Thank you. I was excited to see the announcement about your new well in Mississippi Canyon. As you mentioned you certainly got a lot of experience there with your Matterhorn and Mississippi Canyon 698 and several other blocks. Would you want to disclose what block this new wells in?

Yeah, I'd like to John. I just don't have permission right now from the other interests in the well to do so. So I'm a little bit reticent to do that. We haven't given out the names or depths or anything like that. But if you did a little research, it wouldn't be hard to figure that out I don't think. But I just haven't gotten that permission. And I actually I didn't seek it. So I didn't think it was best to do that since the well just about a day or so ago.

Okay, totally understand. Any ballpark timeline on when we might hear the results, or is that they held tight also?

No, I'm hoping we'll have something about it in September.

Okay. Well, we don't see many wildcats nowadays. So it's exciting to see.

Yeah, it is. It's very high quality prospects.

I'll pass it on.

Right, thanks.

The next question comes from Michael Scialla with Stifel. Please go ahead.

Hey, good morning, Tracy. Good morning, everybody. If you could just give any --, want to see if you give any kind of detail on the CapEx for the second half? Obviously the second half weighted with the spending, should we assume more of that is third quarter or fourth quarter?

I think more in the third quarter.

Okay.

We've got a little bit to spend in the fourth quarter because of Cota - third and fourth quarter because of Cota, but more primarily in third quarter.

Got it. So you get the non-op well in the third quarter in the flex trend and then assume some additional workovers in the second half. You get the Cota well fourth quarter, anything else that we should be thinking about?

Yeah, will be doing the development on the Cota well also.

Great. Okay. And then you had mentioned in your prepared remarks on - looking at the debt markets improving. Just want to get your - kind of your view on the high yield market? Now, maybe has that compares to the new SPV financing opportunities that you have?

Yeah, the debt markets have been pretty wide hot this year. So, I think it bears taking a look at and that's exactly what we're going to do. I think, we should avail ourselves of different options. That's kind of what they pay me for. So I'm reticent not to do it. I think that there's a really - we see a lot of money on the sidelines, looking to chase yield and always think that it's probably better to go find money when you can rather than when things are turned around.

Very good. Thank you, Tracy.

Thank you, sir.

[Operator Instructions] The next question comes from Jeff Robertson with Water Tower Research. Please go ahead.

Thanks. Good morning, Tracy. I was wondering if you could talk a little bit more about the prospects market in the Gulf of Mexico with the new addition to your capital program in terms of are there - what kind of promotes people are looking for? And also, are you seeing opportunities to add prospects to your 2022 capital program?

Yeah, so the first part of your question on promotes, and we're not seeing really heavy promotes. I think everybody's fairly tentative on their drilling programs at this point in time. Prices were up, so I think that that guides a lot of the thought process. The most recent well, that we're talking about drilling - that we're not drilling right now was an opportunity that came to us in the area that we know a lot about. And we're able to take advantage of the technology that we have with the data in-house to enhance that. So I'm fairly confident that we'll see some more things like that in the future. And I assure you that we're looking at it in house and from others as well.

Thank you. On this well, that you've just spud, Tracy, if it's successful, is this something that adds to the production profile in early 2022 or late 2022 or even earlier this year?

Yeah, it's a little bit of a well - not a little bit. It's a big function of the size of the discovery. Because it makes a difference, whether we tie it back subsea or whether we go ahead and install a facility.

Okay.

If we worry about installing a facility, that means it's a lot bigger.

Okay. That's potentially a good problem.

That's a quality problem. You're right.

All right. Thank you very much.

Thank you, sir.

And we have a follow up from Michael Scialla with Stifel. Please go ahead.

You'd just mentioned also that you do have the intent now to drill at Mobile Bay. Just want to get a sense of is that something that could happen next year or are you thinking longer term?

We're not quite sure yet. We've got some permitting things that we need to work through to get that done. The increase in the price of gas is certainly made that more relevant. But there are some permitting things that we need to do in that area. So I would suspect that permitting and prices of gas will make that that more evident and on more than one well. So we're relatively confident that this is happening, we get done in the next - or at least we get the permitting done in the next 18 months at this point for at least the first well, that would be our thought process at this point in time. We see prices is staying up for a good while, that's one of the reasons why we entered into all these call - contracts or bought calls [ph] rather to assist us in some of our thought process around pricing on gas. We're pretty bullish on it. So hopefully, we get - these are fairly complex deep wells. Now they're over four miles deep and hot high pressure and got a little H2S in it as well.

Right. And since you mentioned the permitting process, can you just talk in general about the regulatory environment now? How things have changed at all with the new administration?

Yeah, this is more to do with the State of Alabama but also the Feds too, as well as several other agencies that need to pass muster on the process. And I recall, a lot of the permitting things that we had to do at Mobile when we discovered the field nearly 40 years ago. And although I will say that, I'm pretty confident that State of Alabama would like to see some wells drilled out there. And we're looking forward to doing it.

I guess more broadly, in terms of your overall operations in the Gulf, are you seeing any greater challenges in getting permits or I guess, obviously, the whole bidding process has been put on hold for a while of the sale? But anything else in terms of the regulatory environment?

Yeah, of course, new leases are being sold right now aren't being optioned. But existing permits or existing leases, we are able to get permits. It take a little bit longer. The regulatory folks aren't back in their offices yet. So I'm sure that will demonstrate now is that that gets more in line with having people closer together and able to function more efficiently in a group environment as opposed to on the phone and via video. A lot of this requires looking at maps and details that are really hard to do on a video screen, as opposed to together in a room.

Understood. Thanks, Tracy.

Yes, sir. Thank you.

There are no further questions. At this time. I would like to turn the conference back over to Tracy Krohn, Chairman and CEO for any closing remarks.

Thank you, operator. We appreciate everybody's attention today. And look forward to speaking with you again in the near future. Thanks so much. Good bye.

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