Ladies and gentlemen, thank you for standing by. Welcome to the W&T Offshore Third Quarter 2023 Conference Call. During today's call, all parties will be in a listen-only mode. Following the company's prepared comments, this call will be opened 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. Please go ahead.

Thank you, Sarah. And on behalf of the management team, I'd like to welcome all of you to today's conference call to review W&T Offshore's third quarter 2023 financial and operational 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 earnings release that we issued yesterday for disclosures on forward-looking statements and reconciliations of non-GAAP financial measures. With that, I would like to turn the call over to Tracy Krohn, our Chairman and CEO.

Thanks, Al. Good day, everyone, and thanks for joining us this morning. With me today are William Williford, our Executive VP and Chief Operating Officer; Sameer Parasnis, our Executive VP and Chief Financial Officer; and Trey Hartman, our Chief Accounting Officer. They're all available to answer questions later during the call. But before I get into the operational and financial results, I would like to begin by reviewing our long-standing and successful strategic rationale. Our strategy has always been simple, to generate free cash flow, maintain high-quality conventional production and opportunistically capitalize on accretive opportunities to build shareholder value. We've delivered 23 consecutive quarters of free cash flow because we prioritize cash flow through our operational and cost-controlling initiatives. We have a prolific asset base that delivers strong production and generates meaningful EBITDA. We have generated positive free cash flow every quarter since the beginning of 2018. And in Q3 2023, we delivered over $25 million in free cash flow. So by prioritizing cash flow, we've built a strong balance sheet with ample cash to navigate our cyclical business, opportunistically acquire complementary assets and now be able to pay a quarterly cash dividend on our common stock. Our Board this week adopted a program to report -- to return a portion of our strong cash flow that we generate each quarter directly to our shareholders to enhance the return on their investment. Our first dividend of $0.01 per share will be paid on December 22 to shareholders of record on November 28, 2023. So we began 2023 by making a decision with regard to how we were going to manage our debt going forward. We have the ability to pay it all off, but we know that in times of uncertainty, maintaining liquidity is extremely important. So we redeemed all…

Thank you. We will now begin the question-and-answer session. [Operator Instructions] Our first question comes from Nate Pendleton with Stifel. Please go ahead.

Good morning all. Congrats on another strong quarter and the new dividend.

Thanks, Nate.

My first question, with your continued success in the M&A market, I wanted to get your thoughts on the opportunity set and the size of the packages you are seeing on the market today?

Yes. The opportunity is always good. It's used to a matter of pricing and timing as the price of oil and natural gas float up and down, it makes it difficult for people to make decisions about how they want to move forward. We recognize that. We're patient. We just -- we adhere to the principles that we've established over time, and that carries us through and -- but it does require some patience. I think that the company is well positioned going forward to either make acquisitions or drill. And we'll have a little bit more on that later on in the year.

Thanks. And given your ability to optimize production and use workovers to mitigate decline rates in the quarter, can you provide us any details on what you are able to do from an optimization perspective and how much more running room you have for further initiatives?

Yes. This is William Williford, I'll answer that. Essentially, we kind of base it on projects that we can think we can turn cash flow around pretty quickly and get good production associated with it. That's why you can see us from a strong cash flow position, you will see a lot of expenses going out versus the cash we have going in and we kind of plan it out accordingly. So that's kind of how we said it can be officially spin our cash effectively.

Got it. Thanks for taking my questions.

Our next question comes from Jeff Robertson with Water Tower Research. Please go ahead.

Thanks, good morning. Tracy, can you provide any update on the Cox situation in the acquisition that you all talked about that I think is just tied up in court?

Yes, good morning, Jeff. Yes, that's a very good question. The bankruptcy process is particularly difficult one. There's a lot of emotion, there's a lot of debts that haven't been paid. Otherwise, they wouldn't be there. So the process is at best variable as to how it proceeds. We were the high bidder at the auction. And since then, and we've actually gotten to the point where we signed a PSA with the debtor. However, there are other interests that weren't interested in it because it didn't relay a particularly good return to them. But it's really a hard situation for everyone. Nobody is happy. Everybody is usually in a position where they're losing money, and nobody likes to lose. I think it just will require more patience. I can't tell you that I fully understand the process. I'm not sure if anyone fully understands the process. We've been in this position before looking for properties and through bankruptcy courts. It's a difficult situation for all. And the best thing to do is just to be patient and see what develops because there's going to be changes all along the way. So I think it's going to take a little while longer to sort it out. We don't know 100% if this is something that will happen favorably toward us or how it will end up in the next several weeks.

Tracy, the acquisition that you did close in the third quarter, can you talk about what impact, if any, that has on W&T's overall corporate decline?

Yes. Essentially, if you look at the press release we put out there, I think we said it was around 2,400 barrels associated with quarter North once we added a full production. I think when we first got the asset under our roof, we actually kind of look at it and see what we can do. As far as efficient things that we get more efficient, optimize production and that sort of things. Sometimes the -- we got to look at some of the facilities and do some, spend some costs there to kind of look at a future and then maintaining production over time. And with that increase, that kind of helps to maintain our overall decline for the company.

I'll add to that just a little bit, Jeff, in that very often when we first make these acquisitions, the seller isn't spending a lot of money on maintenance and the other things they would normally spend money on.

And lastly, Tracy, are you willing to share an AFE for Holy Grail?

I don't think I have those total dollar amounts yet. We're still working on some of the longer lead items that we need to resolve. The rig will be coming from the bank to get offshore. So I'll probably be able to give you a little more clarity on that after the first of the year.

Thanks. And to be clear, the longer lead items are some of the items that would allow you to tie this in pretty quickly, right?

Yes.

Thank you.

Thank you sir.

[Operator Instructions]. Showing no further questions, I would like to turn the conference back over to Tracy Krohn for any closing remarks.

Thank you, operator. Thanks for joining us this quarter. We're happy that that we're on a really good track for this year and also very happy to be returning dividends again to shareholders. So we look forward to that for a long time. And we appreciate your attendance, and we'll talk to you very soon. Thank you.

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