Ladies and gentlemen, thank you for standing by, and welcome to the W&T Offshore First Quarter 2024 Conference Call. [Operator Instructions] This conference call 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 Mr. Al Petrie of Investor Relations Coordinator. Please go ahead, sir.

Thank you, Chuck. 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 First Quarter 2024 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 Friday for disclosures on forward-looking statements and reconciliations of non-GAAP measures. With that, I would like to turn the call over to Tracy Krohn, our Chairman and CEO.

Thanks, Al, and good day to everyone, and thanks for joining us on our conference call. So joining us today are William Williford, our Executive VP and Chief Operating Officer; Sameer Parasnis, our Executive VP and Chief Financial Officer; and Trey Hartman, our Vice President and Chief Accounting Officer. They'll be available to answer questions later during the call. So we began 2024 with another quarter of solid operational and financial results, while continuing to execute our strategic vision. We focus on generating free cash flow, maintaining and optimizing high-quality conventional assets and opportunistically capitalizing on accretive opportunities to build shareholder value. We have a strong balance sheet and because of our focus on generating free cash flow, we continue to build cash on hand. We have generated positive free cash flow every quarter for over 6 years now because we know that cash is king and it provides us with an opportunity and the optionality to capitalize on other opportunities. We prioritize operational excellence, cost controlling initiatives, prudent capital spending and maximizing the value of our prolific asset base to deliver strong production and meaningful adjusted EBITDA. So in addition, it's our ability to successfully and seamlessly integrate producing property acquisitions that's helped W&T grow during our 40-plus year history. In the first quarter, we had a number of accomplishments that demonstrate how successful we're executing that strategy. So in January 2024, we acquired operatorship and 100% working interest in 6 shallow Gulf of Mexico field for $77.2 million that are adjacent to our existing operations. The impact of this acquisition could immediately be seen in our results. We reported production of over 35,000 barrels of oil equivalent per day. That's above the midpoint of our guidance range, and up 3% from the fourth quarter. More importantly, we increased…

[Operator Instructions] And first question will come from John White with ROTH Capital.

Congratulations on the nice results. I noticed on the guidance -- the new guidance gathering and transportation and G&A were a little lower than I had in my estimates. Do you want to comment on that?

Yes. Some of that reason is because we have some of that production still shut in. And that reflects some of that. We're negotiating somewhat on some of the midstream issues around that. And there's still maintenance that we need to do on some of that property.

And the lower G&A?

Yes. Go ahead.

Yes. Look, the G&A was slightly higher than the midpoint just because of some one-off costs that we have. But again, we maintain our guidance for the full year. We don't expect that to change.

Yes. It's not unusual for us to see a little increase in LOE and G&A with acquisitions in the initial part of the production curve going forward. It helps us to bring the facilities up to standard, hire the right people, and we want to take a little share in doing this. Get it right the first time and you don't have to invest with it as much further on down the line.

Your next question will come from Jeffrey Robertson with Water Tower Research.

Tracy, on the Cox assets, how long does it typically take to evaluate what kind of remediation work you need to do to bring the assets up to standards you're comfortable with? And then also to quantify and put a plan together for any kind of development or recompletion work to enhance the production profile of the assets?

Yes. Normally, it takes a few months, Jeff. In this particular case, there wasn't the normal kind of care that we see in making these types of acquisitions, this company, the predecessor Cox, went into bankruptcy and the maintenance wasn't what we've normally would expect to see. So as a result, we're having to do some remediation primarily around corrosion and that's taken a bit of time. It's not anything dangerous or anything. It's just something that needs to get done. And the regulatory agency certainly recognizes it, and we do too. So we're making sure that all gets done. I think that long term, that's a better strategy to make sure that we handle all the operating issues on the front end. It's been a little extra money to generate better revenues and better safety conditions going forward.

Tracy, you talked on the year-end earnings call about the potential of forming a drilling partnership that would include -- or could include Holy Grail. Can you provide any kind of an update on where that effort stands?

Yes. Really good question. We -- again, as I said earlier, we struggled a little bit with late '22 and whether we should just go ahead and pay off all the debt that we had in the second lien and not do another issuance. We ultimately decided to go ahead and redeem all those notes and do another -- a new issuance for $275 million, just to make sure that we had additional liquidity. And that was the right decision. So as we look at the situation going forward, we see the ability to make more acquisitions and grow the company from that methodology.

[Operator Instructions]

Jeff, I'm sorry, I didn't directly answer your question with regard to drilling. We did focus on making the acquisition that's why we haven't unveiled the drilling joint venture, we mentioned it. We told shareholders and potential investors and investors that we would probably defer for about a year. We are looking at that now, and we're putting together that program. It's going to be relatively extensive. I'm very encouraged by what I'm seeing, we are seeing interest in the program. We'll start off at Holy Grail still looking for proven reserves actually, initially. And it looks like that's still a goal for next year and possibly sooner if we get all the program put together in time. But I'm relatively pleased with the quality of not only the proven reserves that we're looking for, but also the exploratory potential of several of these projects that are fairly large. So I'm expecting a drilling program in the range of $500 million to $1 billion drill, complete and hook up.

And there are no further questions showing at this time. So this will conclude our question-and-answer session. And now I would like to turn the conference back over to Mr. Tracy Krohn for any closing remarks.

Ladies and gentlemen, we appreciate your interest in W&T. We will continue to work hard to make sure that we're increasing production reserves and cutting costs. Those are the primary things that we need to do and work towards every day. I do want to thank the team. They've done a really good job under difficult conditions with the latest acquisition that came out of bankruptcy. Nobody is ever happy during bankruptcy and understandably so. But it does have nice outcome for us, and we look forward to continuing to develop these assets and continue to also look at other assets to acquire. So thank you for your attention. We'll talk to you again soon.

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