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 opened 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. If you require operator assistance, please press star then zero. 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. 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 operation 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. I have with me today Janet Yang, our Executive Vice President and Chief Financial Officer, William Williford, our Executive Vice President and General Manager, 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 later during the call. 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 2021. We continued 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 increased 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. Looking at our mid-year 2020 reserve report prepared by Netherland, Sewell, those are our independent reserve engineering consultants. W&T's reserves and PV-10 value increased meaningfully. SEC proved reserves as of June 30, 2021, totaled 158.9 million bbl oil equivalent, compared with 144.4 million bbl oil equivalent at year-end 2020. About 36% of mid-year reserves were liquids, and the balance was natural gas. Approximately 87% were classified as proved developed producing. Strong positive revisions of previous estimates from field performance of 6.5 million bbl oil equivalent in the first six months of 2021, nearly offset year-to-date 2021 production of 7.3 million bbl oil equivalent without any additional drilling to date in 2021. This shows the quality and significant value of our asset base. Notably, we have spent minimal capital over the past 12 months, and we continue to see positive reserve revisions. In addition, the mid-year report reflected 15.3 million bbl oil equivalent of positive revisions due to SEC price changes resulting from the significant recovery in both oil and natural gas prices. The PV-10, excluding the impact of ARO of our mid-year proved reserves utilizing SEC pricing, was $1 billion. That's an increase of 39% compared with $741 million at year-end 2020. The mid-year 2021 SEC reserves and PV-10 were based on an average realized crude oil price of $47.78 /bbl, compared with $37.78 at year-end 2020, and an average realized natural gas price of $2.50 / Mcf, compared with $2.05 at year-end 2020. Utilizing NYMEX strip pricing as of July 1, 2021, mid-year proved reserves were 165.7 million bbl of oil, with a PV-10 of $1.5 billion. Mid-year 2021 NYMEX strip pricing, as of July 1, 2021, was based on an average realized crude oil price of $57.80 /bbl and an average realized natural gas price of $2.96 / Mcf. Turning to our operational and financial results, we had good second quarter results as we continued to operate efficiently in an improved commodity price environment. We reported $18.7 million in free cash flow for the second quarter of 2021 and have now generated almost $60 million in free cash flow for the first half of 2021. Adjusted EBITDA was $49.8 million in the second quarter of 2021. We've generated $107.3 million in adjusted EBITDA in the first half of 2021. While we reported a second quarter net loss of $51.7 million, or $0.36 per share, this was largely driven by a $66.1 million unrealized commodity derivative loss. Excluding primarily the unrealized derivative loss, our adjusted net income was $2.2 million, or $0.02 per share. In addition to the strong quarterly results, we also completed a financial transaction with Munich Re in May that meaningfully improved our financial flexibility by more efficiently utilizing the collateral value of our Mobile Bay Area assets. We transferred 100% of our Mobile Bay Area producing assets and related gas treatment facilities to wholly-owned special purpose vehicles in return for the net cash proceeds from a $215 million first-lien, non-recourse term loan to the SPVs at a very competitive fixed interest rate of 7%. This allowed us to pay off our existing RBL of $48 million and added significant cash to the balance sheet. Through our 100% ownership of the SPVs, we retain the upside value in the assets transferred. We still plan to drill new wells in Mobile Bay, and we will benefit from the potential additional cash flow from those new wells as we will receive quarterly dividends back to W&T after paying principal and interest on the loan and building a debt service reserve. We entered into a series of natural gas derivative contracts to cover debt service through the term of the loan. This transaction doesn't impact us operationally and allows us to take advantage of the long-lived nature of our Mobile Bay assets. Additionally, it provides long-term capital without maintenance covenants or borrowing base redetermination requirements and with no covenants at the parent level. Most importantly, it provides us the dry powder we need to continue to accretively grow W&T through attractive producing property acquisitions. Over the years, we've built a tremendous group of assets through organic growth and targeted acquisitions. We are actively looking at opportunities that meet our criteria, especially those that provide a solid foundation for our ability to generate free cash flow. We've integrated two strong acquisitions over the past two years, and we'll look for more of those types of opportunities in the future. We believe that market conditions in the Gulf remain very favorable for additional accretive acquisitions. Our immediate access to a significant cash balance and continued strong cash flow generation have well positioned us to actively pursue these opportunities. Turning to production for the second quarter of 2021, W&T produced 40,888 bbl of oil equivalent per day, or 3.7 million bbl of oil equivalent. That's an increase of 3% compared to 39,657 bbl of oil equivalent per day in the first quarter of 2021. Production was above the midpoint of our guidance due to better runtime efficiency and uplift from completed workovers. Liquids production comprised 45% of total production in the second quarter of 2021. Looking ahead to the third quarter of 2021, we're forecasting our production to be in line with the second quarter and average 38,500 bbl -42,500 bbl of oil equivalent per day. Our operations team is doing a really good job of maintaining our production despite not having any new wells coming online until later this year. We're tightening our full year 2021 production guidance range to between 39,000 bbl and 41,000 bbl of oil equivalent per day. Our lower production decline profile allows for reductions in capital expenditures without significantly impacting near-term production levels. In the second quarter, we spent $4.3 million. For the entire first half of 2021, we've only spent $5.9 million of our $30 million-$60 million full-year capital budget. We have an exciting new drilling opportunity in the second half of the year. I'll give more details on that later in this call. For the second quarter of 2021, our average realized sale price for a barrel of oil equivalent was almost unchanged from the first quarter. Our second quarter 2021 average realized crude oil sales price increased to $65.11 /bbl from $56.73 /bbl in the first quarter of 2021, and $21.67/bbl in the second quarter of 2020. It's great to see $70 crude today after actually going negative on NYMEX just a year ago. Our natural gas liquids sales price was also up slightly from the first quarter of 2021 to $26.18 /bbl, offset by lower natural gas prices of $2.66 / Mcf compared to $3.35/Mcf in the first quarter. Excluding the effect of hedges, revenues for the second quarter increased quarter-over-quarter by 6% to $132.8 million, driven by increased production. Despite the improved pricing environment, our focus will remain steadfast on capital discipline, operational excellence, and most importantly, free cash flow generation. In March 2021, we issued our inaugural corporate ESG report. Since day one, we've been committed to developing and producing oil and gas resources in a safe and environmentally responsible manner, all the while meeting or exceeding all regulatory requirements. These core values have guided our success and provided the foundation for W&T to grow into a trusted operator in the Gulf of Mexico, a generous partner to the communities where we operate, and good stewards to the environment. With that in mind, we're working with the new administration and BSEE to ensure that we have safe facilities that minimize the impact to the environment in which we operate. We've seen some reductions in operating costs and GHG emissions associated with the consolidation of our two Mobile Bay treating facilities into one plant in early 2021. However, we've seen increases in other operating expenses due not only to increased industry activity levels, but also in conjunction with ensuring that we meet or exceed regulatory requirements. Additionally, we're increasing our P&A activity this year, and we'll have more capital costs associated with asset retirements. We're expecting to spend $25 million-$35 million this year, of which we have spent only about $11.2 million through June. We established a multidisciplinary ESG task force that contributed to creating our initial ESG report, and they have the ongoing responsibility to monitor our adherence to our ESG standards and formally communicate their findings on to me and our board, and to suggest opportunities for further improvements. We're acting on their recommendations and continue to improve on our commitment to powering America safely and in a more sustainable manner for many years to come. I'm also pleased to say that their efforts in creating our first ESG report recently resulted in a meaningful improvement in one of our third-party ESG ratings by a highly regarded ESG rating agency. Turning to costs, lease operating expense, which includes base lease operating expenses, insurance premiums, workovers, and facilities maintenance, was $47.6 million in the second quarter of 2021, compared to $42.4 million in the first quarter. We'll continue to operate efficiently and do so in a rising price environment. We may see some cost increase in the near term. Additionally, recently, BSEE has prioritized certain types of maintenance repair for all Gulf of Mexico operators due to corrosion-related incidents at platforms operated by other companies. Nonetheless, we haven't changed our annual LOE guidance of $158 million-$174 million. We will remain vigilant in our cost containment initiatives, and we'll control the costs that we can without impacting safety or the environment. G&A was $14 million in the second quarter of 2021, which was at the low end of our guidance range. While we were at the low end of the range, G&A costs were up compared to the $10.7 million in the first quarter of 2021, which benefited from a $2.1 million employee retention credit associated with the CARES Act. We've increased our full year 2021 guidance range for G&A a little less than 4%, which takes into account the recent Mobile Bay financing and other ongoing M&A activity. Additional details on our expense guidance are in the earnings release we issued yesterday. Turning to the balance sheet and cash flow, net cash provided by operating activities for the three months ended June 30th, 2021 was $1.2 million, which was reduced by $25.6 million in derivative premiums paid for our hedging activities in conjunction with the new first lien secured term loan to retain the upside of higher natural gas prices while locking in floors for natural gas prices for production from Mobile Bay properties over the next seven years, higher ARO settlements and increased operating expenses. Considering each dollar of gas price increase could cost the company $165 million in hedge losses, we believe the call and put premiums are a good insurance cost to protect us over the next seven years. As I stated earlier, in the second quarter, we utilized a portion of the proceeds from the Munich Re transaction to pay off the remaining $48 million RBL balance. Working with our bank group, we recently executed an amendment and waiver that defers the spring 2021 borrowing base redetermination under our RBL until early October. During the interim time period, we've agreed to not access the credit facility, which remains fully undrawn. Given our very strong cash balance of $209 million as of June 30th, 2021, we don't see a need to access the revolver. We're also actively monitoring the debt capital markets and intend to seek financing with longer tenors and market-based covenants to provide even more liquidity in the future. Current total debt is $754.7 million, consisting of the balance of the Munich Re term loan of $208.3 million and $546.4 million of 9.75% senior second lien notes due 2023, net of amortized debt issuance costs for both transactions. W&T is currently in compliance with all applicable covenants of the credit agreement and the senior secured second lien notes indenture. Turning to operations during the second quarter of 2021, we performed one workover at Mahogany that in total added approximately 700 net barrels of oil equivalent per day to production. That's a very strong result that is both highly economic and helps us to mitigate natural decline. We plan to continue to perform workover and recompletions, as they are often some of the best economic projects in our portfolio. The successful Cota well that we drilled early last year at East Cameron 338 - 349 is currently in the development phase of the project and is expected to be on production in this year's fourth quarter. The well is in over 290 ft of water. It was drilled to a total depth of over 6,000 ft while encountering approximately 100 ft of net oil pay. Our interest will increase to 38.4% once the well is brought online and certain performance thresholds are met. While we continue to proceed with preparing our internally generated prospects for potential drilling later this year and into 2022, a third-party operated opportunity in Mississippi Canyon recently emerged that we're excited about. Based on our assessment, we believe the well is a high potential but relatively lower risk opportunity located in the Flex Trend area where W&T has had significant experience and success. Furthermore, assuming success, it could de-risk additional drilling opportunities that W&T has in the area. This prospect was identified using high-quality 3D seismic and reprocessing and has multiple objectives located beneath the salt overhang. This high-potential oil play ties directly to analogous fields in the area and has significant upside. We have a 25% working interest, and the well has just spudded. In summary, we believe this is an excellent opportunity with good upside potential that could also allow us to de-risk existing organic opportunities. The rising price environment presents many opportunities for W&T. We have a premier portfolio of both shallow water and deep water properties in the Gulf of Mexico with low decline rates and significant upside. There are many opportunities for acquisitions in our focus area, and we're constantly looking at any that can meet our stringent criteria. Our disciplined approach to growth has allowed us to navigate many cycles in the past. We remain opportunistic, and we'll look for ways that we can add value to W&T. We've always focused on generating free cash flow by operating efficiently and executing our long-term strategy to maximize shareholder value. Production is up, reserves are up, prices are up over $100 / bbl since April 20th, 2020. Differential spreads are down. Acquisitions are likely going forward as bid-ask spreads have narrowed. We're also seeking growth organically in an area and basin that we know very well, armed with better data. We're quite confident in our ability going forward to gain low-cost financing when it's necessary to do so. There's plenty of cash on the sidelines looking for yield, and the Gulf of Mexico is an excellent play for cash flow as well as a lower carbon intensity. Our management team's interests are highly aligned with those of our shareholders, given our 34% stake in W&T's equity, which is one of the highest of any public E&P company. This alignment of interest ensures that we're truly incentivized to maximize shareholder value and mitigate risk. Operator, if you would, we can now open the lines for questions. Thank you. We will now begin the question- and- answer session. To ask a question, you may press star then one on your telephone keypad. If you are using a speaker phone, please pick up your handset before pressing the keys. If anytime your question has been addressed and you would like to withdraw your question, please press star then two. Again, during the question-and-answer session, we ask that you limit your question to one and a follow-up. You can always rejoin the queue. At this time we will pause momentarily to assemble our roster. 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 it. Thanks, John. With these higher crude prices, are you seeing any oil service cost pressure starting to build? Yeah. We're seeing it 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. It's a little bit hard to discern that, but I see prices going up more on the transportation side of it at this point. Thank you. I was excited to see the announcement about your new well in Mississippi Canyon. As you mentioned, you've 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 well is 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 I'm a little bit reticent to do that. We haven't given out the names or depths or anything like that. If you did a little research, it wouldn't be hard to figure that out, I don't think. I just haven't gotten that permission. Actually, I didn't seek it, so I didn't think it was best to do that since the well just spudded a day or so ago. Okay. Totally understand. Any ballpark timeline on when we might hear the results, or is that being held tight also? No, I'm hoping we'll have something by the end of September. Okay. Well, we don't see many wildcats nowadays, so it's exciting to see. I'll pass. Yeah, it is. It's a very high-quality prospect. I'll pass it on. Great, thanks. The next question comes from Michael Scialla with Stifel. Please go ahead. Hey, good morning, Tracy. Good morning, everybody. Good morning, Michael. I want to see if you could give any kind of detail on the CapEx for the second half. You're obviously 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 the third quarter. Got it. You got the non-op well in the third quarter in the Flex Trend, and then I assume some additional workovers in the second half. You got the Cota well, fourth quarter. Anything else that we should be thinking about in terms of activity? Yeah. We'll be doing the development on the Cota well also. Great. Okay. Then you had mentioned in your prepared remarks on looking at the debt markets improving. Just want to get your view on the high-yield market now, maybe as that compares to the new SPV financing opportunity that you have. Yeah. The debt markets have been pretty white hot this year. I think it bears taking a look at. 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. I'm reticent not to do it. I think that we see a lot of money on the sidelines looking to chase yield. I 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. Again, if you have a question, please press star then one. The next question comes from Jeff Robertson with Water Tower Research. Please go ahead. Thanks. Good morning, Tracy. Hey, good morning, Jeff. 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 what kind of promotes people are looking for. Are you seeing opportunities to add prospects to your 2022 capital program? Yeah. The first part of your question on promotes, we're not seeing really heavy promotes. I think everybody's fairly tentative on their drilling programs at this point in time. Prices are up, I think that guides a lot of the thought process. The most recent well that we're talking about drilling, that we are drilling right now, was an opportunity that came to us in an area that we know a lot about, we're able to take advantage of the technology that we have with the data in-house to enhance that. I'm fairly confident that we'll see some more things like that in the future, I assure you that we're looking at it in-house and from others as well. Thank you. On this well that you're just spud, Tracy. Yeah 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 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're worried about installing a facility, that means it's a lot bigger. Okay. Yeah. That's potentially a good problem. That's a quality problem. You're right. All right. Thank you very much. Thank you, sir. We have a follow-up from Michael Scialla with Stifel. Please go ahead. Yes, sir. Yeah, Tracy. You'd 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 has certainly made that more relevant. There are some permitting things that we need to do in that area. I would suspect that permitting and prices of gas will make that more evident and on more than one well. We're relatively confident that this is something 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 as staying up for a good while. That's one of the reasons why we entered into all these call contracts that, or bought the calls rather, to assist us in some of our thought process around pricing on gas. We're pretty bullish on it. These are fairly complex, deep wells. They're over 4 mi deep, and it's hot, high pressure, and got a little H2S in it as well. Right. 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? 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. I recall a lot of the permitting things that we had to do at Mobile when we discovered the field nearly 40 years ago. 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, the lease sale, but anything else in terms of the regulatory environment? Yeah, the lease sale, of course, new leases aren't being sold right now or aren't being auctioned. Existing permits or existing leases, we are able to get permits. It's taking a little bit longer. The regulatory folks aren't back in their offices yet. I'm sure that'll straighten out as 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. Okay. 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. Goodbye. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.