W&T OFFSHORE INC
For the period ended Sep 30, 2024. Filed Nov 8, 2024.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Sep 30, 2024 · Filed Nov 8, 2024
WTI$3.09-1.0%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-06-30; filed 2024-08-07.
0001558370-24-011203
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-09-30; filed 2024-11-08.
0001558370-24-014923
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 94 previous paragraphs and 95 current paragraphs.
50 unchanged; 35 reworded; 9 added; 7 removed; 2 previous and 1 current paragraphs rearranged.
Tables are not compared: 17 previous and 17 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (9)
Current report
Since our operations are in the Gulf of Mexico, we are particularly vulnerable to the effects of hurricanes on production and operations. Significant hurricane impacts include reductions and/or deferrals of future oil and natural gas production and revenues, increased lease operating expenses for evacuations and repairs and possible acceleration of plugging and abandonment costs.
Current report
In its latest Short-Term Energy Outlook published in October 2024, the U.S. Energy Information Administration (“EIA”) estimated that Hurricane Francine, which made landfall on the Louisiana coast on September 11, 2024, resulted in the shut-in of up to 42% of oil production and 53% of natural gas production in the Gulf of Mexico (“GOM”). Production capacity in the GOM was unable to return to full capacity because Hurricane Helene, a Category 4 storm, went through a nearby area two weeks later, extensively disrupting energy systems.
Current report
Our production was impacted due to precautionary shut-ins of facilities and evacuations associated with both Hurricane Francine and Hurricane Helene. For the three months ended September 30, 2024, we estimate deferred production related to Hurricane Francine was approximately 132.8 MBoe and affected 35 fields, and deferred production related to Hurricane Helene was approximately 16.0 MBoe and affected five fields. Production downtime following these hurricanes was extended as a result of damage and power loss at third party downstream facilities, including oil terminals, natural gas processing plants and refineries, causing them to remain offline for several weeks. While our assets and infrastructure did not suffer significant damage during the storm, unplanned costs for minor repairs and restoring production, as well as evacuating employees and contractors, were incurred as a result of the hurricane and are reflected in lease operating expense.
Current report
Spot prices for West Texas Intermediate (“WTI”) oil averaged $70.24 per barrel in September 2024, down 8% from August 2024. Prices fell in September 2024 as concerns about global oil demand growth outweighed declines in oil inventories and OPEC+ members’ decisions to delay production increases until December 2024. However, after recent military actions involving Israel, Lebanon and Iran, the spot price for WTI rose to $77.76 per barrel on October 7, 2024, up 13% from a week earlier. In its latest STEO, the EIA is forecasting that WTI spot prices are expected to average $73.13 per barrel in 2025, reflecting a reduction for global oil demand in 2025. However, the conflict between Israel,
Current report
Lebanon and Iran has escalated in recent weeks with no timeline for potential resolution, increasing the possibility for supply disruptions and price volatility.
Current report
Spot prices for Henry Hub natural gas averaged $2.28 per MMBtu in September, 15% higher than the August 2024 average of $1.98 per MMBtu, as natural gas production fell slightly from August 2024. The decline in production was partly due to an 11% drop in natural gas production from the Gulf of Mexico primarily as a result of Hurricanes Francine and Helene. The EIA is forecasting that Henry Hub spot prices are expected to average $2.81 per MMBtu in the fourth quarter of 2024 and $3.06 in 2025. The EIA is expecting natural gas prices to rise in 2025 as liquid natural gas exports increase while domestic consumption and production is expected to remain relatively flat.
Current report
Production volumes decreased by 448 MBoe to 2,854 MBoe during the three months ended September 30, 2024 compared to the same period in 2023 primarily related toapproximately 3.5 MBoe per day of downtime mainly due to hurricanes and third-party downtime. These decreases were partially offset by increased production from wells acquired in January 2024.
Current report
Nine Months Ended September 30, 2024 Compared to the Nine Months Ended September 30, 2023
Current report
As of September 30, 2024, we had outstanding $275.0 million principal amount of the 11.75% Notes. We have commenced discussions with potential lenders and institutional investors regarding a potential refinancing of all or a portion of the 11.75% Notes prior to maturity, although there is no assurance as to the terms of any such refinancing or whether or when such refinancing will occur. We also may seek financings with longer tenors and market-based covenants to continue to provide working and potential acquisition capital. The terms of such financings, which may replace or augment our Credit Agreement, the Term Loan and refinance all or a portion of the 11.75% Notes, may vary significantly from those under the Credit Agreement, the Term Loan and the 11.75% Notes. We may also consider using a portion of our cash balances to reduce the amount required to be refinanced. While the nearing maturity of the 11.75% Notes creates risk with respect to our future liquidity, management believes that the actions being taken to fully repay the 11.75% Notes, including from cash on hand, cash to be generated through operations, a refinancing transaction and from the proceeds of a potential equity sale of up to $83.0 million available under the ATM program, would allow us to repay the 11.75% Notes prior to their maturity. However, there is no guarantee we will be successful in achieving these objectives.
Removed paragraphs (7)
Previous report
In April 2024, the Bureau of Ocean Energy Management (“BOEM”) released a final rule that changes the way BOEM evaluates the financial health of companies and offshore assets in setting financial assurance requirements. Under the new rule, BOEM streamlined the criteria used to evaluate the financial health of an energy company down to two factors: (i) the company’s credit rating, and (ii) the ratio of the value of the company’s proved reserves to decommissioning liability associated with those reserves. The new rule also codifies the usage of Bureau of Safety and Environmental Enforcement decommissioning estimates to evaluate supplemental financial assurance requirements and allows third party guarantors (upon agreement with BOEM) to provide limited guarantees to specific amounts or specific leases instead of the blanket guarantees that have been used in the past. Finally, the new rule also requires a base financial assurance requirement of $500,000 for federal rights-of-use and easements (“RUEs”) to match the requirement for state RUEs. To provide the industry with flexibility to meet the new financial assurance requirements, BOEM will allow current lessees and grant holders to request phased-in payments over a three-year period. BOEM estimates that the industry will be required to provide $6.9 billion in new financial assurances under the new rule, which took effect on June 29, 2024. Following the announcement of the new rule, a series of lawsuits from both states and industry groups have been filed against BOEM to block the implementation of the new rule. We are actively monitoring ongoing litigation with respect to the new rule.
Previous report
On June 28, 2024, we amended the Credit Agreement to (i) extend the maturity date to December 31, 2024, (ii) prohibit the use of loan proceeds to pay other Indebtedness (as defined in the Credit Agreement), and (iii) lower the excess cash balance sweep threshold.
Previous report
Spot prices for West Texas Intermediate (“WTI”) oil averaged $79.77 per barrel in June 2024, relatively unchanged from May 2024. Prices fell to $74.27 per barrel on June 4, 2024 following the Organization of the Petroleum Exporting Countries and Russia (“OPEC+”) meeting on June 2, 2024, when the group announced that 2.2 million barrels of oil per day of voluntary cuts would gradually be unwound beginning in the fourth quarter of 2024. Prices fell following this announcement as market participants assessed that unwinding production cuts could cause a significant increase in global oil inventories. The WTI spot price then reached a high of $85.19 per barrel on July 3, 2024, as market participants reassessed the announcement based on current global oil inventory levels and the indication by OPEC+ that production cuts remain subject to market conditions. In its latest Short-Term Energy Outlook published in July 2024, the U.S. Energy Information Administration (“EIA”) is forecasting that WTI spot prices are expected to average $84.33 per barrel for the second half of 2024 and $86.17 per barrel for the first quarter of 2025.
Previous report
Spot prices for Henry Hub natural gas averaged $2.53 per MMBtu in June 2024. At the end of June 2024, there was 19% more natural gas in storage compared with the five-year average. The EIA is forecasting that less natural gas will be injected into storage than the five-year average this summer season because of relatively flat production in the second half of 2024 and a seasonal increase in demand from the electric power sector. Despite the relatively flat production, the EIA still expects the U.S. will end the injection season in October 2024 with 6% more natural gas in storage than the five-year average. The EIA is forecasting that Henry Hub spot prices are expected to average $2.86 per MMBtu in the second half of 2024 and $3.29 per MMBtu in 2025.
Previous report
Production volumes decreased by 191 MBoe to 3,177 MBoe during the three months ended June 30, 2024 compared to the same period in 2023, driven by lower NGL and natural gas volumes. This decrease in NGL and natural gas volumes was primarily related to our primary Mobile Bay processing plant getting shut-in by the third-party operator to perform a turnaround. This forced us to re-route Mobile Bay volumes to a separate third-party processing plant that did not have the same capacity, leading to curtailed production and sales. These decreases were partially offset by increased production from wells acquired in both January 2024 and September 2023.
Previous report
Six Months Ended June 30, 2024 Compared to the Six Months Ended June 30, 2023
Previous report
On June 28, 2024, we amended the Credit Agreement to (i) extend the maturity date to December 31, 2024, (ii) prohibit the use of loan proceeds to pay other Indebtedness (as defined in the Credit Agreement), and (iii) lower the excess cash balance sweep threshold.
Reworded paragraphs (35)
Previous wording
We are an independent oil and natural gas producer, active in the exploration, development and acquisition of oil and natural gas properties in the Gulf of Mexico. As of June 30, 2024, we hold working interests in 63 producing offshore fields in federal and state waters (which include 55 fields in federal waters and 8 in state waters). We currently have under lease approximately 678,100 gross acres (520,400 net acres) spanning across the outer continental shelf off the coasts of Louisiana, Texas, Mississippi and Alabama, with approximately 5,600 gross acres in Alabama state waters, 519,000 gross acres on the conventional shelf and approximately 153,500 gross acres in the deepwater. A majority of our daily production is derived from wells we operate.
Current wording
We are an independent oil and natural gas producer, active in the exploration, development and acquisition of oil and natural gas properties in the Gulf of Mexico. As of September 30, 2024, we hold working interests in 53 producing offshore fields in federal and state waters (which include 46 fields in federal waters and seven in state waters). We currently have under lease approximately 673,100 gross acres (515,400 net acres) spanning across the outer continental shelf off the coasts of Louisiana, Texas, Mississippi and Alabama, with approximately 5,600 gross acres in Alabama state waters, 514,000 gross acres on the conventional shelf and approximately 153,500 gross acres in the deepwater. A majority of our daily production is derived from wells we operate.
Previous wording
On August 6, 2024, we declared a regular quarterly dividend of $0.01 per share for the third quarter of 2024. We expect to pay the dividend on August 27, 2024, to stockholders of record as of the close of business on August 20, 2024.
Current wording
On November 7, 2024, we declared a regular quarterly dividend of $0.01 per share for the fourth quarter of 2024. We expect to pay the dividend on November 29, 2024, to stockholders of record as of the close of business on November 21, 2024.
Previous wording
In addition to the impact of volatile commodity prices on our operations, continuing inflation could also impact our sales margins and profitability. The annual inflation rate for June 2024 was 3.0%, a decrease from the 3.3% rate for May 2024. Although inflation seems to be easing, the Federal Reserve left the fed funds target range steady at 5.25% to 5.50% for a seventh consecutive meeting in June 2024. Policymakers do not expect it will be appropriate to reduce rates until they gain greater confidence that inflation is moving sustainably toward 2%. Policymakers see only one rate cut this year and four reductions in 2025. However, if inflation were to begin to rise again, it is possible the Federal Reserve would continue to take action they deem necessary to bring inflation down and to ensure price stability, including further rate increases, which could have the effects of raising the cost of capital and depressing economic growth, either or both of which could negatively impact our business.
Current wording
In addition to the impact of volatile commodity prices on our operations, continuing inflation could also impact our sales margins and profitability. The annual inflation rate for September 2024 was 2.4%, a slight decrease from the 2.5% rate for August 2024. In September 2024, the Federal Reserve lowered the target federal funds range by 50 basis points to 4.75% to 5.00%, easing monetary policy for the first time in four years due to progress in inflation moving sustainably toward 2%. The Summary of Economic Projections published by the Federal Reserve in September 2024 points to another 50 basis points of cuts in 2024 and another 100 basis points of cuts in 2025. However, if inflation were to begin to rise again, it is possible the Federal Reserve would continue to take action they deem necessary to bring inflation down and to ensure price stability, including rate increases, which could have the effects of raising the cost of capital and depressing economic growth, either or both of which could negatively impact our business.
Previous wording
Lease operating expenses* –*Lease operating expenses, which include base lease operating expenses, workovers, and facilities maintenance expense, increased $8.0 million to $74.0 million during the three months ended June 30, 2024 compared to the same period in 2023. On a component basis, base lease operating expenses increased $8.9 million, workover expenses decreased $6.7 million, and facilities maintenance expense increased $5.8 million.
Current wording
Lease operating expenses* –*Lease operating expenses, which include base lease operating expenses, workovers, and facilities maintenance expense, increased $10.6 million to $72.4 million during the three months ended September 30, 2024 compared to the same period in 2023. On a component basis, base lease operating expenses increased $7.2 million, workover expenses decreased $0.9 million, facilities maintenance expense increased $3.9 million and hurricane expenses increased $0.4 million.
Previous wording
Expenses for direct labor, materials, supplies, repair, third-party costs and insurance comprise the most significant portion of our base lease operating expense. Base lease operating expenses increased primarily due to three months of expenses at the fields acquired in January 2024 and September 2023.
Current wording
Expenses for direct labor, materials, supplies, repair, third-party costs and insurance comprise the most significant portion of our base lease operating expense. Base lease operating expenses increased primarily due to the fields acquired in January 2024 and September 2023.
Previous wording
Workover and facilities maintenance expenses consist of costs associated with major remedial operations on completed wells to restore, maintain or improve the well’s production. Since these remedial operations are not regularly scheduled, workover and maintenance expense are not necessarily comparable from period to period. The decrease in workover expenses and the increase in facilities maintenance expenses were due to the timing and mix of projects undertaken.
Current wording
Workover and facilities maintenance expenses consist of costs associated with major remedial operations on completed wells to restore, maintain or improve the well’s production. Hurricane expenses consist of costs forminor repairs and restoring production, as well as evacuating employees and contractors incurred as a result of the hurricanes. These types of expenses are not necessarily comparable from period to period and can changedue to the timing and mix of projects undertaken.
Previous wording
Depreciation, depletion and amortization (“DD&A”) –*DD&Aincreased $8.5 million for the three months ended June 30, 2024 as compared to the three months ended June 30, 2023. The DD&A rate increased to $11.55 per Boe for the three months ended June 30, 2024 from $8.37 per Boe for the three months ended June 30, 2023. The DD&A rate per Boe increased primarily as a result of a higher depreciable base due to our January 2024 acquisition, increases in capital expenditures, future development costs and capitalized ARO and lower proved reserves.
Current wording
Depreciation, depletion and amortization (“DD&A”) –*DD&Aincreased $4.0 million for the three months ended September 30, 2024 as compared to the three months ended September 30, 2023. The DD&A rate increased to $11.99 per Boe for the three months ended September 30, 2024 from $9.15 per Boe for the three months ended September 30, 2023. The DD&A rate per Boe increased primarily as a result of a higher depreciable base due to our January 2024 acquisition, increases in capital expenditures, future development costs and capitalized ARO and lower proved reserves.
Previous wording
Asset retirement obligations accretion expense *–*Accretion expense is the expensing of the changes in value of our ARO as a result of the passage of time over the estimated productive life of the related assets as the discounted liabilities are accreted to their expected settlement values. Accretion expense increased $0.7 million in the three months ended June 30, 2024 compared to the same period in 2023 primarily due to the increase in our ARO liability as a result of our January 2024 acquisition and revisions to the estimates used in calculating the liability.
Current wording
Asset retirement obligations accretion expense *–*Accretion expense is the expensing of the changes in value of our ARO as a result of the passage of time over the estimated productive life of the related assets as the discounted liabilities are accreted to their expected settlement values. Accretion expense increased $1.4 million in the three months ended September 30, 2024 compared to the same period in 2023 primarily due to the increase in our ARO liability as a result of our January 2024 acquisition and revisions to the estimates used in calculating the liability.
Previous wording
General and administrative expenses (“G&A”)* –*G&A increased $4.0 million to $21.4 million for the three months ended June 30, 2024 as compared to $17.4 million for the three months ended June 30, 2023. The increase is primarily due to non-recurring professional and legal services.
Current wording
General and administrative (“G&A”) expenses* –*G&A expenses for the three months ended September 30, 2024 were relatively flat compared to the three months ended September 30, 2023.
Previous wording
Derivative loss (gain), net* –*During the three months ended June 30, 2024, we recorded a $2.4 million derivative loss for our natural gas derivative contracts consisting of $2.7 million of unrealized loss from the decrease in the fair value of our open natural gas contracts and $0.3 million of realized gains. During the three months ended June 30, 2023, we recorded a $0.8 million derivative gainfor our natural gas derivative contracts consisting of $0.3 million in realized losses and $1.1 million of unrealized gain from the increase in the fair value of our open natural gas contracts.
Current wording
Derivative gain, net* –*During the three months ended September 30, 2024, we recorded a $3.2 million derivative gain for our natural gas derivative contracts consisting of $1.8 million of unrealized gain from the increase in the fair value of our open natural gas contracts and $1.4 million of realized gains. During the three months ended September 30, 2023, we recorded a $1.5 million derivative gainfor our natural gas derivative contracts consisting of $2.0 million in realized losses and a $3.5 million unrealized gain from the increase in the fair value of our open natural gas contracts.
Previous wording
Other expense (income), net* –*Other expense, net increased $1.6 million for the three months ended June 30, 2024 compared to the same period in 2023 primarily related to the accrual of additional expenses for net abandonment obligations pertaining to a number of legacy Gulf of Mexico properties.
Current wording
Other expense (income), net* –*Other expense, net increased $13.8 million for the three months ended September 30, 2024 compared to the same period in 2023 primarily related to the accrual of additional expenses for net abandonment obligations pertaining to a number of legacy Gulf of Mexico properties, partially offset by fees paid by producers to tie into our subsea equipment at one of our wells.
Previous wording
Income tax (benefit) expense* –*Our effective tax rate for the three months ended June 30, 2024 was 23.1%. The difference between the effective tax rate and the federal statutory rate was primarily due to the impact of nondeductible compensation and adjustments to the valuation allowance. Our effective tax rate for the three months ended June 30, 2023 is not meaningful primarily as a result of changes in the valuation allowance on our deferred tax assets.
Current wording
Income tax (benefit) expense* –*Our effective tax rate for the three months ended September 30, 2024 was 11.0%. The difference between the effective tax rate and the federal statutory rate was primarily due to the impact of nondeductible compensation and adjustments to the valuation allowance. Our effective tax rate for the three months ended September 30, 2023 was not meaningful primarily as a result of changes in the Company’s valuation allowance on our deferred tax assets.
Previous wording
The following table presents information regarding our revenues, production volumes and average realized sales prices (which exclude the effect of hedging unless otherwise stated) for the six months ended June 30, 2024 and 2023 (in thousands, except average realized sales prices data):
Current wording
The following table presents information regarding our revenues, production volumes and average realized sales prices (which exclude the effect of hedging unless otherwise stated) for the nine months ended September 30, 2024 and 2023 (in thousands, except average realized sales prices data):
Previous wording
Changes in average sales prices and production volumes caused the following changes to our oil, NGL and natural gas revenues between the six months ended June 30, 2024 and 2023 (in thousands):
Current wording
Changes in average sales prices and production volumes caused the following changes to our oil, NGL and natural gas revenues between the nine months ended September 30, 2024 and 2023 (in thousands):
Previous wording
Production volumes increased by 84 Mboe to 6,376 Mboe during the six months ended June 30, 2024 compared to the same period in 2023, primarily due to both the January 2024 and the September 2023 acquisitions, partially offset by the change in the NGL and natural gas processing plant and normal production decline on existing wells.
Current wording
Production volumes decreased by 363 Mboe to 9,230 Mboe during the nine months ended September 30, 2024 compared to the same period in 2023, primarily due to the effects of Hurricanes Francine and Helene, third-party downtime andour Mobile Bay production that had to be re-routed to a different processing plant. These decreases were partially offset by increased production from wells acquired in both the January 2024 and the September 2023 acquisitions.
Previous wording
Lease operating expenses* –*Lease operating expenses, which include base lease operating expenses, workovers, and facilities maintenance expense, increased $13.6 million to $144.8 million during the six months ended June 30, 2024 compared to the same period in 2023. On a component basis, base lease operating expenses increased $22.1 million, workover expenses decreased $8.7 million, and facilities maintenance expense increased $0.2 million.
Current wording
Lease operating expenses* –*Lease operating expenses, which include base lease operating expenses, workovers, and facilities maintenance expense, increased $24.2 million to $217.2 million during the nine months ended September 30, 2024 compared to the same period in 2023. On a component basis, base lease operating expenses increased $29.3 million, workover expenses decreased $9.6 million, facilities maintenance expense increased $4.1 million and hurricane expenses increased $0.4 million.
Previous wording
Base lease operating expenses increased primarily due to three months of expenses at the fields acquired in January 2024 and September 2023, as well as higher repair, maintenance and labor costs at other fields.
Current wording
Base lease operating expenses increased primarily due to nine months of expenses at the fields acquired in January 2024 and September 2023, as well as higher repair, maintenance and labor costs at other fields.
Previous wording
Workover and facilities maintenance expenses consist of costs associated with major remedial operations on completed wells to restore, maintain or improve the well’s production. Since these remedial operations are not regularly scheduled, workover and maintenance expense are not necessarily comparable from period to period. The decrease in workover expenses and the increase in facilities maintenance expenses were due to the timing and mix of projects undertaken.
Current wording
Workover and facilities maintenance expenses consist of costs associated with major remedial operations on completed wells to restore, maintain or improve the well’s production. Hurricane expenses consist of costs forminor repairs and restoring production, as well as evacuating employees and contractors incurred as a result of the hurricanes. These types of expenses are not necessarily comparable from period to period and can changedue to the timing and mix of projects undertaken.
Previous wording
Gathering, transportation and production taxes* –*Gathering, transportation and production taxes increased $1.8 million for the three months ended June 30, 2024 compared to the three months ended June 30, 2023 primarilydue to higher processing fees for our Mobile Bay production that had to be re-routed to a different processing plant.
Current wording
Gathering, transportation and production taxes* –*Gathering, transportation and production taxes increased $2.6 million for the nine months ended September 30, 2024 compared to the same period in 2023 primarilydue to higher processing fees for our Mobile Bay production that had to be re-routed to a different processing plant, partially offset by lower production volumes.
Previous wording
*DD&A –*DD&Aincreased $19.8 million for the six months ended June 30, 2024 as compared to the six months ended June 30, 2023. The DD&A rate increased to $11.07 per Boe for the six months ended June 30, 2024 from $8.07 per Boe for the six months ended June 30, 2023. The DD&A rate per Boe increased primarily as a result of a higher depreciable base due to our January 2024 acquisition, increases in capital expenditures, future development costs and capitalized ARO and lower proved reserves.
Current wording
*DD&A –*DD&Aincreased $23.8 million for the nine months ended September 30, 2024 as compared to the same period in 2023. The DD&A rate increased to $11.36 per Boe for the nine months ended September 30, 2024 from $8.45 per Boe for the nine months ended September 30, 2023. The DD&A rate per Boe increased primarily as a result of a higher depreciable base due to our January 2024 acquisition, increases in capital expenditures, future development costs and capitalized ARO and lower proved reserves.
Previous wording
Asset retirement obligations accretion expense *–*Accretion expense increased $1.1 million in the six months ended June 30, 2024 compared to the same period in 2023 primarily due to the increase in our ARO liability related to our acquisitions in September 2023 and January 2024 and revisions to the estimates used in calculating the liability.
Current wording
Asset retirement obligations accretion expense *–*Accretion expense increased $2.6 million in the nine months ended September 30, 2024 compared to the same period in 2023 primarily due to the increase in our ARO liability related to our acquisitions in September 2023 and January 2024 and revisions to the estimates used in calculating the liability.
Previous wording
G&A* –*G&A increased $4.6 million to $41.9 million for the six months ended June 30, 2024 as compared to $37.3 million for the six months ended June 30, 2023. The increase is primarily due to non-recurring professional and legal services and higher medical claims.
Current wording
G&A expenses* –*G&A expenses increased $4.3 million to $61.6 million for the nine months ended September 30, 2024 as compared to $57.3 million for the nine months ended September 30, 2023. The increase is primarily due to non-recurring professional and legal services and higher medical claims.
Previous wording
Interest expense, net* –*Interest expense, net, decreased $4.8 million for the six months ended June 30, 2024 compared to the same period in 2023 due to the redemption of the 9.75% Notes in February 2023 and a decrease in interest expense on the lower outstanding principal balance of the Term Loan, partially offset by interest expense incurred on the 11.75% Notes issued in late January 2023 and a decrease in interest income.
Current wording
Interest expense, net* –*Interest expense, net, decreased $4.7 million for the nine months ended September 30, 2024 compared to the same period in 2023 due to the redemption of our 9.75% Senior Second Lien Notes due 2023 (the “9.75% Notes”) in February 2023 and a decrease in interest expense on the lower outstanding principal balance of the Term Loan, partially offset by interest expense incurred on the 11.75% Senior Second Lien Notes due 2026 (the “11.75% Notes”) issued in late January 2023 and a decrease in interest income.
Previous wording
Derivative gain, net* –*During the six months ended June 30, 2024, we recorded a $2.5 million derivative gain for our natural gas derivative contracts consisting of $4.1 million of realized gains offset by $1.6 million of unrealized losses from the decrease in the fair value of our open natural gas contracts. During the six months ended June 30, 2023, we recorded a $40.1 million derivative gainfor our natural gas derivative contracts consisting of $40.6 million in unrealized gains from the increase in the fair value of our open derivative contracts and $0.5 million of realized losses.
Current wording
Derivative gain, net* –*During the nine months ended September 30, 2024, we recorded a $5.7 million derivative gain for our natural gas derivative contracts consisting of $5.5 million of realized gains and a $0.2 million unrealized gain from the increase in the fair value of our open natural gas contracts. During the nine months ended September 30, 2023, we recorded a $41.6 million derivative gainfor our natural gas derivative contracts consisting of an unrealized gain of $44.1 million from the increase in the fair value of our open derivative contracts offset by $2.5 million of realized losses.
Previous wording
Other expense (income), net* –*Other expense, net increased $6.6 million for the six months ended June 30, 2024 compared to the same period in 2023 primarily related to the accrual of additional expenses for net abandonment obligations pertaining to a number of legacy Gulf of Mexico properties.
Current wording
Other expense, net* –*Other expense, net increased $20.3 million for the nine months ended September 30, 2024 compared to the same period in 2023 primarily related to the accrual of additional expenses for net abandonment obligations pertaining to a number of legacy Gulf of Mexico properties, partially offset by fees paid by producers to tie into our subsea equipment at one of our wells.
Previous wording
Income tax (benefit) expense* –*Our effective tax rates for the six months ended June 30, 2024 and 2023 were 11.8% and 45.6%, respectively. The effective tax rates differed from the statutory federal tax rate primarily due to the impact of state income taxes, nondeductible compensation, and adjustments to the valuation allowance.
Current wording
Income tax (benefit) expense* –*Our effective tax rates for the nine months ended September 30, 2024 and 2023 were 11.3% and 50.6%, respectively. The effective tax rates differed from the statutory federal tax rate primarily due to the impact of state income taxes, nondeductible compensation, and adjustments to the Company’s valuation allowance.
Previous wording
We expect to support our business requirements primarily with cash on hand and cash generated from operations. As of June 30, 2024, we had $123.4 million cash on hand and $50.0 million available under our Credit Agreement, based on a borrowing base of $50.0 million. We also have up to approximately $83.0 million of availability through our “at-the-market” equity offering program, pursuant to which we may offer and sell shares of our common stock from time to time. Based on our current financial condition and current expectations of future market conditions, we believe our cash on hand, cash flows from operating activities and access to the equity markets from our “at-the-market” equity offering program will provide us with additional liquidity to continue our growth and will allow us to meet our cash requirements for at least the next 12 months.
Current wording
We expect to support our business requirements primarily with cash on hand and cash generated from operations. As of September 30, 2024, we had $126.5 million of unrestricted cash on hand and $50.0 million available under our Credit Agreement, based on a borrowing base of $50.0 million. We also have up to approximately $83.0 million of availability through our “at-the-market” equity offering program, pursuant to which we may offer and sell shares of our common stock from time to time. Based on our current financial condition and current expectations of future market conditions, we believe our cash on hand, cash flows from operating activities and access to the equity markets from our “at-the-market” equity offering program will provide us with additional liquidity to continue our growth and will allow us to meet our cash requirements for at least the next 12 months.
Previous wording
Operating Activities* –*Net cash provided by operating activities decreased $0.5 million for the six months ended June 30, 2024 compared to the corresponding period in 2023. This was primarily due to a $10.4 million increase in net (loss) income adjusted for certain noncash items offset by a$10.9 million decrease in operating cash flows from changes in operating assets and liabilities. The increase in net (loss) income adjusted for certain noncash items was primarily related to a $25.6 million increase in revenues anda $9.4 million increase in derivative cash settlements, partially offset by increases in cash operating expenses. The decrease in operating assets and liabilities primarily related to higher accounts receivable balances due to increased revenues partially offset by higher accounts payable and accrued liabilities balances in the current period.
Current wording
Operating Activities* –*Net cash provided by operating activities decreased $15.8 million for the nine months ended September 30, 2024 compared to the corresponding period in 2023. This was primarily due to a $31.3 million decrease in net (loss) income adjusted for certain noncash items offset by a $15.5 million increase in operating cash flows from changes in operating assets and liabilities. The decrease in net (loss) income adjusted for certain noncash items was primarily related to a $4.6 million increase in revenues anda $12.3 million increase in derivative cash receipts, partially offset by increases in cash operating expenses. The decrease in operating assets and liabilitiesis primarily related to lower accounts receivable balances due to decreased revenues partially offset by higher accounts payable and accrued liabilities balances in the current period.
Previous wording
Investing Activities* –*Net cash used in investing activities increased $59.9 million for the six months ended June 30, 2024 compared to the corresponding period in 2023. This was primarily due to $80.6 million of acquisition of property interests costs, partially offset by a decrease of $11.7 million in investment in oil and natural gas properties and equipment.
Current wording
Investing Activities* –*Net cash used in investing activities increased $24.6 million for the nine months ended September 30, 2024 compared to the corresponding period in 2023. This was primarily due to an increase of $51.8 million in the acquisition of property interests costs, partially offset by a decrease of $6.4 million in investment in oil and natural gas properties and equipment.
Previous wording
*Financing Activities –*Net cash used in financing activities decreased by $300.2 million for the six months ended June 30, 2024 compared to the corresponding period in 2023. This was primarily due to the redemption of the $552.5 million principal amount outstanding 9.75% Notes in February 2023 partially offset by the net cash proceeds of $275.0 million received from the issuance of the 11.75% Notes in January 2023.
Current wording
*Financing Activities –*Net cash used in financing activities decreased by $306.0 million for the nine months ended September 30, 2024 compared to the corresponding period in 2023. This was primarily due to the redemption of the $552.5 million principal amount outstanding of the 9.75% Notes in February 2023 partially offset by the net cash proceeds of $275.0 million received from the issuance of the 11.75% Notes in January 2023.
Previous wording
As of June 30, 2024, we expect to incur an additional $30.0 million to $35.0 million of capital expenditures in the next six months, which excludes acquisitions. In our view of the outlook for the remainder of 2024, we believe this level of capital expenditure will leave us with sufficient liquidity to operate our business, while providing liquidity to make strategic acquisitions. At current pricing levels, we expect our cash flows to cover our liquidity requirements, and we expect additional financing sources to be available if needed. If our liquidity becomes stressed from significant or
Current wording
As of September 30, 2024, we expect to incur an additional $8.0 million to $10.0 million of capital expenditures in the remainder of 2024, which excludes acquisitions. In our view of the outlook for the remainder of 2024, we believe this level of capital expenditure will leave us with sufficient liquidity to operate our business, while providing liquidity to make strategic acquisitions. At current pricing levels, we expect our cash flows to cover our liquidity requirements, and we expect additional financing sources to be available if needed. If our liquidity becomes stressed from significant or prolonged reductions in realized prices, we have flexibility in our capital expenditure budget to reduce investments. We strive to maintain flexibility in our capital expenditure projects and if commodity prices improve, we may increase our investments.
Previous wording
We have obligations to plug and abandon wells, remove platforms, pipelines, facilities and equipment and restore the land or seabed at the end of oil and natural gas production operations. Through the six months ended June 30, 2024, we have paid $12.0 million related to these obligations, and we expect to incur an additional $25.0 million to $30.0 million of payments during the next six months. Our ARO estimates as of June 30, 2024 and December 31, 2023 were $534.5 million and $498.8 million, respectively. As our ARO estimates are for work to be performed in the future, and in the case of our non-current ARO, extend from one to many years in the future, actual expenditures could be substantially different than our estimates. See Part I, Item 1A.Risk Factors, of our 2023 Annual Report for additional information.
Current wording
We have obligations to plug and abandon wells, remove platforms, pipelines, facilities and equipment and restore the land or seabed at the end of oil and natural gas production operations. Through the nine months ended September 30, 2024, we have paid $20.3 million related to these obligations, and we expect to incur an additional $15.0 million to $25.0 million of payments during the remainder of 2024. Our ARO estimates as of September 30, 2024 and December 31, 2023 were $555.0 million and $498.8 million, respectively. As our ARO estimates are for work to be performed in the future, and in the case of our non-current ARO, extend from one to many years in the future, actual expenditures could be substantially different than our estimates. See Part I, Item 1A.Risk Factors, of our 2023 Annual Report for additional information.
Previous wording
As of June 30, 2024, we have $399.6 million in aggregate principal amount of long-term debt outstanding, with $16.4 million in aggregate principal coming due over the next twelve months.
Current wording
As of September 30, 2024, we have $399.4 million in aggregate principal amount of long-term debt outstanding, with $22.4 million in aggregate principal coming due over the next twelve months.
Previous wording
In November 2023, our board of directors approved the implementation of a quarterly cash dividend payable to holders of common stock. During the six months ended June 30, 2024, we have paid two cash dividends, totaling approximately $3.0 million, to holders of our common stock. The amount and frequency of future dividends is subject to the discretion of our board of directors and primarily depends on earnings, capital expenditures, debt covenants and various other factors.
Current wording
In November 2023, our board of directors approved the implementation of a quarterly cash dividend payable to holders of common stock. During the nine months ended September 30, 2024, we have paid three cash dividends, totaling approximately $4.5 million, to holders of our common stock. The amount and frequency of future dividends is subject to the discretion of our board of directors and primarily depends on earnings, capital expenditures, debt covenants and various other factors.
Previous wording
Below is consolidating statement of operations information reflecting the elimination of the accounts of the Aquasition Entities from our Condensed Consolidated Statement of Operations for the six months ended June 30, 2024 (in thousands):
Current wording
Below is consolidating statement of operations information reflecting the elimination of the accounts of the Aquasition Entities from our Condensed Consolidated Statement of Operations for the nine months ended September 30, 2024 (in thousands):
Rearranged current paragraphs (1)
Current report — wording carried from elsewhere
Gathering, transportation and production taxes* –*Gathering, transportation and production taxes decreased $0.5 million for the three months ended September 30, 2024 compared to the three months ended September 30, 2023 primarilydue to the decrease in production volumes.
Rearranged previous paragraphs (2)
Previous report — wording carried elsewhere
Gathering, transportation and production taxes* –*Gathering, transportation and production taxes increased $3.2 million for the six months ended June 30, 2024 compared to the same period in 2023 primarilydue to the increase in production in the three months ended March 31, 2024 and higher processing fees for our Mobile Bay production that had to be re-routed to a different processing plant, partially offset by the decrease in realized prices for natural gas.
Previous report — wording carried elsewhere
prolonged reductions in realized prices, we have flexibility in our capital expenditure budget to reduce investments. We strive to maintain flexibility in our capital expenditure projects and if commodity prices improve, we may increase our investments.