Good morning. Greetings and welcome to the W&T Offshore First Quarter Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Lisa Elliott. Thank you, Ms. Elliott. Please go ahead.

Thank you, operator, and good morning, everyone. We're glad to have you join us for W&T Offshore's conference call to review financial and operational results for the first quarter of 2017. Before I turn the call over to the company, I would like to remind you that information reported on this call speaks only as of today, May 4, 2017, and therefore, time-sensitive information may no longer be accurate as of the date of any replay. Also, please refer to first quarter 2017 financial and operational results announcement that W&T released yesterday for a disclosure on forward-looking statements and reconciliations of non-GAAP measures. So at this time, I'd like to turn the call over to Mr. Tracy Krohn, W&T's Chairman and CEO.

Thanks, Lisa. Good morning, everyone. And thanks all of you for joining us today. With me this morning are: Tom Murphy, our Chief Operations Officer; Danny Gibbons, our Chief Financial Officer; Steve Schroeder, our Chief Technical Officer; Jim Hersch, our VP, Geoscience; Janet Yang our VP Business and Corporate Development; David Bump, our -- Dave is VP, Drilling and Completions; and David Bump, our -- Dave is VP for our drilling operations. All will be available to answer your questions after prepared remarks. So we're pretty pleased with our results in the first quarter. They were in line with our expectations, but apparently, much lightning than what was expected by some others. We produced approximately 3.8 million barrels of oil equivalent, or 42,712 barrels of oil equivalent per day, of which about 57% was oil and gas and liquids. Sequentially, that is quarter-over-quarter, our production increased 6%, primarily due to Ship Shoal 349 A-18 well at the Mahogany Field that came on line in mid-January. This really exceeds expectations and continues to produce about 5,000 barrels of oil equivalent per day, of which about 75% is crude oil. Our first quarter CapEx was about $23 million, and that was on the heels of our CapEx program of just $49 million of all of 2016. Over half of our first quarter 2017 expenses were dedicated to Mahogany Field, which included continuing A-18 well and drilling and completing the A-16 bypass well. The A-16 well is currently producing about 2,000 barrels of oil equivalent per day and is 82% oil. So our strategy has allowed us to build our cash balances and leave our revolving credit facility undrawn. And that provides the financial flexibility to pursue growth opportunities which are both organic and acquisition oriented. Net cash provided by operating activities in the first 3 months of 2017 was $81.2 million. Higher commodity prices and lower OpEx in the first quarter resulted in greater improved results over last year's first quarter. Our average realized sales price was up 66% over last year's first quarter, driving a 60% increase in revenue. So due to our cost control efforts, our lease operating expenses decreased $4.3 million or 10% compared to last year's first quarter. And our G&A expenses decreased $3.2 million or 19%. DD&A had decreased $23 million. Interest expense declined $16.2 million or 59% compared to the first quarter of 2016, and that's a result of the debt exchange transaction that we did last fall. With higher revenues and lower expenses, we reported earnings, excluding special items, of $0.17 per share compared to a loss of $0.95 per share a year ago. Adjusted EBITDA was $65.2 million, up from $16.6 million last year. Our adjusted EBITDA margin was 52% in the first quarter of 2017 compared to 21% in the first quarter of 2016. So our liquidity has continued to improve since year 2016, our cash balance grew to $126 million by the end of the first quarter of 2017, representing a $60 million increase since December 31, 2016. Our cash balance has continued to grow, and on April 25, it stood at $150 million cash. And in addition to that, yesterday we learned that our bank group reaffirmed our borrowing base with $150 million. We believe that our improved reserves would support a higher borrowing base than that, but we didn't feel the need to pursue a higher level at this point as we are cash flow positive and the bank line is undrawn. We also believe that we're in final stages of resolving a matter with the BOEM that began over a year ago with its demand that W&T secure financial assurances in the aggregate of $260.8 million. As we previously updated you, we've been having ongoing settlement discussions with BOEM and filed various appeals to the Interior Board of Land Appeals concerning these orders and received a stay with the effectiveness of these orders several times with the current stay effective to August 28, 2017. Recently, we received a letter from BOEM that indicated that in order for BOEM to rescind the order, we must first satisfy our financial assurance requirement related to sole liability properties. We now believe that we can satisfy the more recent BOEM request for financial assurance of sole liability properties. Well, considering the economy with solid growth opportunities in the Gulf of Mexico right now, we're reviewing a number of strategies to find opportunities to substantially enhance our growth prospects. In that regard, we've engaged [ Evan ] Stifel to help us create a drilling and acquisition pipeline. We've just started this process, and we're pretty excited about what we've learned so far and the level of interest. We've nothing to report today, but we are hopeful that by the time of the next call this time around we're going to have, we will have some very positive things to discuss with you. Organically, we have a growing inventory of low-cost projects. This includes workovers, recompleted bypass operations and the like to enhance production, and in some cases, add reserves. We also had new drilling opportunities that are low risk and high potential from the area of existing infrastructure. These opportunities include not only our own inventory, but from others operators we've got. Our capital plan is designed to be pretty flexible. So based on new information, partner participation, permian equipment availability, we can move very quickly to pursue these best opportunities. The stacked pay characteristics of Gulf of Mexico combined with prudent seismic data and a lot of data from recently drilled wells are generating substantial new opportunities for us and a number of our peers. Taking advantage of these opportunities to maximize field profitability at the lowest cost, resulting in any of our -- any of a number of our existing wellbores to find better ways to utilizing the stacked gas reserves and create value to highly accelerate income. At our Mahogany field, both the A-8 and A-5 wells were 2 of the next 3 wells in the Mahogany rotation are exactly that, the new wells [indiscernible] . After we finish the A-16 well, the rig was scheduled to commence the sidetrack of our A-8 well as we seek to complete the well on the stacked pay reservoir in 'P' Sand as well as 'Q' Sand, which is walled by the A-18 well. Sidetracked operations in this field are expected to cost about $6 million to $8 million, which is considerable savings from the cost of a new well. In contrast, our next Mahogany drill well targeting the 'T' Sand would be the new A-17 well. That well is being anticipated to cost about $28 million to drill and complete. A bypass or sidetrack, a very efficient use of capital allows us to optimize our rig cost. We continue to find technologies, applications, strategies and processes to improve operating financial results. So especially now that we're a pure play Gulf of Mexico country again, you should see various metrics improve substantially and particularly cash flow. So as I mentioned a moment ago, our A-18 well at Mahogany was placed on production in mid-January, and we ramped that production to about 5,000 barrels of oil equivalent per day. That's consistent with our reservoir management plan, and it's really holding steady at that level. As we've previously stated, it's producing from the 'P' Sand with numerous features with great increased opportunities that are based on stacked pay as a whole. With a very high rate of return well, you need days to monetize this. And it's expected to reach payout before the year end. We expect to see reserve additions from the 'T' and the newly discovered 'U' Sand associated with that well. So on March 31, 2017, we completed a bypass operation at our A-16 well, brought the ground on line in mid-April. The well is producing from the 'P' Sand. This bypass operation not only allowed us to return to the well to a high level of production, but it has allowed us to potentially improve total reserve recovery. It is currently producing about 2,000 barrels of oil equivalent per day and is just improved in general. Gross daily production at Mahogany is currently 10,200 barrels of oil equivalent per day, and we have 100% working interest in this sub-salt shelf field. Okay. Mahogany field open ray has now [ broke ] the A-8 sidetracked well targeting an updip location in 'P' sand, as I mentioned earlier. That well should be in production in July, and we expect it to produce over 700 barrels of oil equivalent per day. Following the A-8 well, we will most likely drill the A-17 well, which would target the deep 'T' Sand as an extension of T reservoir. Following that well, we plan to drill a low-cost sidetrack well at the A-5 location targeting the 'P' and 'Q' Sands. So not to worry about the order of all this activity, I'm just telling you that we'll have a new slide presentation available on our website in the next couple of days. And now, we'll detail that activity in a gain chart, as well. So our 2017 capital plan is currently focused on a number of core areas to get completed in Mahogany field, the Ship Shoal 300 field, the Ewing Banks 910 field, the South Tim 224 field and the Viosca Knoll 823 field, and that's Virgo. We have around 25 recompletions to execute this year and a number of work orders planned in various other fields. So at this time, we would expect to drill B-5 well, Ship Shoal 300 from the ship. This well was recently added to our 2017 capital plan. We will also do a sidetrack operation from the existing nonproducing wellbore. We believe that the probability of success there is very high as well as stacked pay potential. New seismic indicates a strong amplitude feature and multiple pay horizons. So we'll drill that well in field's existing production platforms, while another project in our 2017 capital program, Ship Shoal 300 B-5 well, is expected to achieve a rate of return in excess of 75%. Assuming the well is successful, we may add a second well to further increase reserves and value. We have an 80% working interest in the value of field. Two wells are planned in the second half of 2017 in our deep water Ewing Bank 910 field. As you may recall, we drilled 2 discovery dip wells there, 1 well in 2015, 1 in 2016. This field is currently producing about 4,500 barrels of oil per day in net diameters. Since the well location is in the northern part of the field, we plan to mobilize the platform rig of the nearby South Tim 311 platform to drill direction wells to South Tim 320 A-2 and A-3 locations. Since South Tim 320 block is a part of Ewing Bank 910 field, we believe these wells are low-risk exploration opportunities with stacked pay targets and rate of return in excess of 100%. We have a 36% working interest in both of those wells. So we're working now to develop a multi-well drilling program in our VIRGO platform and are securing permits and ways to support a late 2017 spud peg. Well recompletions in VIRGO, Viosca Knoll includes the recently completed High Island 21 A-1 well as a dual completion in the High Island 22 field. That work along with returning the High Island 22 platform to service increased production to approximately 5.6 million cubic feet per day of gas and that's going to add new reserves and additional value above our previous projections. Also, the recompletion operations to new sand at our South Tim 229 A-4 well in April successfully increased the well's production from approximately 20 barrels of oil a day to well reaching an initial production rate of 500 barrels of oil and 300 Mcf gas per day. We've also had wells that are opportunities ahead of us at Main Pass 69 during the May, June time frame as the Main Pass 98 is planned for this month. So our focus on proving or improving rather our field profitability will not be and has not been at the expense of safety and rigorous operative procedures. I am proud to tell you that W&T's environmental score ratio remains exceptional. W&T's performance was well below the Gulf of Mexico's average on that. It is currently running below our 2016 ratio for us. Our field rate is about 1/10 of the Gulf of Mexico average. In addition to identifying opportunities to enhance field profitability, we're making significant progress at lowering the cost of field abandonment and restoration due to the development and identification of alternative new paths and new seamless process procedures used for wells. That allow continued use of the fit for purpose of subsea grown adventure vessels instead of higher cost and high risk in some cases deepwater drilling rigs for subsea level aims. So all of our cost in deepwater P&A operations are coming at less than half the estimated cost we used up a year ago. This is one of the many things that we've pointed out during our revenue estimates involving the aims being way too high. Like other venues in the U.S., the Gulf of Mexico has benefited from new technologies, improved processes, greater thinking and just hard work that's driving higher efficiencies and better results. Certainly, advanced seismic is having a significant impact, particularly in sub-salt plays like Mahogany. We spend a great deal of time and money on seismic data in processing and reprocessing that data. We're figuring in actuality is that dedication to this data is generally cheaper than trials and I believe we have one of the highest success rates in the Gulf of Mexico and a wide measure is a result of this philosophy. Better costs and better results have been driving production increases from the basin. According to an article in Rigzone in January, Gulf of Mexico production totaled 1.75 million barrels per day. That's less than a percentage point away from the previous record set in 2009. Within the next month ago, that record is expected to be broken. The EIA expects Gulf of Mexico production to be 1.9 million barrels per day by 2018. So anyone that's thinking that Gulf is at the edges, he isn't paying attention. So with that, I'll open up the lines for questions.

[Operator Instructions] We have a question from Madalina Iacob, Debtwire.

Tracy, I have a question for you. You said you guys hired Stifel. We also wrote about that. So it's more -- so Stifel is doing more of an M&A process? Or are they looking at some plugging and abandonment liabilities as well? Or is just trying to help you guys look at specific assets, identify assets in the Gulf and then buy them or even sell some of your assets? I just want to see if you can offer us more details about that mandate?

Okay. Madalina, thanks for the question. As we put in our script here today, [ Evan ] Stifel is helping us with the drill and acquisition front. That's where you all had a report on that. At this point in time, but we're just in the beginning of that process and hopefully we'll have something to tell you in the next few months.

Do you have any other advisers beside these guys?

We have a number of advisers to the company. Madalina, I'm not sure what you mean.

Okay. I mean, if your -- if you've engaged someone else as well to kind of -- besides I mean or simultaneously if you're working with another adviser?

I don't have any other advisers for this drill and acquisition front. Thank you.

[Operator Instructions] Mr. Krohn, there are no questions at this time.

We got a couple of more, it just popped out now here. I think we can...

Okay. We'll take Gail Nicholson from KLR group.

Tracy, just out of curiosity could provide a little bit more clarity on the standpoint of the BOEM update. Do you think that with the sole liability, you need to post anything? Or do you feel like, at this point in time, you need to post any incremental fund to persuade the BOEM?

I've reported a pretty good shift , Gail. We just finished one of the larger obligations we've abandoned our [indiscernible] we just actually finished that yesterday. So those are 2 subsea wells that came in under time and under budget. So we're moving forward with that. And I will expect that we won't have any kind of difficulty in meeting the rest of the financial obligations.

Okay, great. And then I believe that you have budgeted $74 million for G&A for '17, but you mentioned that the P&A costs are coming in like half as initially anticipated. So does that $74 million include what the current cost you're seeing or the forecasted cost that were higher? I'm just trying to understand if the P&A liability that you will be -- expenditures in '17 could potentially be lower than what you're budgeting for.

Yes, we expect that's given the success of these last 2 abandonments, and it's hard to think of abandonments' success, but we did. We did check those costs, and those were our figures starting off with and clearly we'll look around the budget on the last couple of wells, not a good impression on our when we abandon wells. So I'm hopeful that, that they will reduce those wells during the year.

Great. Well, looking forward to the wells that are coming on line in the rest of the year. And great quarter, guys.

Thank you very much.

We have a question from Mr. Al Shams, American Capital.

Yes. Tracy, I think in the news release, I think it said that the company had filed with the IRS for some tax refunds. Could you speak a bit more about that and maybe give us a sense as to what the timing might be on that?

We've scheduled it for '17 and '18. We don't know the exact timing on that. That relates to a provision in the tax code, and it allows us to write them off against revenues over about a 10-year period or so. So we were able to carry that back as a function of our revenues based on the code regarding abandonment of resources.

Well, is this a write-off or is this is a refund of previously paid taxes?

It'll be a refund.

Okay. So cash coming back to the company.

Yes, it's real cash.

Okay. And then lastly, I'm surprised we haven't seen more insider buys in the stock? Could you comment on that?

Really? I bought a bunch of them.

I guess, going back, I guess, around November, but since then.

Well, you have to understand that we're in periods of material [indiscernible] this is not public. Our employees can't buy. So we're under that, as we speak and we have been for some time.

Right, okay. I do understand that. Okay. Well, look, Congratulations on a good quarter and the good progress that we're making.

Mr. Krohn, at this time, there are no further questions. I'd like to turn the floor back over to you.

Okay. Thank you very much, operator. I think we're done. We appreciate, and we'll talk to you -- with everyone real soon. Thanks again.

Ladies and gentlemen, this does conclude today's teleconference. Please disconnect your phones.