A Lone Ranger in an Industry of Mega Companies An Independent s Perspective. Tracy W. Krohn, CEO and President

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Transcription:

A Lone Ranger in an Industry of Mega Companies An Independent s Perspective Tracy W. Krohn, CEO and President Marine Technology Society May 22, 2008 Omni Place, 12121 Westheimer, Houston, TX 77077

Company Highlights Reserve Data (as of 12/31/07) Proved Reserves (Bcfe) 639 Proved Developed Reserves (Bcfe) 395 Proved Developed % 62% Oil and Liquids % 48% Highlights Field Statistics (as of 12/31/07) Ticker WTI (NYSE) # of Producing Fields w/wi 155 Initial Public Offering January 2005 Approx. Acreage (Gross/Net) 1.7 million/1.0 million Employees 295 % Held-by-Production 73% Market Capitalization ($ in MMs) $4,056 Insider Ownership (% of S. O.) 61% Key Financials ($ in MMs) 2007 2006 Production (as of 05/06/08) Revenue $1,114 $800 Average Daily Production (MMcfe) 345 +/- Adjusted EBITDA $820 $642 Natural Gas % 57% Adjusted EBITDA Margin % 74% 80% Operated Production % (net) 67% CAPEX $362 $589 Market capitalization as of May 16, 2008 1

Why W&T is the Lone Ranger? The prevailing belief about the Gulf of Mexico The Gulf has a short reserve life The conventional shelf has been picked over The conventional shelf can t move the needle The Gulf is dead What the Lone Ranger (aka Tracy Krohn) thinks about the Gulf of Mexico W&T has maintained a constant R/P over a long period of time W&T has a 50 well program in 2008, it s most ever Still plenty of big reserves on Shelf like our recent HI 24 discovery with over 100 Bcfe gross of proved reserves We have been hearing that mantra for 25 years. They are right and thanks for leaving, we ll turn out the lights Therefore the conventional wisdom is WRONG 2

W&T s Business Strategy Cash flow returns and generation is our top priority Increase reserves and revenue through the drill bit and by acquisition Focus on offshore Gulf of Mexico Conventional shelf primary focus Deep Shelf and Deepwater secondary focus Numerous acquisition opportunities exist today Competitors continue to divest GOM assets-majors and large independents leaving Assets are not leaving basin, just changing hands Acreage will be King! Many companies have left or are leaving the shelf Held by production acreage is best Maintain financial discipline 3

W&T s Business Strategy, Part II Deeper and Deeper and Deeper in Deeper Continued long-term success for W&T will depend on our success in finding oil and gas reserves as we move further away from the shoreline or drill deeper under the sea floor. Numerous Deep Shelf (>15,000 ) Prospects in Areas of Known Production at Shallow Water Depths Only 2,200 +/- wells have been drilled below 15,000 Numerous Deepwater (>500 1,000 ) Prospects in Areas near existing infrastructure Less than 2,600 wells drilled; only 35 active platforms Potential for Faster Development from Existing Infrastructure will benefit both Deepwater and Deep Shelf Technology will benefit both Deepwater and Deep Shelf 4

The Dead Sea Large Independents and Majors have gradually exited the Gulf of Mexico W&T has taken full advantage of asset sales Cumulative production through 2007 was 473 Bcfe Transaction Producing Fields Acq'd Reserves Acq'd Transaction Price ($MM) Acq. Multiple $/Mcfe 2007 Reserves Vastar - 1999 7 18 Bcfe $9.9 $0.55 37 Bcfe Amoco -1999* 5 64 Bcfe $26.1 $0.41 43 Bcfe EEX - 2000 40 46 Bcfe $43.8 $0.95 15 Bcfe Burlington - 2002 53 120 Bcfe $52.3 $0.44 104 Bcfe ConocoPhillips - 2003* 13 95 Bcfe $55.8 $0.59 72 Bcfe Sub Total 118 343 Bcfe $187.9 $0.55 271 Bcfe Kerr-McGee - 2006 72 247 Bcfe $1,061.0 $4.30 197 Bcfe Apache "Mahogany" - 2008 * 1 60 Bcfe $116.0 $1.93 60 Bcfe Grand Total 191 650 Bcfe $1,364.9 $2.10 528 Bcfe * Closed 1/29/08 with effective date of 1/1/08, Purchased partial working interest in Amoco and ConocoPhilips transactions 5

Transaction Report Card Value created from 7 Major Transactions from 1999-2008 ($ in millions) $3,000 $3,072* $2,500 $2,000 $1,500 $1,000 $500 $0 -$500 Aggregate Transaction Cost Cumulative Revenue less Expenditures and Transaction Cost $451 PV-10 Value at 12/31/07 (1) -$1,000 -$1,500 -$1,365* (1) PV-10 value does not include P&A expense 6 *Proforma Mahogany purchase 12-31-07

Enormous Exploitation Potential Left Behind W&T has exploited each transaction post closing 105 wells drilled on 190 fields acquired is just over 1/2 a well per field to date Still finding prospects nine years later Transaction Year Acq'd Producing Fields Acq'd Development Wells Drilled Exploration Wells Drilled Well(s) in 2008 Program Vastar 1999 7 2 7 1 Amoco 1999 5 11 5 1 EEX 2000 40 4 15 1 Burlington 2002 53 12 33 7 ConocoPhillips 2003 13 0 4 4 Kerr-McGee 2006 72 2 10 27 Total Results 190 31 74 41 7

Building on Prospects Left Behind by Majors We believe that the combination of successful lease sales and acquisitions provide W&T more than adequate opportunities to explore and develop years worth of drilling prospects W&T has accumulated 1 million net acres of which 73% is Held By Production W&T is the third largest conventional shelf acreage holder after Chevron and Apache Lease Sale 206 Lease Sale 205 Kerr-McGee Lease Sale 198 Lease Sale 196 Lease Sale 194 Lease Sale 192 Lease Sale 190 Lease Sale 187 Lease Sale 185 Burlington Lease Sale 184 0 10 20 30 40 50 60 70 80 90 Lease Awards Undeveloped Leases Apparent High Bidder 8

Exploit, Exploit, Exploit Previous large transactions have taken approximately two years to fully evaluate Development Drilling Exploration Drilling Gross Wells 9 8 7 6 5 4 3 2 1 0 100% 100% 100% 100% 86% 86% 86% 67% 1 1 1 1 2 6 3 6 7 6 8 2 6 +/- Well program for 2008 2000 2001 2002 2003 2004 2005 2006 2007 2008E Gross Wells 50 100% 100% 45 40 1999 EEX, Vastar 35 Amoco 30 25 20 15 10 5 0 83% 75% 66% 2002 Burlington 11 7 5 2 2 5 18 6 10 21 17 19 2006 Kerr-McGee 100% 77% 86% 75% 44 +/- Well Program for 2008 1 6 8 2000 2001 2002 2003 2004 2005 2006 2007 2008E Successful Non-Commercial % Successful Successful Non-Commercial % Successful Overall Development Drilling success: 40 of 44, 91% success rate Overall Exploration Drilling success: 110 of 138, 80% success rate 9

Deep Shelf Plenty of meat still on the bone Majors leaving the conventional shelf for Deepwater or other basins, i.e U.S. Onshore and Internationally During the Major s exodus from the Gulf of Mexico, W&T has acquired approximately 1.7 million gross acres Conventional shelf acreage is approximately 1.4 million gross acres Fewer than 2,300 wells drilled below 15,000 feet W&T large acreage holdings is a unique advantage as the Deep Shelf frontier opens MMS estimates 55 Tcf of natural gas in zones below 15,000 feet drilling depth in the Gulf Advances in drilling technology, improved seismic, metallurgy and completion processes make Deep Shelf very attractive shhh majors returning to conventional shelf for the Deep Shelf potential 10

SS349 Mahogany First commercial field in the subsalt play in the GOM 5 productive horizons below salt at depths as deep as 17,000 feet Miocene section is undrilled 83% oil reserves on 12/31/07 Newly reprocessed pre-stack depth seismic Maximizing production Acid Stimulation Program (A-4, A-5) Recomplete to P-sand (A-11) 1 st quarter 2008 P-sand recomplete W&T 100% OWNER Dec-07 Apr-08 Oil ( MBopd) 1.5 4.0 Gas (MMcf/d) 1.4 6.9 Total (MMcfe/d) 10.4 30.9 2008 Development well (4Q) 11

SS349 Mahogany recomplete Ship Shoal 349/359 A-11 1st quarter 2008 P-sand recomplete W&T 100% OWNER 2008 Development well (4Q) 12

SS349 Mahogany A-11 deepest well in Field @ 18,380 TVD Deepest pay zone X-Sand @ 17,150 A-11 TD in lower most Pliocene, essentially all of Miocene & deeper section not penetrated P-Sand most prolific of productive zones beneath salt Production through 12/2007 15 MMBO & 25 BCFG Total subsalt production 12/2007 6 sands 18.4 MMBO & 35 BCFG 13

Deep Water Many Majors and large independents moving out from transition zone (500-1000 ft water depth) into ultra Deepwater (3000-5000+ ft water depth) W&T focused it s Deepwater efforts around it s existing infrastructure Due to W&T s vast existing infrastructure, it is possible to sub sea tieback Deepwater projects to conventional shelf infrastructure EW 989 (Cypress) in 523 feet of water tie-back to SS 349 (Mahogany) platform in 372 feet of water, 7 miles in length GB 139 in 550 feet of water tie-back to HI 389 in 410 feet of water, 5 miles in length EW 977 (Dice) in 550 feet of water tie-back to EI 371B in 415 feet of water, 8 miles in length EW 949 (Queen of Hearts) in 865 feet of water tie-back to EW 947 in 477 feet of water, 5 miles in length GC 178 (Bacarat) in 1,404 feet of water tie-back to EI 397 in 472 feet of water, 14 miles in length 14

Reducing Deep Water costs by tying back to the Shelf EW 989 (Cypress) tie-back to SS 349 (Mahogany) platform, 5 miles Mobile GB 139 tie-back to HI 389 platform, 5 miles EW 949 W. (Queen of Hearts) tie-back Cameron to EW 947 platform, 5 miles Main Pass Viosca Knoll Main Pass S. and E. Brazos Galveston High Island E. Cameron Vermilion Eugene Island Ship Shoal South Timbalier Grand Isle West Delta S. Pass E. Add Mississippi Canyon Matagorda Island Ewing Bank Mustang Island East Breaks Garden Banks Green Canyon Atwater Valley EW 977 (Dice) tie-back to EI 371 platform, 8 miles GC 178 (Bacarat) tie-back to EI 397 platform, 14 miles 15

Queen of Hearts 16

Cypress 17

Green Canyon 82 - Healey Lease purchased in 2004 Original well drilled in 1996 by Kerr- McGee, eventually let lease expire 100% W&T Working Interest EW 784 EW 828 Tarantula Development options under review FPS Subsea tieback Lobster platform Morpeth TLP Prince TLP Prince Lobster Morpeth Black Widow Reserves (Bcfe) Proved = 60 Probable = 60 Possible = 150 3P Total = 270 4 Additional prospects identified with Healey #4 7 total prospects 18 2,400 feet water depth Healey GC 82

Conclusions Why W&T likes being the Lone Ranger Short reserve life W&T has maintained constant R/P over a long period of time, must work harder but reserve life can be maintained The shelf has been picked over You have to work harder everyday but W&T knows there are plenty of opportunities left on the Shelf, especially below 15,000 feet The shelf can t move the needle Plenty of potential for large reserves in the Deep Shelf, MMS estimates 55 Tcf of Natural gas below 15,000 feet The Gulf is dead Far from it, W&T has been operating in the Gulf for 25 years and believe it offers the best returns 19

W&T Offshore, Inc. (NYSE: WTI) Nine Greenway Plaza Suite 300 Houston, TX 77046 Main line - 713-626-8525 Fax - 713-626-8527 Investor Relations - 713-297-8024 www.wtoffshore.com www.investorrelations@wtoffshore.com