W&T Offshore output suffers amid ‘the most active storm season in 10 years’
Production by W&T Offshore, a U.S.-based oil and gas company, has suffered an adverse impact due to an extremely active tropical storm season in the Gulf of Mexico.
Production across the Gulf of Mexico has been significantly impacted by an extraordinary six named storms thus far in this hurricane season. All of these storms resulted in varying amounts of production being shut-in depending on the size and path of the storms, W&T said in an update on Monday.
Primarily due to the significant impact of these storms, unplanned downtime at Mobile Bay, and previously-announced planned downtime at the Magnolia field, W&T currently estimates its third-quarter 2020 volumes will average 32,500 to 33,900 barrels of oil equivalent per day (Boe/d), with approximately 35% oil, 12% natural gas liquids, and 53% natural gas.
W&T has restored a portion of its shut-in operated and non-operated production but continues to have production shut-in primarily due to extended storm-related downtime at several fields and at a third-party operated platform downstream from the Magnolia field.
Additional costs for repairs
W&T said it did not experience any material damage to any of its platforms or infrastructure from the series of storms but did incur approximately $5 million in additional costs related to repairs and restoring production following multiple shut-ins.
Nonetheless, W&T expects that its overall costs and expenses for the third quarter and full-year 2020 will be in-line with the guidance it previously provided, but per-unit costs will be higher due to lower production volumes.
There continues to be tropical storm activity in the Gulf of Mexico in early October and the hurricane season extends until November 30.
As such, W&T said that there remains the potential for additional tropical weather impact to production and costs in the fourth quarter of 2020.
Currently, W&T estimates its fourth-quarter production will average 31,500 to 35,000 Boe/d which includes the ongoing impact from prior storms and other planned shut-ins, as well as an estimate of additional potential storm-related downtime for the balance of the fourth quarter.
Tracy W. Krohn, W&T’s Chairman and Chief Executive Officer, commented: “This year has been particularly difficult for energy producers, including a global COVID-19 pandemic, supply and demand imbalances and the most active tropical storm season in the GOM over the past 10 years.
“The third quarter had five hurricanes enter the GOM, which caused significant production to be shut-in but minimal physical damage. These storms and unplanned downtime at Mobile Bay adversely impacted our production by nearly 9,000 Boe/d in the third quarter.
“Production in the fourth quarter is forecasted to be between 31,500 and 35,000 Boe/d, depending on when Magnolia and other fields are restored to production, and includes the impact of additional shut-ins at Mobile Bay including consolidation of the gas plants and the potential impact from additional tropical storms”.