W&T Offshore, (WTI) is a “scavenger” of assets that have been poorly or under-developed in the past. It reaps a benefit of typically of not having to do much in the way of facilities infrastructure-type development, as these have been put in place by prior operators. This helps to keep capex pointed toward well construction, which is the very end of the line in field development.
The Gulf of Mexico’s-GoM, Continental Shelf (the areas in blue blocks) has largely been abandoned by the big guys, the Shell’s, the BP’s, the Chevron’s and so on. The reason is largely these companies are so huge that finding a million or two barrels of oil just doesn’t move the needle. Periodically these companies “high grade” their portfolios, which means to auction off assets that no longer fit into their core strategy. The shelf largely quit being “core” to the supermajors about twenty years ago, and was high graded away to other companies.
One man’s table scraps, becomes another’s meat and potatoes, as the saying goes, and smart operators like WTI move in. They pick over the logs, take a new look at seismic data with modern processing algorithms, and find substantial new reserves (substantial to them anyway), and set to work on development plans.
It should also be noted that some deepwater acreage in the GoM is being high-graded now as well. An example would be ExxonMobil, (XOM) putting their deepwater GoM stuff on the block.
Recently WTI’s stock…