Q307 WTI notes
Completed acquisition of Kerr-McGee, $1B paid at closing, not including a $25M performance deposit last quarter, for 280Bfce proved reserves. (last quarter had the purchase at $1.3B, so was the price dropped $.3B based on contigent factors?)
Cash decreased to $12M from $187M due to "Kerr-McGee” merger
Net income increased 26%, includes unrealized gains on derivatives of $14.M, which would have been a 2.2% decrease without the derivatives.
(7) exploration wells (all successful), 2 were conv shelf, 4 deep shelf, 1 deepwater
(1) developed well (successful) on conv shelf
Oil and Natural gas Revenues:
Both nat gas and oil revenues increased.
Nat gas volumes up 3.9 Bcf or 34% (15.4Bcf from 11.5Bcf), partially offset by a 24% decrease average price
Oil volume up 816 MBbls and a 14% increase in average price
Lease and Operating Expenses:
89% overall increase, on a per Mcfe basis, increased 26%
Gathering and transportation costs and production taxes
G&TC up 100%, due to higher throughput of nat gas and an increased ownership one of our processing facilities ( nat gas volume was up 34% so nearly 2/3 of increase was from the ownership increase - I appears as though processing facilities have high transportation costs)
Depreciation, depletion, amortization and accretion
General and administrative expenses
increased 47%, increased personnel and resources for growth, professional fees related to Sarbanes-Oxley Act. Up 5.8% from last quarter. I can see expenses increasing ahead of growth, but its hard to say whether growth will come and whether these expenses will ever prove to be of value.
Items of Concern:
CEO Krohn's wife owns Brooke Companies that did $.4M in business with WTI for the past 9 months compared with $.2M against a year ago.
For the past 9 months the company purchased homes for (2) vice-predidents for a total of $2.8M.
$12.1M development and $62.4M production costs up from ($7.8M and $41.1M last quarter) . An additional claim was filed for a well that experienced uncontrollable water flow which the companies thinks will probably be paid under insurance.
$17.2M reimbursements received
Total estimated damage from Rita and Katrina - $90M-100M.