The board of directors of W&T Offshore Inc. (NYSE: WTI) approved a 2017 capital expenditure budget of $125 million, excluding potential acquisitions. The company has also provided production and expense guidance for 2017 and expects total production in 2017 to be approximately 4% higher than the mid-point of the company's expected production in 2016.
2017 capital program
W&T currently anticipates drilling six to eight wells during 2017 in the Gulf of Mexico in a program that is expected to be generally balanced between exploration and development projects and between wells located on the Shelf and in the Deepwater.
The 2017 capital plan includes completing the Ship Shoal 349 "Mahogany" A-18 well, which was drilled to total depth in late 2016 and put on production in mid-January, and the drilling and completion of three additional wells in the Mahogany field. Each of these projects is expected to achieve a rate of return in excess of 100%, with a relatively quick payback. The plan also includes the drilling and completion of two wells at the Ewing Bank 910 field, which are expected to average a rate of return in excess of 100%, with an average projected payout in approximately one year.
Additionally, the 2017 plan includes performing between 20 and 25 recompletions at a cost of approximately $26 million. These recompletions on average are projected to have very good rates of return and short payback cycles. Approximately two-thirds of the entire capital budget is directed at projects that will come on line and start producing in 2017.