W&T Offshore (NYSE: WTI) strengthened the cornerstone of its 2017 capital programas one of its latest wells on the U.S. Gulf of Mexico (GoM) Shelf hit oil pay in five zones.

The Houston-based company said Jan. 6 that its Ship Shoal 359 A-18 well logged 45 m (149 ft) of net oil pay at the Mahogany Field. The results confirm the presence of oil on the field’s west side in the so-called “T” sand, which was found by another well drilled in 2013. The company recently restarted its drilling campaign at the field after economic challenges brought by the downturn forced a slowdown in 2015.

In addition, the A-18 well hit four more “attractive pay sands” in the deeper “U” sand interval, boosting hopes that more subsalt drilling could be forthcoming. Key to the success was the company’s new WAZ seismic data, which W&T Offshore CEO Tracy Krohn said allowed the company “to more clearly image the subsalt formations and assess the additional upside of this field.”

W&T Offshore is not providing an estimated IP rate for the well, but the production rate will be announced when the well goes online. “We assume that some gas will be produced but the vast majority is expected to be oil,” W&T Offshore told Hart Energy. “The field typically produces about 75% oil or higher.”

Now that market conditions are improving more companies are cranking up exploration programs, many of which were paused when financial woes hit companies’ coffers amid the world’s abundant hydrocarbon oversupply. But technology advances, including in the seismic arena, have made it possible for oil and gas players to find more resources to meet future energy demand.

For W&T Offshore, a third-quarter 2016 debt exchange transaction helped to improve the company’s liquidity, enabling it to put focus on new capital projects, Krohn said in a Nov. 2 statement. The company also has been paying down debt, including by selling off its Yellow Rose Field in the prolific Permian Basin in 2015.

“Our focus on lowering drilling and operating costs in the Gulf of Mexico, combined with Mahogany's outstanding reservoir characteristics and existing infrastructure on the Shelf, delivers very compelling economic returns for our shareholders,” Krohn said in the Jan. 6 statement.

“The A-18 well allowed the company to acquire its first core data from this important reservoir with rock permeability estimated to exceed one darcy, confirming the excellent flow potential of this exceptional reservoir,” Krohn added. “By comparison, the permeability of shale plays in the Permian Basin is often stated as having permeabilities in nanodarcies. A nanodarcy is one billionth of a darcy, which is obviously significantly less than a darcy.”

The A-18 well was drilled to a vertical depth of about 6,096 m (20,000 ft) in a water depth of 114 m (375 ft), the company said.

W&T Offshore COO Tom Murphy pointed out that the well hit the field’s historic producing intervals in the “P” and “Q” sands and achieved the main well objectives, establishing “a very attractive attic recovery project in an area of the field with good water drive characteristics and recovery efficiency.”

Plans for the A-18 well include completing the main Upper “T” sand with production targeting early first-quarter 2017. A recompletion is planned for the  “U” sand, and additional recompletions or further development is being considered for the “P” and “Q” intervals. W&T has not announced its 2017 drilling budget, but expects additional drilling and recompletion activity in the field in 2017.

“The well’s success is expected to generate several high-quality additions to our organic drilling inventory, including a future extension of the main ‘T’ sand based on this most recent penetration, a crestal development well opportunity to exploit the western ‘P’ and ‘Q’ attic area, and deeper drilling opportunities to exploit and target the newly discovered deep ‘U’ sand,” Murphy added.

W&T produced an average of 5.4 Mboe/d in the Mahogany Field in third-quarter 2016. In all, the company’s GoM production was 41,508 boe/d, or 3.8 MMboe, for third-quarter 2016. Of this, 56.6% was oil and NGL. Fourth-quarter 2016 production of between 1.9 MMbbl and 2.1 MMbbl is expected based on guidance provided by the company.

Velda Addison can be reached at vaddison@hartenergy.com.