Koil Energy Solutions Inc. (KLNG)

[MossyOak]

Nice comparison to Deep Down's growing company!! An officer with Deep down Inc. once said a good friend, and customer of Ron's talked him into starting his own company. Would like to know if may be Tracy W. Krohn had something to do with it. Many similarities here.......jmo

Maintain financial discipline
By historically using debt only to fund acquisitions – not exploration drilling activities – we have maintained a conservative stance. During 2006, we offered shares of stock for sale, with the proceeds earmarked primarily to help finance a portion of the cash consideration related to the Kerr-McGee transaction and maintain a healthy balance sheet, effectively “reloading” the company.

Continue to acquire high-quality properties.
Companies continue to divest high-quality Gulf of Mexico assets, and W&T continues to acquire them. In addition to closing the Kerr-McGee transaction in 2006, we reviewed more than a dozen opportunities to acquire additional properties, and see more opportunity in 2007.

2007 and beyond

We have a 5-year backlog of exploration prospects.

In 2007, we will be paying down some of the debt associated with the Kerr-McGee transaction. That’s important because having less debt better equips us for other acquisition opportunities. Historically, W&T has paid its debt early, as evidenced in our cash-generating abilities.

Drilling costs – which accelerated in 2005 and 2006 – are beginning to moderate. As more new-build drilling rigs are completed and E&P drilling projects scale back, we expect drilling costs to fall. The current trend supports our approach of committing to short-term rig contracts only.

We entered 2007 fully equipped to make additional acquisitions. We strongly believe that we have sufficient access to capital markets necessary to support our ongoing growth strategy. Helping to guide our financially sound growth is a new member of our executive team. Senior Vice President and Chief Financial Officer John D. (Danny) Gibbons, who joined W&T in February 2007. Danny brings valuable experience from Westlake Chemical and Deloitte & Touche, and from Valero Energy, where he was Chief Financial Officer during a period of remarkable growth.

W&T Offshore is part of a vital industry. We benefit from the third-largest acreage position on the conventional shelf of the Gulf of Mexico. Most of that acreage is held by production, which perpetuates our lease rights without having to assure renewals. We’ve proven our ability to find energy reserves and acquire them at attractive prices.

We focus on the Gulf of Mexico market exclusively because the profit margins remain very attractive.

Frequently, we are asked why we continue to focus exclusively on the Gulf of Mexico. The answer is simple: cash. We believe the lucrative profit margins in the Gulf of Mexico and potential rewards for shareholders are greater than with other basins around the world and domestically. When the numbers convince us to redirect our E&P focus, we will.

I think we offer an outstanding investment opportunity. Our full-economic cycle approach and proven ability to execute are an excellent foundation for producing higher returns year after year and reducing risk over the long term.

For our 250 employees, I want to thank you for your continued confidence and interest in W&T.

Very truly yours,

Tracy W. Krohn
Founder and Chief Executive Officer

http://www.wtoffshore.com/default.asp?id=122