W&T Offshore, Inc. is an independent oil and natural gas producer, active in the exploration, development and acquisition of oil and natural gas properties in the Gulf of Mexico. W&T Offshore, Inc. is a Texas corporation originally organized as a Nevada corporation in 1988, and successor by merger to W&T Oil Properties, Inc., a Louisiana corporation organized in 1983.
In managing our business, we are focused on optimizing production and increasing reserves in a profitable and prudent manner, while managing cash flows to meet our obligations and investment needs. Our cash flows are materially impacted by the prices of commodities we produce (crude oil and natural gas, and the NGLs extracted from the natural gas). In addition, the prices of goods and services used in our business can vary and impact our cash flows. During 2018, average commodity realized prices improved from those we experienced during 2017 and 2016. Our margins in 2018 improved from 2017 and 2016 levels, and were approximately the margin levels achieved prior to 2015. We measure margins using adjusted earnings before interest, income taxes, depreciation and amortization, ("Adjusted EBITDA") as a percent of revenue, which is a not a measurement under generally accepted accounting principles ("GAAP"). We have historically increased our reserves and production through acquisitions, our drilling programs, and other projects that optimize production on existing wells. While our production decreased 8.5% in 2018 from the prior year, we added 23.1 million barrels of oil equivalent ("MMBoe") of proved reserves in 2018, replacing 174% of production. (MMBoe was computed on an equivalency ratio as described below.) The 13.2% net increase in proved reserves year-over-year is a result of successful drilling, technical revisions driven by improved well performance, recompletion and workover efforts, and improved commodity prices. During 2018, we completed one well which had reached target depth in 2017, and drilled and completed five additional wells which began producing during 2018. One of these wells, the Viosca Knoll 823 A-12 BP2, is currently offline and we are evaluating methods by which to enhance production at that well.
The Gulf of Mexico is an area where we have developed significant technical expertise and where high production rates associated with hydrocarbon deposits have historically provided us the best opportunity to achieve a rapid return on our invested capital. We have leveraged our experience in the conventional shelf (water depths of less than 500 feet) to develop higher impact capital projects in the Gulf of Mexico in both the deepwater (water depths in excess of 500 feet) and the deep shelf (well depths in excess of 15,000 feet and water depths of less than 500 feet). We have acquired rights to explore and develop new prospects and existing oil and natural gas properties in both the deepwater and the deep shelf, while at the same time continuing our focus on the conventional shelf. Our drilling efforts in recent years have included the deepwater of the Gulf of Mexico. The investment associated with drilling an offshore well and future development of an offshore project principally depends upon water depth, the depth of the well, the complexity of the geological formations involved and whether the well or project can be connected to existing infrastructure or will require additional investment in infrastructure. Deepwater and deep shelf drilling projects can be substantially more capital intensive than those on the conventional shelf. During 2018, we participated in the drilling and completion of three deepwater wells, and in 2016, we participated in the completion of one deepwater well.