At W&T Offshore, one of our key objectives has always been to create and protect shareholder value by adjusting our budget and strategy to align with market conditions and opportunities, which in the oil and gas industry are often driven by commodity price cycles. In 2015, the average realized price we received per barrel of oil equivalent dropped 45% compared to the prior year, and in the first few months of 2016 it has dropped even further. As we focus on navigating through the challenges of this low commodity price environment, our strategy is to protect our balance sheet and liquidity, reduce costs, and preserve and build opportunities for growth in the future.


Throughout 2015, we focused on completing the projects that were already in progress or that we were committed to with partners. We successfully brought on line significant earlier discoveries at the Big Bend and Dantzler fields as well as new discoveries at the Medusa field and the Ewing Bank 910 project. In 2015, we reduced our capital spending by 63% to $231 million, down from $630 million in 2014, reduced our net debt with the sale of our Yellow Rose field and reduced our lease operating expenses by 27% compared to the prior year. Even with this conservative approach, we maintained a fairly steady production profile due to our strategic shift in years past to pursue high impact and longer-term projects. In 2015, our focus was on drilling higher value oil projects, which drove our crude oil production higher by 8%. This was more than offset by a reduction in natural gas and natural gas liquids production volumes, which allowed total combined production volumes to decline 3% year over year.


This modest production decline, on a greatly scaled back capital spending program, highlights the quality of our assets and the success we achieved investing in the Gulf of Mexico over the last several years. Our track record for achieving a 100% exploration success rate has now extended to three years. With the application of advanced technologies and innovative operating practices, we are consistently achieving solid results and excellent drilling success. As Gulf of Mexico experts, we are doing an excellent job of evaluating drilling prospects and choosing the right operating partners. We also are finding substantial, high quality deepwater projects near or relatively near existing infrastructure, so new production can be brought on relatively quickly. This is an important trend for enhancing economics for Gulf of Mexico projects.


During 2015, we made three significant deepwater discoveries that were all brought on production within a few months of reaching total depth. Two of these discovery wells were at our Medusa field and one was from our Ewing Bank 910 platform. We also made a fourth deepwater discovery, the EW 954 A-8 well in December 2015, which came on line in the first quarter of 2016. While our Big Bend and Dantzler wells required more than a few months to put on line, they were developed fairly quickly and placed on production ahead of schedule and on budget. More importantly, they achieved their expected peak production rate of over 50,000 Boe per day gross and are still maintaining steady levels with only a very modest natural decline from the peak. All of these successful high impact projects are helping us maintain good production levels.


Despite our fairly steady production volumes, a 45% decline in commodity prices in 2015 resulted in a 47% reduction in revenues from $949 million in 2014 to $507 million in 2015. While the cost of goods and services did not fall as rapidly as commodity prices, we worked aggressively to cut costs and reduce expenses. Our lease operating expenses decreased 35% in the fourth quarter and 27% for the full year. General and administrative expenses were down 29% in the fourth quarter and down 16% for the year 2015. Due to our decisive actions, Adjusted EBITDA margin was down only 16 points to 44% in 2015 compared to 2014. Despite our efforts, in the first quarter of 2016, the drop in commodity prices continued to outpace the drop in the cost of goods and services.


The steep decline in commodity prices caused us to have a ceiling test impairment in every quarter in 2015 and we expect to have another one in the first quarter of 2016.


Low pricing also negatively impacted the calculation of our reported year-end proved reserves. Excluding the reserves attributable to the Yellow Rose field of 19 million barrels of oil equivalent (“MMBoe”) that we sold in October 2015, our year-end 2015 proved reserves of 76.4 MMBoe declined by 6.2 MMBoe, or 7.6%, from the prior year. The impact of lower commodity prices reduced year-end 2015 reserves by 10.7 MMBoe and 2015 production reduced reserves by 17.0 MMBoe.

  • The GOM currently supplies approximately 17% of U.S. oil production.

  • During 2015, eight new fields in the GOM deepwater came online, of which all but one was developed using a subsea tie-back. W&T Offshore has an interest in two of these fields – Big Bend & Dantzler.

  • W&T Offshore is the operator of the oldest field in the Gulf of Mexico that is out of sight of land and still on production. Our Ship Shoal 28 field has been producing for over 60 years.

  • Historically, American offshore energy is one of the largest revenue contributors to the U.S. Treasury. Since 2004, W&T has paid over $1 billion in lease royalties alone to the U.S. Treasury.


On the upside, net increases from revisions were 15.3 MMBoe, extensions and discoveries were 4.1 MMBoe and purchases were 1.0 MMBoe. If not for the price decline, we would have more than replaced reserves with the drill bit, which is a great accomplishment considering the size of our capital budget.


We had positive revisions from over 13 fields, including a small proved reserve contribution from Big Bend. The biggest upward revision came from Ship Shoal 349, our Mahogany Field, with other increases coming from our Fairway, Matterhorn, Neptune, Tahoe, and Brazos A 133 fields. Reserve additions from discoveries were primarily associated with Medusa and Ewing Bank 910. Our reported year-end 2015 proved reserves do not reflect all of our recent successes through drilling and our solid performance from some of our newly developed properties, such as Big Bend and Dantzler.

As part of our strategy to align our business with current market conditions and to aggressively respond to the sharp decline in commodity prices, throughout 2015, we initiated a series of actions to maximize our cash position and shore up our balance sheet. In early 2015, we opted to suspend our common stock quarterly dividend payments. In April and again in October, we amended our revolving bank credit facility and modified or eliminated certain financial covenants to provide additional financial flexibility. In May, we obtained a five-year $300 million term loan to boost our liquidity and reduce borrowings under our credit facility. Our timing couldn’t have been better. In October, we repaid the balance of those borrowing with the proceeds of the sale of our Yellow Rose assets in West Texas for $372.9 million and enhanced our cash balance by $100 million.


With the further decline in oil prices in 2016, which reached as low as $26.19 per barrel in mid-February and subsequently improved modestly, we have continued to proactively manage our liquidity and balance sheet. In February 2016, we drew $340 million on our revolving bank credit facility to preserve our liquidity and provide support as we navigate through these industry headwinds. The Company’s cash position subsequent to the draw was $447 million. Our Senior Unsecured Notes do not mature until June 2019 and our Term Loan doesn’t mature until May 2020. In addition, we do not have any long-term contracts for drilling rigs or drilling obligations of any significance and no material near-term lease expirations as most of our acreage is held by production.


We have established a capital budget for 2016 that funds the completion of our EW 954 A-8 discovery well and provides some maintenance capital. We currently expect to spend only about $15 million in 2016, not including plug and abandonment costs.


In the face of a depressed commodity price outlook for the balance of 2016 and the potential need to utilize a portion of our current cash position to support supplemental bonding requirements from the U.S. Department of the Interior’s Bureau of Ocean Energy Management, we are focused on preserving liquidity. We are working with our lenders and financial advisors and evaluating our options.


In the future, we expect to see a growing number of acquisition opportunities and if appropriate, we will evaluate those that fit our criteria. As always, we look for quality producing assets with bankable reserves. We then apply our expertise and extensive knowledge of the Gulf of Mexico to assess the upside potential of those assets, which is a key ingredient. And of course, we’ll need to purchase at the right price. Additional opportunities to consider are farm outs, joint venture opportunities, assets sales and acquisitions, just to name a few.


We do hold a substantial amount of quality acreage by production and we believe that some of it has additional untapped upside potential, including projects that could be impactful. W&T has some great assets and we are working hard to make sure we can take full advantage of those opportunities in the future. I can promise you that as a majority shareholder of W&T, this is personal.


Thank you for your continued support.

Tracy W. Krohn,

Chief Executive Officer



W&T Offshore, Inc. is an independent oil and natural gas producer with operations offshore in the Gulf of Mexico. We have grown through acquisitions, exploration and development and currently hold working interests in approximately 54 offshore fields in federal and state waters (50 producing and four fields capable of producing). We currently have under lease approximately 900,000 gross acres, with approximately 550,000 gross acres on the shelf and approximately 350,000 gross acres in the deepwater. A majority of our daily production is derived from wells we operate offshore.


W&T Offshore, Inc.

Nine Greenway Plaza, Suite 300

Houston, TX 77046

Tel 713.626.8525

Web wtoffshore.com



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The common stock of W&T Offshore, Inc.

is traded on the New York Stock Exchange

under the symbol WTI. As of March 3, 2016 there were 195 registered holders of our common stock.



Ernst & Young LLP, Houston, TX




Netherland, Sewell & Associates, Inc.

1601 Elm Street, Suite 4500

Dallas, TX 75201-4754



The Company's 2016 Annual Meeting of

Shareholders will be held at 8 a.m. Central

Time on May 4, 2016, at the Corporate

Office, Nine Greenway Plaza, Suite 300,

Houston, Texas 77046.



A copy of the W&T Offshore, Inc. Form

10-K for the year ended December 31,

2015, filed with the Securities and Exchange Commission, is available from the Company. Requests for investor-related information should be directed to Investor Relations at the Company’s corporate office or on the Internet at www.wtoffshore.com. E-mail:

investorrelations@wtoffshore.com. The W&T Offshore, Inc. Form 10-K is also available on our Web site at www.wtoffshore.com. The most recent certifications by our Chief Executive Officer and Chief Financial Officer pursuant to Section 301 of the Sarbanes-Oxley Act of 2002 are filed as exhibits to the Form 10-K. Tracy W. Krohn, our Chief Executive Officer, has also filed with the New York Stock Exchange the most recent Annual CEO Certification as required by Section 303A.12(a) of the New York Stock Exchange Listed Company Manual.

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