Quarterly report pursuant to Section 13 or 15(d)

Supplemental Guarantor Information

v3.3.0.814
Supplemental Guarantor Information
3 Months Ended
Mar. 31, 2015
Supplemental Guarantor Information [Abstract]  
Supplemental Guarantor Information

W&T OFFSHORE, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

 

13.  Supplemental Guarantor Information

Our payment obligations under the 8.50% Senior Notes and the Credit Agreement (see Note 5 and Note 12) are fully and unconditionally guaranteed by certain of our 100%-owned subsidiaries, including W & T Energy VI, LLC and W & T Energy VII, LLC (together, the “Guarantor Subsidiaries”).  W & T Energy VII, LLC does not currently have any active operations or contain any assets.  Guarantees of the 8.50% Senior Notes will be released under certain circumstances, including:  

(1) in connection with any sale or other disposition of all or substantially all of the assets of a Guarantor Subsidiary (including by way of merger or consolidation) to a person that is not (either before or after giving effect to such transaction) the Company or a Restricted Subsidiary (as such term is defined in the indenture governing the 8.50% Senior Notes of the Company, if the sale or other disposition does not violate the “Asset Sales” provisions of the indenture;

(2) in connection with any sale or other disposition of the capital stock of such Guarantor Subsidiary to a person that is not (either before or after giving effect to such transaction) the Company or a Restricted Subsidiary of the Company, if the sale or other disposition does not violate the “Asset Sales” provisions of the indenture and the Guarantor Subsidiary ceases to be a subsidiary of the Company as a result of such sales or disposition;

(3) if such Guarantor Subsidiary is a Restricted Subsidiary and the Company designates such Guarantor Subsidiary as an Unrestricted Subsidiary in accordance with the applicable provisions of the indenture;

(4) upon Legal Defeasance or Covenant Defeasance (as such terms are defined in the indenture) or upon satisfaction and discharge of the indenture;

(5) upon the liquidation or dissolution of such Guarantor Subsidiary, provided no event of default has occurred and is continuing; or

(6) at such time as such Guarantor Subsidiary is no longer required to be a Guarantor Subsidiary as described in the indenture, provided no event of default has occurred and is continuing.

 

The following condensed consolidating financial information presents the financial condition, results of operations and cash flows of the Parent Company and the Guarantor Subsidiaries, together with consolidating adjustments necessary to present the Company’s results on a consolidated basis.  Transfers of property, including related ARO and deferred income tax liabilities, were made during 2014 from the Parent Company to the Guarantor Subsidiaries to assist the Parent Company to continue to qualify for a waiver of certain supplemental bonding requirements from the Bureau of Ocean Energy Management.  As these transfers were transactions between entities under common control, the prior period financial information has been retrospectively adjusted for comparability purposes, as prescribed under authoritative guidance.  The condensed consolidating financial information for the prior period ended March 31, 2014 was adjusted as if all transfers occurred at the beginning of the period presented.  None of the above adjustments had any effect on the consolidated results for the current or prior periods presented.

 

 

 

Condensed Consolidating Balance Sheet as of March 31, 2015

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consolidated

 

 

Parent

 

 

Guarantor

 

 

 

 

 

 

W&T

 

 

Company

 

 

Subsidiaries

 

 

Eliminations

 

 

Offshore, Inc.

 

 

(In thousands)

 

Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

$

8,367

 

 

$

 

 

$

 

 

$

8,367

 

Receivables:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Oil and natural gas sales

 

27,184

 

 

 

18,937

 

 

 

 

 

 

46,121

 

Joint interest and other

 

115,017

 

 

 

 

 

 

(85,717

)

 

 

29,300

 

Total receivables

 

142,201

 

 

 

18,937

 

 

 

(85,717

)

 

 

75,421

 

Deferred income taxes

 

34,656

 

 

 

1,865

 

 

 

(33,325

)

 

 

3,196

 

Prepaid expenses and other assets

 

14,400

 

 

 

4,442

 

 

 

 

 

 

18,842

 

Total current assets

 

199,624

 

 

 

25,244

 

 

 

(119,042

)

 

 

105,826

 

Property and equipment – at cost:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Oil and natural gas properties and equipment

 

6,058,159

 

 

 

2,075,085

 

 

 

 

 

 

8,133,244

 

Furniture, fixtures and other

 

23,495

 

 

 

 

 

 

 

 

 

23,495

 

Total property and equipment

 

6,081,654

 

 

 

2,075,085

 

 

 

 

 

 

8,156,739

 

Less accumulated depreciation, depletion and amortization

 

4,705,609

 

 

 

1,249,930

 

 

 

 

 

 

5,955,539

 

Net property and equipment

 

1,376,045

 

 

 

825,155

 

 

 

 

 

 

2,201,200

 

Restricted deposits for asset retirement obligations

 

15,501

 

 

 

 

 

 

 

 

 

15,501

 

Other assets

 

911,505

 

 

 

316,253

 

 

 

(1,211,224

)

 

 

16,534

 

Total assets

$

2,502,675

 

 

$

1,166,652

 

 

$

(1,330,266

)

 

$

2,339,061

 

Liabilities and Shareholders’ Equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accounts payable

$

122,627

 

 

$

5,650

 

 

$

 

 

$

128,277

 

Undistributed oil and natural gas proceeds

 

28,152

 

 

 

1,019

 

 

 

 

 

 

29,171

 

Asset retirement obligations

 

10,153

 

 

 

6,347

 

 

 

 

 

 

16,500

 

Accrued liabilities

 

28,592

 

 

 

85,345

 

 

 

(85,717

)

 

 

28,220

 

Total current liabilities

 

189,524

 

 

 

98,361

 

 

 

(85,717

)

 

 

202,168

 

Long-term debt, less current maturities

 

1,426,437

 

 

 

 

 

 

 

 

 

1,426,437

 

Asset retirement obligations, less current portion

 

240,943

 

 

 

123,780

 

 

 

 

 

 

364,723

 

Deferred income taxes

 

382

 

 

 

107,818

 

 

 

(33,325

)

 

 

74,875

 

Other liabilities

 

388,431

 

 

 

 

 

 

(374,531

)

 

 

13,900

 

Shareholders’ equity:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common stock

 

1

 

 

 

 

 

 

 

 

 

1

 

Additional paid-in capital

 

417,325

 

 

 

703,237

 

 

 

(703,237

)

 

 

417,325

 

Retained earnings (accumulated deficit)

 

(136,201

)

 

 

133,456

 

 

 

(133,456

)

 

 

(136,201

)

Treasury stock, at cost

 

(24,167

)

 

 

 

 

 

 

 

 

(24,167

)

Total shareholders’ equity

 

256,958

 

 

 

836,693

 

 

 

(836,693

)

 

 

256,958

 

Total liabilities and shareholders’ equity

$

2,502,675

 

 

$

1,166,652

 

 

$

(1,330,266

)

 

$

2,339,061

 

 

 

 

Condensed Consolidating Balance Sheet as of December 31, 2014

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consolidated

 

 

Parent

 

 

Guarantor

 

 

 

 

 

 

W&T

 

 

Company

 

 

Subsidiaries

 

 

Eliminations

 

 

Offshore, Inc.

 

 

(In thousands)

 

Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

$

23,666

 

 

$

 

 

$

 

 

$

23,666

 

Receivables:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Oil and natural gas sales

 

41,820

 

 

 

25,422

 

 

 

 

 

 

67,242

 

Joint interest and other

 

142,885

 

 

 

 

 

 

(99,240

)

 

 

43,645

 

Total receivables

 

184,705

 

 

 

25,422

 

 

 

(99,240

)

 

 

110,887

 

Deferred income taxes

 

9,797

 

 

 

1,865

 

 

 

 

 

 

11,662

 

Prepaid expenses and other assets

 

28,728

 

 

 

7,619

 

 

 

 

 

 

36,347

 

Total current assets

 

246,896

 

 

 

34,906

 

 

 

(99,240

)

 

 

182,562

 

Property and equipment – at cost:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Oil and natural gas properties and equipment

 

6,038,915

 

 

 

2,006,751

 

 

 

 

 

 

8,045,666

 

Furniture, fixtures and other

 

23,269

 

 

 

 

 

 

 

 

 

23,269

 

Total property and equipment

 

6,062,184

 

 

 

2,006,751

 

 

 

 

 

 

8,068,935

 

Less accumulated depreciation, depletion and amortization

 

4,442,899

 

 

 

1,132,179

 

 

 

 

 

 

5,575,078

 

Net property and equipment

 

1,619,285

 

 

 

874,572

 

 

 

 

 

 

2,493,857

 

Restricted deposits for asset retirement obligations

 

15,444

 

 

 

 

 

 

 

 

 

15,444

 

Other assets

 

974,049

 

 

 

349,912

 

 

 

(1,306,717

)

 

 

17,244

 

Total assets

$

2,855,674

 

 

$

1,259,390

 

 

$

(1,405,957

)

 

$

2,709,107

 

Liabilities and Shareholders’ Equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accounts payable

$

188,654

 

 

$

5,455

 

 

$

 

 

$

194,109

 

Undistributed oil and natural gas proceeds

 

36,130

 

 

 

879

 

 

 

 

 

 

37,009

 

Asset retirement obligations

 

30,711

 

 

 

5,292

 

 

 

 

 

 

36,003

 

Accrued liabilities

 

17,437

 

 

 

99,180

 

 

 

(99,240

)

 

 

17,377

 

Total current liabilities

 

272,932

 

 

 

110,806

 

 

 

(99,240

)

 

 

284,498

 

Long-term debt, less current maturities

 

1,360,057

 

 

 

 

 

 

 

 

 

1,360,057

 

Asset retirement obligations, less current portion

 

235,876

 

 

 

118,689

 

 

 

 

 

 

354,565

 

Deferred income taxes

 

59,616

 

 

 

127,372

 

 

 

 

 

 

186,988

 

Other liabilities

 

417,885

 

 

 

 

 

 

(404,194

)

 

 

13,691

 

Shareholders’ equity:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common stock

 

1

 

 

 

 

 

 

 

 

 

1

 

Additional paid-in capital

 

414,580

 

 

 

703,440

 

 

 

(703,440

)

 

 

414,580

 

Retained earnings

 

118,894

 

 

 

199,083

 

 

 

(199,083

)

 

 

118,894

 

Treasury stock, at cost

 

(24,167

)

 

 

 

 

 

 

 

 

(24,167

)

Total shareholders’ equity

 

509,308

 

 

 

902,523

 

 

 

(902,523

)

 

 

509,308

 

Total liabilities and shareholders’ equity

$

2,855,674

 

 

$

1,259,390

 

 

$

(1,405,957

)

 

$

2,709,107

 

 

 

 


 

Condensed Consolidating Statement of Operations for the Three Months Ended March 31, 2015

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consolidated

 

 

Parent

 

 

Guarantor

 

 

 

 

 

 

W&T

 

 

Company

 

 

Subsidiaries

 

 

Eliminations

 

 

Offshore, Inc.

 

 

(In thousands)

 

Revenues

$

82,463

 

 

$

45,444

 

 

$

-

 

 

$

127,907

 

Operating costs and expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Lease operating expenses

 

37,386

 

 

 

15,945

 

 

 

 

 

 

53,331

 

Production taxes

 

637

 

 

 

 

 

 

 

 

 

637

 

Gathering and transportation

 

2,548

 

 

 

2,276

 

 

 

 

 

 

4,824

 

Depreciation, depletion, amortization and accretion

 

75,152

 

 

 

50,315

 

 

 

 

 

 

125,467

 

Ceiling test write-down of oil and natural gas properties

 

190,695

 

 

 

69,695

 

 

 

 

 

 

260,390

 

General and administrative expenses

 

12,388

 

 

 

8,378

 

 

 

 

 

 

20,766

 

Total costs and expenses

 

318,806

 

 

 

146,609

 

 

 

 

 

 

465,415

 

Operating loss

 

(236,343

)

 

 

(101,165

)

 

 

 

 

 

(337,508

)

Loss of affiliates

 

(65,627

)

 

 

 

 

 

65,627

 

 

 

 

Interest expense:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Incurred

 

22,230

 

 

 

714

 

 

 

 

 

 

22,944

 

Capitalized

 

(1,069

)

 

 

(714

)

 

 

 

 

 

(1,783

)

Loss before income tax benefit

 

(323,131

)

 

 

(101,165

)

 

 

65,627

 

 

 

(358,669

)

Income tax benefit

 

(68,036

)

 

 

(35,538

)

 

 

 

 

 

(103,574

)

Net loss

$

(255,095

)

 

$

(65,627

)

 

$

65,627

 

 

$

(255,095

)

 

 

Condensed Consolidating Statement of Operations for the Three Months Ended March 31, 2014

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consolidated

 

 

Parent

 

 

Guarantor

 

 

 

 

 

 

W&T

 

 

Company

 

 

Subsidiaries

 

 

Eliminations

 

 

Offshore, Inc.

 

 

(In thousands)

 

Revenues

$

143,986

 

 

$

110,530

 

 

$

 

 

$

254,516

 

Operating costs and expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Lease operating expenses

 

39,110

 

 

 

16,507

 

 

 

 

 

 

55,617

 

Production taxes

 

1,992

 

 

 

 

 

 

 

 

 

1,992

 

Gathering and transportation

 

3,338

 

 

 

1,958

 

 

 

 

 

 

5,296

 

Depreciation, depletion, amortization and accretion

 

62,431

 

 

 

60,875

 

 

 

 

 

 

123,306

 

General and administrative expenses

 

11,445

 

 

 

12,143

 

 

 

 

 

 

23,588

 

Derivative loss

 

7,492

 

 

 

 

 

 

 

 

 

7,492

 

Total costs and expenses

 

125,808

 

 

 

91,483

 

 

 

 

 

 

217,291

 

Operating income

 

18,178

 

 

 

19,047

 

 

 

 

 

 

37,225

 

Earnings of affiliates

 

12,451

 

 

 

 

 

 

(12,451

)

 

 

 

Interest expense:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Incurred

 

20,679

 

 

 

781

 

 

 

 

 

 

21,460

 

Capitalized

 

(1,291

)

 

 

(781

)

 

 

 

 

 

(2,072

)

Income before income tax expense

 

11,241

 

 

 

19,047

 

 

 

(12,451

)

 

 

17,837

 

Income tax expense

 

52

 

 

 

6,596

 

 

 

 

 

 

6,648

 

Net income

$

11,189

 

 

$

12,451

 

 

$

(12,451

)

 

$

11,189

 

 

 

 

 

 

Condensed Consolidating Statement of Cash Flows for the Three Months Ended March 31, 2015

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consolidated

 

 

Parent

 

 

Guarantor

 

 

 

 

 

 

W&T

 

 

Company

 

 

Subsidiaries

 

 

Eliminations

 

 

Offshore, Inc.

 

 

Restated

 

 

(In thousands)

 

Operating activities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

$

(255,095

)

 

$

(65,627

)

 

$

65,627

 

 

$

(255,095

)

Adjustments to reconcile net loss to net cash provided by

    (used in) operating activities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation, depletion, amortization and accretion

 

75,152

 

 

 

50,315

 

 

 

 

 

 

125,467

 

Ceiling test write-down of oil and gas properties

 

190,695

 

 

 

69,695

 

 

 

 

 

 

260,390

 

Amortization of debt issuance costs and premium

 

156

 

 

 

 

 

 

 

 

 

156

 

Share-based compensation

 

2,816

 

 

 

 

 

 

 

 

 

2,816

 

Deferred income taxes

 

(83,649

)

 

 

(19,925

)

 

 

 

 

 

(103,574

)

Loss of affiliates

 

65,627

 

 

 

 

 

 

(65,627

)

 

 

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Oil and natural gas receivables

 

14,636

 

 

 

6,485

 

 

 

 

 

 

21,121

 

Joint interest and other receivables

 

14,533

 

 

 

 

 

 

 

 

 

14,533

 

Income taxes

 

15,287

 

 

 

(15,612

)

 

 

 

 

 

(325

)

Prepaid expenses and other assets

 

(21,690

)

 

 

68,599

 

 

 

(29,663

)

 

 

17,246

 

Asset retirement obligation settlements

 

(19,122

)

 

 

(432

)

 

 

 

 

 

(19,554

)

Accounts payable, accrued liabilities  and other

 

(40,260

)

 

 

334

 

 

 

29,663

 

 

 

(10,263

)

Net cash provided by (used in) operating activities

 

(40,914

)

 

 

93,832

 

 

 

 

 

 

52,918

 

Investing activities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Investment in oil and natural gas properties and equipment

 

(18,750

)

 

 

(64,015

)

 

 

 

 

 

(82,765

)

Changes in operating assets and liabilities associated with investing activities

 

(22,562

)

 

 

(29,614

)

 

 

 

 

 

(52,176

)

Investment in subsidiary

 

203

 

 

 

 

 

 

(203

)

 

 

 

Purchases of furniture, fixtures and other

 

(226

)

 

 

 

 

 

 

 

 

(226

)

Net cash used in investing activities

 

(41,335

)

 

 

(93,629

)

 

 

(203

)

 

 

(135,167

)

Financing activities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Borrowings of long-term debt – revolving bank credit facility

 

82,000

 

 

 

 

 

 

 

 

 

82,000

 

Repayments of long-term debt – revolving bank credit facility

 

(15,000

)

 

 

 

 

 

 

 

 

(15,000

)

Other

 

(50

)

 

 

 

 

 

 

 

 

(50

)

Investment from parent

 

 

 

 

(203

)

 

 

203

 

 

 

 

Net cash provided by financing activities

 

66,950

 

 

 

(203

)

 

 

203

 

 

 

66,950

 

Decrease in cash and cash equivalents

 

(15,299

)

 

 

 

 

 

 

 

 

(15,299

)

Cash and cash equivalents, beginning of period

 

23,666

 

 

 

 

 

 

 

 

 

23,666

 

Cash and cash equivalents, end of period

$

8,367

 

 

$

 

 

$

 

 

$

8,367

 

 


 

Condensed Consolidating Statement of Cash Flows for the Three Months Ended March 31, 2014

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consolidated

 

 

Parent

 

 

Guarantor

 

 

 

 

 

 

W&T

 

 

Company

 

 

Subsidiaries

 

 

Eliminations

 

 

Offshore, Inc.

 

 

(In thousands)

 

Operating activities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

$

11,189

 

 

$

12,451

 

 

$

(12,451

)

 

$

11,189

 

Adjustments to reconcile net income to net cash

   provided by operating activities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation, depletion, amortization and accretion

 

62,431

 

 

 

60,875

 

 

 

 

 

 

123,306

 

Amortization of debt issuance costs and premium

 

187

 

 

 

 

 

 

 

 

 

187

 

Share-based compensation

 

3,758

 

 

 

 

 

 

 

 

 

3,758

 

Derivative loss

 

7,492

 

 

 

 

 

 

 

 

 

7,492

 

Cash payments on derivative settlements

 

(4,670

)

 

 

 

 

 

 

 

 

(4,670

)

Deferred income taxes

 

15,335

 

 

 

(8,690

)

 

 

 

 

 

6,645

 

Earnings of affiliates

 

(12,451

)

 

 

 

 

 

12,451

 

 

 

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Oil and natural gas receivables

 

4,020

 

 

 

(1,205

)

 

 

 

 

 

2,815

 

Joint interest and other receivables

 

2,286

 

 

 

 

 

 

 

 

 

2,286

 

Income taxes

 

(15,321

)

 

 

15,286

 

 

 

 

 

 

(35

)

Prepaid expenses and other assets

 

(58,791

)

 

 

(29,717

)

 

 

91,217

 

 

 

2,709

 

Asset retirement obligations

 

(8,878

)

 

 

(7,464

)

 

 

 

 

 

(16,342

)

Accounts payable, accrued liabilities  and other

 

86,795

 

 

 

1,137

 

 

 

(91,217

)

 

 

(3,285

)

Net cash provided by operating activities

 

93,382

 

 

 

42,673

 

 

 

 

 

 

136,055

 

Investing activities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Investment in oil and natural gas properties and equipment

 

(71,636

)

 

 

(23,431

)

 

 

 

 

 

(95,067

)

Changes in operating assets and liabilities associated with investing activities

 

6,316

 

 

 

(23,881

)

 

 

 

 

 

(17,565

)

Investment in subsidiary

 

(4,639

)

 

 

 

 

 

4,639

 

 

 

 

Purchases of furniture, fixtures and other

 

(260

)

 

 

 

 

 

 

 

 

(260

)

Net cash used in investing activities

 

(70,219

)

 

 

(47,312

)

 

 

4,639

 

 

 

(112,892

)

Financing activities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Borrowings of long-term debt – revolving bank credit facility

 

92,000

 

 

 

 

 

 

 

 

 

92,000

 

Repayments of long-term debt – revolving bank credit facility

 

(103,000

)

 

 

 

 

 

 

 

 

(103,000

)

Dividends to shareholders

 

(7,563

)

 

 

 

 

 

 

 

 

(7,563

)

Investment from parent

 

 

 

 

4,639

 

 

 

(4,639

)

 

 

 

Other

 

(65

)

 

 

 

 

 

 

 

 

(65

)

Net cash used in financing activities

 

(18,628

)

 

 

4,639

 

 

 

(4,639

)

 

 

(18,628

)

Increase in cash and cash equivalents

 

4,535

 

 

 

 

 

 

 

 

 

4,535

 

Cash and cash equivalents, beginning of period

 

15,800

 

 

 

 

 

 

 

 

 

15,800

 

Cash and cash equivalents, end of period

$

20,335

 

 

$

 

 

$

 

 

$

20,335