(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 (as such terms are define in certain debt documents);

(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 certain debt documents 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 certain debt documents;

(4)

upon Legal Defeasance or Covenant Defeasance (as such terms are defined in certain debt documents) 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 certain debt documents, provided no event of default has occurred and is continuing.

Consolidated

Parent

Guarantor

W&T

Company

Subsidiaries

Eliminations

Offshore, Inc.

Assets

Current assets:

Cash and cash equivalents

$

85,414

$

—

$

—

$

85,414

Receivables:

Oil and natural gas sales

2,742

32,263

—

35,005

Joint interest and other

121,190

—

(99,178

)

22,012

Total receivables

123,932

32,263

(99,178

)

57,017

Prepaid expenses and other assets

25,375

1,504

—

26,879

Total current assets

234,721

33,767

(99,178

)

169,310

Property and equipment – at cost:

Oil and natural gas properties and equipment

5,682,793

2,219,701

—

7,902,494

Furniture, fixtures and other

20,802

—

—

20,802

Total property and equipment

5,703,595

2,219,701

—

7,923,296

Less accumulated depreciation, depletion and amortization

5,258,563

1,822,273

(147,589

)

6,933,247

Net property and equipment

445,032

397,428

147,589

990,049

Deferred income taxes

27,251

344

—

27,595

Restricted deposits for asset retirement obligations

15,606

—

—

15,606

Other assets

498,782

266,748

(760,068

)

5,462

Total assets

$

1,221,392

$

698,287

$

(711,657

)

$

1,208,022

Liabilities and Shareholders’ Equity (Deficit)

Current liabilities:

Accounts payable

$

100,282

$

9,515

$

—

$

109,797

Undistributed oil and natural gas proceeds

20,463

976

—

21,439

Asset retirement obligations

63,716

20,619

—

84,335

Accrued liabilities

11,922

99,178

(99,178

)

11,922

Total current liabilities

196,383

130,288

(99,178

)

227,493

Long-term debt, less current maturities

1,196,855

—

—

1,196,855

Asset retirement obligations, less current portion

173,105

120,882

—

293,987

Deferred income taxes

—

—

—

—

Other liabilities

329,129

—

(312,951

)

16,178

Shareholders’ equity:

Common stock

1

—

—

1

Additional paid-in capital

423,499

704,885

(704,885

)

423,499

Retained earnings (deficit)

(1,073,413

)

(257,768

)

405,357

(925,824

)

Treasury stock, at cost

(24,167

)

—

—

(24,167

)

Total shareholders’ equity (deficit)

(674,080

)

447,117

(299,528

)

(526,491

)

Total liabilities and shareholders’ equity (deficit)

$

1,221,392

$

698,287

$

(711,657

)

$

1,208,022

Consolidated

Parent

Guarantor

W&T

Company

Subsidiaries

Eliminations

Offshore, Inc.

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

Prepaid expenses and other assets

28,728

7,619

—

36,347

Total current assets

237,099

33,041

(99,240

)

170,900

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

966,112

357,992

(1,314,797

)

9,307

Total assets

$

2,837,940

$

1,265,605

$

(1,414,037

)

$

2,689,508

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

1,352,120

—

—

1,352,120

Asset retirement obligations, less current portion

235,876

118,689

—

354,565

Deferred income taxes

49,819

125,507

—

175,326

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

207,163

(207,163

)

118,894

Treasury stock, at cost

(24,167

)

—

—

(24,167

)

Total shareholders’ equity

509,308

910,603

(910,603

)

509,308

Total liabilities and shareholders’ equity

$

2,837,940

$

1,265,605

$

(1,414,037

)

$

2,689,508

Consolidated

Parent

Guarantor

W&T

Company

Subsidiaries

Eliminations

Offshore, Inc.

Revenues

$

290,212

$

217,053

$

—

$

507,265

Operating costs and expenses:

Lease operating expenses

126,189

66,576

—

192,765

Production taxes

3,002

—

—

3,002

Gathering and transportation

9,209

7,948

—

17,157

Depreciation, depletion and amortization

201,154

172,214

—

373,368

Asset retirement obligations accretion

11,587

9,116

—

20,703

Ceiling test write-down of oil and natural gas properties

616,947

517,880

(147,589

)

987,238

General and administrative expenses

39,009

34,101

—

73,110

Derivative gain

(14,375

)

—

—

(14,375

)

Total costs and expenses

992,722

807,835

(147,589

)

1,652,968

Operating loss

(702,510

)

(590,782

)

147,589

(1,145,703

)

Loss of affiliates

(464,931

)

—

464,931

—

Interest expense:

Incurred

101,542

3,050

—

104,592

Capitalized

(4,206

)

(3,050

)

—

(7,256

)

Other (income) expense, net

4,663

—

—

4,663

Loss before income tax benefit

(1,269,440

)

(590,782

)

612,520

(1,247,702

)

Income tax benefit

(77,133

)

(125,851

)

—

(202,984

)

Net loss

$

(1,192,307

)

$

(464,931

)

$

612,520

$

(1,044,718

)

Consolidated

Parent

Guarantor

W&T

Company

Subsidiaries

Eliminations

Offshore, Inc.

Revenues

$

571,365

$

377,343

$

—

$

948,708

Operating costs and expenses:

Lease operating expenses

180,149

84,602

—

264,751

Production taxes

7,932

—

—

7,932

Gathering and transportation

11,790

8,031

—

19,821

Depreciation, depletion, amortization and accretion

267,406

223,063

—

490,469

Asset retirement obligations accretion

10,981

9,652

—

20,633

General and administrative expenses

46,513

40,486

—

86,999

Derivative loss

(3,965

)

—

—

(3,965

)

Total costs and expenses

520,806

365,834

—

886,640

Operating income

50,559

11,509

—

62,068

Earnings of affiliates

8,320

—

(8,320

)

—

Interest expense:

Incurred

84,460

2,462

—

86,922

Capitalized

(6,064

)

(2,462

)

—

(8,526

)

Other (income) expense, net

(208

)

—

—

(208

)

Income (loss) before income tax expense

(19,309

)

11,509

(8,320

)

(16,120

)

Income tax expense (benefit)

(7,648

)

3,189

—

(4,459

)

Net income (loss)

$

(11,661

)

$

8,320

$

(8,320

)

$

(11,661

)

Consolidated

Parent

Guarantor

W&T

Company

Subsidiaries

Eliminations

Offshore, Inc.

Revenues

$

631,267

$

352,821

$

—

$

984,088

Operating costs and expenses:

Lease operating expenses

202,096

68,743

—

270,839

Production taxes

7,135

—

—

7,135

Gathering and transportation

9,248

8,262

—

17,510

Depreciation, depletion and amortization

236,600

194,011

—

430,611

Asset retirement obligations accretion

14,218

6,700

—

20,918

General and administrative expenses

44,040

37,834

—

81,874

Derivative loss

8,470

—

—

8,470

Total costs and expenses

521,807

315,550

—

837,357

Operating income

109,460

37,271

—

146,731

Earnings of affiliates

24,400

—

(24,400

)

—

Interest expense:

Incurred

82,570

3,069

—

85,639

Capitalized

(6,989

)

(3,069

)

—

(10,058

)

Other (income) expense, net

(8,946

)

—

—

(8,946

)

Income before income tax expense

67,225

37,271

(24,400

)

80,096

Income tax expense

15,903

12,871

—

28,774

Net income

$

51,322

$

24,400

$

(24,400

)

$

51,322

Consolidated

Parent

Guarantor

W&T

Company

Subsidiaries

Eliminations

Offshore, Inc.

Operating activities:

Net loss

$

(1,192,307

)

$

(464,931

)

$

612,520

$

(1,044,718

)

Adjustments to reconcile net loss to net cash provided by

       (used in) operating activities:

Depreciation, depletion, amortization and accretion

212,741

181,330

—

394,071

Ceiling test write-down of oil and gas properties

616,947

517,880

(147,589

)

987,238

Debt issuance costs write-off/amortization of debt items

4,411

—

—

4,411

Share-based compensation

10,242

—

—

10,242

Derivative gain

(14,375

)

—

—

(14,375

)

Cash receipts on derivative settlements, net

6,703

—

—

6,703

Deferred income taxes

(77,421

)

(125,851

)

—

(203,272

)

Loss of affiliates

464,931

—

(464,931

)

—

Changes in operating assets and liabilities:

Oil and natural gas receivables

39,078

(6,842

)

—

32,236

Joint interest and other receivables

21,633

—

—

21,633

Income taxes

(7

)

—

—

(7

)

Prepaid expenses and other assets

(13,916

)

122,977

(91,245

)

17,816

Asset retirement obligation settlements

(26,637

)

(5,918

)

—

(32,555

)

Accounts payable, accrued liabilities and other

(142,270

)

4,156

91,245

(46,869

)

Net cash provided by (used in) operating activities

(90,247

)

222,801

—

132,554

Investing activities:

Investment in oil and natural gas properties and equipment

(31,534

)

(198,627

)

—

(230,161

)

Changes in operating assets and liabilities associated with investing activities

(29,806

)

(25,619

)

—

(55,425

)

Proceeds from sales of assets and other, net

372,939

—

—

372,939

Investment in subsidiary

(1,445

)

—

1,445

—

Purchases of furniture, fixtures and other

(1,278

)

—

—

(1,278

)

Net cash used in investing activities

308,876

(224,246

)

1,445

86,075

Financing activities:

Borrowings of long-term debt – revolving bank credit facility

263,000

—

—

263,000

Repayments of long-term debt – revolving bank credit facility

(710,000

)

—

—

(710,000

)

Issuance of 9.00% Term Loan

297,000

—

—

297,000

Debt issuance costs

(6,669

)

—

—

(6,669

)

Other

(212

)

—

—

(212

)

Investment from parent

—

1,445

(1,445

)

—

Net cash provided by financing activities

(156,881

)

1,445

(1,445

)

(156,881

)

Decrease in cash and cash equivalents

61,748

—

—

61,748

Cash and cash equivalents, beginning of period

23,666

—

—

23,666

Cash and cash equivalents, end of period

$

85,414

$

—

$

—

$

85,414

Consolidated

Parent

Guarantor

W&T

Company

Subsidiaries

Eliminations

Offshore, Inc.

Operating activities:

Net income (loss)

$

(11,661

)

$

8,320

$

(8,320

)

$

(11,661

)

Adjustments to reconcile net income to net cash

   provided by operating activities:

Depreciation, depletion, amortization and accretion

278,387

232,715

—

511,102

Amortization of debt issuance costs and premium

701

—

—

701

Share-based compensation

14,744

—

—

14,744

Derivative gain

(3,965

)

—

—

(3,965

)

Cash payments on derivative settlements

(5,318

)

—

—

(5,318

)

Deferred income taxes

(32,456

)

27,696

—

(4,760

)

Earnings of affiliates

(8,320

)

—

8,320

—

Changes in operating assets and liabilities:

Oil and natural gas receivables

19,553

9,957

—

29,510

Joint interest and other receivables

(4,255

)

—

—

(4,255

)

Income taxes

27,650

(24,507

)

—

3,143

Prepaid expenses and other assets

45,962

(7,525

)

(23,425

)

15,012

Asset retirement obligations

(57,253

)

(17,060

)

—

(74,313

)

Accounts payable, accrued liabilities and other

11,083

(30,475

)

23,425

4,033

Net cash provided by operating activities

274,852

199,121

—

473,973

Investing activities:

Acquisition of property interest in oil and natural gas properties

(17,407

)

(54,827

)

—

(72,234

)

Investment in oil and natural gas properties and equipment

(312,044

)

(242,334

)

—

(554,378

)

Changes in operating assets and liabilities associated with investing activities

1,733

35,717

—

37,450

Investment in subsidiary

(62,323

)

—

62,323

—

Purchases of furniture, fixtures and other

(3,340

)

—

—

(3,340

)

Net cash used in investing activities

(393,381

)

(261,444

)

62,323

(592,502

)

Financing activities:

Borrowings of long-term debt – revolving bank credit facility

556,000

—

—

556,000

Repayments of long-term debt – revolving bank credit facility

(399,000

)

—

—

(399,000

)

Dividends to shareholders

(30,260

)

—

—

(30,260

)

Other

(345

)

—

—

(345

)

Investment from parent

—

62,323

(62,323

)

—

Net cash provided in financing activities

126,395

62,323

(62,323

)

126,395

Increase in cash and cash equivalents

7,866

—

—

7,866

Cash and cash equivalents, beginning of period

15,800

—

—

15,800

Cash and cash equivalents, end of period

$

23,666

$

—

$

—

$

23,666

Consolidated

Parent

Guarantor

W&T

Company

Subsidiaries

Eliminations

Offshore, Inc.

Operating activities:

Net income

$

51,322

$

24,400

$

(24,400

)

$

51,322

Adjustments to reconcile net income to net cash

   provided by operating activities:

Depreciation, depletion, amortization and accretion