19. Subsequent Events

Financial Assurance Requirements by the BOEM   

In January 2017, the IBLA stay related to our appeal of the BOEM orders issued during the first quarter of 2016 was extended to May 31, 2017.  

In January 2017, the BOEM, in a notice to stakeholders, extended the implementation timeline for NTL #2016-N01 by an additional six months with respect to non-sole liability properties, except in circumstances in which the BOEM determines there is a substantial risk of nonperformance of the interest holder’s decommissioning liabilities.  The extension did not affect the demand to provide financial assurance for leases, ROWs and RUEs constituting sole liability properties.  

  In February 2017, the BOEM withdrew the orders it issued in December 2016 affecting so called “sole liability properties” to allow time for the new President’s administration to review the complex financial assurance program.  Sole liability properties are leases, ROWs or RUEs for which the holder is the only liable party, i.e., there are no co-lessees, operating rights owners and/or other grant holders, and no prior interest holders liable to meet the lease and/or grant obligations.  This withdrawal rescinded the Order to Provide Additional Security issued to us in December 2016.  However, the BOEM may re-issue sole liability orders before the end of the six-month period if it determines there is a substantial risk of nonperformance of the interest holder’s decommissioning liabilities.

As suggested by the BOEM in its January and February notices, we intend to use the six month extension granted by the BOEM as an opportunity to propose and negotiate acceptable plans dealing with both sole and non-sole liability properties.

Appeal with ONRR

On January 27, 2017, the IBLA affirmed the decision of the ONRR requiring W&T to pay approximately $4.7 million in additional royalties, which is described in Note 17.  We are reviewing the decision with counsel to determine an appropriate course of action.