W&T Offshore, Inc. Quarterly report pursuant to Section 13 or 15(d)

Quarterly report pursuant to Section 13 or 15(d)

Supplemental Guarantor Information

Supplemental Guarantor Information

9 Months Ended

Sep. 30, 2012

14. Supplemental Guarantor Information

Our payment obligations under the 8.50% Senior Notes and the Credit Agreement (see Note 6) are fully and unconditionally guaranteed by certain of our wholly-owned subsidiaries, W&T Energy VI, LLC and W&T Energy VII, LLC, which does not have any active operations (together, the “Guarantor Subsidiaries”).

The following unaudited condensed consolidating financial information presents the financial condition, results of operations and cash flows of W&T Offshore, Inc. (when referred to on a stand-alone basis, the “Parent Company”) and the Guarantor Subsidiaries, together with consolidating adjustments necessary to present the Company’s results on a consolidated basis.

Condensed Consolidating Balance Sheet as of September 30, 2012


	Parent Company			Guarantor Subsidiaries		Eliminations			Consolidated W&T Offshore, Inc.
	(In thousands)
Assets
Current assets:
Cash and cash equivalents	$	6,993		$	—	$	—		$	6,993
Receivables:
Oil and natural gas sales		53,969			14,261		—			68,230
Joint interest and other		21,105			—		—			21,105
Income taxes		124,012			—		(109,728	)		14,284

Total receivables		199,086			14,261		(109,728	)		103,619
Restricted cash and cash equivalents		24,026			—		—			24,026
Deposit for acquisition		22,800			—		—			22,800
Prepaid expenses and other assets		32,455			—		—			32,455

Total current assets		285,360			14,261		(109,728	)		189,893
Property and equipment – at cost:
Oil and natural gas properties and equipment		5,917,591			312,035		—			6,229,626
Furniture, fixtures and other		20,912			—		—			20,912

Total property and equipment		5,938,503			312,035		—			6,250,538
Less accumulated depreciation, depletion and amortization		4,384,839			171,709		—			4,556,548

Net property and equipment		1,553,664			140,326		—			1,693,990
Restricted deposits for asset retirement obligations		28,441			—		—			28,441
Deferred income taxes		—			15,986		(15,986	)		—
Other assets		421,125			376,655		(783,452	)		14,328

Total assets	$	2,288,590		$	547,228	$	(909,166	)	$	1,926,652


Liabilities and Shareholders’ Equity
Current liabilities:
Accounts payable	$	103,370		$	904	$	—		$	104,274
Undistributed oil and natural gas proceeds		34,437			223		—			34,660
Asset retirement obligations		83,545			—		—			83,545
Accrued liabilities		32,331			—		—			32,331
Income taxes		—			110,078		(109,728	)		350
Deferred income taxes – current		2,945			—		—			2,945

Total current liabilities		256,628			111,205		(109,728	)		258,105
Long-term debt		719,000			—		—			719,000
Asset retirement obligations, less current portion		221,478			29,226		—			250,704
Deferred income taxes		114,379			—		(15,986	)		98,393
Other liabilities		386,125			—		(376,655	)		9,470
Shareholders’ equity:
Common stock		1			—		—			1
Additional paid-in capital		396,601			231,759		(231,759	)		396,601
Retained earnings		218,545			175,038		(175,038	)		218,545
Treasury stock, at cost		(24,167	)		—		—			(24,167	)

Total shareholders’ equity		590,980			406,797		(406,797	)		590,980

Total liabilities and shareholders’ equity	$	2,288,590		$	547,228	$	(909,166	)	$	1,926,652

Condensed Consolidating Balance Sheet as of December 31, 2011


	Parent Company			Guarantor Subsidiaries		Eliminations			Consolidated W&T Offshore, Inc.
	(In thousands)
Assets
Current assets:
Cash and cash equivalents	$	4,512		$	—	$	—		$	4,512
Receivables:
Oil and natural gas sales		78,131			20,419		—			98,550
Joint interest and other		25,804			—		—			25,804
Income taxes		74,183			—		(74,183	)		—

Total receivables		178,118			20,419		(74,183	)		124,354
Deferred income taxes – current		2,007			—		—			2,007
Prepaid expenses and other assets		30,315			—		—			30,315

Total current assets		214,952			20,419		(74,183	)		161,188
Property and equipment – at cost:
Oil and natural gas properties and equipment		5,689,535			269,481		—			5,959,016
Furniture, fixtures and other		19,500			—		—			19,500

Total property and equipment		5,709,035			269,481		—			5,978,516
Less accumulated depreciation, depletion and amortization		4,208,825			111,585		—			4,320,410

Net property and equipment		1,500,210			157,896		—			1,658,106
Restricted deposits for asset retirement obligations		33,462			—		—			33,462
Deferred income taxes		—			17,637		(17,637	)		—
Other assets		372,572			275,181		(631,584	)		16,169

Total assets	$	2,121,196		$	471,133	$	(723,404	)	$	1,868,925


Liabilities and Shareholders’ Equity
Current liabilities:
Accounts payable	$	73,333		$	2,538	$	—		$	75,871
Undistributed oil and natural gas proceeds		33,391			341		—			33,732
Asset retirement obligations		138,185			—		—			138,185
Accrued liabilities		29,705			—		—			29,705
Income taxes		—			84,575		(74,183	)		10,392

Total current liabilities		274,614			87,454		(74,183	)		287,885
Long-term debt		717,000			—		—			717,000
Asset retirement obligations, less current portion		228,419			27,276		—			255,695
Deferred income taxes		76,518			—		(17,637	)		58,881
Other liabilities		280,071			—		(275,181	)		4,890
Shareholders’ equity:
Common stock		1			—		—			1
Additional paid-in capital		386,920			231,759		(231,759	)		386,920
Retained earnings		181,820			124,644		(124,644	)		181,820
Treasury stock, at cost		(24,167	)		—		—			(24,167	)

Total shareholders’ equity		544,574			356,403		(356,403	)		544,574

Total liabilities and shareholders’ equity	$	2,121,196		$	471,133	$	(723,404	)	$	1,868,925

Condensed Consolidating Statement of Income for the Three Months Ended September 30, 2012


	Parent Company			Guarantor Subsidiaries		Eliminations			Consolidated W&T Offshore, Inc.
	(In thousands)

Revenues	$	141,139		$	44,807	$	—		$	185,946


Operating costs and expenses:
Lease operating expenses		47,353			6,058		—			53,411
Production taxes		1,353			—		—			1,353
Gathering and transportation		2,084			726		—			2,810
Depreciation, depletion, amortization and accretion		58,744			18,718		—			77,462
General and administrative expenses		18,691			—		—			18,691
Derivative loss		24,659			—		—			24,659

Total costs and expenses		152,884			25,502		—			178,386

Operating income (loss)		(11,745	)		19,305		—			7,560
Earnings of affiliates		12,551			—		(12,551	)		—
Interest expense:
Incurred		14,791			—		—			14,791
Capitalized		(3,383	)		—		—			(3,383	)
Other income		202			—		—			202

Income (loss) before income tax expense (benefit)		(10,400	)		19,305		(12,551	)		(3,646	)
Income tax expense (benefit)		(8,929	)		6,754		—			(2,175	)

Net income (loss)	$	(1,471	)	$	12,551	$	(12,551	)	$	(1,471	)

Condensed Consolidating Statement of Income for the Nine Months Ended September 30, 2012


	Parent Company			Guarantor Subsidiaries		Eliminations			Consolidated W&T Offshore, Inc.
	(In thousands)

Revenues	$	473,297		$	164,048	$	—		$	637,345


Operating costs and expenses:
Lease operating expenses		150,860			19,489		—			170,349
Production taxes		4,174			—		—			4,174
Gathering and transportation		8,788			2,352		—			11,140
Depreciation, depletion, amortization and accretion		189,827			62,067		—			251,894
General and administrative expenses		60,200			2,593		—			62,793
Derivative loss		14,421			—		—			14,421

Total costs and expenses		428,270			86,501		—			514,771

Operating income		45,027			77,547		—			122,574
Earnings of affiliates		50,395			—		(50,395	)		—
Interest expense:
Incurred		43,409			—		—			43,409
Capitalized		(9,899	)		—		—			(9,899	)
Other income		210			—		—			210

Income before income tax expense		62,122			77,547		(50,395	)		89,274
Income tax expense		6,807			27,152		—			33,959

Net income	$	55,315		$	50,395	$	(50,395	)	$	55,315

Condensed Consolidating Statement of Income for the Three Months Ended September 30, 2011


	Parent Company			Guarantor Subsidiaries		Eliminations			Consolidated W&T Offshore, Inc.
	(In thousands)

Revenues	$	174,935		$	70,436	$	—		$	245,371


Operating costs and expenses:
Lease operating expenses		49,854			9,045		—			58,899
Production taxes		1,050			—		—			1,050
Gathering and transportation		3,669			1,184		—			4,853
Depreciation, depletion, amortization and accretion		62,372			22,083		—			84,455
General and administrative expenses		18,104			—		—			18,104
Derivative gain		(17,323	)		—		—			(17,323	)

Total costs and expenses		117,726			32,312		—			150,038

Operating income		57,209			38,124		—			95,333
Earnings of affiliates		24,780			—		(24,780	)		—
Interest expense:
Incurred		14,721			—		—			14,721
Capitalized		(3,163	)		—		—			(3,163	)
Loss on extinguishment of debt		2,031			—		—			2,031
Other income		6			—		—			6

Income before income tax expense		68,406			38,124		(24,780	)		81,750
Income tax expense		15,478			13,344		—			28,822

Net income	$	52,928		$	24,780	$	(24,780	)	$	52,928

Condensed Consolidating Statement of Income for the Nine Months Ended September 30, 2011


	Parent Company			Guarantor Subsidiaries		Eliminations			Consolidated W&T Offshore, Inc.
	(In thousands)

Revenues	$	507,689		$	201,459	$	—		$	709,148


Operating costs and expenses:
Lease operating expenses		130,001			29,900		—			159,901
Production taxes		2,183			—		—			2,183
Gathering and transportation		9,990			3,213		—			13,203
Depreciation, depletion, amortization and accretion		176,999			64,918		—			241,917
General and administrative expenses		51,653			2,582		—			54,235
Derivative gain		(10,815	)		—		—			(10,815	)

Total costs and expenses		360,011			100,613		—			460,624

Operating income		147,678			100,846		—			248,524
Earnings of affiliates		65,550			—		(65,550	)		—
Interest expense:
Incurred		36,913			—		—			36,913
Capitalized		(6,654	)		—		—			(6,654	)
Loss on extinguishment of debt		22,694			—		—			22,694
Other income		22								22

Income before income tax expense		160,297			100,846		(65,550	)		195,593
Income tax expense		33,545			35,296		—			68,841

Net income	$	126,752		$	65,550	$	(65,550	)	$	126,752

Condensed Consolidating Statement of Cash Flows for the Nine Months Ended September 30, 2012


	Parent Company			Guarantor Subsidiaries			Eliminations			Consolidated W&T Offshore, Inc.
	(In thousands)
Operating activities:
Net income	$	55,315		$	50,395		$	(50,395	)	$	55,315
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, depletion, amortization and accretion		189,827			62,067			—			251,894
Amortization of debt issuance costs		2,046			—			—			2,046
Share-based compensation		9,137			—			—			9,137
Derivative loss		14,421			—			—			14,421
Cash payments on derivative settlements		(6,960	)		—			—			(6,960	)
Deferred income taxes		42,816			1,649			—			44,465
Earnings of affiliates		(50,395	)		—			50,395			—
Changes in operating assets and liabilities:
Oil and natural gas receivables		24,162			6,158			—			30,320
Joint interest and other receivables		3,935			—			—			3,935
Insurance receivables		500			—			—			500
Income taxes		(49,830	)		25,503			—			(24,327	)
Prepaid expenses and other assets		669			(101,473	)		101,474			670
Asset retirement obligations		(63,150	)		—			—			(63,150	)
Accounts payable and accrued liabilities		34,063			(1,752	)		—			32,311
Other liabilities		102,386			—			(101,474	)		912

Net cash provided by operating activities		308,942			42,547			—			351,489


Investing activities:
Investment in oil and natural gas properties and equipment		(269,825	)		(42,547	)		—			(312,372	)
Proceeds from sales of oil and gas properties and equipment		30,453			—			—			30,453
Change in restricted cash		(24,026	)		—			—			(24,026	)
Deposit for acquisition		(22,800	)		—			—			(22,800	)
Purchases of furniture, fixtures and other		(2,125	)		—			—			(2,125	)

Net cash used in investing activities		(288,323	)		(42,547	)		—			(330,870	)


Financing activities:
Borrowings of long-term debt – revolving bank credit facility		316,000			—			—			316,000
Repayments of long-term debt – revolving bank credit facility		(314,000	)		—			—			(314,000	)
Debt issuance costs		(2,081	)		—			—			(2,081	)
Dividends to shareholders		(17,848	)		—			—			(17,848	)
Other		(209	)		—			—			(209	)

Net cash used in financing activities		(18,138	)		—			—			(18,138	)

Increase in cash and cash equivalents		2,481			—			—			2,481
Cash and cash equivalents, beginning of period		4,512			—			—			4,512

Cash and cash equivalents, end of period	$	6,993		$	—		$	—		$	6,993

Condensed Consolidating Statement of Cash Flows for the Nine Months Ended September 30, 2011


	Parent Company			Guarantor Subsidiaries			Eliminations			Consolidated W&T Offshore, Inc.
	(In thousands)
Operating activities:
Net income	$	126,752		$	65,550		$	(65,550	)	$	126,752
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, depletion, amortization and accretion		176,999			64,918			—			241,917
Amortization of debt issuance costs		1,401			—			—			1,401
Loss on extinguishment of debt		22,694			—			—			22,694
Share-based compensation		6,437			—			—			6,437
Derivative gain		(10,815	)		—			—			(10,815	)
Cash payments on derivative settlements		(9,239	)		—			—			(9,239	)
Deferred income taxes		68,350			(8,908	)		—			59,442
Earnings of affiliates		(65,550	)		—			65,550			—
Changes in operating assets and liabilities:
Oil and natural gas receivables		(10,946	)		8,033			—			(2,913	)
Joint interest and other receivables		7,465			—			—			7,465
Insurance receivables		18,971			—			—			18,971
Income taxes		(60,099	)		44,205			—			(15,894	)
Prepaid expenses and other assets		(22,796	)		(165,495	)		165,690			(22,601	)
Asset retirement obligations		(51,349	)		—			—			(51,349	)
Accounts payable and accrued liabilities		25,717			(1,631	)		(194	)		23,892
Other liabilities		165,387			—			(165,496	)		(109	)

Net cash provided by operating activities		389,379			6,672			—			396,051


Investing activities:
Acquisition of significant property interest in oil and natural gas properties		(434,582	)		—			—			(434,582	)
Investment in oil and natural gas properties and equipment		(183,735	)		(1,487	)		—			(185,222	)
Investment in subsidiary		5,185			—			(5,185	)		—
Purchases of furniture, fixtures and other		(303	)		—			—			(303	)

Net cash used in investing activities		(613,435	)		(1,487	)		(5,185	)		(620,107	)


Financing activities:
Issuance of 8.5% Senior Notes		600,000			—			—			600,000
Repurchase of 8.25% Senior Notes		(450,000	)		—			—			(450,000	)
Borrowings of long-term debt – revolving bank credit facility		512,000			—			—			512,000
Repayments of long-term debt – revolving bank credit facility		(418,000	)		—			—			(418,000	)
Repurchase premium and debt issuance costs		(31,997	)		—			—			(31,997	)
Investment from parent		—			(5,185	)		5,185			—
Dividends to shareholders		(8,936	)		—			—			(8,936	)

Net cash provided by financing activities		203,067			(5,185	)		5,185			203,067

Decrease in cash and cash equivalents		(20,989	)		—			—			(20,989	)
Cash and cash equivalents, beginning of period		28,655			—			—			28,655

Cash and cash equivalents, end of period	$	7,666		$	—		$	—		$	7,666