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, 2011

Supplemental Guarantor Information [Abstract]

13. Supplemental Guarantor Information

Our payment obligations under the 8.5% Senior Notes and the Credit Agreement (see Note 6) are fully and unconditionally guaranteed by certain of our wholly-owned subsidiaries, Energy VI, which includes the operations of acquisitions closed in 2010 as described in Note 2, 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. and other consolidated subsidiaries ("Parent Company") and the Guarantor Subsidiaries, together with consolidating adjustments necessary to present the Company's results on a consolidated basis. Consolidated subsidiaries other than the Guarantor Subsidiaries are considered "minor" under applicable accounting rules of the SEC.

Condensed Consolidating Balance Sheet as of September 30, 2011


	Parent Company			Guarantor Subsidiaries		Eliminations			Consolidated W&T Offshore, Inc.


	(In thousands)
Assets
Current assets:
Cash and cash equivalents	$	7,666		$	—	$	—		$	7,666
Receivables:
Oil and natural gas sales		61,368			21,456		—			82,824
Joint interest and other		18,199			—		—			18,199
Insurance		1,664			—		—			1,664
Income taxes		62,592			—		(62,592	)		—

Total receivables		143,823			21,456		(62,592	)		102,687
Prepaid expenses and other assets		45,545			—		—			45,545

Total current assets		197,034			21,456		(62,592	)		155,898
Property and equipment – at cost:
Oil and natural gas properties and equipment		5,587,206			271,608		—			5,858,814
Furniture, fixtures and other		16,158			—		—			16,158

Total property and equipment		5,603,364			271,608		—			5,874,972
Less accumulated depreciation, depletion and amortization		4,149,960			90,109		—			4,240,069

Net property and equipment		1,453,404			181,499		—			1,634,903
Restricted deposits for asset retirement obligations		34,675			—		—			34,675
Deferred income tax		—			11,662		(11,662	)		—
Other assets		345,143			212,655		(542,075	)		15,723

Total assets	$	2,030,256		$	427,272	$	(616,329	)	$	1,841,199

Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable	$	79,587		$	1,410	$	—		$	80,997
Undistributed oil and natural gas proceeds		34,355			351		—			34,706
Asset retirement obligations		128,584			—		—			128,584
Accrued liabilities		30,294			—		—			30,294
Income taxes		—			64,249		(62,592	)		1,657
Deferred income taxes – current portion		5,293			—		—			5,293

Total current liabilities		278,113			66,010		(62,592	)		281,531
Long-term debt		694,000			—		—			694,000
Asset retirement obligations, less current portion		233,704			31,843		—			265,547
Deferred income taxes		57,100			—		(11,662	)		45,438
Other liabilities		221,342			—		(212,656	)		8,686
Commitments and contingencies		—			—		—			—
Shareholders' equity:
Common stock		1			—		—			1
Additional paid-in capital		383,966			231,759		(231,759	)		383,966
Retained earnings		186,197			97,660		(97,660	)		186,197
Treasury stock, at cost		(24,167	)		—		—			(24,167	)

Total shareholders' equity		545,997			329,419		(329,419	)		545,997

Total liabilities and shareholders' equity	$	2,030,256		$	427,272	$	(616,329	)	$	1,841,199

Condensed Consolidating Balance Sheet as of December 31, 2010


	Parent Company			Guarantor Subsidiaries		Eliminations			Consolidated W&T Offshore, Inc.
	(In thousands)
Assets
Current assets:
Cash and cash equivalents	$	28,655		$	—	$	—		$	28,655
Receivables:
Oil and natural gas sales		50,421			29,490		—			79,911
Joint interest and other		25,415			—		—			25,415
Insurance		1,014			—		—			1,014
Income taxes		2,492			—		(2,492	)		—

Total receivables		79,342			29,490		(2,492	)		106,340
Deferred income taxes		5,784			2,755		(2,755	)		5,784
Prepaid expenses and other assets		23,426			—		—			23,426

Total current assets		137,207			32,245		(5,247	)		164,205
Property and equipment – at cost:
Oil and natural gas properties and equipment		4,955,460			270,122		—			5,225,582
Furniture, fixtures and other		15,841			—		—			15,841

Total property and equipment		4,971,301			270,122		—			5,241,423
Less accumulated depreciation, depletion and amortization		3,994,085			27,310		—			4,021,395

Net property and equipment		977,216			242,812		—			1,220,028
Restricted deposits for asset retirement obligations		30,636			—		—			30,636
Deferred income taxes		2,819			—		—			2,819
Other assets		275,461			47,160		(316,215	)		6,406

Total assets	$	1,423,339		$	322,217	$	(321,462	)	$	1,424,094

Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable	$	77,422		$	3,020	$	—		$	80,442
Undistributed oil and natural gas proceeds		24,866			374		—			25,240
Asset retirement obligations		92,575			—		—			92,575
Accrued liabilities		25,827			—		—			25,827
Income taxes		—			20,044		(2,492	)		17,552

Total current liabilities		220,690			23,438		(2,492	)		241,636
Long-term debt		450,000			—		—			450,000
Asset retirement obligations, less current portion		269,016			29,725		—			298,741
Deferred income taxes		2,755			—		(2,755	)		—
Other liabilities		59,135			—		(47,161	)		11,974
Commitments and contingencies		—			—		—			—
Shareholders' equity:
Common stock		1			—		—			1
Additional paid-in capital		377,529			236,944		(236,944	)		377,529
Retained earnings		68,380			32,110		(32,110	)		68,380
Treasury stock, at cost		(24,167	)		—		—			(24,167	)

Total shareholders' equity		421,743			269,054		(269,054	)		421,743

Total liabilities and shareholders' equity	$	1,423,339		$	322,217	$	(321,462	)	$	1,424,094

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 and amortization		55,679			21,377		—			77,056
Asset retirement obligation accretion		6,693			706		—			7,399
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
Interest 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 and amortization		155,874			62,800		—			218,674
Asset retirement obligation accretion		21,125			2,118		—			23,243
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
Interest 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 Income for the Three Months Ended September 30, 2010


	Parent Company			Guarantor Subsidiaries		Eliminations			Consolidated W&T Offshore, Inc.


	(In thousands)
Revenues	$	140,410		$	29,165	$	—		$	169,575

Operating costs and expenses:
Lease operating expenses		31,091			3,280		—			34,371
Production taxes		276			—		—			276
Gathering and transportation		4,225			382		—			4,607
Depreciation, depletion and amortization		59,756			9,295		—			69,051
Asset retirement obligation accretion		6,119			145		—			6,264
General and administrative expenses		13,389			—		—			13,389
Derivative loss		4,770			—		—			4,770

Total costs and expenses		119,626			13,102		—			132,728

Operating income		20,784			16,063		—			36,847
Earnings of affiliates		10,441			—		(10,441	)		—
Interest expense:
Incurred		10,485			—		—			10,485
Capitalized		(1,345	)		—		—			(1,345	)
Interest income		150			—		—			150

Income before income tax expense		22,235			16,063		(10,441	)		27,857
Income tax expense (benefit)		(4,953	)		5,622		—			669

Net income	$	27,188		$	10,441	$	(10,441	)	$	27,188

Condensed Consolidating Statement of Income for the Nine Months Ended September 30, 2010


	Parent Company			Guarantor Subsidiaries (1)		Eliminations			Consolidated W&T Offshore, Inc.


	(In thousands)
Revenues	$	470,506		$	48,321	$	—		$	518,827

Operating costs and expenses:
Lease operating expenses		113,004			9,190		—			122,194
Production taxes		788			—		—			788
Gathering and transportation		12,324			596		—			12,920
Depreciation, depletion and amortization		186,511			15,359		—			201,870
Asset retirement obligation accretion		18,435			241		—			18,676
General and administrative expenses		36,870			1,273		—			38,143
Derivative (gain)		(8,500	)		—		—			(8,500	)

Total costs and expenses		359,432			26,659		—			386,091

Operating income		111,074			21,662		—			132,736
Earnings of affiliates		14,080			—		(14,080	)		—
Interest expense:
Incurred		32,319			—		—			32,319
Capitalized		(4,090	)		—		—			(4,090	)
Interest income		632			—		—			632

Income before income tax expense		97,557			21,662		(14,080	)		105,139
Income tax expense		184			7,582		—			7,766

Net income	$	97,373		$	14,080	$	(14,080	)	$	97,373

(1)	Began operations on May 1, 2010. Includes only May 2010 to September 2010 activity.

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 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	)		—
Proceeds from sales of oil and natural gas properties and equipment		15			—			—			15
Purchases of furniture, fixtures and other		(318	)		—			—			(318	)

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 (used in) 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

Condensed Consolidating Statement of Cash Flows for the Nine Months Ended September 30, 2010


	Parent Company			Guarantor Subsidiaries (1)			Eliminations			Consolidated W&T Offshore, Inc.


	(In thousands)
Operating activities:
Net income	$	97,373		$	14,080		$	(14,080	)	$	97,373
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, depletion, amortization and accretion		204,946			15,600			—			220,546
Amortization of debt issuance costs		1,004			—			—			1,004
Share-based compensation		3,576			—			—			3,576
Derivative (gain)		(8,500	)		—			—			(8,500	)
Cash payments on derivative settlements		(410	)		—			—			(410	)
Deferred income taxes		4,253			2,230			—			6,483
Earnings of affiliates		(14,080	)		—			14,080			—
Changes in operating assets and liabilities:
Oil and natural gas receivables		12,941			(9,311	)		—			3,630
Joint interest and other receivables		29,542			—			—			29,542
Insurance receivables		36,763			—			—			36,763
Income taxes		78,801			5,351			—			84,152
Prepaid expenses and other assets		(1,464	)		(29,448	)		29,448			(1,464	)
Asset retirement obligations		(62,620	)		—			—			(62,620	)
Accounts payable and accrued liabilities		(32,632	)		2,484			—			(30,148	)
Other liabilities		42,398			—			(29,448	)		12,950

Net cash provided by operating activities		391,891			986			—			392,877

Investing activities:
Acquisition property interests in oil and natural gas properties		—			(116,589	)		—			(116,589	)
Investment in oil and natural gas properties and equipment		(126,441	)		(986	)		—			(127,427	)
Proceeds from sales of oil and natural gas properties and equipment		1,335			—			—			1,335
Investment in subsidiary		(116,589	)		—			116,589			—
Purchases of furniture, fixtures and other		(405	)		—			—			(405	)

Net cash used in investing activities		(242,100	)		(117,575	)		116,589			(243,086	)

Financing activities:
Borrowings of long-term debt – revolving bank credit facility		427,500			—			—			427,500
Repayments of long-term debt – revolving bank credit facility		(427,500	)		—			—			(427,500	)
Dividends to shareholders		(7,467	)		—			—			(7,467	)
Investment from parent		—			116,589			(116,589	)		—

Net cash provided by (used in) financing activities		(7,467	)		116,589			(116,589	)		(7,467	)

Increase in cash and cash equivalents		142,324			—			—			142,324
Cash and cash equivalents, beginning of period		38,187			—			—			38,187

Cash and cash equivalents, end of period	$	180,511		$	—		$	—		$	180,511

(1)	Began operations on May 1, 2010. Includes only May 2010 to September 2010 activity.