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

3 Months Ended

Mar. 31, 2013

14. Supplemental Guarantor Information

Our payment obligations under the Company’s outstanding 8.50% Senior Notes and the Credit Agreement (see Note 6) are fully and unconditionally guaranteed by certain of our wholly-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. 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 of the 8.50% Senior Notes as described in the indenture, provided no event of default has occurred and is continuing.

The following unaudited condensed consolidating financial information presents the financial condition, results of operations and cash flows of W&T Offshore, Inc. (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 March 31, 2013


	Parent Company			Guarantor Subsidiaries		Eliminations			Consolidated W&T Offshore, Inc.
	(In thousands)
Assets
Current assets:
Cash and cash equivalents	$	12,277		$	—	$	—		$	12,277
Receivables:
Oil and natural gas sales		80,556			16,753		—			97,309
Joint interest and other		35,681			—		—			35,681
Income taxes		167,708			—		(122,070	)		45,638

Total receivables		283,945			16,753		(122,070	)		178,628
Deferred income taxes		1,432			—		—			1,432
Prepaid expenses and other assets		22,363			—		—			22,363

Total current assets		320,017			16,753		(122,070	)		214,700
Property and equipment – at cost:
Oil and natural gas properties and equipment		6,480,011			356,579		—			6,836,590
Furniture, fixtures and other		21,949			—		—			21,949

Total property and equipment		6,501,960			356,579		—			6,858,539
Less accumulated depreciation, depletion and amortization		4,543,468			215,730		—			4,759,198

Net property and equipment		1,958,492			140,849		—			2,099,341
Restricted deposits for asset retirement obligations		29,161			—		—			29,161
Deferred income taxes		—			12,776		(12,776	)		—
Other assets		454,552			417,655		(853,352	)		18,855

Total assets	$	2,762,222		$	588,033	$	(988,198	)	$	2,362,057

Liabilities and Shareholders’ Equity
Current liabilities:
Accounts payable	$	112,207		$	16	$	—		$	112,223
Undistributed oil and natural gas proceeds		41,011			244		—			41,255
Asset retirement obligations		69,964			—		—			69,964
Accrued liabilities		38,676			122,461		(122,070	)		39,067

Total current liabilities		261,858			122,721		(122,070	)		262,509
Long-term debt		1,060,079			—		—			1,060,079
Asset retirement obligations, less current portion		278,646			29,615		—			308,261
Deferred income taxes		171,698			—		(12,776	)		158,922
Other liabilities		425,942			—		(417,654	)		8,288
Shareholders’ equity:
Common stock		1			—		—			1
Additional paid-in capital		398,465			231,759		(231,759	)		398,465
Retained earnings		189,700			203,938		(203,939	)		189,699
Treasury stock, at cost		(24,167	)		—		—			(24,167	)

Total shareholders’ equity		563,999			435,697		(435,698	)		563,998

Total liabilities and shareholders’ equity	$	2,762,222		$	588,033	$	(988,198	)	$	2,362,057

Condensed Consolidating Balance Sheet as of December 31, 2012


	Parent Company			Guarantor Subsidiaries		Eliminations			Consolidated W&T Offshore, Inc.
	(In thousands)
Assets
Current assets:
Cash and cash equivalents	$	12,245		$	—	$	—		$	12,245
Receivables:
Oil and natural gas sales		80,729			17,004		—			97,733
Joint interest and other		56,439			—		—			56,439
Income taxes		163,750			—		(115,866	)		47,884

Total receivables		300,918			17,004		(115,866	)		202,056
Deferred income taxes		267			—		—			267
Prepaid expenses and other assets		25,555			—		—			25,555

Total current assets		338,985			17,004		(115,866	)		240,123
Property and equipment – at cost:
Oil and natural gas properties and equipment		6,356,529			337,981		—			6,694,510
Furniture, fixtures and other		21,786			—		—			21,786

Total property and equipment		6,378,315			337,981		—			6,716,296
Less accumulated depreciation, depletion and amortization		4,461,886			193,955		—			4,655,841

Net property and equipment		1,916,429			144,026		—			2,060,455
Restricted deposits for asset retirement obligations		28,466			—		—			28,466
Deferred income taxes		—			13,509		(13,509	)		—
Other assets		442,540			393,499		(816,096	)		19,943

Total assets	$	2,726,420		$	568,038	$	(945,471	)	$	2,348,987

Liabilities and Shareholders’ Equity
Current liabilities:
Accounts payable	$	123,792		$	93	$	—		$	123,885
Undistributed oil and natural gas proceeds		36,791			282		—			37,073
Asset retirement obligations		92,595			—		35			92,630
Accrued liabilities		20,755			116,132		(115,866	)		21,021

Total current liabilities		273,933			116,507		(115,831	)		274,609
Long-term debt		1,087,611			—		—			1,087,611
Asset retirement obligations, less current portion		262,524			28,934		(35	)		291,423
Deferred income taxes		158,758			—		(13,509	)		145,249
Other liabilities		402,407			—		(393,499	)		8,908
Shareholders’ equity:
Common stock		1			—		—			1
Additional paid-in capital		396,186			231,759		(231,759	)		396,186
Retained earnings		169,167			190,838		(190,838	)		169,167
Treasury stock, at cost		(24,167	)		—		—			(24,167	)

Total shareholders’ equity		541,187			422,597		(422,597	)		541,187

Total liabilities and shareholders’ equity	$	2,726,420		$	568,038	$	(945,471	)	$	2,348,987

Condensed Consolidating Statement of Income for the Three Months Ended March 31, 2013


	Parent Company			Guarantor Subsidiaries		Eliminations			Consolidated W&T Offshore, Inc.
	(In thousands)
Revenues	$	209,528		$	49,694	$	—		$	259,222

Operating costs and expenses:
Lease operating expenses		54,529			4,812		—			59,341
Production taxes		1,789			—		—			1,789
Gathering and transportation		3,662			782		—			4,444
Depreciation, depletion, amortization and accretion		86,416			22,456		—			108,872
General and administrative expenses		19,604			1,483		—			21,087
Derivative loss		3,368			—		—			3,368

Total costs and expenses		169,368			29,533		—			198,901

Operating income		40,160			20,161		—			60,321
Earnings of affiliates		13,100			—		(13,100	)		—
Interest expense:
Incurred		21,234			—		—			21,234
Capitalized		(2,433	)		—		—			(2,433	)

Income before income tax expense		34,459			20,161		(13,100	)		41,520
Income tax expense		7,841			7,061		—			14,902

Net income	$	26,618		$	13,100	$	(13,100	)	$	26,618

Condensed Consolidating Statement of Income for the Three Months Ended March 31, 2012


	Parent Company			Guarantor Subsidiaries		Eliminations			Consolidated W&T Offshore, Inc.
	(In thousands)
Revenues	$	176,562		$	59,324	$	—		$	235,886

Operating costs and expenses:
Lease operating expenses		50,018			6,645		—			56,663
Production taxes		1,485			—		—			1,485
Gathering and transportation		3,484			737		—			4,221
Depreciation, depletion, amortization and accretion		67,623			20,868		—			88,491
General and administrative expenses		26,887			2,592		—			29,479
Derivative loss		39,634			—		—			39,634

Total costs and expenses		189,131			30,842		—			219,973

Operating income (loss)		(12,569	)		28,482		—			15,913
Earnings of affiliates		18,516			—		(18,516	)		—
Interest expense:
Incurred		13,905			—		—			13,905
Capitalized		(3,191	)		—		—			(3,191	)

Income (loss) before income tax expense		(4,767	)		28,482		(18,516	)		5,199
Income tax expense (benefit)		(7,985	)		9,966		—			1,981

Net income	$	3,218		$	18,516	$	(18,516	)	$	3,218

Condensed Consolidating Statement of Cash Flows for the Three Months Ended March 31, 2013


	Parent Company			Guarantor Subsidiaries			Eliminations			Consolidated W&T Offshore, Inc.
	(In thousands)
Operating activities:
Net income	$	26,618		$	13,100		$	(13,100	)	$	26,618
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, depletion, amortization and accretion		86,416			22,456			—			108,872
Amortization of debt issuance costs and premium		447			—			—			447
Share-based compensation		2,255			—			—			2,255
Derivative loss		3,368			—			—			3,368
Cash payments on derivative settlements		(4,271	)		—			—			(4,271	)
Deferred income taxes		11,774			733			—			12,507
Earnings of affiliates		(13,100	)		—			13,100			—
Changes in operating assets and liabilities:
Oil and natural gas receivables		172			251			—			423
Joint interest and other receivables		25,875			—			—			25,875
Income taxes		(3,957	)		6,329			—			2,372
Prepaid expenses and other assets		4,911			(24,155	)		24,155			4,911
Asset retirement obligation settlements		(23,311	)		(153	)		—			(23,464	)
Accounts payable, accrued liabilities and other		34,191			(115	)		(24,155	)		9,921

Net cash provided by operating activities		151,388			18,446			—			169,834

Investing activities:
Investment in oil and natural gas properties and equipment		(118,180	)		(18,446	)		—			(136,626	)
Purchases of furniture, fixtures and other		(114	)		—			—			(114	)

Net cash used in investing activities		(118,294	)		(18,446	)		—			(136,740	)

Financing activities:
Borrowings of long-term debt – revolving bank credit facility		112,000			—			—			112,000
Repayments of long-term debt – revolving bank credit facility		(139,000	)		—			—			(139,000	)
Dividends to shareholders		(6,020	)		—			—			(6,020	)
Other		(42	)		—			—			(42	)

Net cash used in financing activities		(33,062	)		—			—			(33,062	)

Increase in cash and cash equivalents		32			—			—			32
Cash and cash equivalents, beginning of period		12,245			—			—			12,245

Cash and cash equivalents, end of period	$	12,277		$	—		$	—		$	12,277

Condensed Consolidating Statement of Cash Flows for the Three Months Ended March 31, 2012


	Parent Company			Guarantor Subsidiaries			Eliminations			Consolidated W&T Offshore, Inc.
	(In thousands)
Operating activities:
Net income	$	3,218		$	18,516		$	(18,516	)	$	3,218
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, depletion, amortization and accretion		67,623			20,868			—			88,491
Amortization of debt issuance costs		586			—			—			586
Share-based compensation		2,659			—			—			2,659
Derivative loss		39,634			—			—			39,634
Cash payments on derivative settlements		(5,800	)		—			—			(5,800	)
Deferred income taxes		2,963			(413	)		—			2,550
Earnings of affiliates		(18,516	)		—			18,516			—
Changes in operating assets and liabilities:
Oil and natural gas receivables		8,187			1,329			—			9,516
Joint interest and other receivables		(2,170	)		—			—			(2,170	)
Insurance receivables		715			—			—			715
Income taxes		(20,766	)		10,380			—			(10,386	)
Prepaid expenses and other assets		3,735			(37,855	)		38,004			3,884
Asset retirement obligation settlements		(5,384	)		—			—			(5,384	)
Accounts payable, accrued liabilities and other		40,556			(1,908	)		(38,004	)		644

Net cash provided by operating activities		117,240			10,917			—			128,157

Investing activities:
Investment in oil and natural gas properties and equipment		(73,709	)		(10,917	)		—			(84,626	)
Purchases of furniture, fixtures and other		(500	)		—			—			(500	)

Net cash used in investing activities		(74,209	)		(10,917	)		—			(85,126	)

Financing activities:
Borrowings of long-term debt – revolving bank credit facility		84,000			—			—			84,000
Repayments of long-term debt – revolving bank credit facility		(117,000	)		—			—			(117,000	)
Dividends to shareholders		(5,948	)		—			—			(5,948	)
Other		(87	)		—			—			(87	)

Net cash used in financing activities		(39,035	)		—			—			(39,035	)

Increase in cash and cash equivalents		3,996			—			—			3,996
Cash and cash equivalents, beginning of period		4,512			—			—			4,512

Cash and cash equivalents, end of period	$	8,508		$	—		$	—		$	8,508