Quarterly report pursuant to Section 13 or 15(d)

Supplemental Guarantor Information

v2.4.0.6
Supplemental Guarantor Information
3 Months Ended
Mar. 31, 2013
Supplemental Guarantor Information

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