W&T Offshore, Inc. Annual report [Section 13 and 15(d), not S-K Item 405]

Annual report [Section 13 and 15(d), not S-K Item 405]

INCOME TAXES (Tables)

INCOME TAXES (Tables)

12 Months Ended

Dec. 31, 2025

Schedule of components income tax expense (benefit)

Components of income tax expense (benefit) were as follows (in thousands):


	Year Ended December 31,
	2025		2024		2023
Current	$	253	$	92	$	(140)
Deferred		50,674		(10,077)		18,485
Total income tax expense (benefit)	$	50,927	$	(9,985)	$	18,345

Schedule of effective income tax rate reconciliation

The reconciliation of income taxes computed at the U.S. federal statutory tax rate of 21% to these effective tax rates is as follows (in thousands):


	Year Ended December 31,
	2025
Income tax benefit at the federal statutory rate	$	(20,818)	21.0	%
State and local income tax, net of federal income tax effect ⁽¹⁾		1,537	(1.6)
Changes in valuation allowance		68,046	(68.6)
Nontaxable or nondeductible items:
Shortfall on vested shares		988	(1.0)
Limited executive compensation		812	(0.8)
Other		353	(0.4)
Prior year taxes		9	—
Income tax expense	$	50,927	(51.4)	%

(1)	Taxes in the state of Alabama contributed to the majority of the tax effect in this category.

The Company’s income tax (benefit) expense for 2024 and 2023 resulted in effective tax rates of 10.3% and 54.0%, respectively. The reconciliation of income taxes computed at the U.S. federal statutory tax rate of 21% to these effective tax rates is as follows (in thousands):


	Year Ended December 31,
	2024		2023
Income tax (benefit) expense at the federal statutory rate	$	(20,397)	$	7,128
Compensation adjustments		2,607		1,752
State income taxes		(57)		1,143
Valuation allowance		7,699		8,125
Other		163		197
Income tax (benefit) expense	$	(9,985)	$	18,345

Schedule of income taxes paid, net of refunds received

Income taxes paid, net of refunds received, were as follows (in thousands):


		Year Ended December 31,
	2025
Federal	$	580
State and local - Louisiana		27
Income taxes paid, net of refunds received	$	607

Schedule of deferred tax assets and liabilities

Significant components of the Company’s deferred tax assets and liabilities were as follows (in thousands):


	December 31,
	2025		2024
Deferred tax assets:
Derivatives	$	—	$	4,376
Asset retirement obligations		122,862		118,398
Contingent asset retirement obligations		7,906		4,493
Right of use liability		2,937		2,743
Federal net operating losses		18,286		10,805
State net operating losses		4,831		4,581
Interest expense limitation carryover		25,743		24,947
Share-based compensation		1,938		1,480
Other		4,952		4,560
Total deferred tax asset		189,455		176,383
Valuation allowance		(100,321)		(29,155)
Total deferred tax asset after valuation allowance		89,134		147,228
Deferred tax liabilities:
Property and equipment	$	86,701	$	93,284
Investment in non-consolidated entity		1,110		2,149
Other		3,198		2,995
Total deferred tax liabilities		91,009		98,428

Net deferred tax (liability) asset ⁽¹⁾	$	(1,875)	$	48,800

(1)	As of December 31, 2025 and 2024, $1.9 million and $8 thousand, respectively, are included in Other liabilities in the Company’s Consolidated Balance Sheets.

Schedule of changes to the company's valuation allowance

Changes to the Company’s valuation allowance are as follows (in thousands):


	Year Ended December 31,
	2025		2024		2023
Balance at beginning of period	$	(29,155)	$	(23,202)	$	(15,311)
Additions to valuation allowance		(71,166)		(5,953)		(7,891)
Balance at end of period	$	(100,321)	$	(29,155)	$	(23,202)

Schedule of operating loss carryforwards

The table below presents the details of the Company’s net operating loss and interest expense limitation carryover as of December 31, 2025 (in thousands):


		Amount			Expiration Year
Federal net operating loss		$	87,078		N/A
State net operating loss			108,804		2038 - 2040
Interest expense limitation carryover			117,550		N/A