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, 2013

W&T OFFSHORE, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
(Unaudited)

14. Supplemental Guarantor Information

Our payment obligations under the Credit Agreement as of September 30, 2013 were, and our payment obligations under the 8.50% Senior Notes and the New Credit Agreement (see Notes 6 and 13) 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 or contain any assets. 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 September 30, 2013

	Parent Company			Guarantor Subsidiaries		Eliminations			Consolidated W&T Offshore, Inc.
	(In thousands)
Assets
Current assets:
Cash and cash equivalents	$	15,227		$	—	$	—		$	15,227
Receivables:
Oil and natural gas sales		66,953			18,301		(33	)		85,221
Joint interest and other		31,492			—		—			31,492
Total receivables		98,445			18,301		(33	)		116,713
Restricted cash and cash equivalents		16,459			—		—			16,459
Prepaid expenses and other assets		152,739			3,991		(123,880	)		32,850
Total current assets		282,870			22,292		(123,913	)		181,249
Property and equipment – at cost:
Oil and natural gas properties and equipment		6,703,175			416,911		—			7,120,086
Furniture, fixtures and other		21,325			—		—			21,325
Total property and equipment		6,724,500			416,911		—			7,141,411
Less accumulated depreciation, depletion and amortization		4,690,550			260,218		—			4,950,768
Net property and equipment		2,033,950			156,693		—			2,190,643
Restricted deposits for asset retirement obligations		34,966			—		—			34,966
Deferred income taxes		—			4,549		(4,549	)		—
Other assets		481,029			441,908		(906,095	)		16,842
Total assets	$	2,832,815		$	625,442	$	(1,034,557	)	$	2,423,700
Liabilities and Shareholders’ Equity
Current liabilities:
Accounts payable	$	130,021		$	—	$	(33	)	$	129,988
Undistributed oil and natural gas proceeds		40,989			289		—			41,278
Asset retirement obligations		95,014			—		—			95,014
Accrued liabilities		45,272			129,656		(123,880	)		51,048
Total current liabilities		311,296			129,945		(123,913	)		317,328
Long-term debt		1,052,984			—		—			1,052,984
Asset retirement obligations, less current portion		235,782			31,311		—			267,093
Deferred income taxes		181,953			—		(4,549	)		177,404
Other liabilities		457,768			—		(441,909	)		15,859
Shareholders’ equity:
Common stock		1			—		—			1
Additional paid-in capital		404,604			231,759		(231,759	)		404,604
Retained earnings		212,594			232,427		(232,427	)		212,594
Treasury stock, at cost		(24,167	)		—		—			(24,167	)
Total shareholders’ equity		593,032			464,186		(464,186	)		593,032
Total liabilities and shareholders’ equity	$	2,832,815		$	625,442	$	(1,034,557	)	$	2,423,700

W&T OFFSHORE, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
(Unaudited)

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
Prepaid expenses and other assets		25,822			—		—			25,822
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

W&T OFFSHORE, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
(Unaudited)

Condensed Consolidating Statement of Income for the Three Months Ended September 30, 2013

	Parent Company			Guarantor Subsidiaries		Eliminations			Consolidated W&T Offshore, Inc.
	(In thousands)
Revenues	$	195,064		$	49,491	$	—		$	244,555
Operating costs and expenses:
Lease operating expenses		64,952			2,394		—			67,346
Production taxes		1,807			—		—			1,807
Gathering and transportation		2,706			905		—			3,611
Depreciation, depletion, amortization and accretion		80,230			23,913		—			104,143
General and administrative expenses		19,375			649		—			20,024
Derivative loss		15,659			—		—			15,659
Total costs and expenses		184,729			27,861		—			212,590
Operating income		10,335			21,630		—			31,965
Earnings of affiliates		14,032			—		(14,032	)		—
Interest expense:
Incurred		21,373			—		—			21,373
Capitalized		(2,573	)		—		—			(2,573	)
Other income		9,062			—		—			9,062
Income before income tax expense		14,629			21,630		(14,032	)		22,227
Income tax expense		435			7,598		—			8,033
Net income	$	14,194		$	14,032	$	(14,032	)	$	14,194

Condensed Consolidating Statement of Income for the Nine Months Ended September 30, 2013

	Parent Company			Guarantor Subsidiaries		Eliminations			Consolidated W&T Offshore, Inc.
	(In thousands)
Revenues	$	590,492		$	148,668	$	—		$	739,160
Operating costs and expenses:
Lease operating expenses		184,458			10,477		—			194,935
Production taxes		5,375			—		—			5,375
Gathering and transportation		10,099			2,564		—			12,663
Depreciation, depletion, amortization and accretion		244,597			68,314		—			312,911
General and administrative expenses		57,738			3,241		—			60,979
Derivative loss		6,186			—		—			6,186
Total costs and expenses		508,453			84,596		—			593,049
Operating income		82,039			64,072		—			146,111
Earnings of affiliates		41,589			—		(41,589	)		—
Interest expense:
Incurred		64,157			—		—			64,157
Capitalized		(7,537	)		—		—			(7,537	)
Other income		9,075			—		—			9,075
Income before income tax expense		76,083			64,072		(41,589	)		98,566
Income tax expense		12,875			22,483		—			35,358
Net income	$	63,208		$	41,589	$	(41,589	)	$	63,208

W&T OFFSHORE, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
(Unaudited)

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		(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

W&T OFFSHORE, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
(Unaudited)

Condensed Consolidating Statement of Cash Flows for the Nine Months Ended September 30, 2013

	Parent Company			Guarantor Subsidiaries			Eliminations			Consolidated W&T Offshore, Inc.
	(In thousands)
Operating activities:
Net income	$	63,208		$	41,589		$	(41,589	)	$	63,208
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, depletion, amortization and accretion		244,597			68,314			—			312,911
Amortization of debt issuance costs and premium		1,366			—			—			1,366
Share-based compensation		8,457			—			—			8,457
Derivative loss		6,186			—			—			6,186
Cash payments on derivative settlements		(6,855	)		—			—			(6,855	)
Deferred income taxes		22,621			8,960			—			31,581
Earnings of affiliates		(41,589	)		—			41,589			—
Changes in operating assets and liabilities:
Oil and natural gas receivables		13,775			(1,264	)		—			12,511
Joint interest and other receivables		24,947			—			—			24,947
Insurance receivables		5,117			—			—			5,117
Income taxes		39,909			13,524			—			53,433
Prepaid expenses and other assets		(6,823	)		(52,400	)		48,408			(10,815	)
Asset retirement obligation settlements		(59,017	)		(171	)		—			(59,188	)
Accounts payable, accrued liabilities and other		81,501			(119	)		(48,408	)		32,974
Net cash provided by operating activities		397,400			78,433			—			475,833
Investing activities:
Investment in oil and natural gas properties and equipment		(344,659	)		(78,433	)		—			(423,092	)
Proceeds from sales of assets and other, net		21,011			—			—			21,011
Change in restricted cash		(16,459	)		—			—			(16,459	)
Purchases of furniture, fixtures and other		(1,327	)		—			—			(1,327	)
Net cash used in investing activities		(341,434	)		(78,433	)		—			(419,867	)
Financing activities:
Borrowings of long-term debt – revolving bank credit facility		335,000			—			—			335,000
Repayments of long-term debt – revolving bank credit facility		(368,000	)		—			—			(368,000	)
Debt issuance costs		(164	)		—			—			(164	)
Dividends to shareholders		(19,570	)		—			—			(19,570	)
Other		(250	)		—			—			(250	)
Net cash used in financing activities		(52,984	)		—			—			(52,984	)
Increase in cash and cash equivalents		2,982			—			—			2,982
Cash and cash equivalents, beginning of period		12,245			—			—			12,245
Cash and cash equivalents, end of period	$	15,227		$	—		$	—		$	15,227

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, accrued liabilities and other		136,449		(1,752	)	(101,474	)		33,223
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