W&T Offshore Reports Second Quarter 2007 Financial and Operational Results

Provides Production and Expense Guidance for the Third Quarter

HOUSTON, Aug. 7 /PRNewswire-FirstCall/ -- W&T Offshore, Inc. (NYSE: WTI) announced today financial and operational results for the second quarter of 2007.

    -- Production increased 58% to 31.2 Bcfe compared to the second quarter of
       2006
    -- Revenues increased 64% to $272.6 million compared to the second quarter
       of 2006
    -- For the first six months of 2007, cash flow from operating activities
       increased 35% to $308.4 million and Adjusted EBITDA increased 42% to
       $376.2 million compared to the first six months of 2006
    -- Completed a senior notes offering of $450 million
    -- 2007 Capital and Major Expenditures Budget increased $100 million to
       $557.5 million

Revenues, Net Income and EPS: Net income for the second quarter of 2007 was $45.5 million, or $0.60 per diluted share, on revenue of $272.6 million. This compares to net income of $38.5 million, or $0.58 per diluted share, on revenues of $165.8 million for the second quarter of 2006. The increase in revenues was primarily a result of the addition of the Kerr-McGee properties in August 2006. Net income for the six months ended June 30, 2007 was $58.6 million, or $0.77 per diluted share, on revenues of $519.1 million, compared to net income of $94.3 million or $1.43 per diluted share, on revenues of $322.7 million for the six months of 2006.

Cash Flow from Operating Activities and EBITDA: EBITDA and Adjusted EBITDA are non-GAAP measures and are hereinafter defined in "Additional Non- GAAP Information" later in this press release. Net cash provided by operating activities for the six months ended June 30, 2007 increased 35% to $308.4 million from $228.1 million in the first six months of 2006. The increase was due to significantly higher revenues, partially offset by higher cash operating expenses. Adjusted EBITDA was $376.2 million for the six months ended June 30, 2007, compared to $265.6 million for the prior six months period.

Production and Prices: Total production in the second quarter of 2007 was 18.3 billion cubic feet ("Bcf") of natural gas sold at an average price of $7.81 per thousand cubic feet ("Mcf") and 2.1 million barrels ("MMBbls") of oil sold at an average price of $60.44 per barrel ("Bbl"), or 31.2 billion cubic feet of natural gas equivalent ("Bcfe") sold at an average price of $8.74 per thousand cubic feet of natural gas equivalent ("Mcfe"). This compares to production of 11.2 Bcf of natural gas sold at an average price of $6.98 per Mcf and 1.4 MMBbls of oil sold at an average price of $61.13 per Bbl, or 19.8 Bcfe sold at an average price of $8.37 per Mcfe in the second quarter of 2006.

For the six months ended June 30, 2007, total production was 38.7 Bcf of natural gas sold at an average price of $7.49 per Mcf and 4.1 MMBbls of oil sold at an average price of $55.94 per Bbl, or 63.3 Bcfe sold at an average price of $8.20 per Mcfe. This compares to 22.1 Bcf of natural gas sold at an average price of $7.88 per Mcf and 2.5 MMBbls of oil sold at an average price of $59.32 per Bbl, or 37.1 Bcfe sold at an average price of $8.69 per Mcfe for the same period in 2006.

Lease Operating Expenses ("LOE"): LOE for the second quarter of 2007 increased to $51.2 million, or $1.64 per Mcfe, from $16.3 million, or $0.82 per Mcfe, in the second quarter of 2006. The increase in LOE was due to operating expenses associated with the Kerr-McGee properties, higher insurance premiums and hurricane remediation costs not covered by insurance. LOE for the six months ended June 30, 2007 was $112.8 million or $1.78 per Mcfe, compared to $32.1 million or $0.86 per Mcfe for the same period in 2006.

Depreciation, Depletion, Amortization and Accretion ("DD&A"): DD&A increased to $126.0 million, or $4.04 per Mcfe, in the second quarter of 2007 from $67.3 million, or $3.40 per Mcfe, in the same period of 2006. DD&A for the six months ended 2007 was $250.2 million or $3.95 per Mcfe, compared to DD&A of $116.4 million, or $3.14 per Mcfe, for the same period in 2006. The increase in DD&A primarily reflects a significant increase in depletable costs and reserves associated with the Kerr-McGee transaction and to a lesser extent to the higher finding and development costs associated with the Company's exploration and development programs.

Capital Expenditures and Operations Update: During the second quarter of 2007, we participated in the drilling of one development well. For the six months ended June 30, 2007, capital expenditures totaled $199.0 million, of which $130.6 million was spent on development activities, $48.2 million for exploration, $19.0 million for acquisition and other leasehold costs and $1.2 million on other capital items. Over half of the development activities were spent on the Company's deepwater drilling program and recompletion program.

As a result of higher than expected commodity prices and the benefits of refinancing Term Loan A, the Company has increased its 2007 exploration and development capital and major expenditures budget by $100 million to $557.5 million.

For the remainder of the year, the Company anticipates drilling between 10 and 13 wells including two wells in the deep shelf and two wells in the deepwater. At this time, all wells planned are exploration wells with the majority of the prospects to be drilled from existing structures.

Tracy W. Krohn, Chairman and Chief Executive Officer stated, "During the second quarter we continued to focus on integrating the properties we acquired from Kerr- McGee last fall. We are making progress toward maximizing well performance of these assets. Historically, we have demonstrated that we can build significant value through exploitation of acquired assets; that is why we are increasing our capital and major expenditures budget by $100 million. This increase in the budget is the beginning of higher drilling activity to come."

Outlook: Certain factors affecting these forward-looking statements are listed in this news release. Guidance on performance for the third quarter and full year of 2007 is shown in the table below.


    Estimated Production        Third Quarter 2007      Full-Year 2007
    Crude oil (MMBbls)               1.8 - 2.0             7.7 - 8.0
    Natural gas (Bcf)               16.6 - 17.9           74.7 - 78.7
    Total (Bcfe)                    27.5 - 29.7          121.0 - 127.0

    Operating Expenses
    ($ in millions,
    except as noted)            Third Quarter 2007      Full-Year 2007
    Lease operating expenses       $51.0 - $60.0        $197.0 - $220.0
    Lease operating expenses -
     Hurricane-related              $3.0 - $7.0          $18.0 - $26.0
    Gathering, transportation &
     production taxes               $6.0 - $7.5          $24.9 - $29.7
    General and administrative     $10.0 - $12.0         $50.0 - $55.0
    Income tax rate, % deferred     34.0%, 80%            34.0%, 80%*

    * Income tax rate changed from 35% to 34% for full-year 2007.

Conference Call Information: W&T will hold a conference call to discuss financial and operational results on Tuesday, August 7, 2007 at 10:00 a.m. Eastern Time / 9:00 a.m. Central Time. To participate, dial (303) 205-0055 a few minutes before the call begins. The call will also be broadcast live over the Internet from the Company's website at www.wtoffshore.com. A replay of the conference call will be available approximately two hours after the end of the call until Tuesday, August 14, 2007, and may be accessed by calling (303) 590-3000 and using the pass code 11094324.

About W&T Offshore

Founded in 1983, W&T Offshore is an independent oil and natural gas company focused primarily in the Gulf of Mexico, including exploration in the deepwater and deep shelf region, where it has developed significant technical expertise. W&T has grown through acquisition, exploitation and exploration and now holds working interests in over 200 fields in federal and state waters and a majority of its daily production is derived from wells it operates. For more information on W&T Offshore, please visit its Web site at www.wtoffshore.com

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These forward-looking statements reflect our current views with respect to future events, based on what we believe are reasonable assumptions. No assurance can be given, however, that these events will occur. These statements are subject to risks and uncertainties that could cause actual results to differ materially including, among other things, market conditions, oil and gas price volatility, uncertainties inherent in oil and gas production operations and estimating reserves, unexpected future capital expenditures, competition, the success of our risk management activities, governmental regulations, uncertainties and difficulties associated with closing our pending Kerr-McGee Transaction and the integration and operation of its properties thereafter and other factors discussed in our Annual Report on 10-K for the year ended December 31, 2006 (www.sec.gov).


                             - Tables to Follow -


                              W&T OFFSHORE, INC.
                      Consolidated Statements of Income
                   (In thousands, except per share amounts)
                                 (Unaudited)

                                  Three Months Ended        Six Months Ended
                                       June 30,                 June 30,
                                2007          2006         2007        2006
    Revenues                  $272,563      $165,796    $519,102     $322,650

    Operating costs and expenses:
      Lease operating           51,157        16,284     112,820       32,064
      Gathering, transportation
       costs and production
       taxes                     4,586         5,252       8,843        6,508
      Depreciation, depletion
       and amortization        120,588        65,072     239,342      111,910
      Asset retirement
       obligation accretion      5,456         2,262      10,903        4,516
      General and
       administrative           10,111         9,072      23,995       20,732
      Derivative loss              302        10,548      12,273        5,272
        Total costs and
         expenses              192,200       108,490     408,176      181,002

      Operating income          80,363        57,306     110,926      141,648

      Interest expense:
        Incurred                15,683           333      33,442          638
        Capitalized             (6,265)            -     (13,093)           -
      Loss on extinguishment
       of debt                   2,806             -       2,806            -
      Other income                 528         1,767         941        3,394
        Income before
         income taxes           68,667        58,740      88,712      144,404

    Income taxes                23,146        20,275      30,162       50,108

      Net income              $ 45,521       $38,465     $58,550     $ 94,296


    Earnings per common share:
      Basic                      $0.60         $0.58       $0.77        $1.43
      Diluted                    $0.60         $0.58       $0.77        $1.43

    Weighted average shares outstanding:
      Basic                     75,786        65,971      75,787       65,971
      Diluted                   75,974        66,138      75,890       66,060

    Consolidated Cash Flow Information
    Net cash provided by
     operating activities     $161,717      $114,798    $308,378     $228,104
    Capital expenditures       $64,252      $151,483    $199,054     $274,376

    Other Financial Information
    Adjusted EBITDA           $207,510      $137,406    $376,162     $265,564



                              W&T OFFSHORE, INC.
                                Operating Data
                                 (Unaudited)

                                  Three Months Ended        Six Months Ended
                                       June 30,                 June 30,
                                  2007          2006        2007         2006
    Net sales:
      Natural gas (MMcf)        18,343        11,212      38,745       22,116
      Oil (MBbls)                2,140         1,431       4,094        2,498
      Total natural
       gas and oil (MMcfe) (1)  31,186        19,798      63,308       37,105

    Average daily equivalent
     sales (MMcfe/d)             342.7         217.6       349.8        205.0

    Average realized
     sales prices: (2)
      Natural gas ($/Mcf)        $7.81         $6.98       $7.49        $7.88
      Oil ($/Bbl)                60.44         61.13       55.94        59.32
      Natural gas equivalent
       ($Mcfe)                    8.74          8.37        8.20         8.69


    Average per Mcfe data ($/Mcfe):
      Lease operating expenses   $1.64         $0.82       $1.78        $0.86
      Gathering, transportation
       costs and production
       taxes                      0.15          0.27        0.14         0.18
      Depreciation, depletion,
       amortization and
       accretion                  4.04          3.40        3.95         3.14
      General and
       administrative             0.32          0.46        0.38         0.56
      Net cash provided by
       operating activities       5.19          5.80        4.87         6.15
      Adjusted EBITDA             6.65          6.94        5.94         7.16




    (1) One billion cubic feet equivalent (Bcfe), one million cubic feet
        equivalent (MMcfe) and one thousand cubic feet equivalent (Mcfe) are
        determined using the ratio of six Mcf of natural gas to one Bbl of
        crude oil, condensate or natural gas liquids (totals may not add due
        to rounding).

    (2) Average realized prices exclude the effects of our commodity
        derivative contracts that do not qualify for hedge accounting.  Had we
        included the effects of these derivatives, our average realized sales
        prices for natural gas would have been $7.85 per Mcf and $7.22 per Mcf
        for the second quarter of 2007 and 2006, respectively, and $7.52 per
        Mcf and $8.01 per Mcf for the six months ended June 30, 2007 and 2006,
        respectively.  Our commodity derivative contracts did not impact our
        average realized sales price for oil during the second quarter of
        2007.  For the second quarter of 2006, our average realized sales
        price for oil would have been $60.78 per barrel, and for the six
        months ended June 30, 2007 and 2006, our average realized sales prices
        for oil would have been $56.26 per barrel and $59.13 per barrel,
        respectively.  On a natural gas equivalent basis, our average realized
        sales prices would have been $8.77 per Mcfe and $8.48 per Mcfe for the
        second quarter of 2007 and 2006, respectively, and $8.24 per Mcfe and
        $8.75 per Mcfe for the six months ended June 30, 2007 and 2006,
        respectively.



                              W&T OFFSHORE, INC.
                         Consolidated Balance Sheets
                                (In thousands)
                                 (Unaudited)

                                                    June 30,     December 31,
                                                      2007           2006
                         Assets
    Current assets:
      Cash and equivalents                          $102,090       $ 39,235
      Accounts receivable                            150,446        164,748
      Insurance receivable                                 -         75,151
      Prepaid expenses and other assets               24,751         49,559
           Total current assets                      277,287        328,693

    Property and equipment                         3,502,121      3,308,101
    Less accumulated depreciation,
     depletion and amortization                    1,281,657      1,042,315
           Net property and equipment              2,220,464      2,265,786

    Other assets                                      18,511         15,206
           Total assets                           $2,516,262     $2,609,685

            Liabilities and Shareholders' Equity
    Current liabilities:
      Current maturities of long-term
       debt-net of discount                          $ 1,556       $271,380
      Accounts payable                               131,181        247,324
      Accrued liabilities and other                   75,243         83,654
      Asset retirement obligations - current portion  30,022         41,718
           Total current liabilities                 238,002        644,076

    Long-term debt, less current maturities-
     net of discount                                 653,989        413,617
    Asset retirement obligations, less
     current portion                                 277,674        272,350
    Deferred income taxes, less current portion      240,543        232,835
    Other liabilities                                  4,608          3,890

    Commitments and contingencies
    Shareholders' equity:
      Common stock                                         1              1
      Additional paid-in capital                     365,314        361,855
      Retained earnings                              735,613        681,634
      Accumulated other comprehensive income (loss)      518           (573)
           Total shareholders' equity              1,101,446      1,042,917
              Total liabilities and
               shareholders' equity               $2,516,262     $2,609,685




                              W&T OFFSHORE, INC.
                    Consolidated Statements of Cash Flows
                                (In thousands)
                                 (Unaudited)

                                                        Six Months Ended
                                                            June 30,
                                                        2007           2006
    Operating activities:
       Net income                                     $58,550        $94,296
       Adjustments to reconcile net income to
        net cash provided by operating activities:
           Depreciation, depletion, amortization
            and accretion                             250,245        116,426
           Amortization of debt issuance costs
            and discount on indebtedness                5,261            159
           Loss on extinguishment of debt               2,806              -
           Share-based compensation related to
            restricted stock issuances                  1,585          1,731
           Unrealized derivative loss                  14,991          7,490
           Deferred income taxes                         (776)        51,087
           Changes in operating assets and
            liabilities and other, net                (24,284)       (43,085)
              Net cash provided by operating
               activities                             308,378        228,104

    Investing activities:
       Investment in oil and gas property and
        equipment, net                               (197,482)      (271,313)
       Purchases of furniture, fixtures and
        other, net                                       (903)        (3,063)
       Other                                             (291)          (153)
              Net cash used in investing activities  (198,676)      (274,529)

    Financing activities:
       Borrowings of long-term debt                   908,000              -
       Repayments of borrowings of long-term debt    (945,000)       (40,000)
       Dividends to shareholders                       (4,563)        (3,964)
       Debt issuance costs                             (5,284)             -
              Net cash used in financing activities   (46,847)       (43,964)
              Increase (decrease) increase in cash
               and cash equivalents                    62,855        (90,389)
       Cash and cash equivalents, beginning of period  39,235        187,698
       Cash and cash equivalents, end of period      $102,090        $97,309



                              W&T OFFSHORE, INC.
                       Additional Non-GAAP Information

Certain financial information included in our financial results are not measures of financial performance recognized by accounting principles generally accepted in the United States, or GAAP. These non-GAAP financial measures are "EBITDA" and "Adjusted EBITDA". Our management uses these non- GAAP measures in its analysis of our performance. These disclosures may not be viewed as a substitute for results determined in accordance with GAAP and are not necessarily comparable to non-GAAP performance measures which may be reported by other companies.

Reconciliation of Net Income to EBITDA

We define EBITDA as net income plus income tax expense, net interest expense (income), and depreciation, depletion, amortization and accretion. Adjusted EBITDA excludes the unrealized gain or loss related to our open derivative contracts and the loss on extinguishment of debt. Although not prescribed under generally accepted accounting principles, we believe the presentation of EBITDA and Adjusted EBITDA are relevant and useful because they help our investors understand our operating performance and make it easier to compare our results with those of other companies that have different financing, capital and tax structures. EBITDA and Adjusted EBITDA should not be considered in isolation from or as a substitute for net income, as an indication of operating performance or cash flows from operating activities or as a measure of liquidity. EBITDA and Adjusted EBITDA, as we calculate them, may not be comparable to EBITDA and Adjusted EBITDA measures reported by other companies. In addition, EBITDA and Adjusted EBITDA do not represent funds available for discretionary use.

The following table presents a reconciliation of our consolidated net income to consolidated EBITDA and Adjusted EBITDA


                                  Three Months Ended       Six Months Ended
                                       June 30,                 June 30,
                                  2007          2006        2007        2006
                                               (In thousands)
                                                (Unaudited)
    Net income                 $45,521      $ 38,465      $58,550     $94,296
    Income taxes                23,146        20,275       30,162      50,108
    Net interest expense
     (income)                    8,890        (1,434)      19,408      (2,756)
    Depreciation, depletion,
     amortization and
     accretion                 126,044        67,334      250,245     116,426
    EBITDA                     203,601       124,640      358,365     258,074

    Adjustments:
    Loss on extinguishment
     of debt                     2,806             -        2,806           -
    Unrealized derivative loss   1,103        12,766       14,991       7,490

    Adjusted EBITDA           $207,510      $137,406     $376,162    $265,564


    Contacts:
     Manuel Mondragon, Vice President of Finance
     investorrelations@wtoffshore.com
     713-297-8024

     Ken Dennard  / ksdennard@drg-e.com
     Lisa Elliott / lelliott@drg-e.com
     DRG&E / 713-529-6600

SOURCE W&T Offshore, Inc.