HOUSTON, May 6, 2014 /PRNewswire/ -- W&T Offshore, Inc. (NYSE: WTI) today reported first quarter 2014 financial and operational results. Some of the highlights include:

• The Mississippi Canyon 243 A-5 side-track well at our "Matterhorn" field was brought online in early January and averaged over 1,000 barrels of oil equivalent ("Boe") per day net to W&T throughout the first quarter.
• The Mississippi Canyon 698 #1 "Big Bend" discovery well was recently completed and is now waiting on facilities installation to bring it on production in 2015.   
• Production for the first quarter of 2014 averaged 48,400 Boe per day (51.7% oil and liquids), and our average realized sales price was $98.56 per barrel for oil, $38.26 per barrel for natural gas liquids ("NGLs") and $5.02 per thousand cubic feet ("Mcf") for natural gas.
• Net income for the first quarter of 2014, excluding special items, was $16.1 million, and earnings were $0.21 per share.
• Adjusted EBITDA was $168.0 million, and the Adjusted EBITDA margin was 66%.

Tracy W. Krohn, W&T Offshore's Chairman and Chief Executive Officer, stated, "As we execute our 2014 exploration program, we expect to add substantial value by continuing to delineate and exploit our quality assets. In the Gulf of Mexico, our use of advanced technology and new seismic is supporting our exploration efforts at our Mahogany, Matterhorn and East Cameron 321 fields as we further expand the reserves of these prolific fields and identify additional drilling opportunities.

"We are opportunity-rich with quality drilling targets on our existing acreage, in addition to the numerous joint venture opportunities currently available to us, particularly in the deepwater. We are pleased to be moving forward with the development of our deepwater discovery at Big Bend, where our MC 698#1 well was completed in the first quarter and is waiting for installation of development infrastructure, with first production expected in 2015. Nearby, the Dantzler discovery is expected to be sanctioned mid-year, with first production anticipated in 2016. We expect both of these projects to add substantial proved reserves starting in 2014 and oil production in 2015 and beyond. We have recently committed to participate in a second Dantzler exploration well to be drilled in 2014 to potentially expand the field. We also anticipate a new deepwater well at our recently acquired interest in the Medusa field in Mississippi Canyon 538 and 584.

"ln the Permian Basin, the value of our Yellow Rose field continues to grow as W&T and other nearby operators demonstrate the productivity of the numerous reservoirs that underlie our acreage. We believe that the industry is beginning to realize the potential value of horizontal development of the Permian Basin. We are working to identify the horizontal potential of our acreage, including the testing of the Wolfcamp "B" zone with our initial horizontal test program. We recently completed drilling of the lateral section of our second operated Wolfcamp "B" horizontal well in Martin County. In Andrews County, our joint venture Wolfcamp "B" horizontal well has just begun flowback operations. These drilling activities are the first steps to developing an optimum horizontal development program at our Yellow Rose Field," he said.

Production, Revenues and Price: For the first quarter of 2014, total production volumes were down 3% compared to 2013 due primarily to production deferrals and weather disruptions affecting various fields, as well as the divestiture of certain producing fields in 2013. Production deferrals for the first quarter were estimated at 661,000 Boe or 4.0 billion cubic feet ("Bcf") equivalent, with the most significant issues being the continued shut-in at the Mississippi Canyon 506 "Wrigley" field and an eight-day pipeline outage affecting our Ship Shoal 349 "Mahogany" field. These factors were partially offset by production from the new A-5 well at Matterhorn, production from the A-14 well at Mahogany and production from certain properties acquired from Callon Petroleum during the fourth quarter of 2013.

Revenues for the first quarter of 2014 were $254.5 million compared to $259.2 million in the first quarter of 2013. During the first quarter of 2014, we sold 1.7 million barrels of oil, 0.5 million barrels of NGLs and 12.6 Bcf of natural gas as compared to 1.8 million barrels of oil, 0.5 million barrels of NGLs and 12.7 Bcf of natural gas during the same period in 2013. Our average realized sales price was $98.56 per barrel for oil, $38.26 per barrel for NGLs and $5.02 per Mcf for natural gas in the first quarter of 2014. On a combined basis, we sold 4.4 million Boe at an average realized sales price of $58.29 per Boe compared to 4.5 million Boe sold at an average realized sales price of $57.53 per Boe in the first quarter of 2013.

Cash Flow from Operating Activities and Adjusted EBITDA: EBITDA and Adjusted EBITDA are non-GAAP measures and are defined in the "Non-GAAP Financial Measures" section at the end of this press release.

Adjusted EBITDA for the first quarter of 2014 was $168.0 million, compared to $172.6 million for the first quarter of 2013. Adjusted EBITDA was lower for the first quarter of 2014 primarily due to lower revenues resulting from reduced production volumes. Our Adjusted EBITDA margin was 66% for 2014, compared to 67% in the first quarter of 2013. Net cash provided by operating activities for the first quarter of 2014 was $118.5 million, down $51.3 million from the same period last year primarily due to lower collections on joint interest receivables and higher paydowns on accounts payable. The change in cash flow from operating activities, excluding changes in working capital, was virtually flat with the first quarter of last year.

At March 31, 2014, we had a cash balance of $20.3 million and $520.6 million of undrawn capacity available under the revolving bank credit facility, with a borrowing base of $800.0 million as of March 31, 2014. Effective April 17, 2014, our borrowing base was changed to $750.0 million upon completion of the semi-annual redetermination by the banks within the revolving bank credit facility and undrawn capacity was $456 million.

Lease Operating Expenses ("LOE"): LOE, which includes base LOE, insurance premiums, workovers, facilities expenses, and hurricane remediation costs net of insurance claims, was $55.6 million for the first quarter of this year, compared to $59.3 million in the first quarter of 2013. Base LOE decreased $0.4 million, insurance premiums were lower by $2.1 million, facilities expense was lower by $0.6 million and insurance reimbursements were up $0.5 million in the first quarter of 2014 as compared to the first quarter of 2013.

Depreciation, depletion, amortization and accretion ("DD&A"): DD&A, including accretion for asset retirement obligation, increased to $4.72 per Mcfe for the first quarter of 2014 from $4.03 per Mcfe in the prior-year period. On a nominal basis, DD&A increased to $123.3 million for the first quarter of 2014 from $108.9 million in the prior-year period. The DD&A rate and accordingly DD&A expense increased in part due to increases in estimated future development costs that were made in the fourth quarter of 2013 and partially due to other increases to the full cost pool without significant changes to our proved reserves.

Net Income & EPS: Net income for the first quarter of 2014 was $11.2 million compared to $26.6 million during the same period in 2013. Excluding special items, net income for the first quarter of 2014 was $16.1 million, and earnings were $0.21 per common share. Earnings declined on lower revenues, higher DD&A and general and administrative expense, partially offset by lower LOE. See the "Reconciliation of Net Income to Net Income Excluding Special Items" and related earnings per share, excluding special items in the table under "Non-GAAP Financial Information" at the back of this press release for a description of the special items.

Capital Expenditures Update: Our capital expenditures for the first quarter of 2014 were $95.1 million compared to $136.6 million for the same period in 2013. Capital expenditures for oil and gas properties consisted of $51.4 million for exploration activities, $30.8 million for development activities, and $12.9 million for seismic, leasehold, and other costs.

OPERATIONS UPDATE

Offshore: The company currently has two rigs running offshore with one rig performing recompletion operations on the A-6 well at Mahogany and one rig drilling the A-2 well at our East Cameron 321 field.

At our Mahogany field, the A-15 was brought on production at an initial production rate of approximately 837 Boe per day (82% liquids) and logged over 65 feet of measured depth pay in the "P" sand. The rig has since skidded over to the A-6 well to initiate an up-hole recompletion to the "N" sand, which is expected to be finished near the end of May.

Onshore: At our Yellow Rose field in the West Texas Permian basin, we are currently running three rigs, with two dedicated to our vertical program and one to our horizontal program. The horizontal well, the Chablis 13H, recently reached total depth on our second operated Wolfcamp "B" well in Martin County. Another Wolfcamp "B" operated well is currently being spud from the same pad, which marks our first multi-well drilling operation from a single pad site. Completion operations of the recently drilled well are expected to commence soon. Our non-operated joint venture horizontal well recently completed frac operations and is now in flowback.

In East Texas at our Star Project, we have elected not to drill another well and have subsequently reassigned approximately 145,000 net acres back to the original assignor.

2014 Outlook:

Our guidance for the second quarter and full year 2014 is provided in the table below and represents the Company's best estimate of the range of likely future results. It is affected by the factors described below in "Forward-Looking Statements."

Conference Call Information: W&T will hold a conference call to discuss our financial and operational results on Wednesday, May 7, 2014, at 9:30 a.m. Eastern Time. To participate, dial 480-629-9818 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 May 14, 2014, and may be accessed by calling 303-590-3030 and using the pass code 4679511#.

About W&T Offshore

W&T Offshore, Inc. is an independent oil and natural gas producer with operations offshore in the Gulf of Mexico and onshore in the Permian Basin of West Texas. We have grown through acquisitions, exploration and development and currently hold working interests in approximately 67 offshore fields in federal and state waters (62 producing and five fields capable of producing). W&T currently has under lease approximately 1.2 million gross acres, including approximately 0.6 million gross acres on the Gulf of Mexico Shelf, approximately 0.5 million gross acres in the deepwater and approximately 50,000 gross acres onshore in West Texas. A substantial majority of our daily production is derived from wells we operate offshore. For more information on W&T Offshore, please visit our website 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 other factors discussed in W&T Offshore's Annual Report on Form 10-K for the year ended December 31, 2013 and subsequent Form 10-Q reports found at www.sec.gov or at our website at www.wtoffshore.com under the Investor Relations section.

W&T OFFSHORE, INC. AND SUBSIDIARIES
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 "Net Income Excluding Special Items," "EBITDA" and "Adjusted EBITDA." Adjusted EBITDA margin represents the ratio of Adjusted EBITDA to total revenues. Our management uses these non-GAAP financial 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 Net Income Excluding Special Items

"Net Income Excluding Special Items" does not include the derivative loss and associated tax effects. Net Income excluding special items is presented because the timing and amount of these items cannot be reasonably estimated and affect the comparability of operating results from period to period, and current periods to prior periods.

Reconciliation of Net Income to Adjusted EBITDA

We define EBITDA as net income plus income tax expense, net interest expense, depreciation, depletion, amortization, and accretion. Adjusted EBITDA excludes the loss related to our derivative contracts. We believe the presentation of EBITDA and Adjusted EBITDA provides useful information regarding our ability to service debt and to fund capital expenditures. We believe this presentation is relevant and useful because it helps our investors understand our operating performance and makes 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. Adjusted EBITDA margin represents the ratio of Adjusted EBITDA to total revenues.

The following table presents a reconciliation of our consolidated net income to consolidated EBITDA and Adjusted EBITDA along with our Adjusted EBITDA margin.