Exhibit 99.1
W&T OFFSHORE, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION
The following unaudited pro forma condensed consolidated balance sheet of W&T Offshore, Inc. (the “Company,” “we” or “our”) as of March 31, 2007 illustrates the pro forma effect on the Company’s historical financial position of the issuance of the Company’s $450 million 8 1/4% Senior Notes due 2014 (the “Notes”). The unaudited pro forma condensed consolidated statement of income of the Company for the three months ended March 31, 2007 illustrates the pro forma effect on the Company’s results of operations of the issuance in June 2007 of the Notes. The unaudited pro forma condensed consolidated balance sheet as of March 31, 2007 was prepared assuming that the issuance of the Notes had occurred on March 31, 2007. The unaudited pro forma condensed consolidated statement of income for the three months ended March 31, 2007 was prepared assuming that the Notes were issued and proceeds applied on January 1, 2007.
The unaudited adjustments that are described in the accompanying notes and the resulting unaudited pro forma condensed consolidated financial information are based on available information and certain assumptions we believe are reasonable in connection with the transaction as described above. In our opinion, all adjustments that are necessary to present fairly the pro forma information have been made. The unaudited pro forma condensed consolidated financial information does not purport to represent what the Company’s financial position or results of operations would have been had the transaction occurred on the dates indicated or the financial position or results of operations for any future date or period.
The unaudited pro forma condensed consolidated financial information and accompanying notes should be read in conjunction with the historical financial statements and the accompanying notes and “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” which are set forth in our annual report on Form 10-K for the year ended December 31, 2006 and the quarterly report on Form 10-Q for the quarter ended March 31, 2007.
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W&T OFFSHORE, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
AS OF MARCH 31, 2007
(In thousands)
| Historical | Pro Forma Adjustments |
Pro Forma | ||||||||||
| Assets | ||||||||||||
| Current assets: |
||||||||||||
| Cash and cash equivalents |
$ | 4,303 | $ | 444,900 | (a) | $ | 4,303 | |||||
| (444,900 | )(b) | |||||||||||
| Receivables: |
||||||||||||
| Oil and natural gas sales |
93,927 | — | 93,927 | |||||||||
| Joint interest and other |
56,404 | — | 56,404 | |||||||||
| Income taxes |
17,009 | 1,149 | (e) | 18,158 | ||||||||
| Total receivables |
167,340 | 1,149 | 168,489 | |||||||||
| Prepaid expenses and other assets |
27,741 | (22 | )(b) | 27,719 | ||||||||
| Total current assets |
199,384 | 1,127 | 200,511 | |||||||||
| Property and equipment—at cost |
||||||||||||
| Oil and gas properties and equipment—full cost method of accounting |
3,431,197 | — | 3,431,197 | |||||||||
| Furniture, fixtures and other |
11,314 | — | 11,314 | |||||||||
| Total property and equipment |
3,442,511 | — | 3,442,511 | |||||||||
| Less accumulated depreciation, depletion and amortization |
1,161,069 | — | 1,161,069 | |||||||||
| Net property and equipment |
2,281,442 | — | 2,281,442 | |||||||||
| Restricted deposits for asset retirement obligations |
10,804 | — | 10,804 | |||||||||
| Other assets |
2,829 | 5,100 | (a) | 7,725 | ||||||||
| (204 | )(c) | |||||||||||
| Total assets |
$ | 2,494,459 | $ | 6,023 | $ | 2,500,482 | ||||||
| Liabilities and Shareholders’ Equity | ||||||||||||
| Current liabilities: |
||||||||||||
| Current maturities of long-term debt—net of discount |
$ | 161,800 | $ | (162,500 | )(b) | $ | 1,200 | |||||
| 1,900 | (c) | |||||||||||
| Accounts payable |
172,436 | — | 172,436 | |||||||||
| Undistributed oil and gas proceeds |
43,151 | — | 43,151 | |||||||||
| Asset retirement obligations—current portion |
40,256 | — | 40,256 | |||||||||
| Accrued liabilities |
8,000 | (1,349 | )(b) | 6,595 | ||||||||
| (56 | )(b) | |||||||||||
| Deferred income taxes—current portion |
2,511 | — | 2,511 | |||||||||
| Total current liabilities |
428,154 | (162,005 | ) | 266,149 | ||||||||
| Long-term debt, less current maturities—net of discount |
481,903 | 450,000 | (a) | 652,332 | ||||||||
| (280,750 | )(b) | |||||||||||
| 1,179 | (c) | |||||||||||
| Asset retirement obligations, less current portion |
276,766 | — | 276,766 | |||||||||
| Deferred income taxes, less current portion |
246,338 | — | 246,338 | |||||||||
| Other liabilities |
5,615 | (267 | )(b) | 5,348 | ||||||||
| Commitments and contingencies |
||||||||||||
| Shareholders’ equity: |
||||||||||||
| Common stock |
1 | — | 1 | |||||||||
| Additional paid-in capital |
364,255 | — | 364,255 | |||||||||
| Retained earnings |
692,378 | (3,283 | )(c) | 690,048 | ||||||||
| (301 | )(d) | |||||||||||
| 1,254 | (e) | |||||||||||
| Accumulated other comprehensive loss |
(951 | ) | 301 | (d) | (755 | ) | ||||||
| (105 | )(e) | |||||||||||
| Total shareholders’ equity |
1,055,683 | (2,134 | ) | 1,053,549 | ||||||||
| Total liabilities and shareholders’ equity |
$ | 2,494,459 | $ | 6,023 | $ | 2,500,482 | ||||||
See accompanying notes.
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W&T OFFSHORE, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
THREE MONTHS ENDED MARCH 31, 2007
(In thousands, except per share data)
| Historical | Pro Forma Adjustments |
Pro Forma | ||||||||||
| Revenues: |
||||||||||||
| Oil and natural gas revenues |
$ | 246,477 | $ | — | $ | 246,477 | ||||||
| Other |
62 | — | 62 | |||||||||
| Total revenues |
246,539 | — | 246,539 | |||||||||
| Operating costs and expenses: |
||||||||||||
| Lease operating |
61,663 | — | 61,663 | |||||||||
| Production taxes |
1,383 | — | 1,383 | |||||||||
| Gathering and transportation |
2,874 | — | 2,874 | |||||||||
| Depreciation, depletion and amortization |
118,754 | — | 118,754 | |||||||||
| Asset retirement obligation accretion |
5,447 | — | 5,447 | |||||||||
| General and administrative |
13,884 | — | 13,884 | |||||||||
| Commodity derivative loss |
11,971 | — | 11,971 | |||||||||
| Total costs and expenses |
215,976 | — | 215,976 | |||||||||
| Operating income |
30,563 | — | 30,563 | |||||||||
| Interest expense: |
||||||||||||
| Incurred |
17,759 | (2,025 | )(f) | 15,734 | ||||||||
| Capitalized |
(6,828 | ) | 1,014 | (g) | (5,814 | ) | ||||||
| Other income |
413 | — | 413 | |||||||||
| Income before income taxes |
20,045 | 1,011 | 21,056 | |||||||||
| Income taxes |
7,016 | 354 | (h) | 7,370 | ||||||||
| Net income |
$ | 13,029 | $ | 657 | $ | 13,686 | ||||||
| Earnings per common share: |
||||||||||||
| Basic |
$ | 0.17 | $ | 0.18 | ||||||||
| Diluted |
0.17 | 0.18 | ||||||||||
| Weighted average number of common shares (basic) |
75,787 | 75,787 | ||||||||||
| Weighted average nonvested common shares |
17 | 17 | ||||||||||
| Weighted average number of common shares (diluted) |
75,804 | 75,804 | ||||||||||
See accompanying notes.
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W&T OFFSHORE, INC.
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION
Pro Forma Financial Information Assumptions
The unaudited pro forma condensed consolidated balance sheet as of March 31, 2007 reflects the following adjustments.
| (a) | To record the issuance of the Notes as follows (in thousands): |
| Senior Notes due 2014 (interest rate of 8.25%) |
$ | 450,000 | ||
| Transaction fees and expenses |
(5,100 | ) | ||
| Net proceeds |
$ | 444,900 | ||
| (b) | To record the use of the net proceeds from the issuance of the Notes as follows (in thousands): |
| Pay the principal outstanding on the revolving credit facility |
$ | 190,000 | |
| Pay the principal outstanding on the Tranche A term loan |
162,500 | ||
| Pay a portion of the principal outstanding on the Tranche B term loan |
90,750 | ||
| Pay accrued interest on the retired debt |
1,349 | ||
| Retire certain interest rate swaps related to the term loans |
301 | ||
| Total uses of the net proceeds |
$ | 444,900 | |
| (c) | To write off the unaccreted discount and unamortized debt issue costs associated with the Tranche A loan and a portion of the Tranche B loan. |
| (d) | To adjust accumulated other comprehensive loss for the retirement of an interest rate swap associated with the Tranche A term loan and a portion of an interest rate swap associated with the Tranche B loan. |
| (e) | To give effect to income taxes related to the above transactions based on the federal statutory rate of 35%. |
The unaudited pro forma condensed consolidated statement of income for the three months ended March 31, 2007 reflects the following adjustments.
| (f) | To adjust interest expense for the issuance of the Notes and application of the net proceeds to repay borrowings under the Credit Agreement and amortization of related debt issuance costs. |
| (g) | To adjust capitalized interest for the issuance of the Notes and application of the net proceeds to repay borrowings under the Credit Agreement and amortization of related debt issuance costs. |
| (h) | To adjust income tax expense for the effects of adjustments (f) and (g) based on the federal statutory rate of 35%. |
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