(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, if the sale or other disposition does not violate the Asset Sales provisions (as such terms are defined in certain debt documents);

(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 certain debt documents;

(4)

upon Legal Defeasance or Covenant Defeasance (as such terms are defined in certain debt documents) or upon satisfaction and discharge of the certain debt documents;

(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 as described in certain debt documents, provided no event of default has occurred and is continuing.

Consolidated

Parent

Guarantor

W&T

Company

Subsidiaries

Eliminations

Offshore, Inc.

Assets

Current assets:

Cash and cash equivalents

$

70,236

$

—

$

—

$

70,236

Receivables:

Oil and natural gas sales

2,173

40,900

—

43,073

Joint interest and other

163,200

—

(99,272

)

63,928

Total receivables

165,373

40,900

(99,272

)

107,001

Prepaid expenses and other assets

12,448

2,056

—

14,504

Total current assets

248,057

42,956

(99,272

)

191,741

Property and equipment – at cost:

Oil and natural gas properties and equipment

5,700,205

2,232,299

—

7,932,504

Furniture, fixtures and other

20,898

—

—

20,898

Total property and equipment

5,721,103

2,232,299

—

7,953,402

Less accumulated depreciation, depletion and amortization

5,360,137

2,045,259

953

7,406,349

Net property and equipment

360,966

187,040

(953

)

547,053

Restricted deposits for asset retirement obligations

27,371

—

—

27,371

Income tax receivables

52,097

—

—

52,097

Other assets

394,931

344,742

(728,209

)

11,464

Total assets

$

1,083,422

$

574,738

$

(828,434

)

$

829,726

Liabilities and Shareholders’ Equity (Deficit)

Current liabilities:

Accounts payable

$

74,306

$

6,733

$

—

$

81,039

Undistributed oil and natural gas proceeds

24,493

1,761

—

26,254

Asset retirement obligations

62,261

16,003

—

78,264

Long-term debt

8,272

—

—

8,272

Accrued liabilities

9,293

99,179

(99,272

)

9,200

Total current liabilities

178,625

123,676

(99,272

)

203,029

Long-term debt, less current maturities

1,012,455

—

—

1,012,455

Asset retirement obligations, less current portion

142,376

113,798

—

256,174

Other liabilities

408,050

—

(390,945

)

17,105

Shareholders’ equity (deficit):

Common stock

1

—

—

1

Additional paid-in capital

539,973

704,885

(704,885

)

539,973

Retained earnings (deficit)

(1,173,891

)

(367,621

)

366,668

(1,174,844

)

Treasury stock, at cost

(24,167

)

—

—

(24,167

)

Total shareholders’ equity (deficit)

(658,084

)

337,264

(338,217

)

(659,037

)

Total liabilities and shareholders’ equity (deficit)

$

1,083,422

$

574,738

$

(828,434

)

$

829,726

Consolidated

Parent

Guarantor

W&T

Company

Subsidiaries

Eliminations

Offshore, Inc.

Assets

Current assets:

Cash and cash equivalents

$

85,414

$

—

$

—

$

85,414

Receivables:

Oil and natural gas sales

2,742

32,263

—

35,005

Joint interest and other

121,190

—

(99,178

)

22,012

Total receivables

123,932

32,263

(99,178

)

57,017

Prepaid expenses and other assets

25,375

1,504

—

26,879

Total current assets

234,721

33,767

(99,178

)

169,310

Property and equipment – at cost:

Oil and natural gas properties and equipment

5,682,793

2,219,701

—

7,902,494

Furniture, fixtures and other

20,802

—

—

20,802

Total property and equipment

5,703,595

2,219,701

—

7,923,296

Less accumulated depreciation, depletion and amortization

5,258,563

1,822,273

(147,589

)

6,933,247

Net property and equipment

445,032

397,428

147,589

990,049

Deferred income taxes

27,251

344

—

27,595

Restricted deposits for asset retirement obligations

15,606

—

—

15,606

Other assets

498,782

266,748

(760,068

)

5,462

Total assets

$

1,221,392

$

698,287

$

(711,657

)

$

1,208,022

Liabilities and Shareholders’ Equity (Deficit)

Current liabilities:

Accounts payable

$

100,282

$

9,515

$

—

$

109,797

Undistributed oil and natural gas proceeds

20,463

976

—

21,439

Asset retirement obligations

63,716

20,619

—

84,335

Accrued liabilities

11,922

99,178

(99,178

)

11,922

Total current liabilities

196,383

130,288

(99,178

)

227,493

Long-term debt, less current maturities

1,196,855

—

—

1,196,855

Asset retirement obligations, less current portion

173,105

120,882

—

293,987

Deferred income taxes

—

—

—

—

Other liabilities

329,129

—

(312,951

)

16,178

Shareholders’ equity (deficit):

Common stock

1

—

—

1

Additional paid-in capital

423,499

704,885

(704,885

)

423,499

Retained earnings

(1,073,413

)

(257,768

)

405,357

(925,824

)

Treasury stock, at cost

(24,167

)

—

—

(24,167

)

Total shareholders’ equity (deficit)

(674,080

)

447,117

(299,528

)

(526,491

)

Total liabilities and shareholders’ equity (deficit)

$

1,221,392

$

698,287

$

(711,657

)

$

1,208,022

Consolidated

Parent

Guarantor

W&T

Company

Subsidiaries

Eliminations

Offshore, Inc.

Revenues

$

161,063

$

238,923

$

—

$

399,986

Operating costs and expenses:

Lease operating expenses

84,415

67,984

—

152,399

Production taxes

1,889

—

—

1,889

Gathering and transportation

9,795

13,133

—

22,928

Depreciation, depletion and amortization

73,268

112,277

8,493

194,038

Asset retirement obligations accretion

8,165

9,406

—

17,571

Ceiling test write-down of oil and natural gas properties

28,305

110,709

140,049

279,063

General and administrative expenses

24,817

34,923

—

59,740

Derivative loss

2,926

—

—

2,926

Total costs and expenses

233,580

348,432

148,542

730,554

Operating loss

(72,517

)

(109,509

)

(148,542

)

(330,568

)

Loss of affiliates

(109,853

)

—

109,853

—

Interest expense:

Incurred

92,607

184

—

92,791

Capitalized

(336

)

(184

)

—

(520

)

Gain on exchange of debt

123,923

—

—

123,923

Other (income) expense, net

(6,520

)

—

—

(6,520

)

Loss before income tax expense (benefit)

(144,198

)

(109,509

)

(38,689

)

(292,396

)

Income tax expense (benefit)

(43,720

)

344

—

(43,376

)

Net loss

$

(100,478

)

$

(109,853

)

$

(38,689

)

$

(249,020

)

Consolidated

Parent

Guarantor

W&T

Company

Subsidiaries

Eliminations

Offshore, Inc.

Revenues

$

290,212

$

217,053

$

—

$

507,265

Operating costs and expenses:

Lease operating expenses

126,189

66,576

—

192,765

Production taxes

3,002

—

—

3,002

Gathering and transportation

9,209

7,948

—

17,157

Depreciation, depletion and amortization

201,154

172,214

—

373,368

Asset retirement obligations accretion

11,587

9,116

—

20,703

Ceiling test write-down of oil and natural gas properties

616,947

517,880

(147,589

)

987,238

General and administrative expenses

39,009

34,101

—

73,110

Derivative loss

(14,375

)

—

—

(14,375

)

Total costs and expenses

992,722

807,835

(147,589

)

1,652,968

Operating loss

(702,510

)

(590,782

)

147,589

(1,145,703

)

Earnings of affiliates

(464,931

)

—

464,931

—

Interest expense:

Incurred

101,542

3,050

—

104,592

Capitalized

(4,206

)

(3,050

)

—

(7,256

)

Other (income) expense, net

4,663

—

—

4,663

Loss before income tax expense

(1,269,440

)

(590,782

)

612,520

(1,247,702

)

Income tax benefit

(77,133

)

(125,851

)

—

(202,984

)

Net loss

$

(1,192,307

)

$

(464,931

)

$

612,520

$

(1,044,718

)

Consolidated

Parent

Guarantor

W&T

Company

Subsidiaries

Eliminations

Offshore, Inc.

Revenues

$

571,365

$

377,343

$

—

$

948,708

Operating costs and expenses:

Lease operating expenses

180,149

84,602

—

264,751

Production taxes

7,932

—

—

7,932

Gathering and transportation

11,790

8,031

—

19,821

Depreciation, depletion and amortization

267,406

223,063

—

490,469

Asset retirement obligations accretion

10,981

9,652

—

20,633

General and administrative expenses

46,513

40,486

—

86,999

Derivative gain

(3,965

)

—

—

(3,965

)

Total costs and expenses

520,806

365,834

—

886,640

Operating income

50,559

11,509

—

62,068

Earnings of affiliates

8,320

—

(8,320

)

—

Interest expense:

Incurred

84,460

2,462

—

86,922

Capitalized

(6,064

)

(2,462

)

—

(8,526

)

Other (income) expense, net

(208

)

—

—

(208

)

Income (loss) before income tax expense (benefit)

(19,309

)

11,509

(8,320

)

(16,120

)

Income tax expense (benefit)

(7,648

)

3,189

—

(4,459

)

Net income (loss)

$

(11,661

)

$

8,320

$

(8,320

)

$

(11,661

)

Consolidated

Parent

Guarantor

W&T

Company

Subsidiaries

Eliminations

Offshore, Inc.

Operating activities:

Net loss

$

(100,478

)

$

(109,853

)

$

(38,689

)

$

(249,020

)

Adjustments to reconcile net loss to net cash provided by

       (used in) operating activities:

Depreciation, depletion, amortization and accretion

81,433

121,683

8,493

211,609

Ceiling test write-down of oil and gas properties

28,305

110,709

140,049

279,063

Gain on exchange of debt

(123,923

)

—

—

(123,923

)

Debt issuance costs write-off/amortization of debt items

2,548

—

—

2,548

Share-based compensation

11,013

—

—

11,013

Derivative gain

2,926

—

—

2,926

Cash receipts on derivative settlements, net

4,746

—

—

4,746

Deferred income taxes

28,048

344

—

28,392

Loss of affiliates

109,853

—

(109,853

)

—

Changes in operating assets and liabilities:

Oil and natural gas receivables

1,630

(8,635

)

—

(7,005

)

Joint interest and other receivables

(1,126

)

—

—

(1,126

)

Income taxes

(64,274

)

—

—

(64,274

)

Prepaid expenses and other assets

(14,395

)

(78,547

)

77,996

(14,946

)

Asset retirement obligation settlements

(49,303

)

(23,017

)

—

(72,320

)

Accounts payable, accrued liabilities and other

46,955

37,538

(77,996

)

6,497

Net cash provided by (used in) operating activities

(36,042

)

50,222

—

14,180

Investing activities:

Investment in oil and natural gas properties and equipment

(37,418

)

(11,188

)

—

(48,606

)

Changes in operating assets and liabilities associated with

   investing activities

4,340

(39,534

)

—

(35,194

)

Proceeds from sales of assets and other, net

1,000

500

—

1,500

Purchases of furniture, fixtures and other

(96

)

—

—

(96

)

Net cash used in investing activities

(32,174

)

(50,222

)

—

(82,396

)

Financing activities:

Borrowings of long-term debt – revolving bank credit facility

340,000

—

—

340,000

Repayments of long-term debt – revolving bank credit facility

(340,000

)

—

—

(340,000

)

Issuance of 1.5 Lien Term Loan

75,000

—

—

75,000

Payment of interest on 1.5 Lien Term Loan

(2,570

)

—

—

(2,570

)

Debt exchange costs

(18,464

)

—

—

(18,464

)

Other

(928

)

—

—

(928

)

Net cash provided by financing activities

53,038

—

—

53,038

Decrease in cash and cash equivalents

(15,178

)

—

—

(15,178

)

Cash and cash equivalents, beginning of period

85,414

—

—

85,414

Cash and cash equivalents, end of period

$

70,236

$

—

$

—

$

70,236

Consolidated

Parent

Guarantor

W&T

Company

Subsidiaries

Eliminations

Offshore, Inc.

Operating activities:

Net loss

$

(1,192,307

)

$

(464,931

)

$

612,520

$

(1,044,718

)

Adjustments to reconcile net loss to net cash

   provided by operating activities:

Depreciation, depletion, amortization and accretion

212,741

181,330

—

394,071

Ceiling test write-down of oil and gas properties

616,947

517,880

(147,589

)

987,238

Amortization of debt issuance costs and premium

4,411

—

—

4,411

Share-based compensation

10,242

—

—

10,242

Derivative gain

(14,375

)

—

—

(14,375

)

Cash payments on derivative settlements

6,703

—

—

6,703

Deferred income taxes

(77,421

)

(125,851

)

—

(203,272

)

Loss of affiliates

464,931

—

(464,931

)

—

Changes in operating assets and liabilities:

Oil and natural gas receivables

39,078

(6,842

)

—

32,236

Joint interest and other receivables

21,633

—

—

21,633

Income taxes

(7

)

—

—

(7

)

Prepaid expenses and other assets

(13,916

)

122,977

(91,245

)

17,816

Asset retirement obligations

(26,637

)

(5,918

)

—

(32,555

)

Accounts payable, accrued liabilities and other

(141,596

)

4,156

91,245

(46,195

)

Net cash provided by (used in) operating activities

(89,573

)

222,801

—

133,228

Investing activities:

Investment in oil and natural gas properties and equipment

(31,534

)

(198,627

)

—

(230,161

)

Changes in operating assets and liabilities associated with

   investing activities

(29,806

)

(25,619

)

—

(55,425

)

Proceeds from sales of assets and other, net

372,939

—

—

372,939

Investment in subsidiary

(1,445

)

—

1,445

—

Purchases of furniture, fixtures and other

(1,278

)

—

—

(1,278

)

Net cash provided by (used) in investing activities

308,876

(224,246

)

1,445

86,075

Financing activities:

Borrowings of long-term debt – revolving bank credit facility

263,000

—

—

263,000

Repayments of long-term debt – revolving bank credit facility

(710,000

)

—

—

(710,000

)

Issuance of 9.00% Second Lien Term Loan

297,000

—

—

297,000

Debt issuance costs

(6,669

)

—

—

(6,669

)

Other

(886

)

—

—

(886

)

Investment from parent

—

1,445

(1,445

)

—

Net cash provided by (used in)  financing activities

(157,555

)

1,445

(1,445

)

(157,555

)

Increase in cash and cash equivalents

61,748

—

—

61,748

Cash and cash equivalents, beginning of period

23,666

—

—

23,666

Cash and cash equivalents, end of period

$