W&T Offshore, Inc. Annual report pursuant to Section 13 and 15(d)

Annual report pursuant to Section 13 and 15(d)

Supplemental Guarantor Information (Tables)

Supplemental Guarantor Information (Tables)

12 Months Ended

Dec. 31, 2016

Supplemental Guarantor Information [Abstract]

The following condensed consolidating financial information presents the financial condition, results of operations and cash flows of the Parent Company and the Guarantor Subsidiaries, together with consolidating adjustments necessary to present the Company’s results on a consolidated basis. Included in the consolidating adjustments was an adjustment related to the ceiling test write-down, as the computation is performed for each subsidiary on a stand-alone basis and also for the consolidated Company. This resulted in write-downs for the combined subsidiaries to be greater than or less than computed on a total Company basis, which required a contra ceiling test write-down adjustment to present the consolidated results appropriately.

When transfers of property were made from the Parent Company to the Guarantor Subsidiaries, which were transactions between entities under common control, the prior period financial information was retrospectively adjusted for comparability purposes, as prescribed under authoritative guidance. None of the adjustments had any effect on the consolidated results for the current or prior periods presented.

Condensed Consolidating Balance Sheet as of December 31, 2016

(In thousands)

										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

Condensed Consolidating Balance Sheet as of December 31, 2015

(In thousands)

										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

Condensed Consolidating Statement of Operations

Condensed Consolidating Statement of Operations for the Year Ended December 31, 2016

(In thousands)

										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	)

Condensed Consolidating Statement of Operations for the Year Ended December 31, 2015

(In thousands)

										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	)

Condensed Consolidating Statement of Operations for the Year Ended December 31, 2014

(In thousands)

										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	)

Condensed Consolidating Statement of Cash Flows

Condensed Consolidating Statement of Cash Flows for the Year Ended December 31, 2016

(In thousands)

										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

Condensed Consolidating Statement of Cash Flows for the Year Ended December 31, 2015

(In thousands)

										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	$	85,414		$	—		$	—		$	85,414

Condensed Consolidating Statement of Cash Flows for the Year Ended December 31, 2014

(In thousands)

										Consolidated
	Parent			Guarantor						W&T
	Company			Subsidiaries			Eliminations			Offshore, Inc.

Operating activities:
Net income (loss)	$	(11,661	)	$	8,320		$	(8,320	)	$	(11,661	)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation, depletion, amortization and accretion		278,387			232,715			—			511,102
Amortization of debt issuance costs and premium		701			—			—			701
Share-based compensation		14,744			—			—			14,744
Derivative loss		(3,965	)		—			—			(3,965	)
Cash payments on derivative settlements		(5,318	)		—			—			(5,318	)
Deferred income taxes		(32,456	)		27,696			—			(4,760	)
Earnings of affiliates		(8,320	)		—			8,320			—
Changes in operating assets and liabilities:
Oil and natural gas receivables		19,553			9,957			—			29,510
Joint interest and other receivables		(4,255	)		—			—			(4,255	)
Income taxes		27,650			(24,507	)		—			3,143
Prepaid expenses and other assets		45,962			(7,525	)		(23,425	)		15,012
Asset retirement obligations		(57,253	)		(17,060	)		—			(74,313	)
Accounts payable, accrued liabilities and other		11,931			(30,475	)		23,425			4,881
Net cash provided by operating activities		275,700			199,121			—			474,821
Investing activities:
Acquisition of property interest in oil and natural gas properties		(17,407	)		(54,827	)		—			(72,234	)
Investment in oil and natural gas properties and equipment		(312,044	)		(242,334	)		—			(554,378	)
Changes in operating assets and liabilities associated with investing activities		1,733			35,717			—			37,450
Investment in subsidiary		(62,323	)		—			62,323			—
Purchases of furniture, fixtures and other		(3,340	)		—			—			(3,340	)
Net cash used in investing activities		(393,381	)		(261,444	)		62,323			(592,502	)
Financing activities:
Borrowings of long-term debt – revolving bank credit facility		556,000			—			—			556,000
Repayments of long-term debt – revolving bank credit facility		(399,000	)		—			—			(399,000	)
Dividends to shareholders		(30,260	)		—			—			(30,260	)
Other		(1,193	)		—			—			(1,193	)
Investment from parent		—			62,323			(62,323	)		—
Net cash provided by financing activities		125,547			62,323			(62,323	)		125,547
Increase in cash and cash equivalents		7,866			—			—			7,866
Cash and cash equivalents, beginning of period		15,800			—			—			15,800
Cash and cash equivalents, end of period	$	23,666		$	—		$	—		$	23,666