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, 2017

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. As to the ceiling test write-downs recorded in 2016 and 2015, the computation is performed for each subsidiary on a stand-alone basis and also for the consolidated Company. Due to this methodology, consolidating adjustments are required to present the consolidated results appropriately.

Condensed Consolidating Balance Sheet as of December 31, 2017

(In thousands)

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

Assets
Current assets:
Cash and cash equivalents	$	99,058		$	—		$	—		$	99,058
Receivables:
Oil and natural gas sales		5,665			39,778			—			45,443
Joint interest		19,754			—			—			19,754
Income taxes		128,835			—			(115,829	)		13,006
Total receivables		154,254			39,778			(115,829	)		78,203
Prepaid expenses and other assets		11,154			2,265			—			13,419
Total current assets		264,466			42,043			(115,829	)		190,680

Oil and natural gas properties and other, net - at cost:		430,354			152,464			(3,802	)		579,016

Restricted deposits for asset retirement obligations		25,394			—			—			25,394
Income tax receivables		52,097			—			—			52,097
Other assets		505,304			453,306			(898,217	)		60,393
Total assets	$	1,277,615		$	647,813		$	(1,017,848	)	$	907,580
Liabilities and Shareholders’ Equity (Deficit)
Current liabilities:
Accounts payable	$	76,703		$	6,962		$	—		$	83,665
Undistributed oil and natural gas proceeds		18,762			1,367			—			20,129
Asset retirement obligations		22,488			1,125			—			23,613
Long-term debt		22,925			—			—			22,925
Accrued liabilities		18,058			115,701			(115,829	)		17,930
Total current liabilities		158,936			125,155			(115,829	)		168,262
Long-term debt:
Principal		889,790			—			—			889,790
Carrying value adjustments		79,337			—			—			79,337
Long term debt, less current portion - carrying value		969,127			—			—			969,127

Asset retirement obligations, less current portion		152,883			123,950			—			276,833
Other liabilities		566,375			—			(499,509	)		66,866
Shareholders’ equity (deficit):
Common stock		1			—			—			1
Additional paid-in capital		545,820			704,885			(704,885	)		545,820
Retained earnings (deficit)		(1,091,360	)		(306,177	)		302,375			(1,095,162	)
Treasury stock, at cost		(24,167	)		—			—			(24,167	)
Total shareholders’ equity (deficit)		(569,706	)		398,708			(402,510	)		(573,508	)
Total liabilities and shareholders’ equity (deficit)	$	1,277,615		$	647,813		$	(1,017,848	)	$	907,580

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		21,885			—						21,885
Insurance reimbursement		30,100			—			—			30,100
Income taxes		111,215			—			(99,272	)		11,943
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

Oil and natural gas properties and other, net		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:
Principal		873,733			—			—			873,733
Carrying value adjustments		138,722			—			—			138,722
Long term debt, less current portion - carrying value		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 Statement of Operations

Condensed Consolidating Statement of Operations for the Year Ended December 31, 2017

(In thousands)

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

Revenues	$	231,396		$	255,700	$	—		$	487,096
Operating costs and expenses:
Lease operating expenses		79,695			64,043		—			143,738
Production taxes		1,740			—		—			1,740
Gathering and transportation		9,781			10,660		—			20,441
Depreciation, depletion and amortization		73,962			61,700		2,848			138,510
Asset retirement obligations accretion		7,416			9,756		—			17,172
General and administrative expenses		28,170			31,574		—			59,744
Derivative gain		(4,199	)		—		—			(4,199	)
Total costs and expenses		196,565			177,733		2,848			377,146
Operating Income		34,831			77,967		(2,848	)		109,950
Earnings of affiliates		61,444			—		(61,444	)		—
Interest expense incurred		45,836			—		—			45,836
Gain on exchange of debt		7,811			—		—			7,811
Other expense, net		4,812			—		—			4,812
Income before income tax expense (benefit)		53,438			77,967		(64,292	)		67,113
Income tax expense (benefit)		(29,092	)		16,523		—			(12,569	)
Net income	$	82,530		$	61,444	$	(64,292	)	$	79,682

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, 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 gain		(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	)
Loss of affiliates		(464,931	)		—			464,931			—
Interest expense:
Incurred		101,542			3,050			—			104,592
Capitalized		(4,206	)		(3,050	)		—			(7,256	)
Other expense, net		4,663			—			—			4,663
Loss before income tax benefit		(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 Cash Flows

Condensed Consolidating Statement of Cash Flows for the Year Ended December 31, 2017

(In thousands)

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

Operating activities:
Net income	$	82,530		$	61,444		$	(64,292	)	$	79,682
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, depletion, amortization and accretion		81,378			71,456			2,848			155,682
Gain on exchange of debt		(7,811	)		—			—			(7,811	)
Amortization of debt items		1,715			—			—			1,715
Share-based compensation		7,191			—			—			7,191
Derivative gain		(4,199	)		—			—			(4,199	)
Cash receipts on derivative settlements, net		4,199			—			—			4,199
Deferred income taxes		217			—			—			217
Loss of affiliates		(61,444	)		—			61,444			—
Changes in operating assets and liabilities:
Oil and natural gas receivables		(3,491	)		1,121			—			(2,370	)
Joint interest receivables		2,131			—			—			2,131
Insurance reimbursements		31,740			—			—			31,740
Income taxes		(17,586	)		16,523			—			(1,063	)
Prepaid expenses and other assets		3,447			(108,773	)		108,564			3,238
Escrow deposit - Apache lawsuit		(49,500	)		—			—			(49,500	)
Asset retirement obligation settlements		(55,672	)		(16,737	)		—			(72,409	)
Accounts payable, accrued liabilities and other		127,496			(7,967	)		(108,564	)		10,965
Net cash provided by operating activities		142,341			17,067			—			159,408
Investing activities:
Investment in oil and natural gas properties and equipment		(105,179	)		(24,869	)		—			(130,048	)
Changes in operating assets and liabilities associated with investing activities		16,072			7,802			—			23,874
Purchases of furniture, fixtures and other		(933	)		—			—			(933	)
Net cash used in investing activities		(90,040	)		(17,067	)		—			(107,107	)
Financing activities:
Payment of interest on 1.5 Lien Term Loan		(8,227	)		—			—			(8,227	)
Payment of interest on 2nd Lien PIK Toggle Notes		(7,335	)		—			—			(7,335	)
Payment of interest on 3rd Lien PIK Toggle Notes		(6,201	)		—			—			(6,201	)
Debt exchange costs		(421	)		—			—			(421	)
Other		(1,295	)		—			—			(1,295	)
Net cash used in financing activities		(23,479	)		—			—			(23,479	)
Increase in cash and cash equivalents		28,822			—			—			28,822
Cash and cash equivalents, beginning of period		70,236			—			—			70,236
Cash and cash equivalents, end of period	$	99,058		$	—		$	—		$	99,058

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 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-down/amortization of debt items		2,548			—			—			2,548
Share-based compensation		11,013			—			—			11,013
Derivative gain		2,926			—			—			2,926
Cash payments on derivative settlements		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 receivables		12			—			—			12
Income taxes		(64,274	)		—			—			(64,274	)
Prepaid expenses and other assets		(14,395	)		(78,547	)		77,996			(14,946	)
Asset retirement obligations		(49,303	)		(23,017	)		—			(72,320	)
Accounts payable, accrued liabilities and other		45,817			37,538			(77,996	)		5,359
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, 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 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
Debt issuance costs write-down/amortization of debt items		4,411			—			—			4,411
Share-based compensation		10,242			—			—			10,242
Derivative loss		(14,375	)		—			—			(14,375	)
Cash payments on derivative settlements		6,703			—			—			6,703
Deferred income taxes		(77,421	)		(125,851	)		—			(203,272	)
Earnings 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 receivables		21,645			—			—			21,645
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		(141,608	)		4,156			91,245			(46,207	)
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, 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