(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 Sale provisions (as such capitalized terms are defined in the applicable indenture);

(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 Sale 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 the applicable indenture) 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

Non-Guarantor

W&T

Company

Subsidiaries

Adjustments

Eliminations

Offshore, Inc.

(In thousands)

Assets

Current assets:

Cash and cash equivalents

$

130,711

$

—

$

—

$

—

$

130,711

Receivables:

Oil and natural gas sales

3,842

41,100

—

—

44,942

Joint interest

17,835

—

—

—

17,835

Income taxes

186,134

—

—

(121,031

)

65,103

Total receivables

207,811

41,100

—

(121,031

)

127,880

Prepaid expenses and other assets

14,592

3,206

2,399

—

20,197

Total current assets

353,114

44,306

2,399

(121,031

)

278,788

Oil and natural gas properties and other, net

406,308

128,745

44,947

(6,648

)

573,352

Restricted deposits for asset retirement obligations

25,622

—

—

—

25,622

Other assets

577,871

503,839

(46,378

)

(970,918

)

64,414

Total assets

$

1,362,915

$

676,890

$

968

$

(1,098,597

)

$

942,176

Liabilities and Shareholders’ Equity (Deficit)

Current liabilities:

Accounts payable

$

70,997

$

5,477

$

970

$

—

$

77,444

Undistributed oil and natural gas proceeds

20,598

1,675

—

—

22,273

Asset retirement obligations

23,635

2,113

—

—

25,748

Long-term debt

22,858

—

—

—

22,858

Accrued liabilities

23,437

120,887

—

(121,031

)

23,293

Total current liabilities

161,525

130,152

970

(121,031

)

171,616

Long-term debt:

Principal

889,790

—

—

—

889,790

Carrying value adjustments

77,691

—

—

—

77,691

Long term debt, less current portion - carrying value

967,481

—

—

—

967,481

Asset retirement obligations, less current portion

154,861

125,862

12

—

280,735

Other liabilities

617,034

—

—

(550,041

)

66,993

Shareholders’ deficit:

Common stock

1

—

—

—

1

Additional paid-in capital

547,039

704,885

—

(704,885

)

547,039

Retained earnings (deficit)

(1,060,859

)

(284,009

)

(14

)

277,360

(1,067,522

)

Treasury stock, at cost

(24,167

)

—

—

—

(24,167

)

Total shareholders’ equity (deficit)

(537,986

)

420,876

(14

)

(427,525

)

(544,649

)

Total liabilities and shareholders’ equity (deficit)

$

1,362,915

$

676,890

$

968

$

(1,098,597

)

$

942,176

Consolidated

Parent

Guarantor

W&T

Company

Subsidiaries

Eliminations

Offshore, Inc.

(In thousands)

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

430,354

152,464

(3,802

)

579,016

Restricted deposits for asset retirement obligations

25,394

—

—

25,394

Income taxes receivable

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’ 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’ 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’ deficit

(569,706

)

398,708

(402,510

)

(573,508

)

Total liabilities and shareholders’ deficit

$

1,277,615

$

647,813

$

(1,017,848

)

$

907,580

Consolidated

Parent

Guarantor

Non-Guarantor

W&T

Company

Subsidiaries

Adjustments

Eliminations

Offshore, Inc.

(In thousands)

Revenues

$

63,786

$

70,427

$

—

$

—

$

134,213

Operating costs and expenses:

Lease operating expenses

19,760

17,083

—

—

36,843

Production taxes

455

—

—

—

455

Gathering and transportation

2,703

2,354

—

—

5,057

Depreciation, depletion, amortization

   and accretion

19,420

15,814

—

2,847

38,081

General and administrative expenses

7,203

7,824

11

—

15,038

Total costs and expenses

49,541

43,075

11

2,847

95,474

Operating income

14,245

27,352

(11

)

(2,847

)

38,739

Earnings of affiliates

22,167

—

—

(22,167

)

—

Interest expense incurred

11,323

—

—

—

11,323

Other (income) expense, net

(336

)

—

3

—

(333

)

Income before income tax

   expense (benefit)

25,425

27,352

(14

)

(25,014

)

27,749

Income tax expense (benefit)

(5,076

)

5,185

—

—

109

Net income

$

30,501

$

22,167

$

(14

)

$

(25,014

)

$

27,640

Consolidated

Parent

Guarantor

W&T

Company

Subsidiaries

Eliminations

Offshore, Inc.

(In thousands)

Revenues

$

53,707

$

70,686

$

—

$

124,393

Operating costs and expenses:

Lease operating expenses

23,702

16,462

—

40,164

Production taxes

515

—

—

515

Gathering and transportation

2,566

3,643

—

6,209

Depreciation, depletion, amortization and accretion

19,154

20,105

731

39,990

General and administrative expenses

5,776

7,498

—

13,274

Derivative gain

(3,955

)

—

—

(3,955

)

Total costs and expenses

47,758

47,708

731

96,197

Operating income

5,949

22,978

(731

)

28,196

Earnings of affiliates

17,527

—

(17,527

)

—

Interest expense incurred

11,294

—

—

11,294

Other expense, net

191

—

—

191

Income before income tax expense (benefit)

11,991

22,978

(18,258

)

16,711

Income tax expense (benefit)

(13,039

)

5,451

—

(7,588

)

Net income

$

25,030

$

17,527

$

(18,258

)

$

24,299

Consolidated

W&T

Parent

Guarantor

Non-Guarantor

Offshore,

Company

Subsidiaries

Adjustments

Eliminations

Inc.

(In thousands)

Operating activities:

Net income

$

30,501

$

22,167

$

(14

)

$

(25,014

)

$

27,640

Adjustments to reconcile net income to net cash

  provided by  operating activities:

Depreciation, depletion, amortization and accretion

19,420

15,814

—

2,847

38,081

Amortization of debt items

466

—

—

—

466

Share-based compensation

1,219

—

—

—

1,219

Deferred income taxes

109

—

—

—

109

Earnings of affiliates

(22,167

)

—

—

22,167

—

Changes in operating assets and liabilities:

—

Oil and natural gas receivables

1,823

(1,322

)

—

—

501

Joint interest receivables

1,919

—

—

—

1,919

Income taxes

(5,186

)

5,186

—

—

—

Prepaid expenses and other assets

25,275

(31,783

)

1,991

(1,874

)

(6,391

)

Asset retirement obligation settlements

(5,633

)

(1,389

)

—

—

(7,022

)

Cash advances from JV partners

13,129

6,018

—

—

19,147

Accounts payable, accrued liabilities and other

2,403

(4,965

)

-

1,874

(688

)

Net cash provided by operating activities

63,278

9,726

1,977

—

74,981

Investing activities:

Investment in oil and natural gas properties and equipment

(10,674

)

(7,496

)

(2,947

)

—

(21,117

)

Changes in operating assets and liabilities associated with

   investing activities

(15,894

)

(2,230

)

970

—

(17,154

)

Deposit for acquisition

(3,000

)

—

—

—

(3,000

)

Net cash used in investing activities

(29,568

)

(9,726

)

(1,977

)

—

(41,271

)

Financing activities:

Payment of interest on 1.5 Lien Term Loan

(2,057

)

—

—

—

(2,057

)

Net cash used in financing activities

(2,057

)

—

—

—

(2,057

)

Increase in cash and cash equivalents

31,653

—

—

—

31,653

Cash and cash equivalents, beginning of period

99,058

—

—

—

99,058

Cash and cash equivalents, end of period

$

130,711

$

—

$

—

$

—

$

130,711

Consolidated

W&T

Parent

Guarantor

Offshore,

Company

Subsidiaries

Eliminations

Inc.

(In thousands)

Operating activities:

Net income

$

25,030

$

17,527

$

(18,258

)

$

24,299

Adjustments to reconcile net loss to net cash

   provided by operating activities:

Depreciation, depletion, amortization and accretion

19,154

20,105

731

39,990

Amortization of debt items

412

—

—

412

Share-based compensation

1,928

—

—

1,928

Derivative gain

(3,955

)

—

—

(3,955

)

Cash receipts on derivative settlements

713

—

—

713

Deferred income taxes

105

—

—

105

Earnings of affiliates

(17,527

)

—

17,527

—

Changes in operating assets and liabilities:

Oil and natural gas receivables

(2,004

)

122

—

(1,882

)

Joint interest receivables

5,042

—

—

5,042

Insurance reimbursements

30,100

—

—

30,100

Income taxes

(5,451

)

5,451

—

—

Prepaid expenses and other assets

(6,927

)

(42,395

)

41,350

(7,972

)

Asset retirement obligations

(12,940

)

(1,559

)

—

(14,499

)

Cash advances from JV partners

(2,531

)

—

—

(2,531

)

Accounts payable, accrued liabilities and other

49,295

1,488

(41,350

)

9,433

Net cash provided by operating activities

80,444

739

—

81,183

Investing activities:

Investment in oil and natural gas properties and equipment

(23,593

)

255

—

(23,338

)

Changes in operating assets and liabilities associated with

   investing activities

2,162

(994

)

—

1,168

Purchases of furniture, fixtures and other

(853

)

—

—

(853

)

Net cash used in investing activities

(22,284

)

(739

)

—

(23,023

)

Financing activities:

Payment of interest on 1.5 Lien Term Loan

(2,056

)

—

—

(2,056

)

Other

(245

)

—

—

(245

)

Net cash provided by financing activities

(2,301

)

—

—

(2,301

)

Increase in cash, cash equivalents and restricted cash

55,859

—

—

55,859

Cash and cash equivalents, beginning of period

70,236

—

—

70,236

Cash and cash equivalents, end of period

$

126,095

$

—

$

—

$

126,095