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

Quarterly report pursuant to Section 13 or 15(d)

Supplemental Guarantor Information (Tables)

Supplemental Guarantor Information (Tables)

6 Months Ended

Jun. 30, 2018

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 a result of the JV Drilling Program, we recorded proportional consolidation adjustments, which are not considered a guarantor asset under our debt agreements and, accordingly, are reported as non-guarantor adjustments in the following tables. Due to the methodology of recording the ceiling-test write down in prior periods, consolidating adjustments are required to present the consolidated results appropriately.

Condensed Consolidating Balance Sheet as of June 30, 2018

													Consolidated
	Parent			Guarantor			Non-Guarantor						W&T
	Company			Subsidiaries			Adjustments			Eliminations			Offshore, Inc.
	(In thousands)
Assets
Current assets:
Cash and cash equivalents	$	129,440		$	—		$	—		$	—		$	129,440
Receivables:
Oil and natural gas sales		8,109			44,161			(197	)		—			52,073
Joint interest		19,366			—			—			—			19,366
Income taxes		193,594			—			—			(128,354	)		65,240
Total receivables		221,069			44,161			(197	)		(128,354	)		136,679
Prepaid expenses and other assets		16,739			3,700			31			—			20,470
Total current assets		367,248			47,861			(166	)		(128,354	)		286,589

Oil and natural gas properties and other, net		416,539			121,075			48,003			(9,544	)		576,073
Restricted deposits for asset retirement obligations		26,072			—			—			—			26,072
Other assets		607,463			544,029			(46,464	)		(1,035,610	)		69,418
Total assets	$	1,417,322		$	712,965		$	1,373		$	(1,173,508	)	$	958,152
Liabilities and Shareholders’ Equity (Deficit)
Current liabilities:
Accounts payable	$	38,445		$	6,457		$	1,562		$	—		$	46,464
Undistributed oil and natural gas proceeds		21,390			1,259			—			—			22,649
Asset retirement obligations		21,663			6,260			—			—			27,923
Current maturities of long-term debt:
Principal		189,829			—			—			—			189,829
Carrying value adjustments		34,917			—			—			—			34,917
Current maturities of long-term debt - carrying value		224,746			—			—			—			224,746
Accrued liabilities		20,523			128,336			—			(128,354	)		20,505
Total current liabilities		326,767			142,312			1,562			(128,354	)		342,287
Long-term debt:
Principal		713,365			—			—			—			713,365
Carrying value adjustments		47,605			—			—			—			47,605
Long term debt, less current portion - carrying value		760,970			—			—			—			760,970

Asset retirement obligations, less current portion		164,010			125,275			12			—			289,297
Other liabilities		663,239			—			—			(590,232	)		73,007
Shareholders’ deficit:
Common stock		1			—			—			—			1
Additional paid-in capital		548,196			704,885			—			(704,885	)		548,196
Retained earnings (deficit)		(1,021,694	)		(259,507	)		(201	)		249,963			(1,031,439	)
Treasury stock, at cost		(24,167	)		—			—			—			(24,167	)
Total shareholders’ equity (deficit)		(497,664	)		445,378			(201	)		(454,922	)		(507,409	)
Total liabilities and shareholders’ equity (deficit)	$	1,417,322		$	712,965		$	1,373		$	(1,173,508	)	$	958,152

Condensed Consolidating Balance Sheet as of December 31, 2017

										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
Current maturities of long-term debt - carrying value		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

Condensed Consolidating Statement of Operations

Condensed Consolidating Statement of Operations for the Three Months Ended June 30, 2018

												Consolidated
	Parent			Guarantor		Non-Guarantor						W&T
	Company			Subsidiaries		Adjustments			Eliminations			Offshore, Inc.
	(In thousands)

Revenues	$	77,270		$	71,873	$	469		$	—		$	149,612
Operating costs and expenses:
Lease operating expenses		21,617			13,929		36			—			35,582
Production taxes		439			—		—			—			439
Gathering and transportation		2,834			2,084		10			—			4,928
Depreciation, depletion, amortization and accretion		19,954			16,743		164			2,896			39,757
General and administrative expenses		6,854			7,166		200			—			14,220
Derivative gain		6,219			—		—			—			6,219
Total costs and expenses		57,917			39,922		410			2,896			101,145
Operating income		19,353			31,951		59			(2,896	)		48,467
Earnings of affiliates		24,502			—		—			(24,502	)		—
Interest expense		12,147			—		—			—			12,147
Other (income) expense, net		(121	)		—		246			—			125
Income before income tax expense (benefit)		31,829			31,951		(187	)		(27,398	)		36,195
Income tax expense (benefit)		(7,337	)		7,449		—			—			112
Net income	$	39,166		$	24,502	$	(187	)	$	(27,398	)	$	36,083

Condensed Consolidating Statement of Operations for the Six Months Ended June 30, 2018

												Consolidated
	Parent			Guarantor		Non-Guarantor						W&T
	Company			Subsidiaries		Adjustments			Eliminations			Offshore, Inc.
	(In thousands)

Revenues	$	141,056		$	142,300	$	469		$	—		$	283,825
Operating costs and expenses:
Lease operating expenses		41,377			31,012		36			—			72,425
Production taxes		894			—		—			—			894
Gathering and transportation		5,537			4,438		10			—			9,985
Depreciation, depletion, amortization and accretion		39,374			32,557		164			5,743			77,838
General and administrative expenses		14,057			14,990		211			—			29,258
Derivative gain		6,219			—		—			—			6,219
Total costs and expenses		107,458			82,997		421			5,743			196,619
Operating income		33,598			59,303		48			(5,743	)		87,206
Earnings of affiliates		46,669			—		—			(46,669	)		—
Interest expense		23,470			—		—			—			23,470
Other (income) expense, net		(457	)		—		249			—			(208	)
Income before income tax expense (benefit)		57,254			59,303		(201	)		(52,412	)		63,944
Income tax expense (benefit)		(12,413	)		12,634		—			—			221
Net income	$	69,667		$	46,669	$	(201	)	$	(52,412	)	$	63,723

Condensed Consolidating Statement of Operations for the Three Months Ended June 30, 2017

									Consolidated
	Parent			Guarantor					W&T
	Company			Subsidiaries		Eliminations			Offshore, Inc.
	(In thousands)
Revenues	$	57,417		$	65,906	$	—		$	123,323
Operating costs and expenses:
Lease operating expenses		17,325			14,194		—			31,519
Production taxes		449			—		—			449
Gathering and transportation		2,578			2,740		—			5,318
Depreciation, depletion, amortization and accretion		21,433			18,143		788			40,364
General and administrative expenses		7,662			8,812		—			16,474
Derivative gain		(3,689	)		—		—			(3,689	)
Total costs and expenses		45,758			43,889		788			90,435
Operating income		11,659			22,017		(788	)		32,888
Earnings of affiliates		18,941			—		(18,941	)		—
Interest expense		11,436			—		—			11,436
Gain on exchange of debt		8,056			—		—			8,056
Other expense, net		5,168			—		—			5,168
Income before income tax expense (benefit)		22,052			22,017		(19,729	)		24,340
Income tax expense (benefit)		(12,051	)		3,076		—			(8,975	)
Net income	$	34,103		$	18,941	$	(19,729	)	$	33,315

Condensed Consolidating Statement of Operations for the Six Months Ended June 30, 2017

									Consolidated
	Parent			Guarantor					W&T
	Company			Subsidiaries		Eliminations			Offshore, Inc.
	(In thousands)
Revenues	$	111,124		$	136,592	$	—		$	247,716
Operating costs and expenses:
Lease operating expenses		41,027			30,656		—			71,683
Production taxes		964			—		—			964
Gathering and transportation		5,144			6,383		—			11,527
Depreciation, depletion, amortization and accretion		40,587			38,248		1,519			80,354
General and administrative expenses		13,438			16,310		—			29,748
Derivative gain		(7,644	)		—		—			(7,644	)
Total costs and expenses		93,516			91,597		1,519			186,632
Operating income		17,608			44,995		(1,519	)		61,084
Earnings of affiliates		36,468			—		(36,468	)		—
Interest expense		22,730			—		—			22,730
Gain on exchange of debt		7,811			—		—			7,811
Other expense, net		5,114			—		—			5,114
Income before income tax expense (benefit)		34,043			44,995		(37,987	)		41,051
Income tax expense (benefit)		(25,090	)		8,527		—			(16,563	)
Net loss	$	59,133		$	36,468	$	(37,987	)	$	57,614

Condensed Consolidating Statement of Cash Flows

Condensed Consolidating Statement of Cash Flows for the Six Months Ended June 30, 2018

													Consolidated
													W&T
	Parent			Guarantor			Non-Guarantor						Offshore,
	Company			Subsidiaries			Adjustments			Eliminations			Inc.
	(In thousands)
Operating activities:
Net income	$	69,667		$	46,669		$	(201	)	$	(52,412	)	$	63,723
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, depletion, amortization and accretion		39,374			32,557			164			5,743			77,838
Amortization of debt items and other items		1,126			—			—			—			1,126
Share-based compensation		2,434			—			—			—			2,434
Derivative loss		6,219			—			—			—			6,219
Cash receipts on derivative settlements, net		(1,149	)		—			—			—			(1,149	)
Deferred income taxes		221			—			—			—			221
Earnings of affiliates		(46,669	)		—			—			46,669			—
Changes in operating assets and liabilities:											—
Oil and natural gas receivables		(2,444	)		(4,383	)		197			—			(6,630	)
Joint interest receivables		251			—			—			—			251
Income taxes		(12,772	)		12,634			—			—			(138	)
Prepaid expenses and other assets		(37,025	)		(72,465	)		4,445			90,722			(14,323	)
Asset retirement obligation settlements		(7,725	)		(4,399	)		—			—			(12,124	)
Accounts payable, accrued liabilities and other		80,147			8,055			264			(90,722	)		(2,256	)
Net cash provided by operating activities		91,655			18,668			4,869			—			115,192
Investing activities:
Investment in oil and natural gas properties and equipment		(15,638	)		(9,999	)		(6,166	)		—			(31,803	)
Changes in operating assets and liabilities associated with investing activities		(21,958	)		(8,669	)		1,297			—			(29,330	)
Acquisition of property interest		(16,617	)		—			—			—			(16,617	)
Net cash used in investing activities		(54,213	)		(18,668	)		(4,869	)		—			(77,750	)
Financing activities:
Payment of interest on 1.5 Lien Term Loan		(4,114	)		—			—			—			(4,114	)
Payment of interest on 2nd Lien PIK Toggle Notes		(2,920	)		—			—			—			(2,920	)
Other		(26	)		—			—			—			(26	)
Net cash used in financing activities		(7,060	)		—			—			—			(7,060	)
Increase in cash and cash equivalents		30,382			—			—			—			30,382
Cash and cash equivalents, beginning of period		99,058			—			—			—			99,058
Cash and cash equivalents, end of period	$	129,440		$	—		$	—		$	—		$	129,440

Condensed Consolidating Statement of Cash Flows for the Six Months Ended June 30, 2017

										Consolidated
										W&T
	Parent			Guarantor						Offshore,
	Company			Subsidiaries			Eliminations			Inc.
	(In thousands)
Operating activities:
Net income	$	59,133		$	36,468		$	(37,987	)	$	57,614
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, depletion, amortization and accretion		40,587			38,248			1,519			80,354
Gain on exchange of debt		(7,811	)		—			—			(7,811	)
Amortization of debt items		836			—			—			836
Share-based compensation		3,466			—			—			3,466
Derivative gain		(7,644	)		—			—			(7,644	)
Cash receipts on derivative settlements		2,208			—			—			2,208
Deferred income taxes		212			—			—			212
Earnings of affiliates		(36,468	)		—			36,468			—
Changes in operating assets and liabilities:
Oil and natural gas receivables		(1,095	)		4,770			—			3,675
Joint interest receivables		1,965			—			—			1,965
Insurance reimbursements		30,100			—			—			30,100
Income taxes		(25,487	)		8,527			—			(16,960	)
Prepaid expenses and other assets		(3,165	)		(74,591	)		74,181			(3,575	)
Escrow deposit - Apache lawsuit		(49,500	)		—			—			(49,500	)
Asset retirement obligations		(25,044	)		(10,977	)		—			(36,021	)
Accounts payable, accrued liabilities and other		81,785			(938	)		(74,181	)		6,666
Net cash provided by operating activities		64,078			1,507			—			65,585
Investing activities:
Investment in oil and natural gas properties and equipment		(41,854	)		(1,946	)		—			(43,800	)
Changes in operating assets and liabilities associated with investing activities		(1,266	)		439			—			(827	)
Purchases of furniture, fixtures and other		(853	)		—			—			(853	)
Net cash used in investing activities		(43,973	)		(1,507	)		—			(45,480	)
Financing activities:
Payment of interest on 1.5 Lien Term Loan		(4,113	)		—			—			(4,113	)
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	)
Other		(372	)		—			—			(372	)
Net cash used in financing activities		(18,021	)		—			—			(18,021	)
Increase in cash, cash equivalents and restricted cash		2,084			—			—			2,084
Cash and cash equivalents, beginning of period		70,236			—			—			70,236
Cash and cash equivalents, end of period	$	72,320		$	—		$	—		$	72,320