9. Restricted Deposits for ARO

Restricted deposits as of December 31, 2021 and 2020 consisted of funds escrowed for collateral related to the future plugging and abandonment obligations of certain oil and natural gas properties.

Pursuant to the Purchase and Sale Agreement with Total E&P USA Inc. (“Total E&P”), security for future plugging and abandonment of certain oil and natural gas properties is required either through surety bonds or payments to an escrow account or a combination thereof. Monthly payments are made to an escrow account and these funds are returned to us once verification is made that the security amount requirements have been met. See Note 16 - Commitments for potential future security requirements.

During the year ended December 31, 2020, W&T received $13.9 million of cash as a restricted deposit to be used exclusively for payment of certain asset retirement obligations related to properties sold by W&T to Black Elk Energy Offshore Operations, LLC (“Black Elk”) in October 2009 in connection with the liquidation of Black Elk under Chapter 11 of the U.S. Bankruptcy Code. The cash was retained in an escrow account and recorded within Restricted Deposits for asset retirement obligations on the Consolidated Balance Sheet as of December 31, 2020. As of December 31, 2020, $11.1 million was recorded in Other liabilities as our estimate of the additional asset retirement obligations to be funded from the restricted deposit account. On December 29, 2021, the United States Bankruptcy Court for the Southern District of Texas sent the Company notice that we are able to retain the remaining funds and that those funds were no longer subject to any restrictions, effectively releasing the cash from escrow. Accordingly, we removed the remaining liability of $11.1 million and transferred the related cash previously retained in escrow to cash. We recorded the $11.1 million in Other (income) expense during the year ended December 31, 2021.

​