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

Quarterly report pursuant to Section 13 or 15(d)

BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES (Policies)

BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES (Policies)

3 Months Ended

Mar. 31, 2022

Basis of Accounting, Policy [Policy Text Block]

Basis of Presentation

The accompanying unaudited Condensed Consolidated Financial Statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim periods and the appropriate rules and regulations of the Securities and Exchange Commission (“SEC”). Accordingly, the condensed consolidated financial statements do not include all of the information and footnote disclosures required by GAAP for complete financial statements for annual periods. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included.

Operating results for interim periods are not necessarily indicative of the results that may be expected for the entire year. These unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes included in the Company’s 2021 Annual Report on Form 10-K (the “2021 Annual Report”).

Reclassification, Comparability Adjustment [Policy Text Block]

Reclassification – For presentation purposes, as of March 31, 2021, Derivative loss has been reclassified from “Operating income” on the Condensed Consolidated Statement of Operations in order to conform to the current period presentation. Such reclassification had no effect on our results of operations, financial position or cash flows.

For presentation purposes, as of March 31, 2021, Gathering and transportation and Production taxes have been combined into one line item within “Operating income” on the Condensed Consolidated Statement of Operations in order to conform to the current period presentation. Such reclassification had no effect on our results of operations, financial position or cash flows.

Use of Estimates, Policy [Policy Text Block]

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, the reported amounts of revenues and expenses during the reporting periods and the reported amounts of proved oil and natural gas reserves. Actual results could differ from those estimates.

Revenue from Contract with Customer and Accounts Receivable [Policy Text Block]

Revenue and Accounts Receivable – Revenue from the sale of crude oil, natural gas liquids (“NGLs”) and natural gas is recognized when performance obligations under the terms of the respective contracts are satisfied; this generally occurs with the delivery of crude oil, NGLs and natural gas to the customer. Revenue is concentrated with certain major oil and gas companies. There have been no significant changes to the Company’s contracts with customers during the three months ended March 31, 2022.

The Company also has receivables related to joint interest arrangements primarily with mid-size oil and gas companies with a substantial majority of the net receivable balance concentrated in less than ten companies. A loss methodology is used to develop the allowance for credit losses on material receivables to estimate the net amount to be collected. The loss methodology uses historical data, current market conditions and forecasts of future economic conditions. Our maximum exposure at any time would be the receivable balance. Joint interest receivables on the Condensed Consolidated Balance Sheet are presented net of allowance for credit losses of $10.9 million and $10.0 million as of March 31, 2022 and December 31, 2021, respectively.

Employee Retention Credit [Policy Text Block]

Employee Retention Credit – Under the Consolidated Appropriations Act of 2021 passed by the United States Congress and signed by the President on December 27, 2020, the Company recognized a $2.1 million employee retention credit during the three months ended March 31, 2021 which is included as a credit to General and administrative expenses in the Condensed Consolidated Statement of Operations. No such credit has been recognized during the three months ended March 31, 2022.

Prepaid Expenses and Other Assets [Policy Text Block]

Prepaid Expenses and Other Assets – The amounts recorded are expected to be realized within one year and the major categories are presented in the following table (in thousands):


	March 31, 2022		December 31, 2021
Derivatives⁽¹⁾(Note 8)	$	77,658	$	21,086
Unamortized insurance/bond premiums		7,291		5,400
Prepaid deposits related to royalties		9,189		8,441
Prepayment to vendors		4,461		4,522
Prepayments to joint interest partners		2,653		2,808
Debt issue costs		1,763		1,065
Other		46		57
Prepaid expenses and other assets	$	103,061	$	43,379

⁽¹⁾	^{Includes closed contracts which have not yet settled.}

Property, Plant and Equipment, Policy [Policy Text Block]

Oil and Natural Gas Properties and Other, Net – Oil and natural gas properties and equipment are recorded at cost using the full cost method. There were no amounts excluded from amortization as of the dates presented in the following table (in thousands):


	March 31, 2022		December 31, 2021
Oil and natural gas properties and equipment	$	8,727,521	$	8,636,408
Furniture, fixtures and other		20,845		20,844
Total property and equipment		8,748,366		8,657,252
Less: Accumulated depreciation, depletion, amortization and impairment		8,016,674		7,992,000
Oil and natural gas properties and other, net	$	731,692	$	665,252

Other Noncurrent Assets [Policy Text Block]

Other Assets (long-term) – The major categories are presented in the following table (in thousands):


	March 31, 2022		December 31, 2021
Right-of-Use assets	$	10,604	$	10,602
Investment in White Cap, LLC		2,740		2,533
Proportional consolidation of Monza (Note 6)		(531)		2,511
Derivatives ⁽¹⁾ (Note 8)		49,550		34,435
Other		1,029		1,091
Total other assets (long-term)	$	63,392	$	51,172

Accrued Liabilities Policy [Policy Text Block]

Accrued Liabilities – The major categories are presented in the following table (in thousands):


	March 31, 2022		December 31, 2021
Accrued interest	$	25,405	$	10,154
Accrued salaries/payroll taxes/benefits		3,997		9,617
Litigation accruals		500		646
Lease liability		1,409		1,115
Derivatives ⁽¹⁾(Note 8)		177,298		81,456
Other		1,236		3,152
Total accrued liabilities	$	209,845	$	106,140

Other Noncurrent Liabilities [Policy Text Block]

Other Liabilities (long-term) – The major categories are presented in the following table (in thousands):


	March 31, 2022		December 31, 2021
Dispute related to royalty deductions	$	4,937	$	5,177
Derivatives (Note 8)		63,318		37,989
Lease liability		10,936		11,227
Other		1,147		996
Total other liabilities (long-term)	$	80,338	$	55,389

At The Market Equity Offering Policy, [Policy Text Block]

At-the-Market Equity Offering – On March 17, 2022, the Company filed a prospectus supplement related to the issuance and sale of up to $100,000,000 of shares of our common stock under our "at-the-market" equity offering program (the "ATM Program"). The designated sales agents will be entitled to a placement fee of up to 3.0% of the gross sales price per share sold. During the three months ended March 31, 2022, we did not sell any shares in connection with the ATM Program.