W&T Offshore Announces Third Quarter 2018 Results and Fourth Quarter 2018 Guidance

HOUSTON, Oct. 31, 2018 /PRNewswire/ -- W&T Offshore, Inc. (NYSE: WTI) today reported its third quarter 2018 operational and financial results, fourth quarter and full year 2018 production and expense guidance. Some of the key highlights included:

    --  On October 18, 2018, W&T closed on a major debt refinancing, which
        reduced total debt principal outstanding from $903 million to $625
        million plus $61 million drawn on a revolving bank credit facility,
        simplified the capital structure, and extended the maturities of our
        revolving bank credit facility and high yield debt to 2022 and 2023,
        respectively, while maintaining strong liquidity in excess of $200
        million.
    --  Net income for the third quarter of 2018 was $46.3 million, or $0.32 per
        share compared to a net loss of $1.3 million or $0.01 loss per share in
        the third quarter of 2017. Net income for the third quarter of 2018
        included $0.1 million of income tax expense compared to $5.5 million for
        the third quarter of 2017. Excluding special items, adjusted net income
        for the third quarter of 2018 was $44.1 million and earnings were $0.30
        per share.
    --  Revenues for the third quarter of 2018 were $153.5 million, up $43.2
        million, or 39% compared to the third quarter of 2017. Oil and natural
        gas liquids ("NGLs") sales made up 84% of revenues, compared to 77% in
        the third quarter of 2017. Our realized crude oil price was $69.57 per
        barrel, up 52% from the third quarter 2017.
    --  Operating income for the third quarter of 2018 was $ 57.1 million, an
        increase of 264% or $41.4 million, over the third quarter of 2017.
    --  Production for the third quarter of 2018 averaged 36,508 barrels of oil
        equivalent ("Boe") per day (or 3.4 million Boe for the quarter), 61% of
        which was oil and NGLs. Production was flat with the third quarter of
        2017 on lower capital expenditures.
    --  Cash flow from operating activities for the first nine months of 2018
        was $294.9 million, increasing over 126% from the first nine months of
        2017.
    --  Adjusted EBITDA for the third quarter of 2018 was $92.2 million, up
        $35.0 million, or 61% compared to the third quarter of 2017. Our
        Adjusted EBITDA margin was 60% for the third quarter of 2018, up from
        52% in third quarter of 2017. For the first nine months of 2018, our
        Adjusted EBITDA was $262.7 million, up $67.1 million or 34% over the
        same period in 2017. (See definitions and reconciliations of non-GAAP
        measures to GAAP measures at the end of this news release.)
    --  On September 28, 2018, W&T closed on the sale of non-core overriding
        royalty interests in the Permian Basin for net proceeds received to date
        of $50.5 million.
    --  Since the end of the second quarter of 2018, W&T participated in the
        drilling of three successful wells.

Tracy W. Krohn, W&T Offshore's Chairman and Chief Executive Officer, stated, "We are very pleased to have completely refinanced our debt, which included the successful and over-subscribed issuance of $625 million of new 9.75% senior second lien notes due November 2023 and a newly established revolving bank credit facility with a borrowing base of $250 million. We dramatically simplified our debt structure and reduced total debt principal outstanding from $903 million to $625 million plus $61 million currently drawn on the revolving bank credit facility. Our current liquidity is over $200 million, and with continued strong positive cash flow, we anticipate exiting 2018 with a much-improved balance sheet and the financial strength to pursue meaningful growth opportunities. W&T has a long history of completing acquisitions of producing assets in the Gulf of Mexico with upside potential and a demonstrated track record for significantly enhancing the value of those assets while boosting cash flow. We believe that market conditions in the Gulf are currently favorable for acquisitions and with our improved financial liquidity, we are very well positioned to benefit."

"Our continued drilling success and ability to put new projects online quickly in a positive commodity price environment has allowed us to significantly increase our cash flow. Since the end of the second quarter we drilled three more successful wells that are adding reserves and production. At the Mahogany field, our newly drilled A-19 well found high quality net pay in multiple sands. The first completion in the A-19 well will be in the 'T' sand. The 'T' sand was found up-dip from known oil which we believe further demonstrates that Mahogany is a world class asset. Additionally, we drilled another successful well at the Ewing Bank 910 field with an exploration discovery that also exceeded our pre-drill estimates. The ST 320 A-2 exploratory well logged approximately 163 vertical feet of pay sands. Both of these wells are currently being completed and are expected to be on production before year-end 2018. We will then continue our drilling programs in both of these fields. At our Virgo field we drilled the A-12 well, which found 60 feet of net vertical pay sands is in final stage of completion activity and is expected to be on production in November. The Virgo field rig is now drilling the A-13 well, which assuming success, would add production in early 2019. The A-12 and A-13 wells are part of the Monza Drilling Joint Venture," concluded Mr. Krohn.

Production, Prices and Revenues: Production for the third quarter of 2018 was 3.4 million Boe, flat with the third quarter of 2017. Third quarter 2018 production was comprised of 1.7 million barrels of oil, 0.3 million barrels of NGLs and 7.9 billion cubic feet ("Bcf") of natural gas. Oil and NGLs production comprised 61% of total production in the third quarter of 2018 compared to 60% of total production in the third quarter of 2017.

Production for the third quarter of 2018 exceeded the mid-point of the production guidance and was partially driven by less storm outage than was projected for the period.

Production increases over the prior year period primarily came from our newly acquired 9.375% non-operated working interest in the Heidelberg field and our Ship Shoal 300 field (with the completion of the SS 300 B-5ST in November 2017). These gains were offset by production decreases primarily due to natural production declines.

For the third quarter of 2018, our realized crude oil sales price was $69.57 per barrel (a 52% increase over the third quarter of 2017), our realized NGL sales price was $31.70 per barrel and our realized natural gas sales price was $2.85 per Mcf. Our combined average realized sales price was $45.32 per Boe, which represents a 40% increase over the $32.43 per Boe sales price that we realized in the third quarter of 2017.

Revenues for the third quarter of 2018 increased 39% to $153.5 million compared to $110.3 million in the third quarter of 2017 as a result of the 40% increase in our realized commodity sales price per Boe.

Lease Operating Expenses: Lease operating expense, which includes base lease operating expenses, insurance premiums, workovers and facilities maintenance, was $37.4 million in the third quarter of 2018 compared to $35.1 million in the third quarter of 2017. The increase was primarily due to higher workover expenses. On a component basis, base lease operating expenses were $29.6 million, insurance premiums were $3.1 million, workovers were $1.2 million and facilities maintenance was $3.5 million. Facilities maintenance tends to be seasonal and is typically lower during the winter months.

Depreciation, depletion, amortization and accretion ("DD&A"): DD&A, including accretion for asset retirement obligations, was $11.01 per Boe of production for the third quarter of 2018 compared to $10.88 per Boe for the third quarter of 2017.

General and Administrative Expenses ("G&A"): G&A was $16.0 million for the third quarter of 2018, an increase of 2% compared to $15.6 million in the third quarter of 2017. The increase was primarily due to an accrual for an executive's separation settlement, an increase in medical claims and the termination of an office lease.

Derivative (gain) loss: In the third quarter of 2018, we recorded a net gain of $0.3 million on our outstanding crude oil commodity derivative contracts. This compared to a net loss of $2.9 million in the third quarter of 2017 on the derivative contracts that expired at the end of 2017. A list of our derivative positions may be found on our website at www.wtoffshore.com in the investor relations section under "other reports" tab.

Income Tax: Income tax expense was $0.1 million in the third quarter of 2018 compared to income tax expense of $5.5 million in the third quarter of 2017. We are not forecasting any current income tax expense and our deferred expense is fully offset by a valuation allowance. Consequently, our effective tax rate is not meaningful. The balance sheet at September 30, 2018, reflects current income tax receivables of $65.2 million, which relates to our net operating loss claims for plug and abandonment work that qualifies as specified liability losses for tax purposes, allowing net operating losses to be carried back to prior years.

Net Income & Earnings Per Share: Our net income for the third quarter of 2018 was $46.3 million, or $0.32 per common share. Excluding special items, our adjusted net income was $44.1 million, or $0.30 per share. For the third quarter of 2017, our net loss was $1.3 million, or $0.01 loss per share; excluding special items, adjusted net income for the third quarter of 2017 was $6.0 million, or $0.04 per share. (See the "Reconciliation of Net Income (loss) to Net Income Excluding Special Items" and related earnings per share, excluding special items in the table under "Non-GAAP Information" at the end of this news release for a description of the special items.)

Cash Flow and Adjusted EBITDA: Net cash provided by operating activities for the nine months ended September 30, 2018 was $294.9 million, an increase of 126% compared to $130.3 million for the nine months ended September 30, 2017. The increase is primarily due to higher realized prices for crude oil and NGLs, lower spending on plug and abandonment activities and $27.0 million in cash advance from joint venture partners.

Adjusted EBITDA for the third quarter of 2018 was $92.2 million and Adjusted EBITDA margin was 60%, compared to Adjusted EBITDA of $57.2 million and Adjusted EBITDA margin of 52% for the third quarter of 2017. Adjusted EBITDA and Adjusted EBITDA margin are non-GAAP measures and are defined in the "Non-GAAP Information" section at the end of this news release.

Liquidity: On October 18, 2018, we closed on a major debt refinancing, which reduced total debt principal outstanding from $903 million to $625 million, simplified the capital structure and extended the maturities of our revolving credit facility and high yield debt to 2022 and 2023, respectively, while maintaining strong liquidity.

We issued $625 million of new 9.75% senior second lien notes due November 2023. The net proceeds from the issuance, along with cash on hand and borrowings on the revolving credit facility are being used to retire all of the Company's previously outstanding notes.

Concurrently, the Company entered into a Sixth Amended and Restated Credit Agreement which provides for a revolving credit and letter of credit facility with an initial borrowing base of $250 million. The revolving credit facility will mature on October 18, 2022. Currently, we have $61 million borrowings on the revolving bank credit facility and $9.7 million of letters of credit outstanding.

Total liquidity on October 18, 2018 was $220.1 million, consisting of an unrestricted cash balance of $40.8 million and $179.3 million of availability under our revolving bank credit facility.

Capital Expenditures: Our capital expenditures for oil and gas properties on an accrual basis for the nine months of 2018 were $59.2 million, compared to $79.1 million for the 2017 period. In addition, we acquired a 9.375% interest in the Heidelberg field for $16.8 million. The 2018 period reflects a net reimbursement from Monza Energy LLC of approximately $20 million for W&T's costs associated with wells drilled or were being drilled prior to the partial interests being contributed by W&T to Monza. During the nine months ended September 30, 2018, we completed the SS 359 A-17 well, drilled and completed the SS 359 A-5 ST well, and drilled the SS 359 A-19 well at Mahogany field; drilled and completed the A-10 ST well and the A-12 well at Viosca Knoll 823 ("Virgo"); and drilled the ST 320 A-2 well at Ewing Bank 910 field. At September 30, 2018 there were two wells being completed and one well being drilled.

OPERATIONS UPDATE

We are currently operating or participating in three active drilling programs in the Gulf of Mexico, as described below.

Ship Shoal 349 "Mahogany" (operated, shelf, 100% working interest): The SS 359 A-19 well was drilled to total depth and found high quality net pay in multiple field pay sands with better than expected reservoir characteristics. Currently, the well is being completed and should be on production before year-end 2018. Following the A-19 well completion, the platform rig will drill the A-20 development well targeting the T-Sand.

Ewing Bank 910 Field Area (non-operated wells, deepwater, in JV Drilling Program): The ST 320 A-2 exploratory well was successfully drilled from the South Timbalier 311 platform that is part of the Ewing Bank 910 field. The well logged approximately 163 vertical feet of net pay, which also exceeded pre-drill estimates, and is currently being completed. We expect to have the well on production via existing infrastructure before year-end 2018. W&T has a 10.8% interest in the ST 320 A-2 well before certain thresholds are met.

Following the completion of the ST 320 A-2 well, the rig will spud the ST 320 A-3 well, another low-risk exploration opportunity in the Ewing Bank 910 field. We believe stratigraphic information from a high quality thick Miocene sand that was penetrated in another offset well has reduced the risk on the ST 320 A-3 prospect. W&T has a 10.8% interest in the ST 320 A-3 well before certain thresholds are met.

Viosca Knoll 823 "Virgo" (operated, shelf, in JV Drilling Program): The Virgo field platform rig drilled and completed the A-12 well in block VK 779, which is currently on flow-back. The well found 60 feet of net vertical pay. The rig has commenced drilling the A-13 well, which is expected to reach total depth in November or December of 2018 with production expected to commence by year-end 2018 or early 2019. W&T has a 16% interest in the A-12 and a 23.9% interest in the A-13 well before certain thresholds are met.

Well Recompletions and Workovers: During the third quarter of 2018 we performed four recompletions that added approximately 1,673 Boe per day of initial production and six workovers that added approximately 265 Boe per day of initial production.

Fourth Quarter and Full Year 2018 Production and Expense Guidance

Our guidance for the fourth quarter and full year 2018 in the table below represents the Company's best estimate of the range of likely future results. Guidance could be affected by the factors described below in "Forward-Looking Statements".


         
            
              Production        
       
         Fourth Quarter                Prior Full 
       
            Revised Full
                                                                                Year                      Year
                                                                     2018                                                2018
                                                                                             2018

    ---




       Oil and NGL's (MMBbls)                    
       1.9 - 2.1            
          7.8 - 8.6          
          7.9 - 8.1





       Natural Gas (Bcf)                         
       7.4 - 8.2           
          32.2 - 35.6        
          32.0 - 32.8





       Total (Bcfe)                             
       18.8 - 20.7          
          79.0 - 87.4        
          79.4 - 81.4





       Total (MMBoe)                             
       3.1 - 3.5           
          13.2 - 14.6        
          13.2 - 13.6




                         Operating Expenses    
       
         Fourth Quarter                Prior Full 
       
            Revised Full
                               ($ in millions)                       2018        Year                      Year
                                                                                             2018                        2018

    ---




       Lease operating expenses                       
            $38 - $42    
            $159 - $176       
            $143 - $158




        Gathering, transportation &



       production taxes                                 
            $6 - $7      
            $23 - $26         
            $22 - $25





       General and administrative                     
            $14 - $15      
            $56 - $62          
            $57 -$63





       Income tax rate benefit                                                                0%                         0%

Conference Call Information: W&T will hold a conference call to discuss our financial and operational results on Thursday, November 1, 2018, at 10:00 a.m. Eastern Time (9:00 a.m. Central Time). To participate, dial 412-902-0030 a few minutes before the call begins. The call will also be broadcast live over the Internet from the Company's website at www.wtoffshore.com. A replay of the conference call will be available after the call through November 9, 2018 and may be accessed by calling 201-612-7415 and using the passcode 13683861#.

About W&T Offshore

W&T Offshore, Inc. is an independent oil and natural gas producer with operations offshore in the Gulf of Mexico and has grown through acquisitions, exploration and development. The Company currently has working interests in 48 producing fields in federal and state waters and has under lease approximately 650,000 gross acres, including approximately 440,000 gross acres on the Gulf of Mexico Shelf and approximately 210,000 gross acres in the deepwater. A majority of the Company's daily production is derived from wells it operates. For more information on W&T Offshore, please visit the Company's website at www.wtoffshore.com.

Forward-Looking and Cautionary Statements

This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements reflect our current views with respect to future events, based on what we believe are reasonable assumptions. No assurance can be given, however, that these events will occur. These statements are subject to risks and uncertainties that could cause actual results to differ materially including, among other things, market conditions, oil and gas price volatility, uncertainties inherent in oil and gas production operations and estimating reserves, unexpected future capital expenditures, competition, the success of our risk management activities, governmental regulations, uncertainties and other factors discussed in W&T Offshore's Annual Report on Form 10-K for the year ended December 31, 2017 and subsequent Form 10-Q reports found at www.sec.gov or at our website at www.wtoffshore.com under the Investor Relations section. Investors are urged to consider closely the disclosures and risk factors in these reports.


                                                                            
              
                W&T OFFSHORE, INC. AND SUBSIDIARIES


                                                                    
              
                Condensed Consolidated Statements of Income (Loss)


                                                                                        
              
                (Unaudited)




                                                    Three Months Ended                                       Nine Months Ended


                                                    September 30,                                       September 30,



                                       2018                                           2017                                     2018                        2017



                                     
          
             (In thousands, except per share data)







     Revenues:



     Oil                                     $
              119,482                                               $
              78,055              $
         333,406  $
        248,648



     NGLs                                                 10,087                                                            6,605                      28,481         22,401



     Natural gas                                          22,641                                                           24,113                      71,485         83,129



     Other                                                 1,249                                                            1,508                       3,912          3,819




     Total revenues                                      153,459                                                          110,281                     437,284        357,997





      Operating costs and expenses:


      Lease operating expenses                             37,430                                                           35,134                     109,855        106,817


      Gathering, transportation
       costs and production taxes                           6,211                                                            4,448                      17,090         16,939


      Depreciation, depletion,
       amortization and accretion                          36,969                                                           36,489                     114,807        116,843


      General and administrative
       expenses                                            15,990                                                           15,631                      45,248         45,379


      Derivative (gain) loss                                (288)                                                           2,879                       5,931        (4,765)



      Total costs and expenses                             96,312                                                           94,581                     292,931        281,213




     Operating income                                     57,147                                                           15,700                     144,353         76,784





     Interest expense                                     11,630                                                           11,554                      35,100         34,284


      Gain on exchange of debt                                                                                                                                       7,811


      Other (income) expense, net                           (885)                                                            (41)                    (1,093)         5,073



      Income before income tax
       expense (benefit)                                   46,402                                                            4,187                     110,346         45,238


      Income tax expense (benefit)                            142                                                            5,484                         363       (11,079)




     Net income (loss)                        $
              46,260                                              $
              (1,297)             $
         109,983   $
        56,317







      Basic and diluted earnings
       (loss) per common share                   $
              0.32                                               $
              (0.01)                $
         0.76     $
        0.39




      Weighted average common shares
       outstanding                                        138,972                                                          137,575                     138,917        137,547


                                                                    
       
            W&T OFFSHORE, INC. AND SUBSIDIARIES


                                                                      
        
              Condensed Operating Data


                                                                         
          
                (Unaudited)




                                                 Three Months Ended


                                       
        
        September 30,                                                               
     
     Variance
                                                                                                                                          Percentage(2)



                                         2018                              2017                                      Variance




     Net sales volumes:



     Oil  (MBbls)                                        1,717                                                        1,700                              17   1.0%



     NGL (MBbls)                                           318                                                          299                              19   6.4%



     Oil and NGLs (MBbls)                                2,036                                                        1,999                              37   1.9%



     Natural gas (MMcf)                                  7,939                                                        8,130                           (191) -2.3%


      Total oil and natural gas (MBoe)
       (1)                                               3,359                                                        3,354                               5   0.1%


      Total oil and natural gas
       (MMcfe) (1)                                       20,152                                                       20,125                              27   0.1%




      Average daily equivalent sales
       (Boe/d)                                             36.5                                                         36.5                             0.0   0.1%


      Average daily equivalent sales
       (MMcfe/d)                                          219.0                                                        218.8                             0.3   0.1%




      Average realized sales prices:



     Oil ($/Bbl)                             $
              69.57                                               $
           45.92               $
              23.65  51.5%



     NGLs ($/Bbl)                                        31.70                                                        22.07                            9.63  43.6%



     Oil and NGLs ($/Bbl)                                63.65                                                        42.35                           21.30  50.3%



     Natural gas ($/Mcf)                                  2.85                                                         2.97                          (0.12) -4.0%


      Barrel of oil equivalent ($/Boe)                    45.32                                                        32.43                           12.89  39.7%


      Natural gas equivalent ($/Mcfe)                      7.55                                                         5.40                            2.15  39.8%




      Average per Boe ($/Boe):


      Lease operating expenses                $
              11.14                                               $
           10.48                $
              0.66   6.3%


      Gathering and transportation
       costs and production taxes                          1.85                                                         1.33                            0.52  39.1%


      Depreciation, depletion,
       amortization and accretion                         11.01                                                        10.88                            0.13   1.2%


      General and administrative
       expenses                                            4.76                                                         4.66                            0.10   2.1%




      Average per Mcfe ($/Mcfe):


      Lease operating expenses                 $
              1.86                                                $
           1.75                $
              0.11   6.3%


      Gathering and transportation
       costs and production taxes                          0.31                                                         0.22                            0.09  40.9%


      Depreciation, depletion,
       amortization and accretion                          1.83                                                         1.81                            0.02   1.1%


      General and administrative
       expenses                                            0.79                                                         0.78                            0.01   1.3%

               (1) MMcfe and MBoe are
                determined using the ratio of
                six Mcf of natural gas to one
                Bbl of crude oil, condensate
                or NGLs (totals may not
                compute due to rounding).  The
                conversion ratio does not
                assume price equivalency and
                the price on an equivalent
                basis for oil, NGLs and
                natural gas may differ
                significantly.




               (2) Variance percentages are
                calculated using rounded
                figures and may result in
                slightly different figures for
                comparable data.


                                                                   
       
            W&T OFFSHORE, INC. AND SUBSIDIARIES


                                                                     
        
              Condensed Operating Data


                                                                        
          
                (Unaudited)




                                                 Nine Months Ended


                                       
        
        September 30,                                                              
     
     Variance
                                                                                                                                       Percentage(2)



                                         2018                             2017                                      Variance




     Net sales volumes:



     Oil  (MBbls)                                        5,012                                                       5,428                           (416)  -7.7%



     NGL (MBbls)                                           985                                                       1,024                            (39)  -3.8%



     Oil and NGLs (MBbls)                                5,998                                                       6,451                           (453)  -7.0%



     Natural gas (MMcf)                                 24,648                                                      28,005                         (3,357) -12.0%


      Total oil and natural gas (MBoe)
       (1)                                              10,106                                                      11,119                         (1,013)  -9.1%


      Total oil and natural gas
       (MMcfe) (1)                                       60,633                                                      66,714                         (6,081)  -9.1%




      Average daily equivalent sales
       (Boe/d)                                             37.0                                                        40.7                           (3.7)  -9.1%


      Average daily equivalent sales
       (MMcfe/d)                                          222.1                                                       244.4                          (22.3)  -9.1%




      Average realized sales prices:



     Oil ($/Bbl)                             $
              66.52                                              $
           45.81               $
              20.71   45.2%



     NGLs ($/Bbl)                                        28.91                                                       21.88                            7.03   32.1%



     Oil and NGLs ($/Bbl)                                60.34                                                       42.01                           18.33   43.6%



     Natural gas ($/Mcf)                                  2.90                                                        2.97                          (0.07)  -2.4%


      Barrel of oil equivalent ($/Boe)                    42.88                                                       31.85                           11.03   34.6%


      Natural gas equivalent ($/Mcfe)                      7.15                                                        5.31                            1.84   34.7%




      Average per Boe ($/Boe):


      Lease operating expenses                $
              10.87                                               $
           9.61                $
              1.26   13.1%


      Gathering and transportation
       costs and production taxes                          1.69                                                        1.52                            0.17   11.2%


      Depreciation, depletion,
       amortization and accretion                         11.36                                                       10.51                            0.85    8.1%


      General and administrative
       expenses                                            4.48                                                        4.08                            0.40    9.8%




      Average per Mcfe ($/Mcfe):


      Lease operating expenses                 $
              1.81                                               $
           1.60                $
              0.21   13.1%


      Gathering and transportation
       costs and production taxes                          0.28                                                        0.25                            0.03   12.0%


      Depreciation, depletion,
       amortization and accretion                          1.89                                                        1.75                            0.14    8.0%


      General and administrative
       expenses                                            0.75                                                        0.68                            0.07   10.3%

               (1) MMcfe and MBoe are
                determined using the ratio of
                six Mcf of natural gas to one
                Bbl of crude oil, condensate
                or NGLs (totals may not
                compute due to rounding).  The
                conversion ratio does not
                assume price equivalency and
                the price on an equivalent
                basis for oil, NGLs and
                natural gas may differ
                significantly.




               (2) Variance percentages are
                calculated using rounded
                figures and may result in
                slightly different figures for
                comparable data.


                                                        
           
                W&T OFFSHORE, INC. AND SUBSIDIARIES


                                                       
           
                Condensed Consolidated Balance Sheets


                                                                 
              
                (Unaudited)




                                                               September 30,                                      December 31,


                                                                            2018                                           2017



                                                          (In thousands, except
                                                                     share data)


          
              
                Assets



     Current assets:


      Cash and cash equivalents                                                             $
              339,063                  $
           99,058



     Receivables:


         Oil and natural gas sales                                                                       49,482                           45,443



        Joint interest                                                                                  16,493                           19,754



        Income taxes                                                                                    65,240                           13,006




           Total receivables                                                                           131,215                           78,203


      Prepaid expenses and other assets                                                                  19,699                           13,419




     Total current assets                                                                              489,977                          190,680





     Property and equipment                                                                          8,166,969                        8,123,875


      Less accumulated depreciation,
       depletion and amortization                                                                     7,644,188                        7,544,859



      Net property and equipment                                                                        522,781                          579,016


      Restricted deposits for asset
       retirement obligations                                                                            20,577                           25,394



     Income tax receivable                                                                                                              52,097



     Other assets                                                                                       69,014                           60,393




     Total assets                                                                        $
              1,102,349                 $
           907,580





                      Liabilities and Shareholders'
                                  Deficit



     Current liabilities:



     Accounts payable                                                                       $
              95,502                  $
           79,667


      Undistributed oil and natural gas
       proceeds                                                                                          34,225                           20,129


      Advances from joint interest
       partners                                                                                          31,012                            3,998


      Asset retirement obligations                                                                       30,207                           23,613


      Current maturities of long-term
       debt:



             Principal                                                                                 189,829


              Carrying value adjustments                                                                 34,985                           22,925



                       Current maturities of long-term
                        debt - carrying value                                                           224,814                           22,925



     Accrued liabilities                                                                                31,058                           17,930


      Total current liabilities                                                                         446,818                          168,262



     Long-term debt:



     Principal                                                                                         713,365                          889,790


      Carrying value adjustments                                                                         45,758                           79,337



                Long-term debt, less current
                 portion - carrying value                                                               759,123                          969,127




      Asset retirement obligations, less
       current portion                                                                                  283,009                          276,833



     Other liabilities                                                                                  73,175                           66,866


      Commitments and contingencies



     Shareholders' deficit:


      Common stock, $0.00001 par value;
       200,000,000 shares authorized;
       142,022,971 
              issued and
       139,153,798 outstanding at
       September 30, 2018;  141,960,462
       issued and 
              139,091,289
       outstanding at December 31, 2017

                                                                                                              1                                1


      Additional paid-in capital                                                                        549,569                          545,820


      Retained earnings (deficit)                                                                     (985,179)                     (1,095,162)



     Treasury stock, at cost                                                                          (24,167)                        (24,167)


      Total shareholders' deficit                                                                     (459,776)                       (573,508)



      Total liabilities and
       shareholders' deficit                                                              $
              1,102,349                 $
           907,580


                                           
        
             W&T OFFSHORE, INC. AND SUBSIDIARIES


                                       
         
          Condensed Consolidated Statements of Cash Flows


                                                 
           
                 (Unaudited)




                                                              Nine Months Ended
                                                                         September 30,



                                               2018                                             2017



                                                              (In thousands)




                   Operating activities:



     Net Income                                        $
              109,983                           $
        56,317


      Adjustments to reconcile net income
       to net cash provided by operating
       activities:


      Depreciation, depletion,
       amortization and accretion                                   114,807                                116,843



     Gain on exchange of debt                                                                            (7,811)


      Amortization of debt items and
       other items                                                    1,796                                  1,271



     Share-based compensation                                        3,808                                  5,449



     Derivative (gain) loss                                          5,931                                (4,765)


      Cash receipts (payments) on
       derivative settlements, net                                  (3,091)                                 3,924



     Deferred income taxes                                             363                                    321


      Changes in operating assets and
       liabilities:


         Oil and natural gas receivables                            (4,039)                                 3,906


         Joint interest receivables                                   3,261                                      8


         Insurance reimbursements                                                                          31,740



        Income taxes                                                 (139)                                   320


         Prepaid expenses and other assets                          (8,467)                                 2,194


         Escrow deposit -Apache lawsuit                                                                  (49,500)


         Asset retirement obligation
          settlements                                              (22,764)                              (56,226)


         Cash advances from JV partners                              27,014                                  (786)


         Accounts payable, accrued
          liabilities and other                                      66,389                                 27,115


        Net cash provided by operating
         activities                                                 294,852                                130,320





                   Investing activities:


      Investment in oil and natural gas
       properties and equipment                                    (59,161)                              (79,088)


      Changes in operating assets and
       liabilities associated with
       investing activities                                        (20,261)                                 5,679


      Acquisition of property interest                             (16,782)


      Proceeds from sale of assets                                   50,474


      Purchases of furniture, fixtures
       and other                                                                                            (905)



      Net cash used in investing
       activities                                                  (45,730)                              (74,314)





                   Financing activities:


      Payment of interest on 1.5 Lien
       Term Loan                                                    (6,171)                               (6,170)


      Payment of interest on 2nd Lien PIK
       Toggle Notes                                                 (2,920)                               (7,335)


      Payment of interest on 3rd Lien PIK
       Toggle Notes                                                                                       (6,201)



     Other                                                            (26)                                 (372)



      Net cash used in financing
       activities                                                   (9,117)                              (20,078)



      Increase in cash and cash
       equivalents                                                  240,005                                 35,928


      Cash and cash equivalents,
       beginning of period                                           99,058                                 70,236



      Cash and cash equivalents, end of
       period                                           $
              339,063                          $
        106,164

W&T OFFSHORE, INC. AND SUBSIDIARIES
Non-GAAP Information

Certain financial information included in our financial results are not measures of financial performance recognized by accounting principles generally accepted in the United States, or GAAP. These non-GAAP financial measures are "Net Income Excluding Special Items," "EBITDA" and "Adjusted EBITDA." Our management uses these non-GAAP financial measures in its analysis of our performance. These disclosures may not be viewed as a substitute for results determined in accordance with GAAP and are not necessarily comparable to non-GAAP performance measures which may be reported by other companies.

Reconciliation of Net Income (Loss) to Net Income Excluding Special Items

"Net Income Excluding Special Items" does not include the unrealized commodity derivative (gain) loss, bad debt reserve, gain on exchange of debt, lawsuits and settlements, and penalties, litigation and related interest and associated income tax adjustments. Net Income Excluding Special Items is presented because the timing and amount of these items cannot be reasonably estimated and affect the comparability of operating results from period to period, and current periods to prior periods.


                                   Three Months Ended                                    Nine Months Ended
                                              September 30,
                                                                                  September 30,



                     2018                                         2017                             2018                2017



                   
          
            (In thousands, except per share amounts)


                            
           
                (Unaudited)




     Net income
      (loss)                  $
           46,260                               $
           (1,297)               $
         109,983   $
           56,317


     Unrealized
      commodity
      derivative
      (gain) loss                     (2,230)                                         4,595                         2,840             (841)


     Bad debt
      reserve                             111                                            385                           654               860


     Gain on
      exchange of
      debt                                                                                                                        (7,811)


     Apache
      lawsuit                                                                                                                       6,285


     EC 321
      settlement                                                                                                                  (1,109)


     Penalties,
      litigation
      and related
      interest                                                                                                       579             1,820


     Income tax
      adjustment
      for the
      items above                           6                                        (1,743)                         (12)              279


     Income tax
      adjustment
      for
      effective
      tax rate for
      the quarter                                                                     4,019



     Net income
      excluding
      special
      items                   $
           44,147                                 $
           5,959                $
         114,044   $
           55,800





     Basic and
      diluted
      income per
      common
      share,
      excluding
      special
      items                     $
           0.30                                  $
           0.04                   $
         0.79     $
           0.39

W&T OFFSHORE, INC. AND SUBSIDIARIES
Non-GAAP Information

Reconciliation of Net Income (Loss) to Adjusted EBITDA

We define EBITDA as net income plus income tax expense (benefit), net interest expense, and depreciation, depletion, amortization and accretion. Adjusted EBITDA excludes the unrealized commodity derivative (gain) loss, bad debt reserve, gain on exchange of debt, lawsuits and settlements, and civil penalties and other litigation. We believe the presentation of EBITDA and Adjusted EBITDA provides useful information regarding our ability to service debt and to fund capital expenditures. We believe this presentation is relevant and useful because it helps our investors understand our operating performance and makes it easier to compare our results with those of other companies that have different financing, capital and tax structures. EBITDA and Adjusted EBITDA should not be considered in isolation from or as a substitute for net income, as an indication of operating performance or cash flows from operating activities or as a measure of liquidity. EBITDA and Adjusted EBITDA, as we calculate them, may not be comparable to EBITDA and Adjusted EBITDA measures reported by other companies. In addition, EBITDA and Adjusted EBITDA do not represent funds available for discretionary use. Adjusted EBITDA margin represents the ratio of Adjusted EBITDA to total revenues.

The following table presents a reconciliation of our net income (loss) to EBITDA and Adjusted EBITDA along with our Adjusted EBITDA margin.


                                  Three Months Ended                           Nine Months Ended
                                             September 30,                                      September 30,



                         2018                                         2017                           2018              2017



                                
             
                (In thousands)


                              
             
                (Unaudited)




      Net income (loss)        $
             46,260                           $
           (1,297)                   $
      109,983   $
        56,317


      Income tax expense
       (benefit)                             142                                      5,484                            363       (11,079)


      Net interest
       expense                            10,949                                     11,513                         34,211         34,231


      Depreciation,
       depletion,
       amortization and
       accretion                          36,969                                     36,489                        114,807        116,843




     EBITDA                              94,320                                     52,189                        259,364        196,312




      Adjustments:


      Unrealized
       commodity
       derivative (gain)
       loss                              (2,230)                                     4,595                          2,840          (841)


      Bad debt reserve                       111                                        385                            654            860


      Gain on exchange
       of debt                                                                                                                 (7,811)


      Apache lawsuit                                                                                                             6,285


      EC 321 settlement                                                                                                        (1,109)


      Civil penalties
       and other
       litigation                                                                                                  (194)         1,820


      Adjusted EBITDA          $
             92,201                            $
           57,169                    $
      262,664  $
        195,516







      Adjusted EBITDA
       Margin                                60%                                       52%                           60%           55%



     
     CONTACT: 
     
                Lisa Elliott               
     
                Janet Yang


                 
     Dennard Lascar Investor Relations       
     VP & CFO


                 
     
                lelliott@dennardlascar.com 
     
                investorrelations@wtoffshore.com


                 
     713-529-6600                            
     713-624-7326


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SOURCE W&T Offshore, Inc.