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W&T Offshore Reports First Quarter 2005 Financial and Operational Results; Provides Guidance for the Second Quarter

HOUSTON, May 6 /PRNewswire-FirstCall/ -- W&T Offshore, Inc. (NYSE: WTI) announced today financial and operational results for the first quarter 2005.

  • W&T successful in participation in five of seven shelf exploration wells
  • Apparent high bidder on 9 of 15 bids submitted by W&T at the MMS OCS lease sale; 5 on the shelf and 2 in the deepwater have already been awarded.

Net Income: Net income for the three months ended March 31, 2005 was $39.3 million, or $0.60 per diluted share, on revenue of $129.1 million, compared to net income of $38.0 million or $0.58 per diluted share, on revenue of $123.3 million for the first quarter of 2004.

Cash Flow from Operations and EBITDA: Net cash provided by operating activities decreased 25% to $72.4 million during the first quarter 2005 from $97.0 million during the prior year's first quarter. The decrease in cash provided by operating activities was primarily attributable to a reduction in accounts payable in the first quarter of this year as compared to last year. First quarter EBITDA was $101.5 million, compared to $98.7 million during the prior year's first quarter. For additional information regarding EBITDA, please refer to the attached schedule for a reconciliation of net income to EBITDA later in this release.

Production and Prices: Total production in the first quarter of 2005 was 12.4 billion cubic feet ("Bcf") of natural gas at an average price of $6.33 per thousand cubic feet ("Mcf") and 1.2 million barrels ("MMBbls") of oil at an average price of $43.67 per Bbl, or 19.3 billion cubic feet of gas equivalent ("Bcfe") at an average price of $6.67 per Mcfe. This compares to production of 14.3 Bcf of gas at an average price of $5.73 per Mcf and 1.3 MMBbls of oil at an average price of $32.95 per Bbl, or 21.8 Bcfe at an average price of $5.65 per Mcfe in the first quarter of 2004. The reduction in sales volumes for all products is attributable to normal decline, as anticipated. Production is expected to increase in the 3rd and 4th quarters as planned projects come on-line. The Company did not have any hedges in place in the first quarter of 2005 or 2004.

Lease Operating Expenses ("LOE"): LOE for the first quarter of 2005 decreased to $16.2 million, or $0.84 per Mcfe, from $17.4 million, or $0.80 per Mcfe, in the first quarter of 2004, primarily due to lower than anticipated base operating expenses and planned maintenance.

Depreciation, depletion, amortization and accretion ("DD&A"): DD&A increased to $41.3 million, or $2.14 per Mcfe, in the first quarter of 2005 from $39.6 million, or $1.82 per Mcfe, in the same period of 2004. The increase in DD&A on a per unit basis during the first quarter of 2005 is a result of higher depletable costs.

Capital Expenditures and Operations Update: During the first quarter of 2005, W&T participated in the drilling of seven gross exploration wells in the Gulf of Mexico. Five wells were successful. W&T spent $30.3 million for development capital, $25.2 million for exploration and $0.5 million for other capital expenditure items.

Lease Sale Update: W&T was the apparent high bidder on nine of 15 leases at the Central Gulf of Mexico lease sale on March 16, 2005. Of the nine blocks, seven of which are on the shelf and two in the deepwater. W&T's net financial exposure totaled $3.3 million. Seven blocks (five on the shelf and two in the deepwater) have been awarded to date, and the remaining two are pending the necessary approvals from the MMS.

Drilling Highlights: In the first quarter of 2005, the Company participated in the drilling of seven exploratory wells, all in the Gulf of Mexico region. Five of the exploration wells were successful. Of the wells drilled in the first quarter of 2005, one was in deepwater, and six were on the conventional shelf. One deepwater and one shelf well were unsuccessful. In the final three quarters of the year, we anticipate drilling 12 exploration wells on the conventional shelf and onshore, four in the deep shelf and six in the deepwater. Unrisked net potential for these remaining wells is about 275 BCFE.

Dividends: On March 28, 2005, the Company's board of directors declared a cash dividend of $0.02 per common share, payable on May 2, 2005 to shareholders of record on April 15, 2005.

"We were successful on five of seven exploration wells during the first quarter and added significant acreage from the recent lease sale. The quarter was quite successful for us," said Tracy W. Krohn, Chairman and Chief Executive Officer. "Like other operators, we are being negatively affected by rising rig rates and the tightening of supplies and services. Although a couple of our projects have been delayed due to lack of rig availability, we currently have six rigs operating for us in the Gulf," Krohn continued, "We continue to add prospects and acreage from the lease sale to our exploration inventory and are moving ahead with our development drilling program. We are expecting a strong second half of the year based on the development of many of our successful discoveries from this and last year."

Outlook: Certain factors affecting these forward-looking statements are listed in this news release. Guidance on performance for the second quarter and full year of 2005 is shown in the table below.

     Estimated Daily Production    Second Quarter 2005    Full-Year 2005
      Crude Oil (MMBbls)                1.1 - 1.2            4.9 - 5.2
      Natural Gas (Bcf)                11.5 - 12.1          53.5 - 56.2
         Total (Bcfe)                  18.3 - 19.3          83.1 - 87.4

     Operating expenses
     ($ in millions,
       except as noted)            Second Quarter 2005    Full-Year 2005
      Lease operating expense         $20.5 - $21.5        $82.0 - $85.0
      Gathering, Transportation
        & Production Taxes             $3.5 - $4.0         $14.0 - $15.0
      General and administrative       $6.5 - $7.5         $26.0 - $30.0
      Income tax rate, % deferred      35.0%, 20%            35.0%, 20%

Conference Call Information: W&T will hold a conference call to discuss financial and operational results on Friday, May 6, 2005 at 10:00 a.m. Eastern Time / 9:00 a.m. Central Time. To participate, dial (303) 262-2137 a few minutes before the call begins. The call will also be broadcast live over the Internet from the Company's website at http://www.wtoffshore.com . A replay of the conference call will be available approximately two hours after the end of the call until Friday, May 13, 2005. To access the replay, dial (303) 590-3000 and reference conference ID 11029672.

About W&T Offshore

Founded in 1983, W&T Offshore is an independent oil and natural gas company focused primarily in the Gulf of Mexico, including exploration in the deep water, where it has developed significant technical expertise. W&T has grown through acquisition, exploitation and exploration and now holds working interests in over 100 fields in federal and state waters and a majority of its daily production is derived from wells it operates. For more information on W&T Offshore, please visit its Web site at http://www.wtoffshore.com

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. 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 and other factors discussed in our Registration Statement on Form S-1 filed with the Securities and Exchange Commission (http://www.sec.gov ).

                             - Tables to Follow -



                                W&T OFFSHORE, INC.
                        Consolidated Statements of Income

                                                        Three Months Ended
                                                             March 31,
                                                      2005              2004
                                                     (In thousands, except per
                                                            share amounts)
                                                            (Unaudited)

    Revenues:
        Oil and natural gas                        $128,724          $123,118
        Other                                           348               149
            Total revenues                          129,072           123,267
    Expenses:
        Lease operating                              16,153            17,368
        Gathering, transportation costs
         and production taxes                         4,496             2,854
        Depreciation, depletion, and amortization    38,957            37,375
        Asset retirement obligation accretion         2,312             2,228
        General and administrative                    6,909             4,318
            Total operating expenses                 68,827            64,143

    Income from operations                           60,245            59,124

    Net interest expense                               (221)             (596)

    Income before income taxes                       60,024            58,528

    Income tax expense                               20,742            20,485

    Net income                                       39,282            38,043

    Less: Preferred stock dividends                     ---               ---

    Net income applicable to common and
     common equivalent shares                       $39,282           $38,043

    Earnings per common share:
        Basic                                         $0.63             $0.72

        Diluted                                       $0.60             $0.58

    Shares outstanding:
        Weighted average shares - Basic              61,962            52,580

        Weighted average shares - Diluted            65,964            65,919

    Consolidated Cash Flow Information
    Net cash provided by operating activities       $72,428           $97,009
    Capital expenditures                             56,040            52,609

    Other Financial Information
    EBITDA                                         $101,514           $98,727

We define EBITDA as net income plus income tax expense, net interest expense, depreciation, depletion, amortization and accretion. Although not prescribed under GAAP, we believe the presentation of EBITDA 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 or tax structures. 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, as we calculate it, may not be comparable to EBITDA measures reported by other companies. In addition, EBITDA does not represent funds available for discretionary use.

The following table presents a reconciliation of our consolidated net income to consolidated EBITDA:



                                                      Three Months Ended
                                                           March 31,
                                                     2005             2004
    Net income                                      $39,282          $38,043
    Income tax expense                               20,742           20,485
    Net interest expense                                221              596
    Depreciation, depletion, amortization
     and accretion                                   41,269           39,603

    EBITDA                                         $101,514          $98,727



                               W&T OFFSHORE, INC.
                                 Operating Data

                                                     Three Months Ended
                                                           March 31,
                                                     2005              2004
                                                           (Unaudited)

    Net sales:
        Natural gas (MMcf)                          12,375            14,258
        Oil (MBbls)                                  1,154             1,258
            Total natural gas and oil
             (MMcfe)                                19,299            21,806

    Average daily equivalent sales
     (MMcfe/d)                                       214.4             239.6

    Average realized sales price:
        Natural gas ($/Mcf)                          $6.33             $5.73
        Oil ($/Bbl)                                  43.67             32.95
            Natural gas equivalent ($/Mcfe)           6.67              5.65

    Average per Mcfe data ($/Mcfe):
        Lease operating expenses                     $0.84             $0.80
        Gathering, transportation cost
         and production taxes                         0.23              0.13
        Depreciation, depletion,
         amortization and accretion                   2.14              1.82
        General and administrative                    0.36              0.20
        Net cash provided by operating activities     3.75              4.45
        EBITDA                                        5.26              4.53



                               W&T OFFSHORE, INC.
                           Consolidated Balance Sheets

                                                  March 31,       December 31,
                                                    2005              2004
                                                         (In thousands)
                                                          (Unaudited)

                      Assets
    Current assets:
       Cash                                        $45,427           $64,975
       Accounts receivable                          56,158            71,714
       Prepaid expenses and other                    9,055             9,293
          Total current assets                     110,640           145,982

    Property and equipment - at cost             1,203,716         1,147,367
    Less accumulated depreciation,
     depletion and amortization                    582,111           543,154
          Net property and equipment               621,605           604,213

    Other assets                                    11,422            10,589
             Total assets                         $743,667          $760,784

       Liabilities and Shareholders' Equity
    Current liabilities:
       Accounts payable                            $76,069          $107,220
       Asset retirement obligations                 23,514            27,489
       Accrued liabilities and other                27,054            21,738
          Total current liabilities                126,637           156,447

    Long-term debt                                     ---            35,000
    Asset retirement obligations, less
     current portion                               117,249           114,937
    Deferred income taxes                           99,131            92,093
    Other liabilities                                2,429             2,429
    Shareholders' equity:
       Preferred stock                                 ---            45,435
       Common stock                                      1               ---
       Additional paid-in capital                   52,293             6,478
       Retained earnings                           345,927           307,965
          Total shareholders' equity               398,221           359,878
             Total liabilities and
              shareholders' equity                $743,667          $760,784



                               W&T OFFSHORE, INC.
                      Consolidated Statements of Cash Flows

                                                      Three Months Ended
                                                           March 31,
                                                     2005              2004
                                                        (In thousands)
                                                          (Unaudited)

    Operating activities:
       Net income                                  $39,282           $38,043
       Adjustments to reconcile net
        income to net cash provided
        by operating activities:
             Depreciation, depletion,
              amortization and accretion            41,269            39,603
             Amortization of debt issuance costs       103               115
             Share-based compensation                  381               391
             Deferred income taxes                   7,038             5,517
             Changes in operating assets
              and liabilities                      (15,645)           13,340
                Net cash provided by
                 operating activities               72,428            97,009

    Investing activities:
       Investment in oil and gas property
        and equipment                              (56,025)          (52,548)
       Proceeds from sales of oil and gas
        property and equipment                         ---               119
       Purchases of furniture, fixtures and other      (15)              (61)
       Change in restricted deposits                   (47)              (46)
                Net cash used in
                 investing activities              (56,087)          (52,536)

    Financing activities:
       Borrowings of long-term debt                    ---            38,500
       Repayments of borrowings of long-term debt  (35,000)          (86,200)
       Debt issuance costs                            (889)              ---
                Net cash used in
                 financing activities              (35,889)          (47,700)
                Decrease in cash and cash
                 equivalents                       (19,548)           (3,227)
    Cash and cash equivalents, beginning
     of period                                      64,975             4,016
    Cash and cash equivalents, end of period       $45,427              $789

     Contacts:
     Manuel Mondragon, Assistant Treasurer
     investorrelations@wtoffshore.com
     713-297-8024

     Ken Dennard  / ksdennard@drg-e.com
     Lisa Elliott / lelliott@drg-e.com
     DRG&E / 713-529-6600
SOURCE  W&T Offshore, Inc.
    -0-                             05/06/2005
    /CONTACT:  Manuel Mondragon, Assistant Treasurer of W&T Offshore, Inc.,
+1-713-297-8024, or investorrelations@wtoffshore.com ; or Ken Dennard,
ksdennard@drg-e.com , or Lisa Elliott, lelliott@drg-e.com , both of DRG&E,
+1-713-529-6600, for W&T Offshore, Inc./
    /Web site:  http://www.wtoffshore.com /
    (WTI)

CO:  W&T Offshore, Inc.
ST:  Texas
IN:  OIL
SU:  ERN DIV ERP CCA MAV

AH-AP
-- DAF024 --
5806 05/06/2005 05:00 EDT http://www.prnewswire.com