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W&T Offshore Reports Second Quarter Results

HOUSTON, Aug 03, 2010 /PRNewswire via COMTEX/ --

W&T Offshore, Inc. (NYSE: WTI) today provides financial and operational results for the second quarter 2010. Some of the highlights for the second quarter 2010 include:

  • Earnings per share increased for the second quarter to $0.37 from a loss per share of $0.08 last year and adjusted EPS increased to $0.22 from a loss per share of $0.05 during the second quarter of 2009.
  • Revenue increased to $179.7 million and includes $20.1 million from the recoupment of royalties previously paid to the Bureau of Ocean Energy Management under the Deepwater Royalty Relief Act.
  • EBITDA increased 49% to $116.2 million and net cash provided by operating activities increased 815% to $157.4 million from the corresponding quarter in 2009.
  • The acquisition of the Matterhorn and Virgo fields from Total E&P USA, Inc. was completed on April 30, 2010, adding 65.6 Bcfe to proved reserves.
  • Successfully drilled two exploration wells during the second quarter of 2010, resulting in a drilling success rate of 80%, year-to-date.
  • Mid-year reserves increased by 15% compared to December 31, 2009.
  • Received $99.7 million in tax loss carrybacks from the U.S. Treasury.
  • On August 2, 2010 we announced, after the close of the market, an increase in our regular cash quarterly dividend to $0.04 per share from $0.03 per share.

On April 30, 2010, the Company completed the acquisition of all of the interest of Total E&P USA, Inc. ("Total") in three federal offshore lease blocks located in the Gulf of Mexico with an effective date of January 1, 2010. The purchase price of $150 million was adjusted for, among other things, net revenue and operating expenses from the effective date to closing, resulting in an adjusted purchase price of $116.6 million. The impact on our operations from the acquisition of these assets has been included in our financial statements beginning May 1, 2010. This acquisition was funded with cash on hand.

The properties acquired from Total are producing interests with future development potential and include a 100% working interest in Mississippi Canyon block 243 ("Matterhorn") and a 64% working interest in Viosca Knoll blocks 822 and 823 ("Virgo"). The estimated proved oil and natural gas reserves on the closing date (determined using the unweighted average of first-day-of-the-month commodity prices over the preceding 12-month period) were 10.9 million barrels of oil equivalent ("Boe"), or 65.6 billion cubic feet equivalent ("Bcfe") of natural gas. The reserves acquired were estimated as 64% oil and 36% natural gas.

Tracy W. Krohn, Chairman and Chief Executive Officer, commented, "Despite the oil spill and related impact on oil and gas projects in the Gulf of Mexico, W&T continues to run its operations on a relatively normal basis. We had a good quarter with the addition of the Matterhorn and Virgo fields to our inventory of producing fields in the Gulf and the upside potential they bring. Production has been better from these two fields than we had originally forecasted and we intend to begin workover and recompletion operations in these two fields shortly. Furthermore, we drilled two successful exploration wells in the Gulf, brought on-line an onshore well that was drilled last year, and began drilling another well onshore in Louisiana as well as an exploration well on the conventional shelf."

"We are mindful that turmoil and challenges often create opportunities and we are working to maintain the flexibility to move quickly should the right opportunities arise. W&T has an excellent safety record in the Gulf of Mexico and a culture to insure that we continue to operate in a prudent and responsible manner."

Revenues, Net Income/Loss and Earnings Per Share ("EPS"): Net income for the second quarter of 2010 was $27.9 million, or $0.37 per common share, on revenues of $179.7 million, compared to a net loss for the same quarter of 2009 of ($6.0) million, or ($0.08) per share, on revenues of $150.4 million. Net income for the six months ended June 30, 2010 was $70.2 million, or $0.94 per common share, on revenues of $349.3 million, compared to a net loss of ($250.6) million, or ($3.33) per share, on revenues of $267.9 million for the first six months of 2009. Included in revenues for the three and six months ended June 30, 2010 is approximately $20.1 million related to the recoupment of royalties paid to the Bureau of Ocean Energy Management (the "BOEM" and formerly the Minerals Management Service) in prior periods that were found to not be owed under the royalty relief granted under the Outer Continental Shelf Deepwater Royalty Relief Act of 1995. Volumes associated with this adjustment were 2.5 Bcfe.

Net income for the second quarter of 2010 excluding special items was approximately $16.1 million, or $0.22 per common share. The net loss excluding special items for the corresponding quarter of 2009 was approximately ($4.1) million, or ($0.05) per common share. Net income for the six months ended June 30, 2010 excluding special items was approximately $55.1 million, or $0.74 per common share, compared to a net loss excluding special items of ($106.4) million, or ($1.41) per common share, in the corresponding period of 2009. See the "Reconciliation of Net Income (Loss) to Net Income (Loss) Excluding Special Items" table at the back of this press release for a description of the special items.

Cash Flow from Operating Activities and Adjusted EBITDA: EBITDA and Adjusted EBITDA are non-GAAP measures and are hereinafter defined in "Non-GAAP Information" later in this press release.Net cash provided by operating activities for the three months ended June 30, 2010 increased 815% to $157.4 million from $17.2 million for the three months ended June 30, 2009. Net cash provided by operating activities for the six months ended June 30, 2010 increased 426% to $244.3 million from $46.4 million for the six months ended June 30, 2009. The increase was mainly a result of $99.8 million in tax reimbursements received from the Treasury related to the Worker, Homeownership, and Business Assistance Act of 2009 that allowed the Company to carry back losses to previously closed years and higher realized prices.

For the quarter ended June 30, 2010, EBITDA was $116.2 million versus $77.9 million during the corresponding quarter of 2009, or a 49% increase. For the six months ended June 30, 2010, EBITDA increased 49% to $241.1 million from $130.0 million during the six months ended June 30, 2009. Second quarter 2010 Adjusted EBITDA was $98.1 million compared to $80.8 million during second quarter 2009, or a 21% increase. Adjusted EBITDA increased 64% to $217.9 million for the six months ended June 30, 2010 from $132.9 million for the comparable period of 2009.

Production and Prices: On a natural gas equivalent ("Bcfe") basis, we sold 22.8 Bcfe at an average price of $7.87 per Mcfe in the second quarter of 2010, of which 46% was from oil and natural gas liquids, compared to 24.8 Bcfe sold at an average price of $6.06 per Mcfe in the second quarter of 2009, of which 46% was from oil and natural gas liquids. Included in sales volumes for the three months ended June 30, 2010 is 2.5 Bcfe related to the recoupment of royalties paid to the BOEM described above, of which 22% was oil and natural gas liquids. Excluding those additional oil and natural gas sales volumes related to the recoupment of royalties, the sales volume decrease is primarily attributable to decreases resulting from the sale of one of our fields in Louisiana state waters in June 2009, the sale of 36 non-core oil and natural gas fields in the fourth quarter of 2009 and natural reservoir declines, partially offset by an increase associated with the Matterhorn and Virgo fields beginning May 1, 2010.

For the six months ended June 30, 2010, we sold 42.8 Bcfe with an average realized price of $8.16 per Mcfe. For the comparable 2009 period, we sold 46.2 Bcfe with an average realized price of $5.79 per Mcfe.

Lease Operating Expenses ("LOE"): LOE for the second quarter of 2010 decreased to $52.5 million, or $2.30 per Mcfe, from $54.1 million, or $2.18 per Mcfe, in the second quarter of 2009. Of the components that make up LOE, base LOE, facility expenses and hurricane remediation costs decreased while insurance and workover costs increased from a year ago. Included in lease operating expenses for the second quarter of 2010 and 2009 are $2.1 million and $5.0 million, respectively, of hurricane remediation costs related to Hurricanes Ike and Gustav that were either not yet approved by our insurance underwriters or were not covered by insurance. Lease operating expenses will be offset in future periods to the extent that costs are approved for payment under our insurance policies. Base LOE is lower due to the property divestitures completed in 2009, partially offset by the costs to operate the Matterhorn and Virgo platforms. The increase in workover costs is related to numerous projects undertaken in 2010 in an effort to stimulate, maintain and/or restore production at various wells. LOE on a per Mcfe basis increased primarily due to lower volumes associated with natural reservoir declines and the 2009 divestitures described above, partially offset by an increase in volumes related to the Matterhorn and Virgo fields and the royalty relief recoupment (both of which reduced the cost per Mcfe).

LOE for the six months ended June 30, 2010 decreased to $87.8 million, or $2.05 per Mcfe, compared to $104.3 million, or $2.26 per Mcfe for the same period in 2009. LOE for the six months ended June 30, 2010 included $4.2 million in net hurricane reimbursements while LOE for the six months ended June 30, 2009 included $15.2 million in net hurricane remediation costs. Excluding these hurricane related items, LOE was higher in the 2010 period primarily due to an increase in workover activity and insurance costs, partially offset by a decrease in base LOE as a result of the divestitures completed in 2009 and lower facilities expenses.

Depreciation, depletion, amortization and accretion ("DD&A"): DD&A decreased to $76.0 million, or $3.33 per Mcfe, in the second quarter of 2010 from $84.6 million, or $3.41 per Mcfe, in the second quarter of 2009. DD&A decreased primarily as a result of lower production volumes and a lower depreciable base (including the estimate of the cost of asset retirement obligations), partially offset by a $7.2 million increase in DD&A related to the recoupment of royalties and lower oil and natural gas reserves, compared to 2009. The decrease in our depreciable base reflects the property divestitures completed in 2009. DD&A for the six months ended 2010 was $145.2 million, or $3.40 per Mcfe, compared to DD&A of $176.1 million, or $3.81 per Mcfe, for the same period in 2009.

Liquidity: Our cash balance at June 30, 2010 was $72.9 million and our revolver availability was $405.2 million. In April 2010, our borrowing base under the Credit Agreement was reaffirmed by our lenders at $405.5 million. During July 2010, we drew $142.5 million of the revolving portion of our Credit Agreement.

Capital Expenditures and Operations Update: For the three months ended June 30, 2010, capital expenditures for oil and natural gas properties of $166.4 million included $116.6 million for acquisitions, $29.2 million for exploration activities, $8.5 million for development activities and $12.1 million for seismic, capitalized interest and other leasehold costs. Our development and exploration capital expenditures consisted of $36.5 million on the conventional shelf, $0.6 million in the deepwater and $0.6 million on other projects.

For the first six months of 2010, our capital expenditures for oil and natural gas properties were $206.3 million, including $116.6 million for acquisitions, $48.6 million for exploration activities, $25.8 million for development activities and $15.3 million for seismic, capitalized interest and other leasehold costs. Our development and exploration capital expenditures consisted of $67.3 million on the conventional shelf, $4.8 million in the deepwater and $2.3 million on other projects. Cash from operating activities and cash on hand financed our capital expenditures for the three and six months ended June 30, 2010.

Drilling Highlights: In the second quarter of 2010, the Company drilled or participated in the drilling of two successful exploration wells.


    Commercial Wells
    Lease Name/Well                     Category           Working Interest %
    ---------------                     --------           ------------------
    Main Pass 98 #1                 Exploration/Shelf                     100%
    Main Pass 279 A-6ST             Exploration/Shelf                      89%


The Company is currently drilling the Main Pass 108 E-3 (100% W. I.) exploration well on the conventional shelf and another exploratory well in Louisiana (50% W.I.).

Outlook: Guidance for the third quarter and full year 2010 is shown in the table below, which represents the Company's best estimate of likely future results, and is affected by the factors described below in "Forward-Looking Statements."

Third Quarter and Full-Year 2010 Production and Revised Cost Guidance:


                                                              Revised Full-
    Estimated Production       Third        Prior Full-Year        Year
                              Quarter                   2010            2010
                                      2010
    Crude oil (MMBbls)       1.4 - 1.7          5.6 - 7.6       6.1 - 7.3
    Natural gas (Bcf)       8.8 - 10.8         36.6 - 49.5     38.4 - 46.0
    Total (Bcfe)            17.4 - 21.3        70.3 - 95.1     75.0 - 90.0

    Operating Expenses ($
     in millions, except as                                   Revised Full-
     noted)                    Third        Prior Full-Year        Year
                              Quarter                   2010            2010
                                      2010
    Lease operating
     expenses                    $48 - $58       $177 - $216     $172 - $211
    Gathering,
     transportation &
     production taxes              $4 - $5         $18 - $22    Unchanged
    General and
     administrative              $12 - $14         $45 - $49       $49 - $54
    Income tax rate                   12.0%             12.0%           10.3%


Conference Call Information: W&T will hold a conference call to discuss financial and operational results on Tuesday, August 3, 2010 at 9:30 a.m. Eastern Time / 8:30 a.m. Central Time. To participate, dial (480) 629-9723 at least ten 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 approximately two hours after the end of the call until Tuesday, August 10, 2010, and may be accessed by calling (303) 590-3030 and using the pass code 4329423.

About W&T Offshore

W&T Offshore is an independent oil and natural gas company focused primarily in the Gulf of Mexico, including exploration in the deepwater and deep shelf regions, where it has developed significant technical expertise. W&T has grown through acquisitions, exploitation and exploration and currently holds working interests in approximately 72 producing fields in federal and state waters. The majority of the Company's daily production is derived from wells it operates. For more information on W&T Offshore, please visit its Web site at 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, uncertainties and other factors discussed in our Annual Report on Form 10-K for the year ended December 31, 2009 (www.sec.gov).


     Contacts:
     Janet Yang, Finance Manager
     investorrelations@wtoffshore.com
     713-297-8024

     Ken Dennard  / ksdennard@drg-e.com
     Lisa Elliott / lelliott@drg-e.com
     DRG&E / 713-529-6600



                       W&T OFFSHORE, INC. AND SUBSIDIARIES
                Condensed Consolidated Statements of Income (Loss)
                                    (Unaudited)


                                               Three Months Ended
                                                     June 30,
                                                     --------
                                           2010                   2009
                                           ----                   ----
                                      (In thousands, except per share data)


    Revenues (1)                         $179,667               $150,432
                                         --------               --------

    Operating costs and
     expenses:
      Lease operating expenses
       (2)                                 52,457                 54,080
      Gathering, transportation
       costs and production taxes           4,009                  4,335
      Depreciation, depletion and
       amortization                        69,895                 74,515
      Asset retirement obligation
       accretion                            6,127                 10,080
      Impairment of oil and
       natural gas properties (3)               -                      -
      General and administrative
       expenses                            14,375                 10,731
      Derivative (gain) loss               (7,374)                   460
                                           ------                    ---
        Total costs and expenses          139,489                154,201
                                          -------                -------
        Operating income (loss)            40,178                 (3,769)
    Interest expense:
      Incurred                             10,914                 11,740
      Capitalized                          (1,329)                (1,722)
    Loss on extinguishment of
     debt                                       -                  2,926
    Other income                              354                    218
                                              ---                    ---
        Income (loss) before income
         tax expense (benefit)             30,947                (16,495)
    Income tax expense
     (benefit)                              3,077                (10,521)
                                            -----                -------
        Net income (loss)                 $27,870                $(5,974)
                                          =======                =======


    Basic and diluted earnings
     (loss) per common share                $0.37                 $(0.08)

    Weighted average common
     shares outstanding                    73,669                 74,642

    Consolidated Cash Flow
     Information
      Net cash provided by
       operating activities              $157,358                $17,190
      Investment in oil and
       natural gas properties             166,391                111,320

    Other Financial Information
      EBITDA                             $116,200                $77,900
      Adjusted EBITDA                      98,075                 80,826


                                              Six Months Ended
                                                   June 30,
                                                   --------
                                        2010                    2009
                                        ----                    ----
                                   (In thousands, except per share data)


    Revenues (1)                      $349,252                $267,854
                                      --------                --------

    Operating costs and
     expenses:
      Lease operating expenses
       (2)                              87,823                 104,311
      Gathering, transportation
       costs and production
       taxes                             8,825                   7,640
      Depreciation, depletion
       and amortization                132,819                 155,303
      Asset retirement
       obligation accretion             12,412                  20,827
      Impairment of oil and
       natural gas properties
       (3)                                   -                 218,871
      General and administrative
       expenses                         24,754                  22,167
      Derivative (gain) loss           (13,270)                    852
                                       -------                     ---
        Total costs and expenses       253,363                 529,971
                                       -------                 -------
        Operating income (loss)         95,889                (262,117)
    Interest expense:
      Incurred                          21,834                  24,249
      Capitalized                       (2,745)                 (3,504)
    Loss on extinguishment of
     debt                                    -                   2,926
    Other income                           482                     723
                                           ---                     ---
        Income (loss) before
         income tax expense
         (benefit)                      77,282                (285,065)
    Income tax expense
     (benefit)                           7,097                 (34,513)
                                         -----                 -------
        Net income (loss)              $70,185               $(250,552)
                                       =======               =========


    Basic and diluted earnings
     (loss) per common share             $0.94                  $(3.33)

    Weighted average common
     shares outstanding                 73,665                  75,308

    Consolidated Cash Flow
     Information
      Net cash provided by
       operating activities           $244,318                 $46,413
      Investment in oil and
       natural gas properties          206,294                 239,684

    Other Financial
     Information
      EBITDA                          $241,120                $129,958
      Adjusted EBITDA                  217,886                 132,884



    (1) Included in oil revenues for the three and six months ended June
     30, 2010 is $20.1 million related to the recoupment of royalties
     paid to the BOEM in prior periods based on price thresholds that
     were believed to limit the availability of royalty relief on certain
     of our properties subject to the Outer Continental Shelf ("OCS")
     Deepwater Royalty Relief Act of 1995.
    (2) Included in lease operating expenses for the three months ended
     June 30, 2010 are hurricane remediation costs of $2.1 million
     related to Hurricanes Ike and Gustav that were either not yet
     approved for payment under our insurance policies or were not
     covered by insurance.  Included in lease operating expenses for the
     six months ended June 30, 2010 is a reduction of $4.2 million
     related to amounts approved for payment under our insurance policies
     and revisions to previous estimates of hurricane remediation costs
     incurred in connection with Hurricanes Ike and Gustav.  Included in
     lease operating expenses for the three and six months ended June 30,
     2009 are hurricane remediation costs of $5.0 million and $15.2
     million, respectively, related to Hurricanes Ike and Gustav that
     were either not yet approved for payment or were not covered by
     insurance.
    (3) The carrying amount of our oil and natural gas properties was
     written down by $218.9 million as of March 31, 2009 through
     application of the full cost ceiling limitation as prescribed by the
     SEC, primarily as a result of lower natural gas prices at March 31,
     2009, as compared to December 31, 2008.  The previously reported
     amount of $205.0 million was subsequently increased by $13.9 million
     in the fourth quarter of 2009 as a result of further analysis of our
     March 31, 2009 ceiling test calculation.  As such, operating income,
     net income and our basic and diluted loss per common share for the
     six months ended June 30, 2009 have been adjusted as well.  We did
     not have a ceiling test write-down during the three and six months
     ended June 30, 2010.


                          W&T OFFSHORE, INC. AND SUBSIDIARIES
                               Condensed Operating Data
                                       (Unaudited)

                                                   Three Months Ended
                                                        June 30,
                                                        --------
                                               2010                  2009
                                               ----                  ----
    Net sales: (1)
      Natural gas (MMcf)                     12,251                13,353
      Oil (MBbls)                             1,758                 1,909
      Total natural gas and oil (MBoe) (2)    3,800                 4,135
      Total natural gas and oil (MMcfe) (3)  22,799                24,808

    Average daily equivalent sales (MBoe/
     d)                                        41.8                  45.4
    Average daily equivalent sales (MMcfe/
     d)                                       250.5                 272.6

    Average realized sales prices
     (Unhedged):
      Natural gas ($/Mcf)                     $4.47                 $3.89
      Oil ($/Bbl)                             70.97                 51.61
      Barrel of oil equivalent ($/Boe)        47.23                 36.38
      Natural gas equivalent ($/Mcfe)          7.87                  6.06

    Average realized sales prices
     (Hedged): (4)
      Natural gas ($/Mcf)                     $4.65                 $3.89
      Oil ($/Bbl)                             70.90                 51.61
      Barrel of oil equivalent ($/Boe)        47.79                 36.38
      Natural gas equivalent ($/Mcfe)          7.97                  6.06

    Average per Boe ($/Boe):
      Lease operating expenses               $13.81                $13.08
      Gathering and transportation costs and
       production taxes                        1.06                  1.05
      Depreciation, depletion, amortization
       and accretion                          20.01                 20.46
      General and administrative expenses      3.78                  2.60
      Net cash provided by operating
       activities                             41.41                  4.16
      Adjusted EBITDA                         25.81                 19.55

    Average per Mcfe ($/Mcfe):
      Lease operating expenses                $2.30                 $2.18
      Gathering and transportation costs and
       production taxes                        0.18                  0.17
      Depreciation, depletion, amortization
       and accretion                           3.33                  3.41
      General and administrative expenses      0.63                  0.43
      Net cash provided by operating
       activities                              6.90                  0.69
      Adjusted EBITDA                          4.30                  3.26



                                                  Six Months Ended
                                                       June 30,
                                                       --------
                                               2010                 2009
                                               ----                 ----
    Net sales: (1)
      Natural gas (MMcf)                     22,298               25,905
      Oil (MBbls)                             3,409                3,386
      Total natural gas and oil (MBoe) (2)    7,125                7,703
      Total natural gas and oil (MMcfe) (3)  42,751               46,221

    Average daily equivalent sales (MBoe/d)    39.4                 42.6
    Average daily equivalent sales (MMcfe/
     d)                                       236.2                255.4

    Average realized sales prices
     (Unhedged):
      Natural gas ($/Mcf)                     $4.88                $4.47
      Oil ($/Bbl)                             70.48                44.93
      Barrel of oil equivalent ($/Boe)        48.99                34.77
      Natural gas equivalent ($/Mcfe)          8.16                 5.79

    Average realized sales prices (Hedged):
     (4)
      Natural gas ($/Mcf)                     $5.06                $4.47
      Oil ($/Bbl)                             70.21                44.93
      Barrel of oil equivalent ($/Boe)        49.43                34.77
      Natural gas equivalent ($/Mcfe)          8.24                 5.79

    Average per Boe ($/Boe):
      Lease operating expenses               $12.33               $13.54
      Gathering and transportation costs and
       production taxes                        1.24                 0.99
      Depreciation, depletion, amortization
       and accretion                          20.38                22.86
      General and administrative expenses      3.47                 2.88
      Net cash provided by operating
       activities                             34.29                 6.02
      Adjusted EBITDA                         30.58                17.25

    Average per Mcfe ($/Mcfe):
      Lease operating expenses                $2.05                $2.26
      Gathering and transportation costs and
       production taxes                        0.21                 0.17
      Depreciation, depletion, amortization
       and accretion                           3.40                 3.81
      General and administrative expenses      0.58                 0.48
      Net cash provided by operating
       activities                              5.71                 1.00
      Adjusted EBITDA                          5.10                 2.88


    (1) Included in natural gas and oil sales volumes for the three and six
        months ended June 30, 2010 is approximately 2.5 Bcfe related to the
        recoupment of royalties paid to the BOEM in prior periods as noted
        above.
    (2) One million barrels of oil equivalent (MMBoe), one thousand barrels of
        oil equivalent (Mboe) and one barrel of oil equivalent (Boe) are
        determined using the ratio of one Bbl of rude oil, condensate or
        natural gas liquids to six Mcf of natural gas (totals may not add
        due to rounding).
    (3) One billion cubic feet equivalent (Bcfe), one million cubic feet
        equivalent (MMcfe) and one thousand cubic feet equivalent (Mcfe) are
        determined using the ratio of six Mcf of natural gas to one Bbl of
        crude oil, condensate or natural gas liquids (totals may not add
        due to rounding).
    (4) Data for 2010 includes the effects of our commodity derivative
        contracts that did not qualify for hedge accounting.


                        W&T OFFSHORE, INC. AND SUBSIDIARIES
                       Condensed Consolidated Balance Sheets
                                    (Unaudited)


                                                     June 30,   December 31,
                                                     --------   -----------
                                                       2010        2009
                                                       ----        ----
                                             (In thousands, except share data)

                         Assets
    Current assets:
      Cash and cash equivalents                        $72,898     $38,187
      Receivables:
         Oil and natural gas sales                      66,717      54,978
         Joint interest and other                       29,381      51,312
         Insurance                                      13,848      30,543
         Income taxes                                        -      85,457
                                                           ---      ------
            Total receivables                          109,946     222,290
      Prepaid expenses and other assets                 40,723      28,777
                                                        ------      ------
        Total current assets                           223,567     289,254
      Property and equipment - at cost:
        Oil and natural gas properties and
         equipment (full cost method, of which
         $64,605 at
         June 30, 2010 and $77,301 at December 31,
          2009 were excluded from
         amortization)                               4,943,283   4,732,696
        Furniture, fixtures and other                   15,248      15,080
                                                        ------      ------
         Total property and equipment                4,958,531   4,747,776
        Less accumulated depreciation, depletion
         and amortization                            3,885,800   3,752,980
                                                     ---------   ---------
         Net property and equipment                  1,072,731     994,796
      Restricted deposits for asset retirement
       obligations                                      31,281      30,614
      Deferred income taxes                              5,975       5,117
      Other assets                                       7,896       7,052
                                                         -----       -----
         Total assets                               $1,341,450  $1,326,833
                                                    ==========  ==========

          Liabilities and Shareholders' Equity
    Current liabilities:
      Accounts payable                                 $55,041    $115,683
      Undistributed oil and natural gas proceeds        25,127      32,216
      Asset retirement obligations                      99,474     117,421
      Accrued liabilities                                9,982      13,509
      Income taxes                                       6,055           -
      Deferred income taxes                              8,921       5,117
        Total current liabilities                      204,600     283,946
    Long-term debt                                     450,000     450,000
    Asset retirement obligations, less current
     portion                                           245,339     231,379
    Other liabilities                                   14,912       2,558
    Commitments and contingencies
    Shareholders' equity:
      Common stock, $0.00001 par value;
       118,330,000 shares authorized; 77,555,011
        issued and 74,685,838 outstanding at June
         30, 2010;  77,579,968 issued and
        74,710,795 outstanding at December 31, 2009          1           1
      Additional paid-in capital                       374,993     373,050
      Retained earnings                                 75,772      10,066
      Treasury stock, at cost                          (24,167)    (24,167)
        Total shareholders' equity                     426,599     358,950
                                                       -------     -------
        Total liabilities and shareholders' equity  $1,341,450  $1,326,833
                                                    ==========  ==========




                     W&T OFFSHORE, INC. AND SUBSIDIARIES
               Condensed Consolidated Statements of Cash Flows
                                (Unaudited)

                                                        Six Months Ended
                                                             June 30,
                                                             --------
                                                         2010       2009
                                                         ----       ----
                                                          (In thousands)




    Operating activities:
    Net income (loss)                                   $70,185  $(250,552)
    Adjustments to reconcile net income (loss) to
     net cash provided by operating activities:
      Depreciation, depletion, amortization and
       accretion                                        145,231    179,230
      Impairment of oil and natural gas properties            -    218,871
      Amortization of debt issuance costs and discount
       on indebtedness                                      669      1,176
      Loss on extinguishment of debt                          -      2,817
      Share-based compensation related to restricted
       stock issuances                                    1,943      3,116
      Derivative (gain) loss                            (13,270)       852
      Cash payments on derivative settlements              (442)    (2,871)
      Deferred income taxes                               2,945       (158)
      Changes in operating assets and liabilities        37,057   (106,526)
      Other                                                   -        458
        Net cash provided by operating activities       244,318     46,413
                                                        -------     ------

    Investing activities:
    Acquisition of property interests                  (116,589)         -
    Investment in oil and natural gas properties and
     equipment                                          (89,705)  (239,684)
    Proceeds from sales of oil and natural gas
     properties and equipment                             1,335      8,368
    Proceeds from insurance                                   -      5,260
    Purchases of furniture, fixtures and other             (167)      (479)
                                                           ----       ----
        Net cash used in investing activities          (205,126)  (226,535)
                                                       --------   --------

    Financing activities:
    Borrowings of long-term debt                        285,000    205,441
    Repayments of long-term debt                       (285,000)  (268,441)
    Dividends to shareholders                            (4,481)    (4,581)
    Repurchases of common stock                               -     (9,247)
    Other                                                     -        131
                                                            ---        ---
        Net cash used in financing activities            (4,481)   (76,697)
                                                         ------    -------
        Increase (decrease)  in cash and cash
         equivalents                                     34,711   (256,819)
    Cash and cash equivalents, beginning of period       38,187    357,552
                                                         ------    -------
    Cash and cash equivalents, end of period            $72,898   $100,733
                                                        =======   ========



                          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 (Loss)
    Excluding Special Items," "EBITDA," and "Adjusted EBITDA."  Our
     management uses these non-GAAP 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 (Loss) Excluding
                                     Special Items

    "Net Income (Loss) Excluding Special Items" does not include the
     unrealized derivative (gain) loss, the impairment of oil and
    natural gas properties and associated tax effects.  Net Income (Loss)
     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
                                                     June 30,
                                                     --------
                                           2010                    2009
                                           ----                    ----
                                     (In thousands, except per share amounts)
                                                    (Unaudited)

    Net income (loss)                     $27,870                 $(5,974)
    Royalty relief recoupment, net
     of DD&A expense                      (12,864)                      -
    Unrealized commodity
     derivative gain                       (5,261)                      -
    Loss on extinguishment of debt              -                   2,926
    Impairment of oil and natural
     gas properties                             -                       -
    Income tax adjustment for
     above items at statutory rate          6,344                  (1,024)
                                            -----                  ------
    Net income (loss) excluding
     special items                        $16,089                 $(4,072)
                                          =======                 =======

    Basic and diluted earnings
     (loss) per common share,
     excluding special items                $0.22                  $(0.05)
                                            =====                  ======


                                                 Six Months Ended
                                                     June 30,
                                                     --------
                                            2010                   2009
                                            ----                   ----
                                     (In thousands, except per share amounts)
                                                    (Unaudited)

    Net income (loss)                     $70,185               $(250,552)
    Royalty relief recoupment, net
     of DD&A expense                      (12,864)                      -
    Unrealized commodity
     derivative gain                      (10,370)                      -
    Loss on extinguishment of debt              -                   2,926
    Impairment of oil and natural
     gas properties                             -                 218,871
    Income tax adjustment for
     above items at statutory rate          8,132                 (77,629)
                                            -----                 -------
    Net income (loss) excluding
     special items                        $55,083               $(106,384)
                                          =======               =========

    Basic and diluted earnings
     (loss) per common share,
     excluding special items                $0.74                  $(1.41)
                                            =====                  ======



                    Reconciliation of Net Income to Adjusted EBITDA

    We define EBITDA as net income (loss) plus income tax expense
     (benefit), net interest expense, depreciation, depletion,
    amortization and accretion and impairment of oil and natural gas
     properties.  Adjusted EBITDA excludes the unrealized gain or
    loss related to our derivative contracts.  Although not prescribed
     under generally accepted accounting principles, we believe the
    presentation of EBITDA and Adjusted EBITDA provide useful information
     regarding our ability to service debt and to fund capital
    expenditures and help our investors understand our operating
     performance and make 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.

    The following table presents a reconciliation of our consolidated net
     income to consolidated EBITDA and Adjusted EBITDA.




                                             Three Months Ended
                                                   June 30,
                                                   --------
                                         2010                    2009
                                         ----                    ----
                                                (In thousands)
                                                  (Unaudited)

    Net income (loss)                  $27,870                  $(5,974)
    Income tax expense (benefit)         3,077                  (10,521)
    Net interest expense                 9,231                    9,800
    Depreciation, depletion,
     amortization and accretion         76,022                   84,595
    Impairment of oil and natural
     gas properties                          -                        -
                                           ---                      ---
    EBITDA                             116,200                   77,900

    Adjustments:
    Unrealized commodity
     derivative gain                    (5,261)                       -
    Royalty relief recoupment, net
     of DD&A expense                   (12,864)                       -
    Loss on extinguishment of debt           -                    2,926
    Adjusted EBITDA                    $98,075                  $80,826
                                       =======                  =======


                                              Six Months Ended
                                                  June 30,
                                                  --------
                                         2010                    2009
                                         ----                    ----
                                               (In thousands)
                                                 (Unaudited)

    Net income (loss)                  $70,185               $(250,552)
    Income tax expense (benefit)         7,097                 (34,513)
    Net interest expense                18,607                  20,022
    Depreciation, depletion,
     amortization and accretion        145,231                 176,130
    Impairment of oil and natural gas
     properties                              -                 218,871
                                           ---                 -------
    EBITDA                             241,120                 129,958

    Adjustments:
    Unrealized commodity derivative
     gain                              (10,370)                      -
    Royalty relief recoupment, net of
     DD&A expense                      (12,864)                      -
    Loss on extinguishment of debt           -                   2,926
    Adjusted EBITDA                   $217,886                $132,884
                                      ========                ========

SOURCE W&T Offshore, Inc.