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W&T Offshore Reports Third Quarter 2007 Financial and Operational Results

Provides Revised Production and Expense Guidance for the Fourth Quarter

HOUSTON, Nov. 7 /PRNewswire-FirstCall/ -- W&T Offshore, Inc. (NYSE: WTI) announced today financial and operational results, including:

    -- Production for the third quarter of 2007 increased 10% to 314 MMcfe per
       day compared to the third quarter of 2006
    -- Production during the third quarter of 2007 was 42% oil and liquids
    -- Revenues for the third quarter of 2007 increased 20% to $255 million
       compared to the third quarter of 2006
    -- For the first nine months of 2007, cash flow from operating activities
       increased 34% to $472.7 million and Adjusted EBITDA increased 31% to
       $567.6 million compared to the first nine months of 2006
    -- Apparent high bidder on three Outer Continental Shelf (OCS) blocks
       offered in the Central Gulf of Mexico Lease Sale 205 held October 3,
       2007
    -- Increased borrowing availability under amended bank credit agreement
       from $300 million to $500 million

Revenues, Net Income and EPS: Net income for the third quarter of 2007 was $36.3 million, or $0.48 per diluted share, on revenue of $255.2 million, compared to net income for the same quarter in 2006 of $66.7 million, or $0.91 per diluted share. Net income for the third quarter of 2007 reflects the impact of a $6.4 million unrealized derivative loss ($4.2 million after-tax), or $0.05 per diluted share, while net income for the third quarter of 2006 included an unrealized derivative gain of $22.7 million. Without the effect of these unrealized derivative gains and losses, net income for the third quarter of 2007 would have been $40.5 million, or $0.53 per diluted share, and net income for the corresponding quarter of 2006 would have been $51.9 million, or $0.71 per diluted share. See "Non-GAAP Information" later in this release.

Net income for the nine months ended September 30, 2007 was $94.9 million, or $1.25 per diluted share ($1.46 per diluted share without the effect of the unrealized derivative loss and the loss on extinguishment of debt), on revenues of $774.3 million, compared to net income of $161.0 million or $2.35 per diluted share ($2.21 per diluted share without the effect of the unrealized derivative gain), on revenues of $536.1 million for the nine months ended September 30, 2006.

Cash Flow from Operating Activities and 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 nine months ended September 30, 2007 increased 34% to $472.7 million from $351.5 million in the first nine months of 2006. The increase was due to significantly higher revenues, partially offset by higher operating expenses. Adjusted EBITDA was $567.6 million for the nine months ended September 30, 2007, compared to $434.1 million for the prior nine-month period in 2006.

Production and Prices: Total production in the third quarter of 2007 was 16.8 billion cubic feet ("Bcf") of natural gas sold at an average price of $6.45 per thousand cubic feet ("Mcf") and 2.0 million barrels ("MMBbls") of oil sold at an average price of $72.72 per barrel ("Bbl"), or 28.9 billion cubic feet of natural gas equivalent ("Bcfe") sold at an average price of $8.83 per thousand cubic feet of natural gas equivalent ("Mcfe"). This compares to production of 15.4 Bcf of natural gas sold at an average price of $6.58 per Mcf and 1.8 MMBbls of oil sold at an average price of $62.08 per Bbl, or 26.2 Bcfe sold at an average price of $8.14 per Mcfe in the third quarter of 2006.

For the nine months ended September 30, 2007, total production was 55.5 Bcf of natural gas sold at an average price of $7.17 per Mcf and 6.1 MMBbls of oil sold at an average price of $61.49 per Bbl, or 92.2 Bcfe sold at an average price of $8.40 per Mcfe. This compares to 37.5 Bcf of natural gas sold at an average price of $7.35 per Mcf and 4.3 MMBbls of oil sold at an average price of $60.48 per Bbl, or 63.3 Bcfe sold at an average price of $8.46 per Mcfe for the same period in 2006.

The increase in volumes is primarily attributable to the properties acquired by merger in the Kerr-McGee transaction, partially offset by properties that experienced natural reservoir declines.

Lease Operating Expenses ("LOE"): LOE for the third quarter of 2007 increased to $51.6 million, or $1.79 per Mcfe, from $35.2 million, or $1.34 per Mcfe, in the third quarter of 2006. LOE for the nine months ended September 30, 2007 was $169.2 million or $1.83 per Mcfe, compared to $68.7 million or $1.08 per Mcfe for the same period in 2006. The increases are attributable to higher operating costs, hurricane repairs, major maintenance expenses, and insurance premiums, partially offset by lower workover expenditures. A significant portion of the increase is attributable to properties acquired by merger in the Kerr-McGee transaction. The Company believes the incurrence of such costs following a large acquisition of properties is not unusual, and the magnitude and timing of additional workover and maintenance expenditures on the properties acquired by merger in the Kerr- McGee transaction may fluctuate as integration of the properties continues. The remainder of the increase in operating costs is primarily attributable to new production and increases in service costs.

During the third quarter of 2007, the Company reclassified certain industry related reimbursements for overhead expenses from lease operating expenses to general and administrative expenses in order to better match the underlying reimbursement with the actual cost recorded. All prior year amounts have been reclassified to conform with the 2007 presentation. The effect of these reclassifications had no impact on net income.

Depreciation, Depletion, Amortization and Accretion ("DD&A"): DD&A increased to $123.1 million, or $4.26 per Mcfe, in the third quarter of 2007 from $85.5 million, or $3.26 per Mcfe, in the same period in 2006. For the nine months ended September 30, 2007 DD&A was $373.4 million or $4.05 per Mcfe, compared to $201.9 million, or $3.19 per Mcfe, for the same period in 2006. The increase primarily reflects higher finding and development costs and increased production volumes.

Capital Expenditures and Operations Update: In the third quarter, the Company successfully drilled one exploration well (see table below). For the nine months ended September 30, 2007, the Company has drilled or participated in the drilling of three exploration wells and two development wells. After the close of the third quarter, the Company drilled one non-commercial well at a cost, net to our interest, of $7.3 million (see table below).

For the nine months ended September 30, 2007, capital expenditures totaled $277.3 million (before dispositions of $3.7 million), of which $162.3 million was spent on development activities, $71.6 million for exploration, $43.4 million for seismic, leasehold costs and other capital items.

During the nine months ended September 30, 2007, development and exploration capital expenditures consisted of $98.7 million in the deepwater, $34.5 million on the deep shelf and $100.7 million on the conventional shelf and other projects.

    Successful Well:
    Field Name/Well                   Category              Working Interest
    South Timbalier 41 B-3ST   Exploration / Deep Shelf           40%

    After the Close of the Quarter

    Non-commercial Well:
    Field Name/Well                   Category              Working Interest
    Main Pass 162 A-3             Exploration / Shelf             67%

Outlook: Certain factors affecting these forward-looking statements are listed in this news release. Guidance on performance for the fourth quarter and full year of 2007 is shown in the table below.


    Fourth Quarter and Full Year 2007 Production and Revised Cost Guidance:

                           Fourth Quarter     Full-Year
    Estimated Production        2007            2007

    Crude oil (MMBbls)       1.5 - 1.9        7.7 - 8.0
    Natural gas (Bcf)       19.2 - 23.2      74.7 - 78.7
    Total (Bcfe)            28.8 - 34.8     121.0 - 127.0

    Operating Expenses     Fourth Quarter   Prior Full-Year     Revised
    ($ in millions,             2007             2007         Full-Year 2007
     except as noted)
    Lease operating
     expenses               $48.6 - $58.6   $197.0 - $220.0  $203.0 - $213.0
    Lease operating
     expenses -
     hurricane-related       $4.2 - $6.2     $18.0 - $26.0    $19.0 - $21.0
    Gathering, transportation
     & production taxes      $6.4 - $8.4     $24.9 - $29.7    $21.0 - $23.0
    General and
     administrative          $8.8 - $12.8    $50.0 - $55.0    $38.0 - $42.0
    Income tax rate,
     % deferred               34%, 10%          34%, 80%         34%, 15%

Conference Call Information: W&T will hold a conference call to discuss financial and operational results on Wednesday, November 7, 2007 at 10:00 a.m. Eastern Time / 9:00 a.m. Central Time. To participate, dial (303) 262-2130 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 approximately two hours after the end of the call until Wednesday, November 14, 2007, and may be accessed by calling (303) 590-3000 and using the pass code 11099965.

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 deepwater and deep shelf region, where it has developed significant technical expertise. W&T has grown through acquisition, exploitation and exploration and now holds working interests in over 200 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 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 10-K for the year ended December 31, 2006 (www.sec.gov).

     Contacts:
     Manuel Mondragon, Vice President of Finance
     investorrelations@wtoffshore.com
     713-297-8024

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


                             - Tables to Follow -


                     W&T OFFSHORE, INC. AND SUBSIDIARIES
                      Consolidated Statements of Income
                   (In thousands, except per share amounts)
                                 (Unaudited)

                               Three Months Ended       Nine Months Ended
                                  September 30,           September 30,
                               2007         2006        2007        2006

    Revenues                 $255,191    $213,431     $774,293    $536,082

    Operating costs and
     expenses:
     Lease operating
      expenses
                               51,627      35,227      169,154      68,704
     Gathering,
      transportation costs
      and production taxes      5,783       5,186       14,626      11,694
     Depreciation, depletion
      and amortization        117,539      82,142      356,881     194,052
     Asset retirement
      obligation accretion      5,574       3,324       16,477       7,840
     General and
      administrative expenses   9,952       8,845       29,240      28,164
     Derivative loss (gain)     2,809     (27,065)      15,082     (21,793)
      Total costs and
       expenses               193,284     107,659      601,460     288,661
      Operating income         61,907     105,772      172,833     247,421
    Interest expense:
     Incurred                  14,332       9,876       47,774      10,514
     Capitalized               (6,024)     (4,138)     (19,117)     (4,138)
    Loss on extinguishment
     of debt                        -           -        2,806           -
    Other income                1,567       2,111        2,508       5,505
     Income before income
      taxes                    55,166     102,145      143,878     246,550
    Income taxes               18,826      35,444       48,988      85,553
     Net income               $36,340     $66,701      $94,890    $160,997

    Earnings per common share:
     Basic                      $0.48       $0.92        $1.25       $2.36
     Diluted                     0.48        0.91         1.25        2.35

    Weighted average shares
     outstanding:
     Basic                     75,787      72,882       75,787      68,300
     Diluted                   75,949      73,039       75,914      68,412

    Consolidated Cash Flow
     Information
     Net cash provided by
      operating activities   $164,290    $123,364     $472,668    $351,468
     Capital expenditures      79,452   1,177,782      277,299   1,449,095

    Other Financial Information
     Adjusted EBITDA         $191,389    $168,524     $567,551    $434,089


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

                                Three Months Ended     Nine Months Ended
                                   September 30,          September 30,
                               2007           2006     2007          2006
    Net sales:
     Natural gas (MMcf)       16,753         15,374   55,498        37,490
     Oil (MBbls)               2,022          1,809    6,116         4,307
     Total natural gas and
      oil (MMcfe) (1)         28,886         26,228   92,194        63,333

    Average daily equivalent
     sales (MMcfe/d)           314.0          285.1    337.7         232.0

    Average realized sales
     prices: (2)
     Natural gas ($/Mcf)       $6.45          $6.58    $7.17         $7.35
     Oil ($/Bbl)               72.72          62.08    61.49         60.48
     Natural gas equivalent
      ($/Mcfe)                  8.83           8.14     8.40          8.46

    Average per Mcfe ($/Mcfe):
     Lease operating
      expenses (3)             $1.79          $1.34    $1.83         $1.08
     Gathering and
      transportation costs
      and production taxes      0.20           0.20     0.16          0.18
     Depreciation, depletion,
      amortization and
      accretion                 4.26           3.26     4.05          3.19
     General and administrative
      expenses (3)              0.34           0.34     0.32          0.44
     Net cash provided by
      operating activities      5.69           4.70     5.13          5.55
     Adjusted EBITDA            6.63           6.43     6.16          6.85

    (1) 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).

    (2) Average realized prices exclude the effects of commodity derivative
        contracts that do not qualify for hedge accounting.  Had the company
        included the effects of these derivatives, the average realized sales
        prices for natural gas would have been $6.69 per Mcf and $6.87 per Mcf
        for the third quarter of 2007 and 2006, respectively, and $7.27 per
        Mcf and $7.54 per Mcf for the nine months ended September 30, 2007 and
        2006, respectively.  The average realized sales prices for oil would
        have been $72.52 per barrel and $62.00 per barrel for the third
        quarter of 2007 and 2006, respectively, and $61.64 per barrel and
        $60.33 per barrel for the nine months ended September 30, 2007 and
        2006, respectively.  On a natural gas equivalent basis, the average
        realized sales prices would have been $8.96 per Mcfe and $8.30 per
        Mcfe for the third quarter of 2007 and 2006, respectively, and $8.47
        per Mcfe and $8.57 per Mcfe for the nine months ended September 30,
        2007 and 2006, respectively.

    (3) Certain industry related reimbursements for overhead expenses from
        joint interest owners have been reclassified from lease operating
        expenses to general and administrative expenses in order to better
        match the underlying reimbursement with the actual cost recorded.  All
        prior year amounts have been reclassified to conform with the 2007
        presentation.  The effect of these reclassifications had no impact on
        net income.


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

                                                 September 30,   December 31,
                                                     2007            2006

                      Assets
    Current assets:
     Cash and cash equivalents                      $187,807        $39,235
     Accounts receivable                             135,493        149,043
     Insurance receivable                                  -         75,151
     Income taxes receivable                               -         15,705
      Total receivables                              135,493        239,899
     Prepaid expenses and other assets                42,594         49,559
      Total current assets                           365,894        328,693
    Property and equipment - at cost:
     Oil and gas property and equipment
     (full cost method, of which $286,535 at
      September 30, 2007 and $308,231 at
      December 31, 2006 were excluded from
      amortization)                                3,575,536      3,297,153
     Furniture, fixtures and other                    10,711         10,948
      Total property and equipment                 3,586,247      3,308,101
     Less accumulated depreciation,
      depletion and amortization                   1,399,196      1,042,315
      Net property and equipment                   2,187,051      2,265,786
    Restricted deposits for asset retirement
     obligations                                      10,463         10,680
    Other assets                                       6,290          4,526
      Total assets                                $2,569,698     $2,609,685

           Liabilities and Shareholders' Equity
    Current liabilities:
     Current maturities of long-term debt             $3,000       $271,380
     Accounts payable                                123,566        247,324
     Undistributed oil and gas proceeds               51,829         46,933
     Asset retirement obligations - current portion   24,762         41,718
     Accrued liabilities                              27,364         28,825
     Income taxes                                     22,164              -
     Deferred income taxes - current portion               -          7,896
      Total current liabilities                      252,685        644,076
    Long-term debt, less current
     maturities - net of discount                    652,164         13,617
    Asset retirement obligations, less current
     portion                                         281,632        272,350
    Deferred income taxes, less current portion      242,579        232,835
    Other liabilities                                  5,553          3,890
    Commitments and contingencies
    Shareholders' equity:
    Common stock, $0.00001 par value; 118,330,000
     shares authorized; issued and outstanding
     76,227,713 and 75,900,082 shares at
     September 30, 2007 and December 31,
     2006, respectively                                    1              1
     Additional paid-in capital                      366,219        361,855
     Retained earnings                               769,670        681,634
     Accumulated other comprehensive loss               (801)          (573)
      Total shareholders' equity                   1,135,089      1,042,917
      Total liabilities and shareholders' equity  $2,569,698     $2,609,685


                     W&T OFFSHORE, INC. AND SUBSIDIARIES
               CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                      (In thousands, except share data)
                                 (Unaudited)

                                                       Nine Months Ended
                                                         September 30,
                                                       2007         2006
    Operating activities:
    Net income                                       $94,890      $160,997
    Adjustments to reconcile net income to net
     cash provided by operating activities:
     Depreciation, depletion, amortization
      and accretion                                  373,358       201,892
     Amortization of debt issuance costs and
      discount on indebtedness                         5,840         3,238
     Loss on extinguishment of debt                    2,806             -
     Share-based compensation related to
      restricted stock issuances                       2,491         2,177
     Unrealized derivative loss (gain)                21,360       (15,224)
     Deferred income taxes                                92        65,977
     Other                                               746             -
     Changes in operating assets and liabilities:
      Oil and gas receivables                         20,429       (34,599)
      Joint interest and other receivables            (7,240)        3,617
      Insurance receivables                           75,151       (36,449)
      Income taxes                                    37,869        19,575
      Prepaid expenses and other assets               (1,199)      (39,306)
      Asset retirement obligations                   (28,890)      (20,781)
      Accounts payable and accrued liabilities      (125,024)       40,354
      Other liabilities                                  (11)            -
       Net cash provided by operating activities     472,668       351,468

    Investing activities:
    Acquisition of Kerr-McGee properties                   -    (1,061,769)
    Investment in oil and gas property and
     equipment, net                                 (273,638)     (387,326)
    Purchases of furniture, fixtures and other, net     (348)       (6,985)
     Net cash used in investing activities          (273,986)   (1,456,080)

    Financing activities:
    Issuance of Senior Notes                         450,000             -
    Borrowings of other long-term debt               458,000       819,732
    Repayments of long-term debt                    (945,750)     (191,000)
    Proceeds from equity offering, net of costs            -       306,980
    Dividends to shareholders                         (6,850)       (5,947)
    Debt issuance costs and other                     (5,510)         (780)
     Net cash (used in) provided by financing
      activities                                     (50,110)      928,985
     Increase (decrease) in cash and cash
      equivalents                                    148,572      (175,627)
    Cash and cash equivalents, beginning of period    39,235       187,698
    Cash and cash equivalents, end of period        $187,807       $12,071


                     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 "Adjusted Net Income," "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 to Adjusted Net Income

"Adjusted Net Income" does not include the unrealized derivative (gain) loss and the loss on extinguishment of debt and associated tax effects. Adjusted Net Income 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,
                               2007       2006       2007         2006
                              (In thousands, except per share amounts)
                                           (Unaudited)

    Net Income               $36,340    $66,701    $94,890      $160,997
    Loss on extinguishment
     of debt                       -          -      2,806             -
    Unrealized derivative
     loss (gain)               6,369    (22,714)    21,360       (15,224)
    Income tax adjustment
     for above items          (2,173)     7,882     (8,228)        5,283
    Adjusted net income      $40,536    $51,869   $110,828      $151,056

    Adjusted earnings per
     share-diluted             $0.53      $0.71      $1.46         $2.21

We define EBITDA as net income plus income tax expense, net interest expense (income), and depreciation, depletion, amortization and accretion. 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. Adjusted EBITDA excludes the loss on extinguishment of debt and the unrealized gain or loss related to our open derivative contracts. Although not prescribed under generally accepted accounting principles, we believe the presentation of EBITDA and Adjusted EBITDA are relevant and useful because they 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        Nine Months Ended
                                September 30,             September 30,
                              2007        2006         2007         2006
                                            (In thousands)
                                              (Unaudited)

    Net Income              $36,340     $66,701      $94,890     $160,997
    Income taxes             18,826      35,444       48,988       85,553
    Net interest expense      6,741       3,627       26,149          871
    Depreciation, depletion,
     amortization and
     accretion              123,113      85,466      373,358      201,892
    EBITDA                  185,020     191,238      543,385      449,313

    Adjustments:
    Loss on extinguishment
     of debt                      -           -        2,806            -
    Unrealized derivative
     loss (gain)              6,369     (22,714)      21,360      (15,224)
    Adjusted EBITDA        $191,389    $168,524     $567,551     $434,089

SOURCE W&T Offshore, Inc.