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W&T Offshore Reports Second Quarter Results

HOUSTON, Aug. 4 /PRNewswire-FirstCall/ -- W&T Offshore, Inc. (NYSE: WTI) today provides financial and operational results for the second quarter 2009. Some of the highlights for the second quarter 2009 include:

    --  Production increased 16% to 24.8 Bcfe from 21.4 Bcfe in the first
        quarter of 2009
    --  Oil and natural gas liquids increased 29% to 1.9 MMbbls from 1.5 MMbbls
        in the first quarter of 2009 and represented 46% of second quarter
        production.
    --  Adjusted EBITDA increased 42% to $79.8 million from $56.2 million in the
        first quarter of 2009

    --  67% success in the drilling program, successfully drilling four out of
        six wells, including one successful deep shelf development well

Tracy W. Krohn, Chairman and Chief Executive Officer, commented, "As a result of the continuing strength in oil prices, the successful cost reduction efforts put in place by the Company, increased production due to our drilling program and pipelines returning to production post Hurricane Ike, the Company returned to profitability in June. I am extremely optimistic that our cash flows from operations will be increasing for the remainder of the year."

"As we have now completed most of our drilling projects for the year and continue to look at our best use of capital in the second half of 2009, we will focus on building cash for strategic opportunities, including acquisitions and attractive third party projects. We believe that over the next 12 to 18 months, sellers and buyers will be increasingly more willing to complete transactions at valuations that are attractive to us," added Mr. Krohn.

Revenues, Net Income/Loss and EPS: Net loss for the second quarter of 2009 was $6.0 million, or $0.08 per common share, on revenues of $150.4 million, compared to net income for the same quarter of 2008 of $134.6 million, or $1.76 per share, on revenues of $461.0 million. Net loss for the six months ended June 30, 2009 was $236.7 million, or $3.14 per common share, on revenues of $267.9 million, compared to net income of $214.4 million, or $2.81 per share, on revenues of $817.5 million for the first six months of 2008. The six months ended June 30, 2009 includes a $205 million ceiling test impairment, which was recorded in the first quarter of 2009. The adjusted net loss for the six month period is $57.0 million, or $0.76 per share.

Net loss for the second quarter of 2009 reflects the impact of a $1.0 million benefit from the change in fair value of our interest rate swap ($0.4 million after-tax) and $2.9 million loss from extinguishment of debt ($1.1 million after-tax). Without the effect of the unrealized derivative gain and loss from extinguishment of debt, net loss for the second quarter of 2009 would have been $5.3 million, or $0.07 per common share. Net income for the second quarter of 2008 included an unrealized derivative loss of $10.2 million ($6.7 million after-tax). Without the effect of the unrealized derivative loss, net income for the second quarter of 2008 would have been $141.3 million, or $1.86 per diluted share. See "Non-GAAP Information" later in this press release. The net loss in the second quarter is principally due to a lower average realized price of $6.06 per thousand cubic feet equivalent ("Mcfe"), versus $14.89 per Mcfe (unhedged) in 2008, decreased sales volumes for oil and natural gas related to the deferral of production caused by Hurricanes Gustav and Ike, and natural reservoir declines.

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, 2009 decreased 94% to $17.2 million from $305.6 million for the three months ended June 30, 2008. The decrease was mainly a result of lower realized prices and lower volumes. Second quarter 2009 Adjusted EBITDA was $79.8 million compared to $374.1 million during second quarter 2008, or a 79% decrease. Adjusted EBITDA was $130.9 million for the six months ended June 30, 2009, compared to $653.3 million for the comparable period of 2008.

Production and Prices: We sold 13.4 billion cubic feet ("Bcf") of natural gas at an average realized price of $3.89 per thousand cubic feet ("Mcf") in the second quarter of 2009. We also sold 1.9 million barrels ("MMBbls") of oil and natural gas liquids at an average realized price of $51.61 per barrel ("Bbl") during the same period. For the second quarter of 2008, we sold 17.0 Bcf of natural gas at an average realized price of $11.53 per Mcf and 2.3 MMBbls of oil and natural gas liquids at an average realized price of $113.74 per Bbl. On a natural gas equivalent ("Bcfe") basis, we sold 24.8 Bcfe at an average realized price of $6.06 per Mcfe in the second quarter of 2009 compared to 31.0 Bcfe sold at an average realized price of $14.89 per Mcfe in the second quarter of 2008.

For the six months ended June 30, 2009, our natural gas production totaled 25.9 Bcf and was sold at an average realized price of $4.47 per Mcf while our oil and natural gas liquids production totaled 3.4 MMBbls, which was sold at an average realized price of $44.93 per Bbl. On a combined, basis our production was 46.2 Bcfe sold at an average realized price of $5.79 per Mcfe. For the comparable 2008 period, we produced 34.7 Bcf of natural gas that was sold at an average realized price of $10.09 per Mcf and 4.5 MMBbls of oil and natural gas liquids production sold at an average realized price of $103.46 per Bbl. On a combined, basis our production was 61.8 Bcfe sold at an average realized price of $13.23 per Mcfe.

Lease Operating Expenses: On a nominal basis, LOE for the second quarter of 2009 decreased to $54.1 million, or $2.18 per Mcfe, from $54.3 million, or $1.75 per Mcfe, in the second quarter of 2008. Included in lease operating expenses for the second quarter of 2009 are $5.0 million 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 these costs are recovered under our insurance policy. LOE on a per Mcfe basis increased primarily due to lower volumes associated with deferred production due to Hurricanes Ike and Gustav and natural reservoir declines.

On a nominal basis, LOE for the six months ended June 30, 2009 remained flat at $104.3 million, or $2.26 per Mcfe, compared to $104.2 million, or $1.69 per Mcfe for the same period in 2008. LOE for the first six months included $15.2 million in hurricane remediation costs. Excluding this, LOE was lower in the 2009 period due to a decrease in base lease operating expenses, fewer workovers and lower facilities expenses.

Depreciation, depletion, amortization and accretion: DD&A decreased to $84.6 million, or $3.41 per Mcfe, in the second quarter of 2009 from $153.8 million, or $4.97 per Mcfe, in the second quarter of 2008. DD&A decreased primarily as a result of a lower depreciable base (due to impairment charges at December 31, 2008 and March 31, 2009 of $1.2 billion and $205 million, respectively), lower production volumes compared to 2008 due in part to the sale of certain assets resulting in a net reduction in our asset retirement obligations. DD&A for the six months ended 2009 was $176.1 million, or $3.81 per Mcfe, compared to DD&A of $299.3 million, or $4.85 per Mcfe, for the same period in 2008.

Liquidity: Our cash balance at June 30, 2009 was $100.7 million and we had $262.4 million of undrawn capacity under our revolving credit facility. During the second quarter we paid off our $205 million Term Loan B with a draw under our revolver. Also during the second quarter we subsequently paid off $63 million of the revolver, leaving us $142.5 million drawn under the facility at June 30, 2009, which matches the notional amount of our interest rate swap. In the second half of 2009, we expect to rebuild our cash position since the vast majority of our capital expenditures were front-end loaded for the year and only approximately $30 million still remains.

Capital Expenditures and Operations Update: For the three months ended June 30, 2009, capital expenditures for oil and natural gas properties of $111.3 million included $44.4 million for exploration activities, $56.0 million for development activities and $10.9 million for seismic, capitalized interest and other leasehold costs. Our development and exploration capital expenditures consisted of $14.0 million in the deepwater, $0.2 million on the deep shelf and $86.2 million on the conventional shelf and other projects.

For the first six months of 2009, our capital expenditures for oil and natural gas properties were $239.7 million, including $80.2 million for exploration activities, $144.2 million for development activities and $15.3 million for seismic, capitalized interest and other leasehold costs. Our development and exploration capital expenditures consisted of $30.8 million in the deepwater, $0.3 million on the deep shelf and $193.3 million on the conventional shelf and other projects. Cash from operating activities and cash on hand financed our capital expenditures for the three and six months ended June 30, 2009.

Drilling Highlights: In the second quarter of 2009, the Company drilled or participated in the drilling of six wells. Of these, five were exploratory shelf wells and one was a deep shelf development well.

Commercial Wells

    Lease Name/Well                  Category           Working Interest %
    ---------------                  --------           ------------------
    Main Pass 279 A-5ST           Exploration/Shelf              89%
    Ship Shoal 349 A-12ST         Development/Deep Shelf        100%
    Main Pass 108 E-2             Exploration/Shelf              67%
    South Timbalier 315 A-5       Exploration/Shelf             100%

Non-commercial Wells

    Lease Name/Well                  Category           Working Interest %
    ---------------                  --------           ------------------
    South Timbalier 316 A-4       Exploration/Shelf              80%
    South Marsh Island 39 B-2ST   Exploration/Shelf              50%

Outlook: Guidance for the third quarter and full year 2009 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 2009 Production and Revised Cost Guidance:

                                   Third
                                  Quarter           Full-Year
    Estimated Production            2009              2009

    Crude oil (MMBbls)           1.5 - 1.9          6.5 - 8.4
    Natural gas (Bcf)           12.1 - 14.4        43.6 - 56.1
    Total (Bcfe)                21.1 -25.8         82.8 - 106.4

    Operating Expenses        Third           Prior        Revised
    ($in millions,           Quarter        Full-Year     Full-Year
    except as noted)          2009            2009          2009

    Lease operating
     expenses               $48 - $59     $205 - $245   $205 - $235
    Gathering,
     transportation &
     production taxes        $4 - $5       $20 - $24      No change
    General and
     administrative         $10 - $12      $45 - $48      No Change
    Income tax rate             0%             9%            14%

Conference Call Information: W&T will hold a conference call to discuss financial and operational results on Tuesday August 4, 2009 at 11:00 a.m. Eastern Time / 10:00 a.m. Central Time. To participate, dial (480) 629-9771 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 Tuesday, August 11, 2009, and may be accessed by calling (303) 590-3030 and using the pass code 4112103.

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 acquisition, exploitation and exploration and now holds working interests in over 148 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 n 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, 2008 (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

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

                                    Three Months Ended   Six Months Ended
                                         June 30,            June 30,
                                         --------            --------
                                      2009      2008       2009      2008
                                      ----      ----       ----      ----
                                      (In thousands,      (In thousands,
                                     except per share    except per share
                                           data)               data)

    Revenues                       $150,432  $461,015   $267,854  $817,510
                                   --------  --------   --------  --------

    Operating costs and expenses:
      Lease operating expenses (1)   54,080    54,329    104,311   104,151
      Gathering, transportation
       costs and production taxes     4,335     7,925      7,640    16,746
      Depreciation, depletion and
       amortization                  74,515   143,908    155,303   279,877
      Asset retirement obligation
       accretion                     10,080     9,927     20,827    19,446
      Impairment of oil and
       natural gas properties (1)         -         -    205,030         -
      General and administrative
       expenses                      10,731    11,062     22,167    23,637
      Derivative loss                   460    23,767        852    36,071
                                        ---    ------        ---    ------
        Total costs and expenses    154,201   250,918    516,130   479,928
                                    -------   -------    -------   -------
        Operating income (loss)      (3,769)  210,097   (248,276)  337,582
    Interest expense:
      Incurred                       11,740    12,461     24,249    26,839
      Capitalized                    (1,722)   (4,762)    (3,504)  (10,435)
    Loss on extinguishment of debt    2,926         -      2,926         -
    Other income                        218     2,691        723     5,131
                                        ---     -----        ---     -----
        Income (loss) before
         income tax expense
         (benefit)                  (16,495)  205,089   (271,224)  326,309
    Income tax expense (benefit)    (10,521)   70,479    (34,513)  111,893
                                    -------    ------    -------   -------
        Net income (loss)           $(5,974) $134,610  $(236,711) $214,416
                                    =======  ========  =========  ========


    Basic and diluted earnings
     (loss) per common share (2)     $(0.08)    $1.76     $(3.14)    $2.81

    Weighted average common
     shares outstanding              74,642    75,910     75,308    75,907

    Consolidated Cash Flow
     Information
      Net cash provided by
       operating activities         $17,191  $305,563    $46,413  $547,962
      Capital expenditures-oil
       and natural gas properties   111,320   153,322    239,684   399,156

    Other Financial Information
      EBITDA                        $77,900  $363,932   $129,958  $636,905
      Adjusted EBITDA                79,800   374,142    130,865   653,300


    (1) Certain reclassifications have been made to prior periods' financial
        statements to conform to the current presentation, including a
        reclassification of $5.2 million of costs previously included in
        impairment of oil and natural gas properties during the quarter ended
        March 31, 2009 to lease operating expenses.
    (2) Earnings per share data for the three and six months ended June 30,
        2008 has been calculated and restated retrospectively in accordance
        with FSP 03-6-1, which resulted in a decrease of $0.01 from each of
        the amounts previously reported as basic and diluted earnings per
        common share for the three and six months ended June 30, 2008.  The
        adoption of FSP 03-6-1 did not have an effect on our basic loss per
        common share for the three and six months ended June 30, 2009.

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

                                          Three Months   Six Months
                                             Ended         Ended
                                            June 30,      June 30,
                                            --------      --------
                                           2009   2008   2009   2008
                                           ----   ----   ----   ----
    Net sales:
      Natural gas (MMcf)                 13,353 16,980 25,905 34,663
      Oil (MBbls)                         1,909  2,331  3,386  4,519
      Total natural gas and oil (MBoe)
       (1)                                4,135  5,161  7,703 10,297
      Total natural gas and oil (MMcfe)
       (2)                               24,808 30,963 46,221 61,780

    Average daily equivalent sales
     (MBoe/d)                              45.4   56.7   42.6   56.6
    Average daily equivalent sales
     (MMcfe/d)                            272.6  340.3  255.4  339.4

    Average realized sales prices
     (Unhedged):
      Natural gas ($/Mcf)                 $3.89 $11.53  $4.47 $10.09
      Oil ($/Bbl)                         51.61 113.74  44.93 103.46
      Barrel of oil equivalent ($/Boe)    36.38  89.32  34.77  79.38
      Natural gas equivalent ($/Mcfe)      6.06  14.89   5.79  13.23

    Average realized sales prices
     (Hedged): (3)
      Natural gas ($/Mcf)                 $3.89 $11.53  $4.47 $10.09
      Oil ($/Bbl)                         51.61 108.33  44.93  99.35
      Barrel of oil equivalent ($/Boe)    36.38  86.87  34.77  77.58
      Natural gas equivalent ($/Mcfe)      6.06  14.48   5.79  12.93

    Average per Boe ($/Boe):
      Lease operating expenses           $13.08 $10.53 $13.54 $10.12
      Gathering and transportation
       costs and production taxes          1.05   1.54   0.99   1.63
      Depreciation, depletion,
       amortization and accretion         20.46  29.81  22.86  29.07
      General and administrative
       expenses                            2.60   2.14   2.88   2.30
      Net cash provided by operating
       activities                          4.16  59.21   6.02  53.22
      Adjusted EBITDA                     19.30  72.49  16.99  63.45

    Average per Mcfe ($/Mcfe):
      Lease operating expenses            $2.18  $1.75  $2.26  $1.69
      Gathering and transportation
       costs and production taxes          0.17   0.26   0.17   0.27
      Depreciation, depletion,
       amortization and accretion          3.41   4.97   3.81   4.85
      General and administrative
       expenses                            0.43   0.36   0.48   0.38
      Net cash provided by operating
       activities                          0.69   9.87   1.00   8.87
      Adjusted EBITDA                      3.22  12.08   2.83  10.57


    (1) 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 crude oil, condensate or
        natural gas liquids to six Mcf of natural gas (totals may not add due
        to rounding).
    (2) 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).
    (3) Data for 2008 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)

                                                                  December
                                                      June 30,       31,
                                                      --------    --------
                                                        2009        2008
                                                        ----        ----
                                                     (In thousands, except
                                                           share data)
                         Assets
    Current assets:
      Cash and cash equivalents                       $100,733    $357,552
      Receivables:
         Oil and natural gas sales                      53,538      36,550
         Joint interest and other                       61,703      83,178
         Insurance                                      55,579       2,040
         Income taxes                                   50,876      34,077
                                                        ------      ------
            Total receivables                          221,696     155,845
      Prepaid expenses and other assets                 55,153      30,417
                                                        ------      ------
        Total current assets                           377,582     543,814
      Property and equipment - at cost:
        Oil and natural gas properties and
         equipment (full cost method, of which
         $101,467 at
         June 30, 2009 and $99,139 at December
         31, 2008 were excluded from
         amortization)                               4,832,494   4,684,730
        Furniture, fixtures and other                   14,850      14,370
                                                        ------      ------
          Total property and equipment               4,847,344   4,699,100
        Less accumulated depreciation, depletion
         and amortization                            3,586,368   3,217,759
                                                     ---------   ---------
          Net property and equipment                 1,260,976   1,481,341
      Restricted deposits for asset retirement
       obligations                                      24,136      24,138
      Deferred income taxes                             11,877           -
      Other assets                                       7,494       6,893
                                                         -----       -----
          Total assets                              $1,682,065  $2,056,186
                                                    ==========  ==========

          Liabilities and Shareholders' Equity
    Current liabilities:
      Current maturities of long-term debt                  $-      $3,000
      Accounts payable                                 205,373     228,899
      Undistributed oil and natural gas proceeds        25,997      29,716
      Asset retirement obligations                     101,488      67,007
      Accrued liabilities                               10,719      18,254
      Deferred income taxes                             11,877           -
                                                        ------         ---
        Total current liabilities                      355,454     346,876
    Long-term debt, less current maturities - net
     of discount                                       592,500     650,172
    Asset retirement obligations, less current
     portion                                           402,945     480,890
    Other liabilities                                    3,149       6,021
    Commitments and contingencies
    Shareholders' equity:
      Common stock, $0.00001 par value;
       118,330,000 shares authorized; 77,817,032
       issued and 76,387,546 outstanding at June
       30, 2009;  76,291,408 issued and
       outstanding at December 31, 2008                      1           1
      Additional paid-in capital                       376,336     372,595
      Retained earnings (accumulated deficit)          (38,726)    200,274
      Treasury stock, at cost                           (9,247)          -
      Accumulated other comprehensive loss                (347)       (643)
                                                          ----        ----
        Total shareholders' equity                     328,017     572,227
                                                       -------     -------
        Total liabilities and shareholders' equity  $1,682,065  $2,056,186
                                                    ==========  ==========

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

                                                   Six Months Ended
                                                       June 30,
                                                       --------
                                                    2009      2008
                                                    ----      ----
                                                    (In thousands)

    Operating activities:
    Net income (loss)                           $(236,711) $214,416
    Adjustments to reconcile net income (loss)
     to net cash provided by operating
     activities:
      Depreciation, depletion, amortization
       and accretion                              179,230   299,323
      Impairment of oil and natural gas
       properties                                 205,030         -
      Amortization of debt issuance costs and
       discount on indebtedness                     1,176     1,316
      Loss on extinguishment of debt                2,817         -
      Share-based compensation related to
       restricted stock issuances                   3,116     3,098
      Unrealized derivative (gain) loss            (2,019)   16,395
      Deferred income taxes                          (158)   48,602
      Changes in operating assets and
       liabilities                               (106,526)  (35,460)
      Other                                           458       272
                                                      ---       ---
        Net cash provided by operating
         activities                                46,413   547,962
                                                   ------   -------

    Investing activities:
    Acquisition of property interest                    -  (116,551)
    Investment in oil and natural gas
     properties and equipment                    (239,684) (282,605)
    Proceeds from sale of oil and natural gas
     properties and equipment                       8,368         -
    Proceeds from insurance                         5,260         -
    Purchases of furniture, fixtures and other       (479)   (2,302)
                                                     ----    ------
        Net cash used in investing activities    (226,535) (401,458)
                                                 --------  --------

    Financing activities:
    Borrowings of long-term debt                  205,441         -
    Repayments of long-term debt                 (268,441)   (1,500)
    Dividends to shareholders                      (4,581)  (34,577)
    Repurchases of common stock                    (9,247)        -
    Other                                             131       (80)
                                                      ---       ---
        Net cash used in financing activities     (76,697)  (36,157)
                                                  -------   -------
        Increase (decrease)  in cash and cash
         equivalents                             (256,819)  110,347
    Cash and cash equivalents, beginning of
     period                                       357,552   314,050
                                                  -------   -------
    Cash and cash equivalents, end of period     $100,733  $424,397
                                                 ========  ========

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, the impairment of oil and natural gas properties, loss on extinguishment of debt, and associated tax effects. Adjusted Net Income is presented because the timing and amount of the derivative 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   Six Months Ended
                                              June 30,            June 30,
                                              --------            --------
                                           2009      2008       2009      2008
                                           ----      ----       ----      ----
                                         (In thousands,      (In thousands,
                                         except per share    except per share
                                             amounts)            amounts)
                                           (Unaudited)         (Unaudited)

    Net income (loss)                  $(5,974) $134,610  $(236,711) $214,416
    Unrealized derivative (gain) loss   (1,026)   10,210     (2,019)   16,395
    Impairment of oil and natural gas
     properties                              -         -    205,030         -
    Loss on extinguishment of debt       2,926         -      2,926         -
    Income tax adjustment for above
     items                              (1,212)   (3,509)   (26,205)   (5,622)
                                        ------    ------    -------    ------
    Adjusted net income (loss)         $(5,286) $141,311   $(56,979) $225,189
                                       =======  ========   ========  ========

    Adjusted basic and diluted
     earnings (loss) per common share
     (1)                                $(0.07)    $1.86     $(0.76)    $2.97
                                        ======     =====     ======     =====


    (1) Earnings per share data for the three and six months ended June 30,
        2008 has been calculated and restated retrospectively in accordance
        with FSP 03-6-1.  The adoption of FSP 03-6-1 did not have an effect on
        our basic and diluted loss per common share for the three and six
        months ended June 30, 2009.

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 loss on extinguishment of debt and 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    Six Months Ended
                                  June 30,             June 30,
                                  --------             --------
                               2009      2008       2009      2008
                               ----      ----       ----      ----
                               (In thousands)      (In thousands)
                                 (Unaudited)         (Unaudited)

    Net income (loss)        $(5,974) $134,610  $(236,711) $214,416
    Income tax expense
     (benefit)               (10,521)   70,479    (34,513)  111,893
    Net interest expense       9,800     5,008     20,022    11,273
    Depreciation,
     depletion, amortization
     and accretion            84,595   153,835    176,130   299,323
    Impairment of oil and
     natural gas properties        -         -    205,030         -
                                   -         -    -------         -
    EBITDA                    77,900   363,932    129,958   636,905

    Adjustments:
    Loss on extinguishment
     of debt                   2,926         -      2,926         -
    Unrealized derivative
     (gain) loss              (1,026)   10,210     (2,019)   16,395
                              ------    ------     ------    ------
    Adjusted EBITDA          $79,800  $374,142   $130,865  $653,300
                             =======  ========   ========  ========

SOURCE W&T Offshore, Inc.