Investor Relations

Press Releases

W&T Offshore Reports Fourth Quarter and Full Year 2009 Financial and Operational Results

HOUSTON, Feb. 25 /PRNewswire-FirstCall/ -- W&T Offshore, Inc. (NYSE: WTI) today announces financial and operational results for the fourth quarter and full year 2009.  Some of the highlights include:

    --  Fourth quarter of 2009 net income and earnings per share were $64.0
        million and $0.84 per share, respectively, versus a net loss of $851.4
        million and loss per share of $11.21 during the fourth quarter of 2008.
    --  Production for 2009 was 94.8 Bcfe, sold at an average realized price of
        $6.39 per Mcfe.
    --  Long-term debt and asset retirement obligations decreased $200.2 million
        and $199.1 million, respectively.
    --  Capital budget for 2010 of $450 million, an increase of 63% over 2009
        expenditures.
    --  77% success in 2009 exploration and development drilling program,
        including successfully drilling eight of ten exploration wells and two
        of three development wells.
    --  LOE decreased $25.8 million for the year through divestitures of
        non-core assets and cost reduction initiatives.


Tracy W. Krohn, Chairman and Chief Executive Officer, commented, "In 2009, we focused on analyzing the best investment opportunities, be it drilling, joint ventures or acquisitions, while implementing a profitability initiative and divesting certain non-core assets to improve our margins.  As a result, we have identified over 160 prospects that we are tracking in our prospect inventory database, and we significantly reduced both operating costs and long-term asset retirement obligations.  We are better able to take advantage of rising energy prices with a lower cost structure.  We enter 2010 as a leaner, more efficient company with internally identified opportunities, the ability to capitalize on acquisitions and/or joint ventures and a Capital Budget of $450 million, which represents a 63% increase over our capital expenditures in 2009."  

Revenues, Net Income and EPS:  Net income for the fourth quarter of 2009 was $64.0 million, or $0.84 per common share, on revenues of $176.1 million, compared to a net loss for the same quarter of 2008 of $851.4 million, or $11.21 per common share, on revenues of $108.3 million. Net income increased in the fourth quarter of 2009, principally due to the $1.2 billion ceiling test impairment in 2008, $38.4 million in additional tax benefits related to new tax legislation in 2009, higher production volumes in 2009 and an increase in our average realized unhedged price to $7.67 per thousand cubic feet equivalent ("Mcfe") in 2009 from $6.68 per Mcfe in 2008.  Production was higher during the fourth quarter of 2009 compared to the corresponding period in 2008 due to the deferral of production caused by Hurricane Gustav in late August 2008 and Hurricane Ike in early September 2008.  The Worker, Homeownership and Business Assistance Act of 2009, which extended the net operating loss carryback period from two years to five years, resulted in additional tax benefits to us.    

Net income for the fourth quarter of 2009 excluding special items would have been approximately $27.1 million, or $0.36 per common share.  The net loss excluding special items for the corresponding quarter of 2008 was approximately $84.3 million, or $1.11 per common share.  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.  

The net loss for the year ended December 31, 2009 was $187.9 million, or $2.51 per common share, on revenues of $611.0 million, compared to a net loss of $558.8 million, or $7.36 per common share, on revenues of $1.2 billion for 2008.  Excluding special items, the net loss for 2009 would have been $81.5 million, or $1.09 per common share, compared to net income excluding special items of $200.9 million, or $2.63 per common share, in the 2008 period.  The net loss, before special items, for the year 2009 compared to net income, before special items, in 2008 resulted from lower average commodity prices throughout a majority of 2009 and lower production volumes.  This decrease was partially offset by lower lease operating expenses ("LOE"), gathering and transportation costs, production taxes, depreciation, depletion, amortization and accretion ("DD&A") and general and administrative expenses ("G&A").  

Cash Flow from Operating activities and Adjusted EBITDA:  EBITDA and Adjusted EBITDA are non-GAAP measures and are defined in "Non-GAAP Information" later in this press release.  Adjusted EBITDA for the fourth quarter of 2009 was $113.9 million, compared to $22.2 million during the prior year's fourth quarter.  Net cash provided by (used in) operating activities for the fourth quarter of 2009 increased to $64.4 million from ($157.8) million in 2008, respectively.  Adjusted EBITDA and cash flow from operating activities for the fourth quarter of 2009 were significantly higher than for the corresponding period in the previous year due to the deferral of production caused by Hurricane Gustav in late August 2008 and Hurricane Ike in early September 2008.  

For the year ended December 31, 2009, adjusted EBITDA was $342.2 million, compared to $883.9 million for the year 2008.  Net cash provided by operating activities for the full year of 2009 decreased to $156.3 million from $882.5 million in 2008.  Cash flow from operating activities and adjusted EBITDA were lower for the year ended December 31, 2009 compared to the prior year due to lower realized prices on sales of our oil and natural gas production, lower production volumes and a significant increase in working capital requirements, primarily to fund accounts payable, plugging and abandonment work and accounts receivable balances.

Production and Prices:  During the fourth quarter of 2009, we sold, on a natural gas equivalent ("Bcfe") basis, 22.9 Bcfe at an average price of $7.67 per Mcfe, compared to 16.2 Bcfe sold at an average price of $6.68 per Mcfe in the comparable 2008 period.  Higher production volumes during the fourth quarter of 2009 versus 2008 were largely due to deferred production from Hurricanes Gustav and Ike during 2008.

For the year ended December 31, 2009, we sold, on a natural gas equivalent basis, 94.8 Bcfe at an average price of $6.39 per Mcfe, compared to 97.9 Bcfe sold at an average price of $12.42 per Mcfe for the 2008 period.  The decline in production is largely attributable to divestitures completed in 2009 as well as natural reservoir declines, partially offset by deferred production from Hurricane Gustav and Ike that came back online during 2009.

Lease Operating Expenses:  LOE for the fourth quarter of 2009 decreased to $45.8 million from $73.2 million in the fourth quarter of 2008.  This LOE decline was due to lower base lease operating expenditures as a result of the divestitures, our cost reduction efforts and lower hurricane remediation expenditures.  

LOE for the year ended December 31, 2009 was $203.9 million, or $2.15 per Mcfe, compared to $229.7 million, or $2.35 per Mcfe, in 2008.  LOE on a nominal basis decreased due to our cost reduction efforts, the sale of certain non-core assets and decreased expenditures on our facilities for maintenance, partially offset by higher insurance costs and increased workover activity.  Included in lease operating expenses for 2009 and 2008 are $18.4 million and $17.7 million, respectively, of hurricane remediation costs related to Hurricanes Ike and Gustav that were either not yet approved by our insurance underwriters' adjuster or were not covered by insurance.  

Depreciation, depletion, amortization and accretion: DD&A decreased to $78.3 million, or $3.42 per Mcfe, in the fourth quarter of 2009 from $108.6 million, or $6.69 per Mcfe, in the same period of 2008.  DD&A for the year ended 2009 was $342.5 million, or $3.61 per Mcfe, compared to DD&A of $521.8 million, or $5.33 per Mcfe, for the same period in 2008.  The decrease is primarily attributable to a lower depreciable base (resulting from ceiling test impairments of $1.2 billion and $218.9 million recognized in the fourth quarter of 2008 and the first quarter of 2009, respectively, and a net reduction of our asset retirement obligations of $199.1 million from the sale of certain non-core assets, revisions to our estimates and other items), partially offset by lower oil and natural gas reserves.

Capital Expenditures and Operations Update:  For the year ended December 31, 2009, our capital expenditures were $276.1 million, consisting of $90.6 million for exploration activities, $162.1 million for development activities and $23.4 million for acquisitions, seismic, capitalized interest and other leasehold costs.  Our capital expenditures were funded by operating cash flow and cash on hand.  Capital expenditures and acquisitions in 2008 were $774.9 million.  

In 2009, the Company made discoveries and successfully completed drilling on eight of 10 exploration wells, for a success rate of 80%, which included seven out of nine conventional shelf wells, and one well in the marshlands of southern Louisiana.  Additionally, the Company successfully drilled and completed two of three development wells, both of which were on the conventional shelf.  For the 13 wells drilled in 2009, the Company achieved a success rate of 77%.  

Drilling Highlights:  In the fourth quarter of 2009, the Company was 100% successful in the drilling of two exploration wells.  One of the wells was located onshore in South Louisiana while the other was on the conventional shelf.  

    
    
    Commercial Wells:
    -----------------
    Well                        Category                  Working Interest %
    ----                        --------                  ------------------
    S. Louisiana Well           Exploration / Onshore             50%
    S. Timbalier 23 SD-18 ST2   Exploration / Conv. Shelf         30%
    
    

After the close of the first quarter, the Company drilled one non-commercial well:

    
    
    Non-commercial Wells:
    ---------------------
    Well                        Category                  Working Interest %
    ----                        --------                  ------------------
    Viosca Knoll 734 A-4        Exploration / Conv. Shelf        100%
    

Reserves:  As of December 31, 2009, total proved reserves were 371.0 Bcfe, compared to proved reserves of 491.1 Bcfe as of December 31, 2008.  This decline in reserves was primarily due to production, the divestiture of certain non-core assets, the use of average prices versus end of year prices, and downward revisions because of the de-booking of proved undeveloped reserves ("PUDs") as a result of the SEC's new five-year limitation on the life of PUDs from the date they were initially recorded.  Partially offsetting this decline were discoveries and extensions from our drilling, recomplete and workover programs.  Year-end 2009 proved reserves are comprised of 45% natural gas and 55% oil and natural gas liquids.  In accordance with guidelines established by the SEC, our proved reserves as of December 31, 2009 were determined to be economically producible under existing economic conditions, which requires the use of the 12-month average price for each product, calculated as the unweighted arithmetic average of the first-day-of-the-month price for the period January 2009 through December 2009.  The present value of our total proved reserves discounted at 10% (referred to as "PV-10"*), which includes the impact of estimated asset retirement obligations, is $890 million.  This is based on average prices of $3.87 per Mcf for natural gas and $57.65 per Bbl for oil and natural gas liquids, adjusted by lease for quality, transportation fees and regional price differentials.  The estimate of proved reserves is based on a reserve report prepared by Netherland, Sewell & Associates, Inc., the Company's independent petroleum consultant.

* The PV-10 value is a non-GAAP measure and defined in the "Non-GAAP Information" later in this press release.

The Company's proved reserves are summarized in the table below.

    
    
    
                                         As of December 31, 2009
                                 ---------------------------------------
                                                                  % of
                                   Oil        Gas       Total     Total
    Classification of Reserves   (MMBbls)    (Bcf)      (Bcfe)    Proved
    --------------------------   --------    ------     ------    ------
    
    Proved developed producing     12.7       86.6      162.5       44%
    Proved developed non-
     producing (1)                 11.0       54.7      121.0       32%
                                   ----       ----      -----      ---
       Total proved developed      23.7      141.3      283.5       76%
    Proved undeveloped             10.5       24.5       87.5       24%
                                   ----       ----       ----      ---
       Total proved                34.2      165.8      371.0      100%
                                   ====      =====      =====      ===
    
    (1) Includes approximately 1.7 Bcfe of reserves with a PV-10 (before 
        estimated asset retirement obligations) of $12.4 million that were 
        shut-in at December 31, 2009 because of damage caused by Hurricane Ike
        in September 2008.  We anticipate that the majority of these reserves 
        will be reclassified to producing in the first half of 2010.
    

2009 Reserve Reconciliation:

    
    
    
                                                                     Total Oil
                                                                        and
                                                Oil and    Natural    Natural
                                                Liquids      Gas        Gas
                                                (MBbls)     (MMcf)    (MMcfe)
                                                -------    -------    -------
    Proved reserves as of December 31, 2008      43,876     227,872   491,125
      Revisions due to pricing                    1,477      (6,371)    2,489
      Revisions due to performance                 (154)     (3,840)   (4,758)
      Revisions due to SEC 5-year rule for PUDs  (3,397)     (2,831)  (23,215)
      Discoveries and extensions                  1,481      14,511    23,402
      Purchases of minerals in place                 43         434       692
      Sales of minerals in place                 (1,927)    (12,397)  (23,957)
      Production                                 (7,197)    (51,621)  (94,806)
                                                 ------     -------   -------
    Proved reserves as of December 31, 2009      34,202     165,757   370,972
                                                 ======     =======   =======
    

2010 Capital Expenditures Budget:  Our total capital expenditure budget for 2010 is $450 million and is expected to be funded with internally generated cash flow and cash on hand.  The budget included seven conventional shelf exploration wells.  It also included other capital items such as well recompletions, facilities capital, seismic and leasehold items.  We have recently added three wells to the plan and continue to evaluate the expected costs associated with the original seven wells.  Our plan now includes ten wells plus the other capital items budgeted at $153 million.  The balance of the $450 million budget will be allocated to acquisitions, additional drilling opportunities from the Company's prospect inventory, joint venture projects and/or other drilling ventures.  WTI is determined to remain as flexible as possible and believes this strategy holds the best promise for value creation and growth.  

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

Guidance for the first quarter and full year 2010 are shown in the table below.  Production guidance includes the planned build up from our original seven wells and does not reflect any build up from the remainder of our capital budget.  

2010 Production and Cost Guidance:

    
    
    
    Estimated Production                     First Quarter        Full-Year
                                                 2010                2010
    Crude oil and NGL (MMBbls)                 1.5 – 1.6          4.6 – 6.2
    Natural gas (Bcf)                          8.9 – 9.9         32.4 – 42.8
    Total (Bcfe)                              17.8 – 19.7        60.0 – 80.0
    
    Operating Expenses ($ in
     millions, except as noted)              First Quarter        Full-Year
                                                 2010               2010
    Lease operating expenses                   $45 – $56         $168 – $206
    Gathering, transportation &
     production taxes                           $3 – $4           $14 – $18
    General and administrative                 $11 – $13          $43 – $47
    Income tax rate*                              35%                35%
    
    * Exclusive of valuation allowance adjustments.

Conference Call Information:  W&T will hold a conference call to discuss financial and operational results on Thursday, February 25, 2010 at 10:00 a.m. Eastern Time / 9:00 a.m. Central Time.  To participate, dial (480) 629-9819 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 Thursday, March 4, 2010, and may be accessed by calling (303) 590-3030 and using the pass code 4206518.

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 holds working interests in approximately 82 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, 2008 (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    Twelve Months Ended 
                                       December 31,          December 31,     
                                    ----------------       ----------------   
                                    2009        2008       2009        2008
                                    ----        ----       ----        ----
                                      (In thousands, except per share data)   
                                                                              
    Revenues                      $176,100    $108,306   $610,996  $1,215,609 
                                  --------    --------   --------  ---------- 
                                                                              
    Operating costs and expenses:                                             
      Lease operating expenses (1)  45,792      73,193    203,922     229,747 
      Gathering, transportation                                               
       costs and production taxes    3,299       1,831     15,163      24,784 
      Depreciation, depletion                                                 
       and amortization             72,634      98,386    308,076     482,464 
      Asset retirement                                                        
       obligation accretion          5,700      10,195     34,461      39,312 
      Impairment of oil and                                                   
       natural gas properties (2)        -   1,182,758    218,871   1,182,758 
      General and administrative                                              
       expenses                     11,065      12,931     42,990      47,225 
      Derivative loss (gain)         2,675      (4,433)     7,372      16,464 
                                     -----      ------      -----      ------ 
        Total costs and expenses   141,165   1,374,861    830,855   2,022,754 
                                   -------   ---------    -------   --------- 
        Operating income (loss)     34,935  (1,266,555)  (219,859)   (807,145)
    Interest expense:                                                         
      Incurred                      11,404      13,791     46,749      54,001 
      Capitalized                   (1,284)     (4,252)    (6,662)    (19,292)
    Loss on extinguishment of debt       -           -      2,926           - 
    Other income                        80       4,101        842      13,372 
                                       ---       -----        ---      ------ 
        Income (loss) before                                                  
         income tax benefit         24,895  (1,271,993)  (262,030)   (828,482)
    Income tax benefit             (39,059)   (420,577)   (74,111)   (269,663)
                                   -------    --------    -------    -------- 
        Net income (loss)          $63,954   $(851,416) $(187,919)  $(558,819)
                                   =======   =========  =========   ========= 
                                                                              
                                                                              
    Basic and diluted earnings                                                
     (loss) per common share         $0.84     $(11.21)    $(2.51)     $(7.36)
                                                                              
    Weighted average common                                                   
     shares outstanding             74,148      75,940     74,852      75,917 
                                                                              
    Consolidated Cash Flow 
     Information                                                              
      Net cash provided by (used                                              
       in) operating activities    $64,395   $(157,763)  $156,266    $882,496 
      Capital expenditures-oil                                                
       and natural gas properties      169     153,255    276,134     774,879 
                                       
                                                                              
    Other Financial Information                                               
      EBITDA                      $113,269     $24,784   $338,623    $897,389 
      Adjusted EBITDA              113,868      22,216    342,242     883,888 
    
    (1) Included in lease operating expenses for the years ended December 31, 
        2009 and 2008 are hurricane remediation costs of $18.4 million and 
        $17.7 million, respectively, related to Hurricanes Ike and Gustav that
        were either not yet approved by our insurance underwriters' adjuster 
        or were not covered by insurance.  
    (2) The carrying amount of our oil and natural gas properties has been 
        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.  This amount includes an 
        increase of $13.9 million from the previously reported amount of 
        $205.0 million as a result of further analysis of our March 31, 2009 
        ceiling test impairment calculation.  As such, operating income, net 
        income and our basic and diluted loss per common share for the first 
        quarter of 2009 have been adjusted as well.  In December 2008, the 
        carrying amount of our oil and natural gas properties was written down
        by $1.2 billion ($768.8 million after-tax) through application of the 
        full cost ceiling limitation as prescribed by the SEC, primarily as a 
        result of the significant decline in both oil and natural gas prices 
        as of December 31, 2008.    
    
    
    
    
                       W&T OFFSHORE, INC. AND SUBSIDIARIES                  
                            Condensed Operating Data                        
                                   (Unaudited)                              
                                                                            
                                                Three Months   Twelve Months
                                                    Ended          Ended
                                                 December 31,   December 31,
                                                 ------------   ------------
                                                  2009   2008    2009   2008
                                                 -----  -----   -----  -----
    Net sales:                                                              
      Natural gas (MMcf)                        11,696 10,485  51,621 56,072
      Oil (MBbls)                                1,871    958   7,197  6,970
      Total natural gas and oil (MBoe) (1)       3,820  2,705  15,801 16,315
      Total natural gas and oil (MMcfe) (2)     22,922 16,233  94,806 97,892
                                                                            
    Average daily equivalent sales (MBoe/d)       41.5   29.4    43.3   44.6
    Average daily equivalent sales (MMcfe/d)     249.2  176.4   259.7  267.5
                                                                            
    Average realized sales prices (Unhedged):                               
      Natural gas ($/Mcf)                        $3.92  $5.90   $3.97  $9.40
      Oil ($/Bbl)                                69.47  48.59   55.67  98.72
      Barrel of oil equivalent ($/Boe)           46.02  40.06   38.32  74.50
      Natural gas equivalent ($/Mcfe)             7.67   6.68    6.39  12.42
                                                                            
    Average realized sales prices (Hedged): (3) 
      Natural gas ($/Mcf)                        $3.90  $5.98   $3.96  $9.42
      Oil ($/Bbl)                                69.47  50.24   55.67  94.67
      Barrel of oil equivalent ($/Boe)           45.96  40.95   38.30  72.82
      Natural gas equivalent ($/Mcfe)             7.66   6.83    6.38  12.14
                                                                            
    Average per Boe ($/Boe):                                                
      Lease operating expenses                  $11.99 $27.05  $12.91 $14.08
      Gathering and transportation costs and                                
       production taxes                           0.86   0.68    0.96   1.52
      Depreciation, depletion, amortization                                 
       and accretion                             20.50  40.13   21.68  31.98
      General and administrative expenses         2.90   4.78    2.72   2.89
      Net cash provided by (used in) operating                              
       activities                                16.86 (58.31)   9.89  54.09
      Adjusted EBITDA                            29.81   8.21   21.66  54.18
                                                                            
    Average per Mcfe ($/Mcfe):                                              
      Lease operating expenses                   $2.00  $4.51   $2.15  $2.35
      Gathering and transportation costs and                                
       production taxes                           0.14   0.11    0.16   0.25
      Depreciation, depletion, amortization                                 
       and accretion                              3.42   6.69    3.61   5.33
      General and administrative expenses         0.48   0.80    0.45   0.48
      Net cash provided by (used in) operating                              
       activities                                 2.81  (9.72)   1.65   9.01
      Adjusted EBITDA                             4.97   1.37    3.61   9.03
    
    (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 and 2009 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 31, December 31,
                                                  ------------ ------------ 
                                                      2009        2008
                                                      ----        ----
                                             (In thousands, except share data)
                        Assets                                           
    Current assets:                                                      
      Cash and cash equivalents                      $38,187    $357,552 
      Receivables:                                                       
         Oil and natural gas sales                    54,978      36,550 
         Joint interest and other                     51,312      83,178 
         Insurance                                    30,543       2,040 
         Income taxes                                 85,457      34,077 
                                                      ------      ------ 
          Total receivables                          222,290     155,845 
      Prepaid expenses and other assets               28,777      30,417 
                                                      ------      ------ 
          Total current assets                       289,254     543,814 
      Property and equipment – at cost:                                  
        Oil and natural gas properties and                               
         equipment (full cost method, of which                           
         $77,301 at December 31, 2009 and $99,139 
         at December 31, 2008 were excluded from                         
         amortization)                             4,732,696   4,684,730 
        Furniture, fixtures and other                 15,080      14,370 
                                                      ------      ------ 
          Total property and equipment             4,747,776   4,699,100 
        Less accumulated depreciation, depletion                         
         and amortization                          3,752,980   3,217,759 
                                                   ---------   --------- 
          Net property and equipment                 994,796   1,481,341 
      Restricted deposits for asset retirement                           
       obligations                                    30,614      24,138 
      Deferred income taxes                            5,117           - 
      Other assets                                     7,052       6,893 
                                                       -----       ----- 
          Total assets                            $1,326,833  $2,056,186 
                                                  ==========  ========== 
                                                                         
         Liabilities and Shareholders’ Equity                            
    Current liabilities:                                                 
      Current maturities of long-term debt                $-      $3,000 
      Accounts payable                               115,683     228,899 
      Undistributed oil and natural gas proceeds      32,216      29,716 
      Asset retirement obligations                   117,421      67,007 
      Accrued liabilities                             13,509      18,254 
      Deferred income taxes                            5,117           - 
                                                       -----         --- 
        Total current liabilities                    283,946     346,876 
    Long-term debt, less current maturities –                            
     net of discount                                 450,000     650,172 
    Asset retirement obligations, less current                           
     portion                                         231,379     480,890 
    Other liabilities                                  2,558       6,021 
    Commitments and contingencies                                        
    Shareholders’ equity:                                                
      Common stock, $0.00001 par value;                                  
       118,330,000 shares authorized; 77,579,968                         
       issued and 74,710,795 outstanding at                             
       December 31, 2009;  76,291,408 issued                           
       and outstanding at December 31, 2008                1           1 
      Additional paid-in capital                     373,050     372,595 
      Retained earnings                               10,066     200,274 
      Treasury stock, at cost                        (24,167)          - 
      Accumulated other comprehensive loss                 -        (643)
                                                         ---        ---- 
        Total shareholders’ equity                   358,950     572,227 
                                                     -------     ------- 
        Total liabilities and shareholders’                              
         equity                                   $1,326,833  $2,056,186 
                                                  ==========  ========== 
    
    
    
                      W&T OFFSHORE, INC. AND SUBSIDIARIES                 
                Condensed Consolidated Statements of Cash Flows           
                                  (Unaudited)                             
                                                                          
                                                      Twelve Months Ended 
                                                          December 31,    
                                                        ---------------    
                                                        2009       2008
                                                        ----       ----
                                                         (In thousands)   
                                                                          
    Operating activities:                                                 
    Net loss                                         $(187,919) $(558,819)
    Adjustments to reconcile net loss to net cash                         
     provided by operating activities:                                    
      Depreciation, depletion, amortization and                           
       accretion                                       345,637    521,776 
      Impairment of oil and natural gas properties     218,871  1,182,758 
      Amortization of debt issuance costs and                             
       discount on indebtedness                          1,838      2,749 
      Loss on extinguishment of debt                     2,817          - 
      Share-based compensation related to                                 
       restricted stock issuances                        6,380      6,029 
      Unrealized derivative loss (gain)                    693    (13,501)
      Deferred income taxes                               (346)  (249,445)
      Changes in operating assets and liabilities     (232,703)    (9,884)
      Other                                                998        833 
                                                           ---        --- 
        Net cash provided by operating activities      156,266    882,496 
                                                       -------    ------- 
                                                                          
    Investing activities:                                                 
    Acquisition of property interest                    (2,421)  (116,551)
    Investment in oil and natural gas properties                          
     and equipment                                    (273,713)  (658,328)
    Proceeds from sales of oil and natural gas                            
     properties and equipment                           32,226          - 
    Proceeds from insurance                              6,916      5,828 
    Purchases of furniture, fixtures and other            (705)    (4,812)
                                                          ----     ------ 
        Net cash used in investing activities         (237,697)  (773,863)
                                                      --------   -------- 
                                                                          
    Financing activities:                                                 
    Borrowings of long-term debt                       205,441          - 
    Repayments of long-term debt                      (410,941)    (3,000)
    Dividends to shareholders                           (9,158)   (59,999)
    Repurchases of common stock                        (24,167)         - 
    Other                                                  891     (2,132)
                                                           ---     ------ 
        Net cash used in financing activities         (237,934)   (65,131)
                                                      --------    ------- 
        Increase (decrease)  in cash and cash                             
         equivalents                                  (319,365)    43,502 
    Cash and cash equivalents, beginning of period     357,552    314,050 
                                                       -------    ------- 
    Cash and cash equivalents, end of period           $38,187   $357,552 
                                                       =======   ======== 
    
    
                         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," "Adjusted EBITDA,"
    and "PV-10."  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 loss on extinguishment of debt, the
    impairment of oil and gas properties and associated tax effects and tax 
    impact of the new tax legislation.  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   Twelve Months Ended 
                                        December 31,          December 31,    
                                      ---------------       ---------------  
                                      2009       2008       2009       2008
                                      ----       ----       ----       ----
                                    (In thousands, except per share amounts) 
                                                   (Unaudited)               
                                                                             
    Net income (loss)               $63,954  $(851,416) $(187,919) $(558,819)
    Unrealized derivative loss                                               
     (gain)                             599     (2,568)       693    (13,501)
    Loss on extinguishment of debt        -          -      2,926          - 
    Income tax adjustment for                                                
     above items                        940        849     (1,024)     4,394 
    Impairment of oil and natural                                            
     gas properties                       -  1,182,758    218,871  1,182,758 
    Income tax adjustment on                                                 
     impairment                           -   (413,965)   (76,605)  (413,965)
    Income tax impact of new                                                 
     legislation (1)                (38,407)         -    (38,407)         - 
                                    -------        ---    -------        --- 
    Net income (loss) excluding                                              
     special items                  $27,086   $(84,342)  $(81,465)  $200,867 
                                    =======   ========   ========   ======== 
                                                                             
    Basic and diluted earnings                                               
     (loss) per common share,                                                
     excluding special items          $0.36     $(1.11)    $(1.09)     $2.63 
                                      =====     ======     ======      ===== 
    
    (1)  The Worker, Homeownership and Business Assistance Act of 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, accretion and
    impairment of oil and gas properties.  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 
    (loss) to consolidated EBITDA and Adjusted EBITDA
    
    
                                    Three Months Ended   Twelve Months Ended 
                                       December 31,          December 31,    
                                      ---------------       ---------------  
                                      2009       2008       2009       2008
                                      ----       ----       ----       ----
                                                 (In thousands)              
                                                   (Unaudited)               
                                                                             
    Net income (loss)               $63,954  $(851,416) $(187,919) $(558,819)
    Income tax benefit              (39,059)  (420,577)   (74,111)  (269,663)
    Net interest expense             10,040      5,438     39,245     21,337 
    Depreciation, depletion,                                                 
     amortization and accretion      78,334    108,581    342,537    521,776 
    Impairment of oil and natural                                            
     gas properties                       -  1,182,758    218,871  1,182,758 
                                        ---  ---------    -------  --------- 
    EBITDA                          113,269     24,784    338,623    897,389 
                                                                             
    Adjustments:                                                             
    Loss on extinguishment of debt        -          -      2,926          - 
    Unrealized derivative loss (gain)   599     (2,568)       693    (13,501)
                                        ---     ------        ---    ------- 
    Adjusted EBITDA                $113,868    $22,216   $342,242   $883,888 
                                   ========    =======   ========   ======== 
    
    
                                Price Sensitivities
    
    In addition to the SEC Case proved reserves, our independent petroleum 
    consultant also prepared estimates of our year-end proved reserves using 
    two alternative commodity price assumptions.  The following table 
    summarizes our total proved reserves as of December 31, 2009 under each of
    the three cases:
    
                             Total Proved Reserves
                            As of December 31, 2009
                            -----------------------
                  Oil       Gas        Total       PV-10 (3)  
    Case       (MMBbls)    (Bcf)      (Bcfe)    (In millions)
    ----       --------    -----       -----    -------------
    
    SEC           34.2     165.8       371.0        $890.0
    Flat (1)      35.8     181.1       396.0       1,578.5
    NYMEX (2)     36.7     186.0       406.0       1,841.1
    
    (1) The Flat Case was based on the posted spot prices as of December 31, 
        2009 for both oil and natural gas.  For oil and natural gas liquids, 
        the West Texas Intermediate posted price of $76.00 per barrel was 
        adjusted by lease for quality, transportation fees and regional price 
        differentials.  For natural gas, the Henry Hub spot price of $5.79 per 
        MMBTU was adjusted by lease for energy content, transportation fees 
        and regional price differentials.  Such prices were held constant 
        throughout the estimated lives of the reserves.  Future production and 
        development costs are based on current costs with no escalations.  
    (2) The NYMEX Case was based on the forward closing prices on the New York 
        Mercantile Exchange for oil and natural gas as of December 31, 2009.  
        For oil and natural gas liquids, the price was based on a crude oil 
        price which increased from $79.36 per Bbl to $101.92 per Bbl during 
        the life of the reserves and was adjusted by lease for quality, 
        transportation fees and regional price differentials.  For natural 
        gas, the price was based on a natural gas price which increased from 
        $5.57 per MMBTU to $9.05 per MMBTU over the life of the properties and 
        was adjusted by lease for energy content, transportation fees and 
        regional price differentials.  Future production and development costs 
        are based on current costs with no escalations.  
    (3) We refer to PV-10 as the present value of estimated future net 
        revenues before asset retirement obligations, as calculated by our 
        independent petroleum consultant, adjusted by the Company to include 
        estimated asset retirement obligations discounted using a 10% annual 
        discount rate.  PV-10 is not a financial measure prescribed under 
        generally accepted accounting principles ("GAAP").  Management 
        believes that the presentation of the non-GAAP financial measure of 
        PV-10 provides useful information to investors because it is widely 
        used by professional analysts and sophisticated investors in 
        evaluating oil and natural gas companies.  Management believes that 
        PV-10 is relevant and useful for evaluating the relative monetary 
        significance of oil and natural gas properties.  Further, professional 
        analysts and sophisticated investors may utilize the measure as a 
        basis for comparison of the relative size and value of our reserves to 
        other companies' reserves.  Management also uses this pre-tax measure 
        when assessing the potential return on investment related to oil and 
        natural gas properties and in evaluating acquisition opportunities.  
        Because there are many unique factors that can impact an individual 
        company when estimating the amount of future income taxes to be paid, 
        we believe the use of a pre-tax measure is valuable for evaluating us.  
        PV-10 is not a measure of financial or operating performance under 
        GAAP, nor is it intended to represent the current market value of our 
        estimated oil and natural gas reserves.  PV-10 should not be 
        considered in isolation or as a substitute for the standardized 
        measure of discounted future net cash flows as defined under GAAP.  
       
    

SOURCE W&T Offshore, Inc.