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W&T Offshore Reports Second Quarter Results

HOUSTON, Aug. 3 /PRNewswire-FirstCall/ -- W&T Offshore, Inc. (NYSE: WTI) today provides financial and operational results for the second quarter 2010.  Some of the highlights for the second quarter 2010 include:

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


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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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


Commercial Wells

Lease Name/Well     Category          Working Interest %

Main Pass 98 #1     Exploration/Shelf 100%

Main Pass 279 A-6ST Exploration/Shelf 89%





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

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

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


                            Third
                            Quarter       Prior Full-Year Revised Full-Year
Estimated Production        2010          2010            2010

Crude oil (MMBbls)          1.4 – 1.7   5.6 – 7.6     6.1 – 7.3

Natural gas (Bcf)           8.8 – 10.8  36.6 – 49.5   38.4 – 46.0

Total (Bcfe)                17.4 – 21.3 70.3 - 95.1     75.0 – 90.0



                            Third
Operating Expenses($ in     Quarter       Prior Full-Year Revised Full-Year
millions, except as noted)  2010          2010            2010

Lease operating expenses    $48 - $58     $177 - $216     $172 - $211

Gathering, transportation &
production taxes            $4 – $5     $18 - $22       Unchanged

General and administrative  $12 - $14     $45 - $49       $49 - $54

Income tax rate             12.0%         12.0%           10.3%





Conference Call Information:  W&T will hold a conference call to discuss financial and operational results on Tuesday, August 3, 2010 at 9:30 a.m. Eastern Time / 8:30 a.m. Central Time.  To participate, dial (480) 629-9723 at least ten minutes before the call begins.  The call will also be broadcast live over the Internet from the Company's website at www.wtoffshore.com.  A replay of the conference call will be available approximately two hours after the end of the call until Tuesday, August 10, 2010, and may be accessed by calling (303) 590-3030 and using the pass code 4329423.

About W&T Offshore

W&T Offshore is an independent oil and natural gas company focused primarily in the Gulf of Mexico, including exploration in the deepwater and deep shelf regions, where it has developed significant technical expertise.  W&T has grown through acquisitions, exploitation and exploration and currently holds working interests in approximately 72 producing fields in federal and state waters.   The majority of the Company's daily production is derived from wells it operates.  For more information on W&T Offshore, please visit its Web site at www.wtoffshore.com.  

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These forward-looking statements reflect our current views with respect to future events, based on what we believe are reasonable assumptions. No assurance can be given, however, that these events will occur. These statements are subject to risks and uncertainties that could cause actual results to differ materially including, among other things, market conditions, oil and gas price volatility, uncertainties inherent in oil and gas production operations and estimating reserves, unexpected future capital expenditures, competition, the success of our risk management activities, governmental regulations, uncertainties and other factors discussed in our Annual Report on Form 10-K for the year ended December 31, 2009 (www.sec.gov).


 Contacts:

 Janet Yang, Finance Manager

 investorrelations@wtoffshore.com

 713-297-8024



 Ken Dennard / ksdennard@drg-e.com

 Lisa Elliott / lelliott@drg-e.com

 DRG&E / 713-529-6600






W&T OFFSHORE, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Income (Loss)

(Unaudited)



                               Three Months Ended      Six Months Ended

                               June 30,                June 30,

                               2010        2009        2010         2009

                               (In thousands, except per share data)



Revenues (1)                   $ 179,667   $ 150,432   $ 349,252    $ 267,854



Operating costs and expenses:

Lease operating expenses (2)     52,457      54,080      87,823       104,311

Gathering, transportation
costs and production taxes       4,009       4,335       8,825        7,640

Depreciation, depletion and
amortization                     69,895      74,515      132,819      155,303

Asset retirement obligation
accretion                        6,127       10,080      12,412       20,827

Impairment of oil and natural
gas properties (3)               -           -           -            218,871

General and administrative
expenses                         14,375      10,731      24,754       22,167

Derivative (gain) loss           (7,374)     460         (13,270)     852

Total costs and expenses         139,489     154,201     253,363      529,971

Operating income (loss)          40,178      (3,769)     95,889       (262,117)

Interest expense:

Incurred                         10,914      11,740      21,834       24,249

Capitalized                      (1,329)     (1,722)     (2,745)      (3,504)

Loss on extinguishment of debt   -           2,926       -            2,926

Other income                     354         218         482          723

Income (loss) before income
tax expense (benefit)            30,947      (16,495)    77,282       (285,065)

Income tax expense (benefit)     3,077       (10,521)    7,097        (34,513)

Net income (loss)              $ 27,870    $ (5,974)   $ 70,185     $ (250,552)





Basic and diluted earnings
(loss) per common share        $ 0.37      $ (0.08)    $ 0.94       $ (3.33)



Weighted average common
shares outstanding               73,669      74,642      73,665       75,308



Consolidated Cash Flow
Information

Net cash provided by
operating activities           $ 157,358   $ 17,190    $ 244,318    $ 46,413

Investment in oil and natural
gas properties                   166,391     111,320     206,294      239,684



Other Financial Information

EBITDA                         $ 116,200   $ 77,900    $ 241,120    $ 129,958

Adjusted EBITDA                  98,075      80,826      217,886      132,884








(1) Included in oil revenues for the three and six months ended June 30, 2010
is $20.1 million related to the recoupment of royalties paid to the BOEM in
prior periods based on price thresholds that were believed to limit the
availability of royalty relief on certain of our properties subject to the
Outer Continental Shelf ("OCS") Deepwater Royalty Relief Act of 1995.

(2) Included in lease operating expenses for the three months ended June 30,
2010 are hurricane remediation costs of $2.1 million related to Hurricanes Ike
and Gustav that were either not yet approved for payment under our insurance
policies or were not covered by insurance. Included in lease operating expenses
for the six months ended June 30, 2010 is a reduction of $4.2 million related
to amounts approved for payment under our insurance policies and revisions to
previous estimates of hurricane remediation costs incurred in connection with
Hurricanes Ike and Gustav. Included in lease operating expenses for the three
and six months ended June 30, 2009 are hurricane remediation costs of $5.0
million and $15.2 million, respectively, related to Hurricanes Ike and Gustav
that were either not yet approved for payment or were not covered by insurance.

(3) The carrying amount of our oil and natural gas properties was written down
by $218.9 million as of March 31, 2009 through application of the full cost
ceiling limitation as prescribed by the SEC, primarily as a result of lower
natural gas prices at March 31, 2009, as compared to December 31, 2008. The
previously reported amount of $205.0 million was subsequently increased by
$13.9 million in the fourth quarter of 2009 as a result of further analysis of
our March 31, 2009 ceiling test calculation. As such, operating income, net
income and our basic and diluted loss per common share for the six months ended
June 30, 2009 have been adjusted as well. We did not have a ceiling test
write-down during the three and six months ended June 30, 2010.






W&T OFFSHORE, INC. AND SUBSIDIARIES

Condensed Operating Data

(Unaudited)



                                       Three Months Ended   Six Months Ended

                                       June 30,             June 30,

                                       2010       2009      2010       2009

Net sales: (1)

Natural gas (MMcf)                       12,251     13,353    22,298     25,905

Oil (MBbls)                              1,758      1,909     3,409      3,386

Total natural gas and oil (MBoe) (2)     3,800      4,135     7,125      7,703

Total natural gas and oil (MMcfe) (3)    22,799     24,808    42,751     46,221



Average daily equivalent sales
(MBoe/d)                                 41.8       45.4      39.4       42.6

Average daily equivalent sales
(MMcfe/d)                                250.5      272.6     236.2      255.4



Average realized sales prices
(Unhedged):

Natural gas ($/Mcf)                    $ 4.47     $ 3.89    $ 4.88     $ 4.47

Oil ($/Bbl)                              70.97      51.61     70.48      44.93

Barrel of oil equivalent ($/Boe)         47.23      36.38     48.99      34.77

Natural gas equivalent ($/Mcfe)          7.87       6.06      8.16       5.79



Average realized sales prices
(Hedged): (4)

Natural gas ($/Mcf)                    $ 4.65     $ 3.89    $ 5.06     $ 4.47

Oil ($/Bbl)                              70.90      51.61     70.21      44.93

Barrel of oil equivalent ($/Boe)         47.79      36.38     49.43      34.77

Natural gas equivalent ($/Mcfe)          7.97       6.06      8.24       5.79



Average per Boe ($/Boe):

Lease operating expenses               $ 13.81    $ 13.08   $ 12.33    $ 13.54

Gathering and transportation costs
and production taxes                     1.06       1.05      1.24       0.99

Depreciation, depletion, amortization
and accretion                            20.01      20.46     20.38      22.86

General and administrative expenses      3.78       2.60      3.47       2.88

Net cash provided by operating
activities                               41.41      4.16      34.29      6.02

Adjusted EBITDA                          25.81      19.55     30.58      17.25



Average per Mcfe ($/Mcfe):

Lease operating expenses               $ 2.30     $ 2.18    $ 2.05     $ 2.26

Gathering and transportation costs
and production taxes                     0.18       0.17      0.21       0.17

Depreciation, depletion, amortization
and accretion                            3.33       3.41      3.40       3.81

General and administrative expenses      0.63       0.43      0.58       0.48

Net cash provided by operating
activities                               6.90       0.69      5.71       1.00

Adjusted EBITDA                          4.30       3.26      5.10       2.88






(1) Included in natural gas and oil sales volumes for the three and six months
ended June 30, 2010 is approximately 2.5 Bcfe related to the recoupment of
royalties paid to the BOEM in prior periods as noted above.

(2) One million barrels of oil equivalent (MMBoe), one thousand barrels of oil
equivalent (Mboe) and one barrel of oil equivalent (Boe) are determined using
the ratio of one Bbl of crude oil, condensate or natural gas liquids to six Mcf
of natural gas (totals may not add due to rounding).

(3) One billion cubic feet equivalent (Bcfe), one million cubic feet equivalent
(MMcfe) and one thousand cubic feet equivalent (Mcfe) are determined using the
ratio of six Mcf of natural gas to one Bbl of crude oil, condensate or natural
gas liquids (totals may not add due to rounding).

(4) Data for 2010 includes the effects of our commodity derivative contracts
that did not qualify for hedge accounting.






W&T OFFSHORE, INC. AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

(Unaudited)



                                                     June 30,      December 31,

                                                     2010          2009

                                                     (In thousands, except

                                                     share data)

Assets

Current assets:

Cash and cash equivalents                            $ 72,898      $ 38,187

Receivables:

Oil and natural gas sales                              66,717        54,978

Joint interest and other                               29,381        51,312

Insurance                                              13,848        30,543

Income taxes                                           -             85,457

Total receivables                                      109,946       222,290

Prepaid expenses and other assets                      40,723        28,777

Total current assets                                   223,567       289,254

Property and equipment – at cost:

Oil and natural gas properties and equipment (full
cost method, of which $64,605 at

June 30, 2010 and $77,301 at December 31, 2009 were
excluded from

amortization)                                          4,943,283     4,732,696

Furniture, fixtures and other                          15,248        15,080

Total property and equipment                           4,958,531     4,747,776

Less accumulated depreciation, depletion and
amortization                                           3,885,800     3,752,980

Net property and equipment                             1,072,731     994,796

Restricted deposits for asset retirement
obligations                                            31,281        30,614

Deferred income taxes                                  5,975         5,117

Other assets                                           7,896         7,052

Total assets                                         $ 1,341,450   $ 1,326,833



Liabilities and Shareholders’ Equity

Current liabilities:

Accounts payable                                     $ 55,041      $ 115,683

Undistributed oil and natural gas proceeds             25,127        32,216

Asset retirement obligations                           99,474        117,421

Accrued liabilities                                    9,982         13,509

Income taxes                                           6,055         -

Deferred income taxes                                  8,921         5,117

Total current liabilities                              204,600       283,946

Long-term debt                                         450,000       450,000

Asset retirement obligations, less current portion     245,339       231,379

Other liabilities                                      14,912        2,558

Commitments and contingencies

Shareholders’ equity:

Common stock, $0.00001 par value; 118,330,000
shares authorized; 77,555,011

issued and 74,685,838 outstanding at June 30, 2010;
77,579,968 issued and

74,710,795 outstanding at December 31, 2009            1             1

Additional paid-in capital                             374,993       373,050

Retained earnings                                      75,772        10,066

Treasury stock, at cost                                (24,167)      (24,167)

Total shareholders’ equity                           426,599       358,950

Total liabilities and shareholders’ equity         $ 1,341,450   $ 1,326,833








W&T OFFSHORE, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows

(Unaudited)



                                                      Six Months Ended

                                                      June 30,

                                                      2010          2009

                                                      (In thousands)



Operating activities:

Net income (loss)                                     $ 70,185      $ (250,552)

Adjustments to reconcile net income (loss) to net
cash provided by operating activities:

Depreciation, depletion, amortization and accretion     145,231       179,230

Impairment of oil and natural gas properties            -             218,871

Amortization of debt issuance costs and discount on
indebtedness                                            669           1,176

Loss on extinguishment of debt                          -             2,817

Share-based compensation related to restricted stock
issuances                                               1,943         3,116

Derivative (gain) loss                                  (13,270)      852

Cash payments on derivative settlements                 (442)         (2,871)

Deferred income taxes                                   2,945         (158)

Changes in operating assets and liabilities             37,057        (106,526)

Other                                                   -             458

Net cash provided by operating activities               244,318       46,413



Investing activities:

Acquisition of property interests                       (116,589)     -

Investment in oil and natural gas properties and
equipment                                               (89,705)      (239,684)

Proceeds from sales of oil and natural gas
properties and equipment                                1,335         8,368

Proceeds from insurance                                 -             5,260

Purchases of furniture, fixtures and other              (167)         (479)

Net cash used in investing activities                   (205,126)     (226,535)



Financing activities:

Borrowings of long-term debt                            285,000       205,441

Repayments of long-term debt                            (285,000)     (268,441)

Dividends to shareholders                               (4,481)       (4,581)

Repurchases of common stock                             -             (9,247)

Other                                                   -             131

Net cash used in financing activities                   (4,481)       (76,697)

Increase (decrease) in cash and cash equivalents        34,711        (256,819)

Cash and cash equivalents, beginning of period          38,187        357,552

Cash and cash equivalents, end of period              $ 72,898      $ 100,733








W&T OFFSHORE, INC. AND SUBSIDIARIES

Non-GAAP Information



Certain financial information included in our financial results are not
measures of financial performance recognized by accounting
principles generally accepted in the United States, or GAAP. These non-GAAP
financial measures are "Net Income (Loss)
Excluding Special Items," "EBITDA," and "Adjusted EBITDA." Our management uses
these non-GAAP measures in its analysis of
our performance. These disclosures may not be viewed as a substitute for
results determined in accordance with GAAP and are
not necessarily comparable to non-GAAP performance measures which may be
reported by other companies.



Reconciliation of Net Income (Loss) to Net Income (Loss) Excluding Special
Items



"Net Income (Loss) Excluding Special Items" does not include the unrealized
derivative (gain) loss, the impairment of oil and
natural gas properties and associated tax effects. Net Income (Loss) excluding
special items is presented because the timing and
amount of these items cannot be reasonably estimated and affect the
comparability of operating results from period to period, and
current periods to prior periods.






                               Three Months Ended      Six Months Ended

                               June 30,                June 30,

                               2010         2009       2010         2009

                               (In thousands, except per share amounts)

                               (Unaudited)



Net income (loss)              $ 27,870     $ (5,974)  $ 70,185     $ (250,552)

Royalty relief recoupment,
net of DD&A expense              (12,864)     -          (12,864)     -

Unrealized commodity
derivative gain                  (5,261)      -          (10,370)     -

Loss on extinguishment of
debt                             -            2,926      -            2,926

Impairment of oil and natural
gas properties                   -            -          -            218,871

Income tax adjustment for
above items at statutory rate    6,344        (1,024)    8,132        (77,629)

Net income (loss) excluding
special items                  $ 16,089     $ (4,072)  $ 55,083     $ (106,384)



Basic and diluted earnings
(loss) per common share,
excluding special items        $ 0.22       $ (0.05)   $ 0.74       $ (1.41)








Reconciliation of Net Income to Adjusted EBITDA



We define EBITDA as net income (loss) plus income tax expense (benefit), net
interest expense, depreciation, depletion,
amortization and accretion and impairment of oil and natural gas properties.
Adjusted EBITDA excludes the unrealized gain or
loss related to our derivative contracts. Although not prescribed under
generally accepted accounting principles, we believe the
presentation of EBITDA and Adjusted EBITDA provide useful information regarding
our ability to service debt and to fund capital
expenditures and help our investors understand our operating performance and
make it easier to compare our results with those
of other companies that have different financing, capital and tax structures.
EBITDA and Adjusted EBITDA should not be
considered in isolation from or as a substitute for net income, as an
indication of operating performance or cash flows from
operating activities or as a measure of liquidity. EBITDA and Adjusted EBITDA,
as we calculate them, may not be comparable to
EBITDA and Adjusted EBITDA measures reported by other companies. In addition,
EBITDA and Adjusted EBITDA do not
represent funds available for discretionary use.



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






                              Three Months Ended       Six Months Ended

                              June 30,                 June 30,

                              2010         2009        2010         2009

                              (In thousands)

                              (Unaudited)



Net income (loss)             $ 27,870     $ (5,974)   $ 70,185     $ (250,552)

Income tax expense (benefit)    3,077        (10,521)    7,097        (34,513)

Net interest expense            9,231        9,800       18,607       20,022

Depreciation, depletion,
amortization and accretion      76,022       84,595      145,231      176,130

Impairment of oil and
natural gas properties          -            -           -            218,871

EBITDA                          116,200      77,900      241,120      129,958



Adjustments:

Unrealized commodity
derivative gain                 (5,261)      -           (10,370)     -

Royalty relief recoupment,
net of DD&A expense             (12,864)     -           (12,864)     -

Loss on extinguishment of
debt                            -            2,926       -            2,926

Adjusted EBITDA               $ 98,075     $ 80,826    $ 217,886    $ 132,884





SOURCE W&T Offshore, Inc.