W&T Offshore, Inc. (NYSE: WTI) (“W&T” or the “Company”)
today reported operational and financial results for the second
quarter 2021.
Key highlights included:
- Produced 40,888
barrels of oil equivalent per day (“Boe/d”), or 3.7 million Boe
(45% liquids), in the second quarter of 2021, above the midpoint of
W&T’s guidance range and reflecting a 3% increase from the
first quarter of 2021;
- Reported net
loss of $51.7 million or $0.36 per share and Adjusted Net Income1
of $2.2 million or $0.02 per share in the second quarter of
2021;
- Generated
Adjusted EBITDA1 of $49.8 million for the second quarter of
2021;
- Generated Free
Cash Flow1 of $18.7 million in the second quarter of 2021; for the
first half of 2021 W&T has generated $58.7 million of free cash
flow;
- Reported
mid-year 2021 SEC proved reserves, based on a reserve report
prepared by Netherland, Sewell and Associates, Inc. (“NSAI”), were
158.9 MMBoe, representing a reserve replacement ratio of nearly
300% of production for the first half of 2021. Proved reserves
include upward revisions due to higher SEC base pricing and
positive reserve revisions from field performance, partially offset
by year-to-date production;
- Utilizing NYMEX
strip pricing as of July 1, 2021, mid-year proved reserves were
165.7 MMBoe;
- Calculated the
present value discounted at 10% (“PV-10”) of mid-year 2021 proved
reserves of $1.0 billion (before consideration of cash
outflows related to asset retirement obligations), an increase of
39% compared with $741 million at year-end 2020;
- Utilizing NYMEX
strip pricing as of July 1, 2021, mid-year PV-10 was $1.5 billion,
(before consideration of cash outflows related to asset retirement
obligations);
- Enhanced capital
structure with a $215 million first-lien secured term loan that is
non-recourse to the W&T parent company and its subsidiaries
(other than its Mobile Bay subsidiaries) and amortized over seven
years at a fixed interest rate of 7%;
- Transaction
significantly increased the Company’s cash position and paid down
the reserve-based lending facility (“RBL”) completely; and
-
Announced participation in drilling of a high potential, lower risk
deepwater exploratory prospect in the Mississippi Canyon area.
Tracy W. Krohn, W&T's Chairman and Chief
Executive Officer, stated, “We continued to deliver strong
operational and financial results in the second quarter and believe
that the improved commodity price environment and our commitment to
expanding margins will lead to a very good second half of 2021. We
continue to generate strong Adjusted EBITDA and free cash flow with
$58.7 million of free cash flow generated thus far in 2021. As a
reminder, during the first quarter of this year, we paid down $32
million of our RBL with a portion of that free cash flow. In
addition to the strong quarterly results, we completed a financial
transaction in May that meaningfully improved our financial
flexibility by more efficiently utilizing the collateral value of
our Mobile Bay Area assets, allowing us to pay off our existing RBL
balance of $48 million, and adding significant cash to the balance
sheet. This transaction does not impact us operationally or affect
our ability to generate significant free cash flow and it allows us
to take advantage of the long-lived nature of our Mobile Bay
assets. Importantly, it provides us the dry powder we need to
continue to accretively grow W&T through attractive producing
property acquisitions. We believe that market conditions in the
Gulf of Mexico remain very favorable for accretive
acquisitions.”
“After a difficult pricing environment in 2020,
we have seen a strong recovery in crude oil and natural gas prices
that has positively impacted our reserves and the PV-10 value of
our reserves. We remain confident in our strong asset base which is
evident in our mid-year 2021 reserve report that included 6.5 MMBoe
of positive revisions due to field performance which nearly offset
our year-to-date production of 7.3 MMBoe and we saw a positive
revision of 15.3 MMBoe due to improved prices. The PV-10 of our
reserves increased 39% using mid-year SEC pricing and increased
102% using July 1, 2021 NYMEX strip pricing.”
”With our further improved balance sheet,
increased cash position and strong projected cash flow generation,
we have positioned W&T to actively pursue opportunities and
continue to deliver on our strategic vision,” concluded Mr.
Krohn.
For the second quarter of 2021, W&T reported
a net loss of $51.7 million, or $0.36 per share. After primarily
excluding a $66.1 million unrealized commodity derivative loss, the
Company’s Adjusted Net Income was $2.2 million, or $0.02 per share.
In the second quarter of 2020, W&T reported a net loss of $5.9
million, or $0.04 per share, which included a $38.0 million
unrealized commodity derivative loss, a $29.0 million non-cash gain
on debt transaction, and $8.7 million of deferred tax benefit.
Adjusted Net Loss for the second quarter of 2020 was $2.2 million,
or $0.02 per share. In the first quarter of 2021, net loss was $0.7
million, or $0.01 per share, which included a $16.3 million
unrealized commodity derivative loss. For that same period,
Adjusted Net Income was $15.9 million or $0.11 per share.
Adjusted EBITDA for the second quarter of 2021
totaled $49.8 million, a decrease of 14% compared to $57.6 million
in the first quarter of 2021 primarily due to increased operating
expenses related to increased activity, employee retention credit
received during the first quarter but not during the second quarter
of 2021, and realized derivatives losses. Second quarter 2021
Adjusted EBITDA increased 18% from $42.1 million in the second
quarter of 2020 primarily due to higher commodity prices, partially
offset by higher expenses as a result of reductions in credits to
expense from prior period royalty adjustments and Paycheck
Protection Program (“PPP”) funds, higher incentive compensation
costs in the second quarter of 2021 compared to the prior year
period, and realized derivative losses.
Free Cash Flow for the second quarter of 2021
totaled $18.7 million, a slight decrease compared with $20.8
million in the second quarter of 2020, and down from $40.0 million
in the first quarter of 2021, primarily driven by higher asset
retirement obligation (“ARO”) settlements, increased capital
expenditures and other factors that similarly affected Adjusted
EBITDA as previously described.
Production, Prices and
Revenues: Production for the second quarter of 2021 was
40,888 Boe/d or 3.7 MMBoe, an increase of 3% compared to 39,657
Boe/d in the first quarter of 2021 and down 3% versus 42,037 Boe/d
in the second quarter of 2020. Production for the second quarter of
2021 was above the midpoint of guidance due to better run time
efficiency and uplift from a successful workover. Second quarter
2021 production was comprised of 1.4 million barrels (“MMBbls”) of
oil, 0.3 MMBbls of natural gas liquids (“NGLs”) and 12.2 billion
cubic feet (“Bcf”) of natural gas. Liquids production comprised 45%
of total production in the second quarter of 2021.
For the second quarter of 2021, W&T’s
average realized crude oil sales price was $65.11 per barrel,
average realized NGL sales price was $26.18 per barrel and average
realized natural gas sales price was $2.66 per Mcf. The Company’s
combined average realized sales price for the second quarter of
2021 was $34.75 per Boe, which was in line with $34.66 per Boe that
was realized in the first quarter of 2021 and an increase of 147%
compared to $14.10 per Boe in the second quarter of 2020.
Revenues for the second quarter of 2021
increased 6% to $132.8 million compared to $125.6 million in the
first quarter of 2021, and increased by 140% compared to $55.2
million in the second quarter of 2020. The quarter-over-quarter
increase was driven primarily by increased production and slightly
higher realized commodity prices. The year-over-year
increase was driven by significantly improved commodity prices,
despite slightly lower production.
Lease Operating Expenses
(“LOE”): LOE, which includes base lease operating
expenses, insurance premiums, workovers and facilities maintenance
was $47.6 million in the second quarter of 2021 compared to $42.4
million in the first quarter of 2021 and $28.3 million in the
second quarter of 2020. On a component basis for the second quarter
of 2021, base lease operating expenses plus insurance premiums were
$41.3 million, workovers were $1.9 million and facilities
maintenance and repairs expenses were $4.4 million. On a unit of
production basis, LOE was $12.78 per Boe in the second quarter of
2021, up 8% from $11.87 per Boe in the first quarter of 2021, and
up 73% from $7.40 per Boe in the second quarter of 2020. The large
year-over-year increase was primarily related to much lower LOE in
the second quarter of 2020 that benefited from $3.1 million in
refunds of amounts previously paid to the Office of Natural
Resources Revenue, $2.3 million in expense reimbursements from
W&T’s PPP funds, lower activity levels, cost cutting in
response to significantly lower pricing in 2020 and credits to
expense related to finalization of the Mobile Bay acquisition.
Gathering, Transportation Costs and
Production Taxes: Gathering, transportation costs and
production taxes totaled $6.8 million, or $1.82 per Boe in the
second quarter of 2021, compared to $6.3 million, or $1.77 per Boe
in the first quarter of 2021, and $4.4 million, or $1.16 per Boe in
the second quarter of 2020. Gathering and transportation costs
increased year-over-year primarily due to lower costs in the prior
year period that were impacted by credits to expense associated
with the finalization of the Mobile Bay acquisition, while
production taxes increased primarily due to higher realized natural
gas prices.
Depreciation, Depletion, Amortization
and Accretion (“DD&A”): DD&A, including accretion
for asset retirement obligations, was $8.32 per Boe of production
for the second quarter of 2021 compared to $7.46 per Boe for the
first quarter of 2021 and $7.71 per Boe for the second quarter of
2020. The DD&A rate in the second quarter of 2021 increased
from the first quarter of 2021 and year-over-year primarily due to
the increase in future development costs associated with larger
proved reserves.
General and Administrative Expenses
(“G&A”): G&A was $14.0 million for the second
quarter of 2021, compared to $10.7 million in the first quarter of
2021 and $5.6 million for the second quarter of 2020. The increase
in sequential quarter G&A cost was driven primarily by an
employee retention credit that reduced costs in the prior quarter.
The large year-over-year increase resulted from credits to expense
of $5.0 million from W&T’s PPP funds and lower incentive
compensation expense that benefited the second quarter of 2020. On
a unit of production basis, G&A was $3.76 per Boe in the second
quarter of 2021, $3.00 per Boe in the first quarter of 2021, and
$1.47 per Boe in the second quarter of 2020.
Derivative (Gain) Loss: In the
second quarter of 2021, W&T recorded a net derivative loss of
$81.4 million, of which $66.1 million was an unrealized commodity
derivative loss. This compared to a net derivative loss of $24.6
million in the first quarter of 2021 of which $16.3 million was an
unrealized commodity derivative loss and a net derivative loss of
$15.4 million in the second quarter of 2020 which consists of a
$38.0 million unrealized commodity derivative loss and a $22.6
million realized commodity derivative gain. During the second
quarter of 2021, the Company utilized a portion of the proceeds
from the new first-lien secured term loan to enter into natural gas
swap, put and call contracts to cover debt service over the term of
the loan. The cost of the $25.6 million in cash premiums paid to
purchase put and call options to retain the upside of higher
natural gas prices will be amortized over the life of the
derivatives.
A summary of the Company’s current outstanding
derivative positions is included in the tables below. A detailed
listing of all hedging positions is maintained on W&T’s web
site in the “Investors” section under the “Financial Info” tab.
Interest Expense: Interest
expense, net as reported in the income statement, in the second
quarter of 2021 was $16.5 million compared with $15.0 million in
the first quarter of 2021 and $14.8 million in the second quarter
of 2020. The increase in interest expense in the second quarter of
2021 related to interest on the $215 million first lien secured
term loan that closed during the quarter.
Income Tax: W&T recorded an
income tax benefit of $12.7 million in the second quarter of 2021
compared to an income tax benefit of $0.2 million in the first
quarter of 2021 and an income tax benefit of $8.7 million in the
second quarter of 2020. For the three months ended June 30,
2021, W&T’s income tax benefit differed from the statutory
Federal tax rate primarily by the impact of state income taxes. For
the three months ended June 30, 2020, the Company’s effective tax
rate primarily differed from the statutory Federal tax rate for
adjustments recorded related to the enactment of the Coronavirus
Aid, Relief and Economic Security Act (“CARES Act”) on March 27,
2020. W&T’s effective tax rate was 19.8% for the three
months ended June 30, 2021 and 59.7% for the three months ended
June 30, 2020.
As of June 30, 2021, W&T’s deferred tax
valuation allowance was $22.8 million. The Company continually
evaluates the need to maintain a valuation allowance on its
deferred tax assets. Any future reduction of a portion or all of
the valuation allowance would result in a non-cash income tax
benefit in the period the decision occurs. W&T is not currently
forecasting any cash income tax expense for the near-term.
Enhancement to Capital
Structure
In May 2021, W&T enhanced its capital
structure by entering into a transaction with its wholly-owned
special purpose vehicles (the “SPVs”) and Munich Re Reserve Risk
Financing, Inc. ("MRRF"). In this transaction, the Company
transferred 100% of its Mobile Bay Area producing assets (the
“Mobile Bay Assets”) and related gas treatment facilities to the
SPVs in return for the net cash proceeds from a $215 million
first-lien non-recourse term loan to the SPVs provided by MRRF.
Through its 100% ownership in the SPVs, W&T retains the upside
value in the Mobile Bay Assets. The term loan is non-recourse to
W&T and is amortized over seven years at a fixed interest rate
of 7%. The transaction provides long-term capital without
maintenance covenants or borrowing base redetermination
requirements and with no covenants at the parent level. It more
efficiently utilizes existing collateral value to generate larger
front-end cash proceeds to better capitalize the Company, as this
term loan offers a greater loan-to-value amount than W&T’s RBL,
at a reasonable cost.
A portion of the proceeds to the Company from
the transaction were used to repay the $48 million outstanding
balance on its RBL and to enter into commodity hedging contracts
related to the anticipated future production of the Mobile Bay
Assets, that are included in the hedging tables below. The majority
of the proceeds to W&T are expected to be used for general
corporate purposes, including oil and gas acquisitions, development
activities, and other opportunities to grow W&T’s broader asset
base. The Company anticipates an adjustment to its borrowing base
under its RBL as a result of the transfer of the Mobile Bay Assets
to the SPVs. The combination of the cash provided by this
transaction along with the amended RBL is expected to provide the
Company significant liquidity.
Since the SPVs are consolidated into W&T,
there are no changes in the reporting of production, earnings, cash
flow, or reserves. Second quarter 2021 results reflect the
additional interest expense associated with the term loan.
Balance Sheet, Cash Flow and
Liquidity: Net cash provided by operating activities for
the three months ended June 30, 2021 was $1.2 million, which was
reduced by $25.6 million in derivative premiums paid in conjunction
with the new first-lien secured term loan, higher ARO settlements,
higher realized derivative losses, and increased operating
expenses. In the second quarter of 2021, W&T utilized a portion
of the proceeds from the MRRF transaction to pay off the remaining
$48 million balance on its RBL. The Company recently executed an
amendment and waiver with its banking group that defers the Spring
2021 borrowing base redetermination under its RBL until early
October. During the interim time period, W&T will not have
access to the credit facility, which remains fully undrawn, but the
Company has a very strong cash balance for use as needed. On June
30, 2021, cash and cash equivalents totaled $209.1 million. The
Company is actively monitoring the debt capital markets and intends
to seek financing with longer tenors and market based covenants to
continue to provide working and potential acquisition capital.
Currently, total debt is $754.7 million,
consisting of the balance of the MRRF term loan of $208.3 million,
and $546.4 million of 9.75% Senior Second Lien Notes Due 2023, net
of amortized debt issuance costs for both transactions. W&T is
currently in compliance with all applicable covenants of the Credit
Agreement and the Senior Secured Second Lien Notes indenture.
Capital Expenditures: Per the
Statement of Cash Flows, capital expenditures, excluding changes in
working capital associated with investing activities, were $4.3
million in the second quarter of 2021, and $5.9 million for the six
months ended June 30, 2021. As previously disclosed, W&T’s 2021
estimated capital budget of $30 million to $60 million (excluding
potential acquisitions) is weighted toward the second half of 2021.
The Company also expended $10.3 million in ARO settlement costs
during the second quarter of 2021, and $11.2 million for the six
months ended June 30, 2021.
Environmental, Social and Governance
(“ESG”) Commentary
W&T issued its 2020 initial corporate ESG
report in March 2021 and has since engaged in outreach with its
large shareholders and ESG rating agencies to discuss its 2020
report for feedback and to begin data gathering for next year’s
report. The 2020 report has an in-depth review of W&T’s ESG
initiatives as well as related key performance indicators. In the
creation of its inaugural report, the Company consulted the
Sustainability Accounting Standards Board’s (“SASB”) Oil and Gas
Exploration and Production Sustainability Accounting Standard, the
recommendations of the Task Force on Climate-related Financial
Disclosures (“TCFD”), and other reporting guidance from industry
frameworks and standards.
Several recent ESG initiatives undertaken by
W&T include:
- Reduced GHG emissions through the
consolidation of its two Mobile Bay treating facilities into one
plant in early 2021;
- Increased diversity of its officers
and board members such that 36% are now women/minorities; and
- Implemented changes in employee and
executive compensation via its annual bonus program that now ties
ESG performance to stated goals.
Mid-Year 2021 Proved
Reserves: As calculated by NSAI, W&T’s
independent reserve engineering consultants, SEC proved
reserves as of June 30, 2021 totaled 158.9 MMBoe compared
with 144.4 MMBoe at year-end 2020. Strong positive revisions of
previous estimates from field performance of 6.5 MMBoe in the first
six months of 2021 nearly offset year-to-date 2021 production of
7.3 MMBoe, without any additional drilling to-date in 2021. W&T
also recorded positive revisions due to SEC price changes of 15.3
MMBoe. The mid-year 2021 reserves, which were 87% proved developed
producing and proved developed non-producing, were 36%
liquids. Utilizing NYMEX strip pricing as of July 1, 2021,
mid-year proved reserves were 165.7 MMBoe.
The PV-10 of mid-year 2021 proved reserves
utilizing SEC pricing was $1.0 billion (before consideration
of cash outflows related to asset retirement obligations), an
increase of 39% compared with $741 million at year-end 2020.
Utilizing NYMEX strip pricing as of July 1, 2021, mid-year PV-10
was $1.5 billion, (before consideration of cash outflows related to
asset retirement obligations).
Mid-year 2021 SEC reserves and PV-10 were based
on an average crude oil price of $47.78 per barrel
(compared with $37.78 at year-end 2020) and an average natural gas
price of $2.50 per Mcf (compared with $2.05 at year-end
2020), after adjustments for quality, transportation fees, energy
content, and regional price differentials and excludes provision
for asset retirement obligations or income taxes. Mid-year 2021
NYMEX strip pricing as of July 1, 2021 was based on an average
crude oil price of $57.80 per barrel and an average natural gas
price of $2.96 per Mcf.
OPERATIONS UPDATE
W&T continues development operations on the
Cota well at East Cameron 338/349 that was drilled in 2020, with
initial production expected in the fourth quarter of 2021. The well
is in over 290 feet of water and was drilled to a total depth of
over 6,000 feet and encountered approximately 100 feet of net oil
pay. The Company has an initial 30% working interest in the Cota
well but the interest will increase to 38.4% once the well is
brought online and certain performance thresholds are met. W&T
did not initiate new drilling activity in the first half of 2021 as
it plans for its capital investment program to be weighted toward
the second half of 2021.
While W&T continues to proceed with
preparing its internally generated prospects for potential drilling
later this year and into 2022, the Company recently became a
working interest owner in a third-party operated exploratory
opportunity in the deepwater Mississippi Canyon area. Based on its
internal assessment, W&T believes the well is a high potential
but relatively lower risk opportunity located in the “Flex Trend”
area, where W&T has had significant experience and success.
Furthermore, assuming success, it could de-risk additional drilling
opportunities that W&T has in the area. This prospect was
identified using high-quality 3D seismic and reprocessing and has
multiple objectives located beneath a salt overhang. This high
potential oil play ties directly to analogous fields in the area
and has significant upside. W&T has a 25% working interest and
the well has just recently spudded.
Well Recompletions and
Workovers: During the second quarter of 2021, the Company
performed one workover that in total added approximately 700 net
Boe/d to production. W&T currently plans to continue to perform
recompletions and workovers that meet economic thresholds.
Third Quarter and Full Year 2021
Production and Expense Guidance
The guidance for the third quarter and full year
2021 in the table below represents the Company's current best
estimate of the range of likely future results. Guidance could be
affected by the factors described below in "Forward-Looking
Statements".
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Third Quarter |
Full Year |
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Production |
2021 |
2021 |
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Oil (MMBbls) |
1.28 - 1.41 |
5.19 - 5.44 |
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NGL's (MMBbls) |
0.38 - 0.41 |
1.47 - 1.54 |
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Natural Gas (Bcf) |
11.3 - 12.5 |
45.6 - 47.9 |
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Total (MMBoe) |
3.5 - 3.9 |
14.2 - 15.0 |
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Total (Boe/d) |
38,500 - 42,500 |
39,000 - 41,000 |
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Operating Expenses |
Third Quarter |
Full Year |
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($ in millions) |
2021 |
2021 |
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Lease operating expenses |
$45 - $50 |
$158 - $174 |
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Gathering, transportation & |
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production taxes |
$6.3 - $6.9 |
$26 - $27 |
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General and administrative |
$14.0 - $15.5 |
$52 - $55 |
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Current income tax expense rate |
0% |
0% |
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Conference Call Information:
W&T will hold a conference call to discuss its financial and
operational results on Wednesday August 4, 2021, at 10:00 a.m.
Central Time (11:00 a.m. Eastern Time). Interested parties may
participate by dialing (844) 739-3797. International parties may
dial (412) 317-5713. Participants should request to
connect to the “W&T Offshore Conference Call.” This call will
also be webcast and available on W&T’s website at
www.wtoffshore.com under “Investors”. An audio replay will be
available on the Company’s website following the call.
About W&T Offshore
W&T Offshore, Inc. is an independent oil and
natural gas producer with operations offshore in the Gulf of Mexico
and has grown through acquisitions, exploration and development.
The Company currently has working interests in 41 producing fields
in federal and state waters and has under lease approximately
622,000 gross acres, including approximately 435,000 gross acres on
the Gulf of Mexico Shelf and approximately 187,000 gross acres in
the Gulf of Mexico deepwater. A majority of the Company’s daily
production is derived from wells it operates. For more information
on W&T, please visit the Company’s website at
www.wtoffshore.com.
Forward-Looking and Cautionary
Statements
This press release contains forward-looking
statements within the meaning of Section 27A of the Securities Act
of 1933, as amended, and Section 21E of the Securities Exchange Act
of 1934, as amended. 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 W&T Offshore’s Annual Report on Form
10-K for the year ended December 31, 2020 and subsequent Form 10-Q
reports found at www.sec.gov or at our website at
www.wtoffshore.com under the Investor Relations section. Investors
are urged to consider closely the disclosures and risk factors in
these reports. We refer to feet of “pay” in our discussions
concerning the evaluation of our recently drilled wells. This
refers to geological indications, typically obtained from well
logging, of the estimated thickness of sands which we believe are
capable of producing hydrocarbons in commercial quantities. These
indications of “pay” may not necessarily forecast the amount of
future production or reserve quantities from the well, which can be
dependent upon numerous other factors.
W&T OFFSHORE, INC. AND
SUBSIDIARIES |
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Condensed Consolidated Statements of
Operations |
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(In thousands, except per share data) |
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(Unaudited) |
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Three Months Ended |
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Six Months Ended |
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June 30, |
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March 31, |
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June 30, |
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June 30, |
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2021 |
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2021 |
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2020 |
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2021 |
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2020 |
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Revenues: |
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Oil |
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$ |
88,013 |
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78,140 |
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30,645 |
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$ |
166,153 |
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$ |
115,295 |
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NGLs |
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8,833 |
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9,359 |
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1,917 |
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18,193 |
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8,369 |
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Natural gas |
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32,470 |
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36,209 |
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21,364 |
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68,679 |
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50,664 |
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Other |
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3,512 |
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1,939 |
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1,315 |
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5,451 |
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5,041 |
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Total revenues |
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132,828 |
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125,647 |
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55,241 |
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258,476 |
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179,369 |
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Operating costs and
expenses: |
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Lease operating expenses |
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47,552 |
|
|
42,357 |
|
|
28,313 |
|
|
|
89,909 |
|
|
|
83,088 |
|
|
|
Gathering, transportation costs and production taxes |
|
|
6,780 |
|
|
6,315 |
|
|
4,444 |
|
|
|
13,095 |
|
|
|
10,809 |
|
|
|
Depreciation, depletion, amortization and accretion |
|
|
30,952 |
|
|
26,637 |
|
|
29,483 |
|
|
|
57,589 |
|
|
|
68,609 |
|
|
|
General and administrative expenses |
|
|
13,986 |
|
|
10,712 |
|
|
5,628 |
|
|
|
24,698 |
|
|
|
19,591 |
|
|
|
Derivative loss (gain) |
|
|
81,440 |
|
|
24,578 |
|
|
15,414 |
|
|
|
106,020 |
|
|
|
(46,498 |
) |
|
|
Total costs and expenses |
|
|
180,710 |
|
|
110,599 |
|
|
83,282 |
|
|
|
291,311 |
|
|
|
135,599 |
|
|
|
Operating (loss) income |
|
|
(47,882 |
) |
|
15,048 |
|
|
(28,041 |
) |
|
|
(32,835 |
) |
|
|
43,770 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense, net |
|
|
16,530 |
|
|
15,034 |
|
|
14,816 |
|
|
|
31,564 |
|
|
|
31,926 |
|
|
|
Gain on debt transactions |
|
|
- |
|
|
- |
|
|
(28,968 |
) |
|
|
- |
|
|
|
(47,469 |
) |
|
|
Other expense, net |
|
|
- |
|
|
963 |
|
|
751 |
|
|
|
963 |
|
|
|
1,474 |
|
|
|
(Loss) income before income taxes |
|
|
(64,412 |
) |
|
(949 |
) |
|
(14,640 |
) |
|
|
(65,362 |
) |
|
|
57,839 |
|
|
|
Income tax benefit |
|
|
(12,740 |
) |
|
(203 |
) |
|
(8,736 |
|
|
|
(12,944 |
) |
|
|
(2,237 |
) |
|
|
Net (loss) income |
|
$ |
(51,672 |
) |
|
(746 |
) |
|
(5,904 |
) |
|
$ |
(52,418 |
) |
|
$ |
60,076 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted (loss) earnings
per common share |
|
$ |
(0.36 |
) |
|
(0.01 |
) |
|
(0.04 |
) |
|
$ |
(0.37 |
) |
|
$ |
0.42 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares
outstanding |
|
|
142,244 |
|
|
142,151 |
|
|
141,597 |
|
|
|
142,197 |
|
|
|
141,571 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
W&T OFFSHORE, INC. AND SUBSIDIARIES |
Condensed Operating Data |
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Six Months Ended |
|
|
|
|
June 30, |
|
|
March 31, |
|
|
June 30, |
|
|
June 30, |
|
|
|
|
2021 |
|
|
2021 |
|
|
2020 |
|
|
|
2021 |
|
|
2020 |
|
Net sales volumes: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Oil (MBbls) |
|
|
1,352 |
|
|
1,377 |
|
|
1,414 |
|
|
|
2,729 |
|
|
3,241 |
|
NGL (MBbls) |
|
|
337 |
|
|
392 |
|
|
410 |
|
|
|
729 |
|
|
905 |
|
Oil and NGLs (MBbls) |
|
|
1,689 |
|
|
1,769 |
|
|
1,824 |
|
|
|
3,459 |
|
|
4,146 |
|
Natural gas (MMcf) |
|
|
12,189 |
|
|
10,799 |
|
|
12,006 |
|
|
|
22,988 |
|
|
27,313 |
|
Total oil and natural gas (MBoe) (1) |
|
|
3,721 |
|
|
3,569 |
|
|
3,826 |
|
|
|
7,290 |
|
|
8,699 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average daily equivalent sales (MBoe/d) |
|
|
40.9 |
|
|
39.7 |
|
|
42.0 |
|
|
|
40.3 |
|
|
47.8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average realized sales prices: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Oil ($/Bbl) |
|
$ |
65.11 |
|
$ |
56.73 |
|
$ |
21.67 |
|
|
$ |
60.88 |
|
$ |
35.57 |
|
NGLs ($/Bbl) |
|
|
26.18 |
|
|
23.88 |
|
|
4.67 |
|
|
|
24.94 |
|
|
9.25 |
|
Oil and NGLs ($/Bbl) |
|
|
57.33 |
|
|
49.45 |
|
|
17.85 |
|
|
|
53.30 |
|
|
29.82 |
|
Natural gas ($/Mcf) |
|
|
2.66 |
|
|
3.35 |
|
|
1.78 |
|
|
|
2.99 |
|
|
1.85 |
|
Barrel of oil equivalent ($/Boe) |
|
|
34.75 |
|
|
34.66 |
|
|
14.10 |
|
|
|
34.71 |
|
|
20.04 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average costs and expenses per Boe ($/Boe): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lease operating expenses |
|
$ |
12.78 |
|
$ |
11.87 |
|
$ |
7.40 |
|
|
$ |
12.33 |
|
$ |
9.55 |
|
Gathering, transportation costs and production taxes |
|
|
1.82 |
|
|
1.77 |
|
|
1.16 |
|
|
|
1.79 |
|
|
1.25 |
|
Depreciation, depletion, amortization and accretion |
|
|
8.32 |
|
|
7.46 |
|
|
7.71 |
|
|
|
7.90 |
|
|
7.89 |
|
General and administrative expenses |
|
|
3.76 |
|
|
3.00 |
|
|
1.47 |
|
|
|
3.39 |
|
|
2.25 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) MBoe is
determined using the ratio of six Mcf of natural gas to one Bbl of
crude oil, condensate or NGLs (totals may not compute due to
rounding). The conversion ratio does not assume price
equivalency and the price on an equivalent basis for oil, NGLs and
natural gas may differ
significantly. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
W&T OFFSHORE, INC. AND SUBSIDIARIES |
|
Condensed Consolidated Balance Sheets |
|
(In thousands) |
|
|
|
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
June 30, |
|
|
December 31, |
|
|
|
2021 |
|
|
2020 |
|
|
|
|
|
|
|
|
|
|
Assets |
|
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
209,148 |
|
|
|
$ |
43,726 |
|
|
Receivables: |
|
|
|
|
|
|
|
|
Oil and natural gas sales |
|
|
50,220 |
|
|
|
|
38,830 |
|
|
Joint interest, net |
|
|
11,750 |
|
|
|
|
10,840 |
|
|
Total receivables |
|
|
61,970 |
|
|
|
|
49,670 |
|
|
Prepaid expenses and other assets |
|
|
30,705 |
|
|
|
|
13,832 |
|
|
Total current assets |
|
|
301,823 |
|
|
|
|
107,228 |
|
|
|
|
|
|
|
|
|
|
|
Oil and natural gas properties and other, net - at cost |
|
|
8,604,828 |
|
|
|
|
8,588,356 |
|
|
Less accumulated depreciation, depletion, amortization and
impairment |
|
|
7,947,171 |
|
|
|
|
7,901,478 |
|
|
Oil and natural gas properties and other, net |
|
|
657,657 |
|
|
|
|
686,878 |
|
|
Restricted deposits for asset retirement obligations |
|
|
29,820 |
|
|
|
|
29,675 |
|
|
Deferred income taxes |
|
|
107,337 |
|
|
|
|
94,331 |
|
|
Other assets |
|
|
42,395 |
|
|
|
|
22,470 |
|
|
Total assets |
|
$ |
1,139,032 |
|
|
|
$ |
940,582 |
|
|
|
|
|
|
|
|
|
|
|
Liabilities and Shareholders’ Deficit |
|
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
|
|
Accounts payable |
|
$ |
51,242 |
|
|
|
$ |
41,304 |
|
|
Undistributed oil and natural gas proceeds |
|
|
28,688 |
|
|
|
|
19,167 |
|
|
Advances from joint interest partners |
|
|
3,382 |
|
|
|
|
7,308 |
|
|
Asset retirement obligations |
|
|
23,888 |
|
|
|
|
17,188 |
|
|
Accrued liabilities |
|
|
100,426 |
|
|
|
|
30,033 |
|
|
Current portion of long-term debt |
|
|
36,771 |
|
|
|
|
- |
|
|
Total current liabilities |
|
|
244,397 |
|
|
|
|
115,000 |
|
|
|
|
|
|
|
|
|
|
|
Long-term debt, net |
|
|
717,916 |
|
|
|
|
625,286 |
|
|
Asset retirement obligations,
less current portion |
|
|
380,115 |
|
|
|
|
375,516 |
|
|
Other liabilities |
|
|
56,387 |
|
|
|
|
33,066 |
|
|
Shareholders’ deficit: |
|
|
|
|
|
|
|
|
Common stock, $0.00001 par value; 200,000 shares authorized;
145,236 issued and 142,367 |
|
|
|
|
|
|
|
|
outstanding at June 30, 2021; 145,174 issued and 142,305
outstanding at December 31, 2020 |
|
|
|
|
|
|
|
|
|
|
|
1 |
|
|
|
|
1 |
|
|
Additional paid-in capital |
|
|
551,260 |
|
|
|
|
550,339 |
|
|
Retained deficit |
|
|
(786,877 |
) |
|
|
|
(734,459 |
) |
|
Treasury stock, at cost; 2,869 shares for both dates
presented |
|
|
(24,167 |
) |
|
|
|
(24,167 |
) |
|
Total shareholders’ deficit |
|
|
(259,783 |
) |
|
|
|
(208,286 |
) |
|
Total liabilities and shareholders’ deficit |
|
$ |
1,139,032 |
|
|
|
$ |
940,582 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- |
|
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
W&T OFFSHORE, INC. AND SUBSIDIARIES |
Condensed Consolidated Statements of Cash
Flows |
(In thousands) |
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Six Months Ended |
|
|
|
|
June 30, |
|
|
March 31, |
|
|
June 30, |
|
June 30, |
|
|
|
|
2021 |
|
|
2021 |
|
|
2020 |
|
|
2021 |
|
2020 |
|
Operating
activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income |
|
$ |
(51,672 |
) |
|
$ |
(746 |
) |
|
$ |
(5,904 |
) |
|
$ |
(52,418 |
) |
$ |
60,076 |
|
|
Adjustments to reconcile net
(loss) income to net cash provided by operating activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation, depletion, amortization and
accretion |
|
|
30,952 |
|
|
|
26,637 |
|
|
|
29,483 |
|
|
|
57,589 |
|
|
68,609 |
|
|
Amortization of debt items and other items |
|
|
948 |
|
|
|
2,019 |
|
|
|
2,057 |
|
|
|
2,967 |
|
|
3,682 |
|
|
Share-based compensation |
|
|
466 |
|
|
|
454 |
|
|
|
1,019 |
|
|
|
921 |
|
|
2,067 |
|
|
Derivative loss (gain) |
|
|
81,440 |
|
|
|
24,578 |
|
|
|
15,414 |
|
|
|
106,020 |
|
|
(46,498 |
) |
|
Derivative cash (payments) receipts, net |
|
|
(36,525 |
) |
|
|
(4,604 |
) |
|
|
33,162 |
|
|
|
(41,130 |
) |
|
37,566 |
|
|
Gain on debt transactions |
|
|
- |
|
|
|
- |
|
|
|
(28,968 |
) |
|
|
- |
|
|
(47,469 |
) |
|
Deferred income taxes |
|
|
(12,802 |
) |
|
|
(203 |
) |
|
|
(8,706 |
) |
|
|
(13,006 |
) |
|
(2,207 |
) |
|
Changes in operating assets and liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Oil and natural gas receivables |
|
|
(289 |
) |
|
|
(11,101 |
) |
|
|
13,030 |
|
|
|
(11,390 |
) |
|
34,984 |
|
|
Joint interest receivables |
|
|
3,484 |
|
|
|
(4,394 |
) |
|
|
(2,380 |
) |
|
|
(910 |
) |
|
4,743 |
|
|
Prepaid expenses and other assets |
|
|
(10,030 |
) |
|
|
(7,575 |
) |
|
|
(7,506 |
) |
|
|
(17,605 |
) |
|
3,505 |
|
|
Income tax |
|
|
(92 |
) |
|
|
- |
|
|
|
2,008 |
|
|
|
(92 |
) |
|
2,008 |
|
|
Asset retirement obligation settlements |
|
|
(10,251 |
) |
|
|
(962 |
) |
|
|
(1,915 |
) |
|
|
(11,213 |
) |
|
(2,164 |
) |
|
Cash advances from JV partners |
|
|
(2,902 |
) |
|
|
(1,023 |
) |
|
|
(7,156 |
) |
|
|
(3,925 |
) |
|
5,850 |
|
|
Accounts payable, accrued liabilities and other |
|
|
8,503 |
|
|
|
21,884 |
|
|
|
(24,484 |
) |
|
|
30,386 |
|
|
(31,274 |
) |
|
Net cash provided by operating activities |
|
|
1,230 |
|
|
|
44,964 |
|
|
|
9,154 |
|
|
|
46,194 |
|
|
93,478 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investing
activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment in oil and natural gas
properties and equipment |
|
|
(4,281 |
) |
|
|
(1,575 |
) |
|
|
(4,596 |
) |
|
|
(5,856 |
) |
|
(14,138 |
) |
|
Changes in operating assets and
liabilities associated with investing activities |
|
|
(1,320 |
) |
|
|
(1,758 |
) |
|
|
(1,778 |
) |
|
|
(3,078 |
) |
|
(25,811 |
) |
|
Acquisition of property
interests |
|
|
- |
|
|
|
- |
|
|
|
1,546 |
|
|
|
- |
|
|
(456 |
) |
|
Purchases of furniture, fixtures
and other |
|
|
- |
|
|
|
2 |
|
|
|
- |
|
|
|
2 |
|
|
(70 |
) |
|
Net cash used in investing activities |
|
|
(5,601 |
) |
|
|
(3,331 |
) |
|
|
(4,828 |
) |
|
|
(8,932 |
) |
|
(40,475 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financing
activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Borrowings on credit
facility |
|
|
- |
|
|
|
- |
|
|
|
25,000 |
|
|
|
- |
|
|
25,000 |
|
|
Repayments on credit
facility |
|
|
(48,000 |
) |
|
|
(32,000 |
) |
|
|
(25,000 |
) |
|
|
(80,000 |
) |
|
(50,000 |
) |
|
Purchase of Senior Second Lien
Notes |
|
|
- |
|
|
|
- |
|
|
|
(15,394 |
) |
|
|
- |
|
|
(23,930 |
) |
|
Proceeds from Term Loan |
|
|
215,000 |
|
|
|
- |
|
|
|
|
|
|
215,000 |
|
|
|
|
Debt issuance costs and
other |
|
|
(6,840 |
) |
|
|
- |
|
|
|
- |
|
|
|
(6,840 |
) |
|
- |
|
|
Net cash provided by (used in) financing
activities |
|
|
160,160 |
|
|
|
(32,000 |
) |
|
|
(15,394 |
) |
|
|
128,160 |
|
|
(48,930 |
) |
|
Increase (decrease) in cash and cash equivalents |
|
|
155,789 |
|
|
|
9,633 |
|
|
|
(11,068 |
) |
|
|
165,422 |
|
|
4,073 |
|
|
Cash and cash equivalents,
beginning of period |
|
|
53,359 |
|
|
|
43,726 |
|
|
|
47,574 |
|
|
|
43,726 |
|
|
32,433 |
|
|
Cash and cash equivalents, end of
period |
|
$ |
209,148 |
|
|
$ |
53,359 |
|
|
$ |
36,506 |
|
|
$ |
209,148 |
|
$ |
36,506 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
W&T OFFSHORE, INC. AND
SUBSIDIARIES |
|
|
Financial Commodity Derivative Positions |
|
|
As of August 3, 2021 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Production Period |
|
Instrument |
|
Avg. Daily Volumes |
Weighted Avg. Swap
Price |
Weighted Avg. Put
Price |
Weighted Avg. Call
Price |
|
|
W&T Excluding Aquasition, LLC |
|
|
Crude Oil - WTI NYMEX: |
|
|
|
|
(Bbls) |
(per Bbl) |
(per Bbl) |
(per Bbl) |
|
|
Aug 2021 - Dec 2021 |
|
Swaps |
|
4,000 |
$42.06 |
|
|
|
|
Jan 2022 - Nov 2022 |
|
Swaps |
|
2,310 |
$49.99 |
|
|
|
|
Aug 2021 - Dec 2021 |
|
Costless
Collars |
1,973 |
|
$39.15 |
$57.41 |
|
|
Jan 2022 - Nov 2022 |
|
Costless
Collars |
2,222 |
|
$41.71 |
$58.91 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Natural Gas - Henry Hub NYMEX: |
|
|
(MMBTU) |
(per MMBTU) |
(per MMBTU) |
(per MMBTU) |
|
|
Aug 2021 - Dec 2021 |
|
Swaps |
|
10,000 |
$2.62 |
|
|
|
|
Jan 2022 - Nov 2022 |
|
Swaps |
|
15,703 |
$2.60 |
|
|
|
|
Aug 2021 - Dec 2021 |
|
Purchased
Calls |
80,000 |
|
|
$3.25 |
|
|
Jan 2022 - Dec 2022 |
|
Purchased
Calls |
77,000 |
|
|
$3.24 |
|
|
Jan 2023 - Dec 2023 |
|
Purchased
Calls |
70,000 |
|
|
$3.50 |
|
|
Jan 2024 - Dec 2024 |
|
Purchased
Calls |
65,000 |
|
|
$3.50 |
|
|
Jan 2025 - Dec 2025 |
|
Purchased
Calls |
62,000 |
|
|
$3.50 |
|
|
Aug 2021 - Dec 2021 |
|
Costless
Collars |
70,000 |
|
$1.98 |
$3.00 |
|
|
Jan 2022 - Dec 2022 |
|
Costless
Collars |
47,370 |
|
$1.89 |
$3.17 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Aquasition, LLC |
|
|
Natural Gas - Henry Hub NYMEX: |
|
|
(MMBTU) |
(per MMBTU) |
(per MMBTU) |
(per MMBTU) |
|
|
Aug - Dec 2021 |
|
Swaps |
|
81,699 |
$3.02 |
|
|
|
|
Jan - Dec 2022 |
|
Swaps |
|
78,904 |
$2.69 |
|
|
|
|
Jan - Dec 2023 |
|
Swaps |
|
72,329 |
$2.48 |
|
|
|
|
Jan - Dec 2024 |
|
Swaps |
|
65,574 |
$2.46 |
|
|
|
|
Jan - Mar 2025 |
|
Swaps |
|
63,333 |
$2.72 |
|
|
|
|
Apr 2025 - Dec 2025 |
|
Purchased
Puts |
62,182 |
|
$2.27 |
|
|
|
Jan - Dec 2026 |
|
Purchased
Puts |
55,890 |
|
$2.35 |
|
|
|
Jan - Dec 2027 |
|
Purchased
Puts |
52,603 |
|
$2.37 |
|
|
|
Jan - Apr 2028 |
|
Purchased Puts |
49,587 |
|
$2.50 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
W&T OFFSHORE, INC. AND
SUBSIDIARIESNon-GAAP Information
Certain financial information included in
W&T’s 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 (Loss) Income”, “Adjusted EBITDA” and “Free Cash
Flow”. Management uses these non-GAAP financial measures in its
analysis of 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 (Loss) Income to
Adjusted Net (Loss) Income
Adjusted Net (Loss) Income does not include the
unrealized commodity derivative loss (gain), amortization of
derivative premium, bad debt reserve, deferred tax benefit, gain on
debt transactions, and litigation and other. Adjusted Net Income is
presented because the timing and amount of these items cannot be
reasonably estimated and affect the comparability of operating
results from period to period, and current periods to prior
periods.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Six Months Ended |
|
|
|
|
June 30, |
|
March 31, |
|
June 30, |
|
June 30, |
|
|
|
|
2021 |
|
2021 |
|
2020 |
|
2021 |
|
|
2020 |
|
|
|
(In thousands, except per share amounts) |
|
|
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income |
|
$ |
(51,672 |
) |
|
(746 |
) |
|
(5,904 |
) |
|
$ |
(52,418 |
) |
|
|
$ |
60,076 |
|
|
Unrealized commodity derivative loss (gain) |
|
|
66,083 |
|
|
16,334 |
|
|
37,992 |
|
|
|
82,418 |
|
|
|
|
(14,528 |
) |
|
Amortization of derivative premium |
|
|
583 |
|
|
456 |
|
|
3,407 |
|
|
|
1,039 |
|
|
|
|
7,756 |
|
|
Bad debt reserve |
|
|
8 |
|
|
- |
|
|
47 |
|
|
|
8 |
|
|
|
|
83 |
|
|
Deferred tax (benefit) expense |
|
|
(12,802 |
) |
|
(203 |
) |
|
(8,736 |
) |
|
|
(13,006 |
) |
|
|
|
(2,237 |
) |
|
Gain on debt transactions |
|
|
- |
|
|
- |
|
|
(28,968 |
) |
|
|
- |
|
|
|
|
(47,469 |
) |
|
Litigation and other |
|
|
40 |
|
|
40 |
|
|
- |
|
|
|
80 |
|
|
|
|
- |
|
|
Adjusted Net Income (Loss) |
|
$ |
2,240 |
|
|
15,881 |
|
|
(2,162 |
) |
|
$ |
18,121 |
|
|
|
$ |
3,681 |
|
|
Basic and diluted adjusted (loss) earnings per common share |
|
$ |
0.02 |
|
|
0.11 |
|
|
(0.02 |
) |
|
$ |
0.13 |
|
|
|
$ |
0.03 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted Average Shares Outstanding |
|
|
142,244 |
|
|
142,151 |
|
|
141,597 |
|
|
|
142,197 |
|
|
|
|
141,571 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
W&T OFFSHORE, INC. AND
SUBSIDIARIESNon-GAAP Information
Adjusted EBITDA/ Free Cash Flow
Reconciliations
The Company also presents the non-GAAP financial
measures Adjusted EBITDA and Free Cash Flow. The Company defines
Adjusted EBITDA as net (loss) income plus income tax (benefit)
expense, net interest expense, and depreciation, depletion,
amortization and accretion, excluding the unrealized commodity
derivative gain or loss, amortization of derivative premium, bad
debt reserve, gain on debt transactions, and litigation and other.
Company management believes this presentation is relevant and
useful because it helps investors understand W&T’s operating
performance and makes it easier to compare its results with those
of other companies that have different financing, capital and tax
structures. 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. Adjusted EBITDA, as W&T calculates it,
may not be comparable to Adjusted EBITDA measures reported by other
companies. In addition, Adjusted EBITDA does not represent funds
available for discretionary use.
The Company defines Free Cash Flow as Adjusted
EBITDA (defined above), less capital expenditures, plugging and
abandonment costs and interest expense (all on an accrual basis).
For this purpose, the Company’s definition of capital expenditures
includes costs incurred related to oil and natural gas properties
(such as drilling and infrastructure costs and the lease
maintenance costs) and equipment, furniture and fixtures, but
excludes acquisition costs of oil and gas properties from third
parties that are not included in the Company’s capital expenditures
guidance provided to investors. Company management believes that
Free Cash Flow is an important financial performance measure for
use in evaluating the performance and efficiency of its current
operating activities after the impact of accrued capital
expenditures, plugging and abandonment costs and interest expense
and without being impacted by items such as changes associated with
working capital, which can vary substantially from one period to
another. There is no commonly accepted definition of Free Cash Flow
within the industry. Accordingly, Free Cash Flow, as defined and
calculated by the Company, may not be comparable to Free Cash Flow
or other similarly named non-GAAP measures reported by other
companies. While the Company includes interest expense in the
calculation of Free Cash Flow, other mandatory debt service
requirements of future payments of principal at maturity (if such
debt is not refinanced) are excluded from the calculation of Free
Cash Flow. These and other non-discretionary expenditures that are
not deducted from Free Cash Flow would reduce cash available for
other uses.
The following tables present (i) a reconciliation of cash flow
from operating activities, a GAAP measure, to Free Cash Flow, as
defined by the Company and (ii) a reconciliation of the Company’s
net (loss) income, a GAAP measure, to Adjusted EBITDA and Free Cash
Flow, as such terms are defined by the Company.
Adjusted EBITDA |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Six Months Ended |
|
|
|
|
June 30, |
|
March 31, |
|
June 30, |
|
June 30, |
|
|
|
|
2021 |
|
2021 |
|
2020 |
|
2021 |
|
|
2020 |
|
|
|
(In
thousands) |
|
|
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income |
|
$ |
(51,672 |
) |
|
(746 |
) |
|
(5,904 |
) |
|
$ |
(52,418 |
) |
|
|
$ |
60,076 |
|
|
Interest expense, net |
|
|
16,530 |
|
|
15,034 |
|
|
14,816 |
|
|
|
31,564 |
|
|
|
|
31,926 |
|
|
Income tax benefit |
|
|
(12,740 |
) |
|
(203 |
) |
|
(8,736 |
) |
|
|
(12,944 |
) |
|
|
|
(2,237 |
) |
|
Depreciation, depletion, amortization and accretion |
|
|
30,952 |
|
|
26,637 |
|
|
29,483 |
|
|
|
57,589 |
|
|
|
|
68,609 |
|
|
Unrealized commodity derivative loss (gain) |
|
|
66,083 |
|
|
16,334 |
|
|
37,992 |
|
|
|
82,418 |
|
|
|
|
(14,528 |
) |
|
Amortization of derivative premium |
|
|
583 |
|
|
456 |
|
|
3,407 |
|
|
|
1,039 |
|
|
|
|
7,756 |
|
|
Bad debt reserve |
|
|
8 |
|
|
- |
|
|
47 |
|
|
|
8 |
|
|
|
|
83 |
|
|
Gain on debt transactions |
|
|
- |
|
|
- |
|
|
(28,968 |
) |
|
|
- |
|
|
|
|
(47,469 |
) |
|
Litigation and other |
|
|
40 |
|
|
40 |
|
|
- |
|
|
|
80 |
|
|
|
|
- |
|
|
Adjusted EBITDA |
|
$ |
49,784 |
|
|
57,552 |
|
|
42,137 |
|
|
$ |
107,336 |
|
|
|
$ |
104,216 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment in oil and natural
gas properties and equipment |
|
|
(4,281 |
) |
|
(1,575 |
) |
|
(4,596 |
) |
|
|
(5,856 |
) |
|
|
|
(14,138 |
) |
|
Purchases of furniture,
fixtures and other |
|
|
- |
|
|
2 |
|
|
- |
|
|
|
2 |
|
|
|
|
(70 |
) |
|
Asset retirement obligation
settlements |
|
|
(10,251 |
) |
|
(962 |
) |
|
(1,915 |
) |
|
|
(11,213 |
) |
|
|
|
(2,164 |
) |
|
Interest expense, net |
|
|
(16,530 |
) |
|
(15,034 |
) |
|
(14,816 |
) |
|
|
(31,564 |
) |
|
|
|
(31,926 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Free Cash Flow |
|
$ |
18,722 |
|
|
39,983 |
|
|
20,810 |
|
|
$ |
58,705 |
|
|
|
$ |
55,918 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Six Months Ended |
|
|
|
June 30, |
|
March 31, |
|
June 30, |
|
|
June 30, |
|
June 30, |
|
|
|
2021 |
|
2021 |
|
2020 |
|
|
2021 |
|
2020 |
|
|
|
(In thousands) |
|
|
|
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by operating activities |
$ |
1,230 |
|
$ |
44,964 |
|
$ |
9,154 |
|
|
$ |
46,194 |
|
$ |
93,478 |
|
|
Bad debt reserve |
|
8 |
|
|
- |
|
|
47 |
|
|
|
8 |
|
|
83 |
|
|
Litigation and other |
|
40 |
|
|
40 |
|
|
- |
|
|
|
80 |
|
|
- |
|
|
Amortization of debt items and
other items |
|
(948 |
) |
|
(2,019 |
) |
|
(2,057 |
) |
|
|
(2,967 |
) |
|
(3,682 |
) |
|
Share-based compensation |
|
(466 |
) |
|
(454 |
) |
|
(1,019 |
) |
|
|
(921 |
) |
|
(2,067 |
) |
|
Current tax benefit (expense)
(1) |
|
62 |
|
|
- |
|
|
(30 |
) |
|
|
62 |
|
|
(30 |
) |
|
Changes in derivatives receivable
(payable) (1) |
|
21,751 |
|
|
(3,184 |
) |
|
(7,177 |
) |
|
|
18,567 |
|
|
2,160 |
|
|
Changes in operating assets and liabilities, excluding asset
retirement obligation settlements |
|
1,326 |
|
|
2,209 |
|
|
26,488 |
|
|
|
3,536 |
|
|
(19,816 |
) |
|
Investment in oil and natural gas
properties and equipment |
|
(4,281 |
) |
|
(1,575 |
) |
|
(4,596 |
) |
|
|
(5,856 |
) |
|
(14,138 |
) |
|
Purchases of furniture, fixtures
and other |
|
- |
|
|
2 |
|
|
- |
|
|
|
2 |
|
|
(70 |
) |
|
Free Cash Flow |
$ |
18,722 |
|
$ |
39,983 |
|
$ |
20,810 |
|
|
$ |
58,705 |
|
$ |
55,918 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) A reconciliation of the adjustment used to calculate Free Cash
Flow to the Condensed Consolidated Financial Statements is included
below: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current tax benefit: |
|
|
|
|
|
|
|
|
|
|
|
|
Income tax (benefit) expense |
$ |
(12,740 |
) |
$ |
(203 |
) |
$ |
(8,736 |
) |
|
$ |
(12,944 |
) |
$ |
(2,237 |
) |
|
Less: Deferred income taxes |
|
(12,802 |
) |
|
(203 |
) |
|
(8,706 |
) |
|
|
(13,006 |
) |
|
(2,207 |
) |
|
Current tax benefit
(expense) |
$ |
62 |
|
$ |
- |
|
$ |
(30 |
) |
|
$ |
62 |
|
$ |
(30 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Changes in derivatives
receivable: |
|
|
|
|
|
|
|
|
|
|
|
|
Derivatives receivable (payable),
end of period |
$ |
(7,289 |
) |
$ |
(3,465 |
) |
$ |
2,505 |
|
|
$ |
(7,289 |
) |
$ |
2,505 |
|
|
Derivatives receivable (payable),
beginning of period |
|
3,465 |
|
|
281 |
|
|
(9,682 |
) |
|
|
281 |
|
|
(345 |
) |
|
Derivative premiums paid |
|
25,575 |
|
|
- |
|
|
- |
|
|
|
25,575 |
|
|
- |
|
|
Change in derivatives receivable
(payable) |
$ |
21,751 |
|
$ |
(3,184 |
) |
$ |
(7,177 |
) |
|
$ |
18,567 |
|
$ |
2,160 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
W and T Offshore (NYSE:WTI)
Historical Stock Chart
From Aug 2024 to Sep 2024
W and T Offshore (NYSE:WTI)
Historical Stock Chart
From Sep 2023 to Sep 2024