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Share Name | Share Symbol | Market | Type |
---|---|---|---|
W and T Offshore Inc | NYSE:WTI | NYSE | Common Stock |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|
-0.05 | -2.10% | 2.33 | 2.435 | 2.29 | 2.40 | 1,566,611 | 01:00:00 |
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Form
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
or
For the transition period from _______________ to ________________
Commission File Number
(Exact name of registrant as specified in its charter)
| ||
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification Number) | |
|
| |
(Address of principal executive offices) | (Zip Code) |
Registrant’s telephone number, including area code: (
Securities registered pursuant to section 12(b) of the Act:
Title of each class |
| Trading Symbol(s) |
| Name of each exchange on which registered |
|
|
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every interactive data file required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer ☐ |
| ☑ | |
Non-accelerated filer ☐ |
| Smaller reporting company | |
|
| Emerging growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company. Yes
As of October 31, 2023, there were
W&T OFFSHORE, INC. AND SUBSIDIARIES
TABLE OF CONTENTS
PART I – FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
W&T OFFSHORE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
September 30, | December 31, | |||||
| 2023 |
| 2022 | |||
Assets |
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Current assets: |
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Cash and cash equivalents | $ | | $ | | ||
Restricted cash | | | ||||
Accounts receivable: |
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Oil and natural gas sales |
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Joint interest, net |
| |
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Income taxes |
| |
| — | ||
Total receivables | | | ||||
Prepaid expenses and other current assets (Note 1) |
| |
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Total current assets |
| |
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Oil and natural gas properties and other, net (Note 1) |
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Restricted deposits for asset retirement obligations |
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Deferred income taxes |
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Other assets (Note 1) |
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Total assets | $ | | $ | | ||
Liabilities and Shareholders’ Equity |
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Current liabilities: |
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Accounts payable | $ | | $ | | ||
Undistributed oil and natural gas proceeds |
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Advances from joint interest partners |
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Current portion of asset retirement obligation (Note 8) |
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Accrued liabilities (Note 1) |
| |
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Current portion of long-term debt, net (Note 2) | | | ||||
Income taxes |
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Total current liabilities |
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Long-term debt, net (Note 2) |
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Asset retirement obligations (Note 8) |
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Other liabilities (Note 1) |
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Deferred income taxes |
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Commitments and contingencies (Note 12) |
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Shareholders’ equity: |
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Preferred stock, $ |
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Common stock, $ |
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Additional paid-in capital |
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Retained deficit |
| ( |
| ( | ||
Treasury stock, at cost; |
| ( |
| ( | ||
Total shareholders’ equity |
| |
| | ||
Total liabilities and shareholders’ equity | $ | | $ | |
See Notes to Condensed Consolidated Financial Statements.
1
W&T OFFSHORE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||
| 2023 |
| 2022 |
| 2023 |
| 2022 |
| |||||
Revenues: |
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Oil | $ | | $ | | $ | | $ | | |||||
NGLs |
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Natural gas |
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| |
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Other |
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Total revenues |
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Operating expenses: |
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Lease operating expenses |
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Gathering, transportation and production taxes | | | | | |||||||||
Depreciation, depletion, and amortization |
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Asset retirement obligations accretion | | | | | |||||||||
General and administrative expenses |
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Total operating expenses |
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Operating income |
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Interest expense, net |
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Derivative (gain) loss, net |
| ( |
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| ( |
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Other expense (income), net |
| |
| ( |
| |
| ( | |||||
Income before income taxes |
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Income tax expense |
| |
| |
| |
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Net income | $ | | $ | | $ | | $ | | |||||
Net income per common share: | |||||||||||||
Basic | $ | | $ | | $ | | $ | | |||||
Diluted | $ | | $ | | $ | | $ | | |||||
Weighted average common shares outstanding: | |||||||||||||
Basic | | | | | |||||||||
Diluted | | | | |
See Notes to Condensed Consolidated Financial Statements.
2
W&T OFFSHORE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (DEFICIT)
(In thousands)
(Unaudited)
| Common Stock |
| Additional |
|
|
|
|
| Total | ||||||||||
Outstanding | Paid-In | Retained | Treasury Stock | Shareholders’ | |||||||||||||||
| Shares |
| Value |
| Capital |
| Deficit |
| Shares |
| Value |
| Equity | ||||||
Balances at June 30, 2023 |
| |
| $ | |
| $ | |
| $ | ( |
| |
| $ | ( |
| $ | |
Share-based compensation |
| — |
|
| — |
|
| |
|
| — |
| — |
|
| — |
|
| |
Stock issued |
| |
|
| — |
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| — |
|
| — |
| — |
|
| — |
|
| — |
Shares withheld related to net settlement of equity awards |
| — |
|
| — |
|
| ( |
|
| — |
| — |
|
| — |
|
| ( |
Net income |
| — |
|
| — |
|
| — |
|
| |
| — |
|
| — |
|
| |
Balances at September 30, 2023 |
| |
| $ | |
| $ | |
| $ | ( |
| |
| $ | ( |
| $ | |
| Common Stock |
| Additional |
|
|
|
|
| Total | ||||||||||
Outstanding | Paid-In | Retained | Treasury Stock | Shareholders’ | |||||||||||||||
| Shares |
| Value |
| Capital |
| Deficit |
| Shares |
| Value |
| Deficit | ||||||
Balances at June 30, 2022 |
| |
| $ | |
| $ | |
| $ | ( |
| |
| $ | ( |
| $ | ( |
Share-based compensation |
| — |
|
| — |
|
| |
|
| — |
| — |
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| — |
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Stock issued |
| |
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| — |
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| — |
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| — |
| — |
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| — |
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| — |
Shares withheld related to net settlement of equity awards |
| — |
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| — |
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| ( |
|
| — |
| — |
|
| — |
|
| ( |
Net income |
| — |
|
| — |
|
| — |
|
| |
| — |
|
| — |
|
| |
Balances at September 30, 2022 |
| |
| $ | |
| $ | |
| $ | ( |
| |
| $ | ( |
| $ | ( |
3
W&T OFFSHORE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (DEFICIT) (Continued)
(In thousands)
(Unaudited)
| Common Stock |
| Additional |
|
|
|
|
| Total | ||||||||||
Outstanding | Paid-In | Retained | Treasury Stock | Shareholders’ | |||||||||||||||
| Shares |
| Value |
| Capital |
| Deficit |
| Shares |
| Value |
| Equity | ||||||
Balances at December 31, 2022 |
| |
| $ | |
| $ | |
| $ | ( |
| |
| $ | ( |
| $ | |
Share-based compensation |
| — |
|
| — |
|
| |
|
| — |
| — |
|
| — |
|
| |
Stock issued | |
|
| — |
|
| — |
|
| — |
| — |
|
| — |
|
| — | |
Shares withheld related to net settlement of equity awards |
| — |
|
| — |
|
| ( |
|
| — |
| — |
|
| — |
|
| ( |
Net income |
| — |
| — |
| — |
| |
| — |
| — |
| | |||||
Balances at September 30, 2023 |
| | $ | | $ | | $ | ( |
| | $ | ( | $ | |
| Common Stock |
| Additional |
|
|
|
|
| Total | ||||||||||
Outstanding | Paid-In | Retained | Treasury Stock | Shareholders’ | |||||||||||||||
| Shares |
| Value |
| Capital |
| Deficit |
| Shares |
| Value |
| Deficit | ||||||
Balances at December 31, 2021 |
| |
| $ | |
| $ | |
| $ | ( |
| |
| $ | ( |
| $ | ( |
Share-based compensation |
| — |
|
| — |
|
| |
|
| — |
| — |
|
| — |
|
| |
Stock issued | |
|
| — |
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| — |
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| — |
| — |
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| — |
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| — | |
Shares withheld related to net settlement of equity awards |
| — |
|
| — |
|
| ( |
|
| — |
| — |
|
| — |
|
| ( |
Net income |
| — |
| — |
| — |
| |
| — |
| — |
| | |||||
Balances at September 30, 2022 |
| | $ | | $ | | $ | ( |
| | $ | ( | $ | ( |
See Notes to Condensed Consolidated Financial Statements.
4
W&T OFFSHORE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Nine Months Ended September 30, | |||||||
| 2023 |
| 2022 |
| |||
Operating activities: |
|
|
|
|
| ||
Net income | $ | | $ | | |||
Adjustments to reconcile net income to net cash provided by operating activities: |
|
|
|
| |||
Depreciation, depletion, amortization and accretion |
| |
| | |||
Share-based compensation |
| |
| | |||
Amortization and write off of debt issuance costs |
| |
| | |||
Derivative (gain) loss |
| ( |
| | |||
Derivative cash payments, net |
| ( |
| ( | |||
Derivative cash premium payments | — | ( | |||||
Deferred income taxes |
| |
| | |||
Changes in operating assets and liabilities: |
|
|
|
| |||
Oil and natural gas receivables |
| |
| ( | |||
Joint interest receivables | ( | ( | |||||
Prepaid expenses and other current assets |
| |
| ( | |||
Accounts payable, accrued liabilities and other | ( | | |||||
Asset retirement obligation settlements |
| ( |
| ( | |||
Cash advances from JV partners |
| ( |
| ( | |||
Income taxes payable |
| ( |
| | |||
Net cash provided by operating activities |
| |
| | |||
Investing activities: |
|
|
|
| |||
Investment in oil and natural gas properties and equipment |
| ( |
| ( | |||
Changes in operating assets and liabilities associated with investing activities | | ( | |||||
Acquisition of property interests |
| ( |
| ( | |||
Deposit related to acqusition of property interests | ( | — | |||||
Purchase of corporate aircraft (Note 13) | ( | — | |||||
Purchases of furniture, fixtures and other | ( | — | |||||
Net cash used in investing activities |
| ( |
| ( | |||
Financing activities: |
|
|
|
| |||
Repayment of | ( | — | |||||
Repayment of Term Loan | ( | ( | |||||
Repayment of TVPX Loan | ( | — | |||||
Proceeds from issuance of | | — | |||||
Debt issuance costs |
| ( |
| ( | |||
Other |
| ( |
| ( | |||
Net cash used in financing activities |
| ( |
| ( | |||
Change in cash, cash equivalents and restricted cash |
| ( |
| | |||
Cash and cash equivalents and restricted cash, beginning of period |
| |
| | |||
Cash and cash equivalents and restricted cash, end of period | $ | | $ | |
See Notes to Condensed Consolidated Financial Statements.
5
W&T OFFSHORE, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 — BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES
Nature of Operations
W&T Offshore, Inc. (with subsidiaries referred to herein as “W&T” or the “Company”) is an independent oil and natural gas producer with substantially all of its operations offshore in the Gulf of Mexico. The Company is active in the exploration, development and acquisition of oil and natural gas properties. The Company operates in
Basis of Presentation
The accompanying unaudited condensed consolidated financial statements include the accounts of the Company, its wholly-owned subsidiaries and an interest in Monza Energy LLC (“Monza”), which is accounted for under the proportional consolidation method. All intercompany accounts and transactions have been eliminated in consolidation. These condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). Accordingly, certain information and disclosures normally included in annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) have been condensed or omitted. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included.
Operating results for interim periods are not necessarily indicative of the results that may be expected for the entire year. These unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes included in Item 8 “Financial Statements and Supplementary Data” of the Company’s Annual Report on Form 10-K for the year ended December 31, 2022 (the “2022 Annual Report”).
Use of Estimates
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, the reported amounts of revenues and expenses during the reporting periods and the reported amounts of proved oil and natural gas reserves. Actual results could differ from those estimates.
Allowance for Credit Losses
The Company has receivables related to joint interest arrangements primarily with mid-size oil and natural gas companies with a substantial majority of the net receivable balance concentrated in less than
Employee Retention Credit
Under the Consolidated Appropriations Act of 2021, the Company recognized a $
6
W&T OFFSHORE, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Prepaid Expenses and Other Current Assets
Prepaid expenses and other current assets consist of the following (in thousands):
September 30, |
| December 31, | ||||
2023 | 2022 | |||||
Derivatives (1) | $ | | $ | | ||
Insurance/bond premiums |
| |
| | ||
Deposit related to acquisition (Note 14) | | — | ||||
Prepaid deposits related to royalties |
| |
| | ||
Prepayments to vendors |
| |
| | ||
Prepayments to joint interest partners | | | ||||
Current portion of debt issuance costs | | | ||||
Other |
| |
| | ||
Prepaid expenses and other current assets | $ | | $ | |
(1) |
Oil and Natural Gas Properties and Other, Net
Oil and natural gas properties and other, net consist of the following (in thousands):
September 30, |
| December 31, | ||||
2023 | 2022 | |||||
Oil and natural gas properties and equipment | $ | | $ | | ||
Furniture, fixtures and other |
| |
| | ||
Total property and equipment |
| |
| | ||
Less: Accumulated depreciation, depletion, amortization and impairment |
| ( |
| ( | ||
Oil and natural gas properties and other, net | $ | | $ | |
Other Assets
Other assets consist of the following (in thousands):
September 30, |
| December 31, | ||||
2023 | 2022 | |||||
$ | | $ | | |||
Investment in White Cap, LLC |
| |
| | ||
Proportional consolidation of Monza |
| |
| | ||
Derivatives (1) |
| |
| | ||
Other |
| |
| | ||
Total other assets | $ | | $ | |
(1) |
7
W&T OFFSHORE, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Accrued Liabilities
Accrued liabilities consist of the following (in thousands):
September 30, |
| December 31, | ||||
2023 | 2022 | |||||
Accrued interest | $ | | $ | | ||
Accrued salaries/payroll taxes/benefits |
| |
| | ||
Litigation accruals |
| |
| | ||
| |
| | |||
Derivatives (1) |
| |
| | ||
Other |
| |
| | ||
Total accrued liabilities | $ | | $ | |
(1) | Includes closed contracts which have not yet settled. |
Other Liabilities
Other liabilities consist of the following (in thousands):
September 30, |
| December 31, | ||||
2023 | 2022 | |||||
Dispute related to royalty deductions | $ | | $ | | ||
Derivatives |
| |
| | ||
| |
| | |||
Other |
| |
| | ||
Total other liabilities | $ | | $ | |
8
W&T OFFSHORE, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 2 — DEBT
The components comprising the Company’s debt are presented in the following table (in thousands):
September 30, |
| December 31, | ||||
2023 | 2022 | |||||
TVPX Loan: | ||||||
Principal | $ | | $ | — | ||
Unamortized discount | ( | — | ||||
Unamortized debt issuance costs |
| ( | — | |||
Total |
| | — | |||
Term Loan: | ||||||
Principal | | | ||||
Unamortized debt issuance costs | ( | ( | ||||
Total |
| |
| | ||
Credit Agreement | — | — | ||||
|
|
| ||||
Principal |
| |
| — | ||
Unamortized debt issuance costs |
| ( |
| — | ||
Total |
| |
| — | ||
|
|
| ||||
Principal |
| — |
| | ||
Unamortized debt issuance costs |
| — |
| ( | ||
Total |
| — |
| | ||
Total debt, net | | | ||||
Less current portion, net | ( | ( | ||||
Long-term debt, net | $ | | $ | |
Current Portion of Long-Term Debt, Net
As of September 30, 2023, the current portion of long-term debt of $
TVPX Loan
On May 15, 2023, the Company acquired a corporate aircraft from a company affiliated with and controlled by W&T’s Chairman, Chief Executive Officer (“CEO”) and President, Tracy W. Krohn. The terms of the transactions were reviewed and approved by the Audit Committee of the Company’s Board of Directors. See Note 13 – Related Party Transactions.
The purchase price of the aircraft was $
9
W&T OFFSHORE, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The TVPX Loan bears a fixed interest rate of
The aircraft was purchased as part of a series of transactions pursuant to which the Company restructured the compensation for its Named Executive Officers. Prior to the Company’s purchase of the aircraft, the Company used the aircraft for business purposes, and the CEO also used the aircraft for personal purposes. Both the Company’s use for business purposes and the CEO’s unlimited use for personal purposes were paid for by the Company pursuant to the CEO’s prior employment agreement. In connection with the Company’s efforts to significantly reduce overall executive compensation, including perquisite compensation Mr. Krohn was receiving for personal use of the aircraft, on April 20, 2023, the Company entered into an amendment to the employment agreement with the CEO which requires that the Company be reimbursed for personal use of the aircraft in accordance with the Company’s aircraft use policy.
Term Loan
On May 19, 2021, Aquasition LLC and Aquasition-II LLC (collectively, the “Subsidiary Borrowers”), both indirect wholly owned subsidiaries of the Company, entered into a credit agreement (the “Subsidiary Credit Agreement”) providing for a $
The Term Loan requires quarterly amortization payments and bears interest at a fixed rate of
The Term Loan is non-recourse to the Company and any subsidiaries other than the Subsidiary Borrowers and the subsidiary that owns the equity in the Subsidiary Borrowers (the “Subsidiary Parent”) and is secured by the first lien security interests in the equity of the Subsidiary Borrowers and a first lien mortgage security interest and mortgages on certain assets of the Subsidiary Borrowers (see Note 6 – Subsidiary Borrowers for additional information).
Credit Agreement
The Company entered into a Credit Agreement with Calculus Lending, LLC (“Calculus”), a company affiliated with and controlled by the Company’s CEO, as sole lender under the Credit Agreement (as amended from time to time, the “Credit Agreement”). The Credit Agreement currently has a maturity date of January 3, 2024. As of September 30, 2023, the primary terms and covenants associated with the Credit Agreement are as follows:
● | $ |
● | Outstanding borrowings accrue interest at SOFR plus |
● | The Company’s ratio of First Lien Debt (as such term is defined in the Credit Agreement) outstanding under the Credit Agreement on the last day of the most recent quarter to EBITDAX (as such term is defined in the Credit Agreement) for the trailing |
● | The Company’s ratio of Total Proved PV-10 to First Lien Debt (as such terms are defined in the Credit Agreement) as of the last day of any fiscal quarter must be equal to or greater than |
● | The ratio of the Company and its restricted subsidiaries’ consolidated current assets to consolidated current liabilities (subject in each case to certain exceptions and adjustments as set forth in the Credit Agreement) at the last day of any fiscal quarter must be greater than or equal to |
10
W&T OFFSHORE, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
● | As of the last day of any fiscal quarter, the Company and its restricted subsidiaries on a consolidated basis must pass a “Stress Test” to determine whether certain future net revenues from the Company’s and its restricted subsidiaries’ and certain joint ventures’ oil and gas properties included in the collateral are sufficient to satisfy the aggregate first lien indebtedness under the Credit Agreement assuming the Borrowing Base is |
● | Certain related party transactions are required to meet certain arm’s length criteria; except in each case as specifically permitted or excluded from the covenant under the Credit Agreement. |
Availability under the Credit Agreement is subject to redetermination of the borrowing base that may be requested at the discretion of either the lender or the Company in accordance with the Credit Agreement. Any redetermination by the lender to change the borrowing base will result in a similar change in the availability under the Credit Agreement. The borrowing base was reconfirmed at $
As of September 30, 2023, there were
On January 27, 2023, the Company issued at par $
The
Prior to August 1, 2024, the Company may redeem all or any portion of the
On and after August 1, 2024, the Company may redeem the
11
W&T OFFSHORE, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The
Redemption of
On February 8, 2023, the Company redeemed all of the $
Covenants
As of September 30, 2023 and for all prior measurement periods presented, the Company was in compliance with all applicable covenants of the Credit Agreement and the Indenture.
NOTE 3 — FAIR VALUE MEASUREMENTS
Derivative Financial Instruments
Derivative financial instruments are reported in the Condensed Consolidated Balance Sheets using fair value. See Note 4 – Derivative Financial Instruments for additional information on derivative financial instruments. The following table presents the fair value of the Company’s derivative financial instruments (in thousands):
September 30, |
| December 31, | ||||
2023 | 2022 | |||||
Assets: |
|
|
|
| ||
Derivative instruments - current | $ | | $ | | ||
Derivative instruments - long-term |
| |
| | ||
Liabilities: |
|
|
|
| ||
Derivative instruments - current |
| |
| | ||
Derivative instruments - long-term |
| |
| |
The Company measures the fair value of derivative financial instruments by applying the income approach, using models with inputs that are classified within Level 2 of the valuation hierarchy. The income approach converts expected future cash flows to a present value amount based on market expectations. The inputs used for the fair value measurement of derivative financial instruments are the exercise price, the expiration date, the settlement date, notional quantities, the implied volatility, the discount curve with spreads and published commodity future prices.
12
W&T OFFSHORE, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Debt Instruments
The following table presents the net value and fair value of the Company’s debt (in thousands):
| September 30, 2023 |
| December 31, 2022 | |||||||||
Net Value |
| Fair Value |
| Net Value |
| Fair Value | ||||||
TVPX Loan | $ | | $ | | $ | — | $ | — | ||||
Term Loan | | | | | ||||||||
|
| |
| — |
| — | ||||||
| — |
| — |
| |
| | |||||
Total | $ | | $ | | $ | | $ | |
The fair value of the TVPX Loan and the Term Loan were measured using a discounted cash flows model and current market rates. The fair value of the
NOTE 4 — DERIVATIVE FINANCIAL INSTRUMENTS
W&T’s market risk exposure relates primarily to commodity prices. The Company attempts to mitigate a portion of its commodity price risk and stabilize cash flows associated with sales of oil and natural gas production through the use of oil and natural gas swaps, costless collars, sold calls and purchased puts. The Company is exposed to credit loss in the event of nonperformance by the derivative counterparties; however, the Company currently anticipates that the derivative counterparties will be able to fulfill their contractual obligations. The Company is not required to provide additional collateral to the derivative counterparties and does not require collateral from the derivative counterparties.
W&T has elected not to designate commodity derivative contracts for hedge accounting. Accordingly, commodity derivatives are recorded on the Condensed Consolidated Balance Sheets at fair value with settlements of such contracts, and changes in the unrealized fair value, recorded as Derivative (gain) loss, net on the Condensed Consolidated Statements of Operations in each period presented.
The natural gas contracts are based off the Henry Hub prices, which is quoted off the New York Mercantile Exchange (“NYMEX”).
The following table reflects the contracted volumes and weighted average prices under the terms of the Company’s open derivative contracts as of September 30, 2023:
Average | |||||||||||||||
Instrument | Daily | Total | Weighted | Weighted | Weighted | ||||||||||
Period |
| Type |
| Volumes |
| Volumes |
| Strike Price |
| Put Price |
| Call Price | |||
Natural Gas - Henry Hub (NYMEX) | (MMbtu)(1) | (MMbtu)(1) | ($/MMbtu)(1) | ($/MMbtu)(1) | ($/MMbtu)(1) | ||||||||||
Oct 2023 - Dec 2023 | calls | | | $ | — | $ | — | $ | | ||||||
Jan 2024 - Dec 2024 | calls | | | $ | — | $ | — | $ | | ||||||
Jan 2025 - Mar 2025 | calls | | | $ | — | $ | — | $ | | ||||||
Oct 2023 - Dec 2023 (2) | swaps | | | $ | | $ | — | $ | — | ||||||
Jan 2024 - Dec 2024 (2) | swaps | | | $ | | $ | — | $ | — | ||||||
Jan 2025 - Mar 2025 (2) | swaps | | | $ | | $ | — | $ | — | ||||||
Apr 2025 - Dec 2025 (2) | puts | | | $ | — | $ | | $ | — | ||||||
Jan 2026 - Dec 2026 (2) | puts | | | $ | — | $ | | $ | — | ||||||
Jan 2027 - Dec 2027 (2) | puts | | | $ | — | $ | | $ | — | ||||||
Jan 2028 - Apr 2028 (2) | puts | | | $ | — | $ | | $ | — |
13
W&T OFFSHORE, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(1) | MMbtu – Million British Thermal Units |
(2) | These contracts were entered into by Aquasition LLC in conjunction with the Term Loan (see Note 6 – Subsidiary Borrowers). |
Financial Statement Presentation
The fair value of the Company’s derivative financial instruments was recorded in the Condensed Consolidated Balance Sheets as follows (in thousands):
| September 30, |
| December 31, | |||
2023 | 2022 | |||||
$ | | $ | | |||
| |
| | |||
| |
| | |||
| |
Although the Company has master netting arrangements with its counterparties, the amounts recorded on the Condensed Consolidated Balance Sheets are on a gross basis.
The impact of commodity derivative contracts on the Condensed Consolidated Statements of Operations were as follows (in thousands):
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||
| 2023 |
| 2022 |
| 2023 |
| 2022 |
| |||||
Realized loss (1) | $ | | $ | | $ | | $ | | |||||
Unrealized (gain) loss | ( | ( | ( | | |||||||||
Derivative (gain) loss, net | $ | ( | $ | | $ | ( | $ | |
(1) | The nine months ended September 30, 2022 includes the effect of the $ |
Cash payments on commodity derivative contract settlements, net, are included within Net cash provided by operating activities on the Condensed Consolidated Statements of Cash Flows and were as follows (in thousands):
Nine Months Ended September 30, | ||||||
| 2023 |
| 2022 | |||
Derivative (gain) loss | $ | ( | $ | | ||
Derivative cash payments, net (1) | ( | ( | ||||
Derivative cash premium payments, net | — | ( |
(1) | The nine months ended September 30, 2022 includes $ |
NOTE 5 —– ACQUISITION
On September 20, 2023, the Company entered into a purchase and sale agreement to acquire working interests in certain oil and natural gas producing properties in
14
W&T OFFSHORE, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The acquisition was accounted for as an asset acquisition, which requires that the total purchase price, including transaction costs, be allocated to the assets acquired and the liabilities assumed based on their relative fair values. The fair value measurements of the oil and natural gas properties acquired and ARO assumed were derived utilizing an income approach and based, in part, on significant inputs not observable in the market. These inputs represent Level 3 measurements in the fair value hierarchy and include, but are not limited to, estimates of reserves, future operating and development costs, future commodity prices, estimated future cash flows and appropriate discount rates. These inputs required significant judgments and estimates by the Company’s management at the time of the valuation.
The following table represents the Company’s preliminary allocation of total purchase consideration to the identifiable assets acquired and liabilities assumed based on the fair values on the date of acquisition (in thousands):
Oil and natural gas properties and other, net | $ | | |||||||
Asset retirement obligations |
| ( | |||||||
Allocated purchase price | $ | |
NOTE 6 — SUBSIDIARY BORROWERS
The Subsidiary Borrowers used the net proceeds from the Term Loan (see Note 2 – Debt) to acquire all of the Company’s interests in certain oil and gas leasehold interests and associated wells and units located in State of Alabama waters and U.S. federal waters in the offshore Gulf of Mexico, Mobile Bay region (such assets, the “Mobile Bay Properties”) and the Company’s interest in certain gathering and processing assets located offshore Gulf of Mexico, Mobile Bay region and onshore near Mobile, Alabama, including offshore gathering pipelines, an onshore crude oil treating and sweetening facility, an onshore gathering pipeline, and associated assets (such assets, the “Midstream Assets”).
The Subsidiary Borrowers are wholly-owned subsidiaries of the Company; however, the assets of the Subsidiary Borrowers are not available to satisfy the debt or contractual obligations of any other entities, including debt securities or other contractual obligations of the Company, and the Subsidiary Borrowers do not bear any liability for the indebtedness or other contractual obligations of any other entities, and vice versa.
During the year ended December 31, 2022, the Subsidiary Borrowers paid cash distributions to W&T of $
15
W&T OFFSHORE, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Consolidation and Carrying Amounts
The following table presents the amounts recorded by the Company on the Condensed Consolidated Balance Sheets related to the consolidation of the Subsidiary Borrowers and the Subsidiary Parent (in thousands):
September 30, | December 31, | |||||
2023 | 2022 | |||||
Assets: |
|
|
|
| ||
Cash and cash equivalents | $ | | $ | | ||
Receivables: |
|
|
|
| ||
Oil and natural gas sales |
| |
| | ||
Joint interest, net |
| ( |
| ( | ||
Prepaid expenses and other assets |
| ( |
| | ||
Oil and natural gas properties and other, net |
| |
| | ||
Other assets |
| |
| | ||
Liabilities: |
|
|
|
| ||
Accounts payable | | | ||||
Undistributed oil and natural gas proceeds |
| |
| | ||
Accrued liabilities |
| |
| | ||
Current portion of long-term debt, net | | | ||||
Long-term debt, net |
| |
| | ||
Asset retirement obligations |
| |
| | ||
Other liabilities |
| |
| |
The following table presents the amounts recorded by the Company in the Condensed Consolidated Statement of Operations related to the consolidation of the operations of the Subsidiary Borrowers and the Subsidiary Parent (in thousands):
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||
Total revenues | $ | | $ | | $ | | $ | | ||||
Total operating expenses |
| |
| |
| |
| | ||||
Interest expense, net |
| |
| |
| |
| | ||||
Derivative (gain) loss |
| ( |
| |
| ( |
| |
NOTE 7 — JOINT VENTURE DRILLING PROGRAM
In March 2018, W&T and other members formed and funded Monza, which jointly participates with the Company in the exploration, drilling and development of certain drilling projects (the “Joint Venture Drilling Program”) in the Gulf of Mexico. The total commitments by all members, including W&T’s commitment to fund its retained interest in Monza projects held outside of Monza, was $
The members of Monza are third-party investors, W&T and an entity owned and controlled by W&T’s CEO. The entity affiliated with the Company’s CEO invested as a minority investor on the same terms and conditions as the third-party investors. Its investment is limited to
16
W&T OFFSHORE, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Monza is an entity separate from any other entity with its own separate creditors who will be entitled, upon its liquidation, to be satisfied out of Monza’s assets prior to any value in Monza becoming available to holders of its equity. The assets of Monza are not available to pay creditors of the Company and its affiliates.
Through September 30, 2023,
Since inception through September 30, 2023, members of Monza have made partner capital contributions, including W&T’s contributions of working interest in the drilling projects, to Monza totaling $
Consolidation and Carrying Amounts
W&T’s interest in Monza is considered to be a variable interest that is proportionally consolidated. Through September 30, 2023, there have been no events or changes that would cause a redetermination of the variable interest status. W&T does not fully consolidate Monza because the Company is not considered the primary beneficiary of Monza.
The following table presents the amounts recorded by W&T on the Condensed Consolidated Balance Sheets related to the consolidation of the proportional interest in Monza’s operations (in thousands):
September 30, | December 31, | |||||
2023 | 2022 | |||||
Working capital | $ | | $ | | ||
Oil and natural gas properties and other, net |
| |
| | ||
Asset retirement obligations | | | ||||
Other assets |
| |
| |
As required, W&T may call on Monza to provide cash to fund its portion of certain Joint Venture Drilling Program projects in advance of capital expenditure spending. As of September 30, 2023 and December 31, 2022, the unused advances were $
The following table presents the amounts recorded by W&T in the Condensed Consolidated Statement of Operations related to the consolidation of the proportional interest in Monza’s operations (in thousands):
Nine Months Ended September 30, | ||||||
2023 | 2022 | |||||
Total revenues | $ | | $ | | ||
Total operating expenses |
| |
| | ||
Interest income |
| |
| — |
17
W&T OFFSHORE, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 8 — ASSET RETIREMENT OBLIGATIONS
AROs represent the estimated present value of the amount incurred to plug, abandon and remediate the Company’s properties at the end of their productive lives. A summary of the changes to ARO is as follows (in thousands):
Nine Months Ended September 30, | ||||||
| 2023 |
| 2022 | |||
Asset retirement obligations, beginning of period | $ | | $ | | ||
Liabilities settled |
| ( |
| ( | ||
Accretion expense |
| |
| | ||
Liabilities acquired |
| |
| | ||
Liabilities incurred | | | ||||
Revisions of estimated liabilities |
| |
| | ||
Asset retirement obligations, end of period | | | ||||
Less: Current portion |
| ( |
| ( | ||
Long-term | $ | | $ | |
NOTE 9 — SHARE-BASED AWARDS AND CASH-BASED INCENTIVE COMPENSATION
On June 16, 2023, the 2023 Incentive Compensation Plan (the “2023 Plan”) was approved by the Company’s shareholders. The 2023 Plan is effective June 16, 2023, and the Company will no longer grant awards pursuant to the W&T Offshore, Inc. Amended and Restated Incentive Compensation Plan, as amended from time to time, or the 2004 Directors Compensation Plan of W&T Offshore, Inc., as amended from time to time (collectively, the “Prior Plans”). Under the 2023 Plan, the Company may issue, subject to the approval of the Board of Directors, stock options, stock appreciation rights, restricted stock (“RSAs”), restricted stock units (“RSUs”), performance awards (“PSUs”), stock awards, dividend equivalents, other stock-based awards, performance units or shares, cash awards, substitute awards or any combination of the foregoing to eligible employees, non-employee directors, and consultants. Any awards granted prior to the effective date of the 2023 Plan are considered to have been granted under the applicable Prior Plan.
Share-Based Awards
Restricted Stock Units
During 2023, the Company granted RSUs to certain employees and non-employee directors under both the 2023 Plan and the Prior Plan. The RSUs granted to employees are a long-term compensation component, subject to service conditions, and generally vest in
18
W&T OFFSHORE, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
A summary of activity related to RSUs during the nine months ended September 30, 2023 is as follows:
Weighted | |||||
|
| Average | |||
Grant Date | |||||
Restricted | Fair Value | ||||
Stock Units | per Unit | ||||
Nonvested, beginning of period | | $ | | ||
Granted |
| |
| | |
Vested |
| ( |
| | |
Forfeited |
| ( |
| | |
Nonvested, end of period |
| | |
Performance Share Units
In June 2023, the Company granted PSUs to certain employees under both the 2023 Plan and the Prior Plan. These PSUs vest subject to continued employment and the Company’s total shareholder return (“TSR”) ranking against peer companies’ TSR over a
A summary of activity related to PSUs during the nine months ended September 30, 2023 is as follows:
Weighted | |||||
|
| Average | |||
Grant Date | |||||
Performance | Fair Value | ||||
Share Units | per Unit | ||||
Nonvested, beginning of period | | $ | | ||
Granted |
| |
| | |
Vested |
| ( |
| | |
Forfeited |
| ( |
| | |
Nonvested, end of period |
| | |
The following table summarizes the assumptions used in the Monte Carlo simulation model to calculate the fair value of the PSUs granted:
Expected term for performance period (in years) | ||||
Expected volatility | | % | ||
Risk-free interest rate | | % |
Share-Based Awards to Non-Employee Directors
Under the Prior Plan, the Company issued RSAs to non-employee directors. These RSAs vested over a
19
W&T OFFSHORE, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
A summary of activity related to restricted shares during the nine months ended September 30, 2023 is as follows:
Weighted | |||||
Average | |||||
Grant Date | |||||
| Restricted |
| Fair Value | ||
Shares | per Share | ||||
Nonvested, beginning of period | | $ | | ||
Granted | — | — | |||
Vested |
| ( |
| | |
Nonvested, end of period |
| — | — |
Share-Based Compensation Expense
The following table presents the compensation costs included in General and administrative expenses in the Condensed Consolidated Statements of Operations (in thousands):
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||
| 2023 |
| 2022 |
| 2023 |
| 2022 | |||||
Restricted stock units | $ | | $ | | $ | | $ | | ||||
Performance share units | | | | | ||||||||
Restricted shares |
| — |
| |
| |
| | ||||
Total | $ | | $ | | $ | | $ | |
Cash-Based Incentive Compensation
In addition to share-based awards, the Company also grants short-term cash-based incentive awards to all eligible employees. These awards provide for an annual cash payment equal to an established target cash incentive amount multiplied by a target performance score for the Company (as determined by a set of pre-defined performance metrics) and multiplied by an individual performance multiplier for all eligible employees except Named Executive Officers.
The following table presents the cash-based incentive compensation costs in the Condensed Consolidated Statements of Operations (in thousands):
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||
| 2023 |
| 2022 |
| 2023 |
| 2022 | |||||
Lease operating expenses | $ | | $ | | $ | | $ | | ||||
General and administrative expenses |
| |
| |
| |
| | ||||
Total | $ | | $ | | $ | | $ | |
20
W&T OFFSHORE, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 10 — INCOME TAXES
Tax Expense and Effective Tax Rate
For the three months ended September 30, 2023 and 2022, the Company recognized income tax expense of $
Valuation Allowance
Deferred tax assets are recorded related to net operating losses and temporary differences between the book and tax basis of assets and liabilities expected to produce tax deductions in future periods. The realization of the Company’s deferred tax assets depends on recognition of sufficient future taxable income in specific tax jurisdictions in which those temporary differences or net operating losses are deductible. In assessing the need for a valuation allowance on deferred tax assets, the Company considers whether it is more likely than not that some portion or all of them will not be realized.
As of September 30, 2023 and December 31, 2022, the valuation allowance was $
Income Taxes Receivable, Refunds and Payments
As of September 30, 2023, the Company has a federal income tax receivable of $
The tax years 2019 through 2022 remain open to examination by the tax jurisdictions to which the Company is subject.
21
W&T OFFSHORE, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 11 — EARNINGS PER SHARE
The following table presents the calculation of basic and diluted (loss) earnings per common share (in thousands, except per share amounts):
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||
| 2023 |
| 2022 |
| 2023 |
| 2022 | |||||
Net income | $ | | $ | | $ | | $ | | ||||
Weighted average common shares outstanding - basic |
| |
| |
| |
| | ||||
Dilutive effect of securities | | | | | ||||||||
Weighted average common shares outstanding - diluted | | | | | ||||||||
Earnings per common share: | ||||||||||||
Basic | $ | | $ | | $ | | $ | | ||||
Diluted | | | | |
NOTE 12 — CONTINGENCIES
Appeal with the Office of Natural Resources Revenue In 2009, W&T recognized allowable reductions of cash payments for royalties owed to the Office of Natural Resources Revenue (the “ONRR”) for transportation of their deepwater production through subsea pipeline systems owned by the Company. In 2010, the ONRR audited calculations and support related to this usage fee, and ONRR notified the Company that they had disallowed approximately $
The Company has continued to pursue its legal rights and, at present, the case is in front of the U.S. District Court for the Eastern District of Louisiana where both parties have filed cross-motions for summary judgment and opposition briefs. W&T has filed a Reply in support of its Motion for Summary Judgment and the government has in turn filed its Reply brief. With briefing now completed, the Company is waiting for the district court’s ruling on the merits.
ONRR Audit of Historical Refund Claims
On September 18, 2023, the Company received notification from the ONRR regarding results of an audit performed on W&T’s historical refund claims taken on various properties for alleged royalties owed to the ONRR. The Company’s review and the ONRR appeal process are ongoing and the Company does not believe any accrual is necessary at this time.
Civil Penalties
In January 2021, W&T entered into a Settlement Agreement with the Bureau of Safety and Environmental Enforcement (the “BSEE”) which resolved
22
W&T OFFSHORE, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Contingent Decommissioning Obligations
The Company may be subject to retained liabilities with respect to certain divested property interests by operation of law. Certain counterparties in past divestiture transactions or third parties in existing leases that have filed for bankruptcy protection or undergone associated reorganizations may not be able to perform required abandonment obligations. Due to operation of law, W&T may be required to assume decommissioning obligations for those interests. The Company may be held jointly and severally liable for the decommissioning of various facilities and related wells. W&T no longer owns these assets nor are they related to current operations.
During 2021 and 2022, as a result of the declaration of bankruptcy by a third party that is the indirect successor in title to certain offshore interests that were previously divested by the Company, W&T recorded a total contingent loss accrual of $
Although it is reasonably possible that the Company could receive additional state or federal decommissioning orders in the future or be notified of defaulting third parties in existing leases, the Company cannot predict with certainty, if, how or when such orders or notices will be resolved or estimate a possible loss or range of loss that may result from such orders. However, the Company could incur judgments, enter into settlements or revise the Company’s opinion regarding the outcome of certain notices or matters, and such developments could have a material adverse effect on the Company’s results of operations in the period in which the amounts are accrued and the Company’s cash flows in the period in which the amounts are paid. To the extent that the Company does incur costs associated with these properties in future periods, W&T intends to seek contribution from other parties that owned an interest in the facilities.
Other Claims
In the ordinary course of business, the Company is a party to various pending or threatened claims and complaints seeking damages or other remedies concerning commercial operations and other matters. In addition, claims or contingencies may arise related to matters occurring prior to the Company’s acquisition of properties or related to matters occurring subsequent to the Company’s sale of properties. In certain cases, W&T has indemnified the sellers of properties acquired, and in other cases, W&T has indemnified the buyers of properties sold. The Company is also subject to federal and state administrative proceedings conducted in the ordinary course of business including matters related to alleged royalty underpayments on certain federal-owned properties. Although W&T can give no assurance about the outcome of pending legal and federal or state administrative proceedings and the effect such an outcome may have, the Company believes that any ultimate liability resulting from the outcome of such proceedings, to the extent not otherwise provided for or covered by insurance, will not have a material adverse effect on the consolidated financial position, results of operations or liquidity of the Company.
23
W&T OFFSHORE, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 13 — RELATED PARTY TRANSACTIONS
On May 15, 2023, the Company acquired a corporate aircraft from a company affiliated with and controlled by the Company’s CEO. The purchase price of the aircraft was $
The aircraft was purchased as part of a series of transactions pursuant to which the Company restructured the compensation for its Named Executive Officers. Prior to the Company’s purchase of the aircraft, the Company used the aircraft for business purposes, and the CEO also used the aircraft for personal purposes. Both the Company’s use for business purposes and the CEO’s unlimited use for personal purposes were paid for by the Company pursuant to the CEO’s prior employment agreement. In connection with the Company’s efforts to significantly reduce overall executive compensation, including perquisite compensation the CEO was receiving for personal use of the aircraft, on April 20, 2023, the Company entered into an amendment to the employment agreement with the CEO which requires that the Company be reimbursed for personal use of the aircraft in accordance with the Company’s aircraft use policy.
NOTE 14 — SUBSEQUENT EVENT
On September 26, 2023, the Company entered into a purchase and sale agreement to acquire rights, titles and interests in and to certain leases, wells and personal property in the central shelf region of the Gulf of Mexico, among other assets, for a gross purchase price of $
24
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) should be read in conjunction with the unaudited condensed consolidated financial statements and the related notes included in Part I, Item 1, Financial Statements, of this Quarterly Report, as well as our audited consolidated financial statements and the notes thereto in the 2022 Annual Report and the related MD&A included in Part II, Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, of our 2022 Annual Report. Unless otherwise indicated or the context otherwise requires, references in this Quarterly Report to “us,” “we,” “our,” “W&T” or the “Company” are to W&T Offshore, Inc. and its wholly owned subsidiaries.
Cautionary Note Regarding Forward-Looking Statements
The information in this Quarterly Report includes “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 (the “Exchange Act”). All statements, other than statements of historical fact included in this Quarterly Report, regarding our strategy, future operations, financial position, estimated revenues and losses, projected costs, prospects, plans and objectives of management are forward-looking statements. These forward-looking statements are based on certain assumptions and analyses made by us in light of our experience and perception of historical trends, current conditions, expected future developments and other factors we believe are appropriate under the circumstances. Although we believe that these forward-looking statements are based upon reasonable assumptions, they are subject to several risks and uncertainties and are made in light of information currently available to us. If the risks or uncertainties materialize or the assumptions prove incorrect, our results may differ materially from those expressed or implied by such forward-looking statements and assumptions. When used in this Quarterly Report, the words “could,” “believe,” “anticipate,” “intend,” “estimate,” “expect,” “project,” “forecast,” “may,” “objective,” “plan,” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain such identifying words. Readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date hereof. We assume no obligation, nor do we intend, to update these forward-looking statements, unless required by law.
The information included in this Quarterly Report includes forward-looking statements that involve risks and uncertainties that could materially affect our expected results of operations, liquidity, cash flows and business prospects. Such statements specifically include our expectations as to our future financial position, liquidity, cash flows, results of operations and business strategy, potential acquisition opportunities, other plans and objectives for operations, capital for sustained production levels, expected production and operating costs, reserves, hedging activities, capital expenditures, return of capital, improvement of recovery factors and other guidance. Actual results may differ from anticipated results, sometimes materially, and reported results should not be considered an indication of future performance. For any such forward-looking statement that includes a statement of the assumptions or bases underlying such forward-looking statement, we caution that, while we believe such assumptions or bases to be reasonable and make them in good faith, assumed facts or bases almost always vary from actual results, sometimes materially. Known material risks that may affect our financial condition and results of operations are discussed in Part I, Item 1A, Risk Factors, and market risks are discussed in Part II, Item 7A, Quantitative and Qualitative Disclosures About Market Risk, of our 2022 Annual Report, and may be discussed or updated from time to time in subsequent reports filed with the SEC.
Reserve engineering is a process of estimating underground accumulations of crude oil, NGLs and natural gas that cannot be measured in an exact manner. The accuracy of any reserve estimate depends on the quality of available data, the interpretation of such data, and the price and cost assumptions made by reservoir engineers. In addition, the results of drilling, testing, and production activities, or changes in commodity prices, may justify revisions of estimates that were made previously. If significant, such revisions would change the schedule of any further production and development drilling. Accordingly, reserve estimates may differ significantly from the quantities of crude oil, NGLs and natural gas that are ultimately recovered.
All forward-looking statements, expressed or implied, included in this Quarterly Report are expressly qualified in their entirety by this cautionary statement. This cautionary statement should also be considered in connection with any subsequent written or oral forward-looking statements that we or persons acting on our behalf may issue.
25
OVERVIEW
We are an independent oil and natural gas producer, active in the exploration, development and acquisition of oil and natural gas properties in the Gulf of Mexico. As of September 30, 2023, we hold working interests in 54 producing offshore fields in federal and state waters (which include 45 fields in federal waters and 9 in state waters). We currently have under lease approximately 602,100 gross acres (466,800 net acres) spanning across the outer continental shelf off the coasts of Louisiana, Texas, Mississippi and Alabama, with approximately 8,000 gross acres in Alabama state waters, 440,600 gross acres on the conventional shelf and approximately 153,500 gross acres in the deepwater. A majority of our daily production is derived from wells we operate.
Known Trends and Uncertainties
Volatility in Oil, NGL and Natural Gas Prices
Our financial condition, cash flow and results of operations are significantly affected by the volume of our oil, NGLs and natural gas production and the prices that we receive for such production. Our realized sales prices received for our oil, NGLs and natural gas production are affected by many factors outside of our control, including changes in market supply and demand, which are impacted by weather conditions, pipeline capacity constraints, inventory storage levels, domestic production activities and political issues, and international geopolitical and economic events.
The U.S. Energy Information Administration (“EIA”) published its latest Short-Term Energy Outlook on October 11, 2023. Prices for West Texas Intermediate (“WTI”) oil averaged $89.43 per barrel in September and the EIA is forecasting WTI spot prices to average $86.67 for the fourth quarter of 2023. Prices for Henry Hub natural gas averaged $2.64 per Mcf in September and the EIA is forecasting that Henry Hub prices will average $3.03 in the fourth quarter of 2023.
The EIA is forecasting WTI spot prices will rise in the coming months, reflecting its expectation of tightening balances in the global oil markets after Saudi Arabia extended its voluntary oil production cuts through the end of the year and U.S. oil inventories fell to the lowest level since early 2022. Although the recent attacks on Israel have not yet affected physical oil markets, they raise the potential for oil supply disruptions and higher oil prices. In addition to this development, the current production targets for the Organization of the Petroleum Exporting Countries and Russia (collectively “OPEC+”) are set to expire at the end of 2024, and the EIA expects that continuing voluntary cuts and other factors will keep actual OPEC+ oil production well below targets as the group tries to limit increase in global oil inventories. These shifts in OPEC+ production levels as well as the Russia-Ukraine war and related sanctions, and overall indicators of slowing global economic growth, continue to contribute to a high level of uncertainty surrounding energy supply and demand, putting additional pressure on commodity prices.
Rising Interest Rates and Inflation of Cost of Goods, Services and Personnel
Due to the cyclical nature of the oil and natural gas industry, fluctuating demand for oilfield goods and services can put pressure on the pricing structure within our industry. As commodity prices rise, the cost of oilfield goods and services generally also increases, while during periods of commodity price declines, oilfield costs typically lag and do not adjust downward as fast as oil prices do. Continued inflationary pressures and increased commodity prices may also result in increases in the costs of our oilfield goods, services and personnel, which would in turn cause our capital expenditures and operating costs to rise.
The United States has experienced a rise in inflation since October 2021. Inflation peaked during mid-2022 at 9.1% but has been gradually declining since the second half of 2022 according to the Consumer Price Index (the “CPI”). The annual inflation rate for September 2023 was 3.7% which matched the annual inflation rate for August 2023. These inflationary pressures have caused the Federal Reserve to tighten monetary policy by approving a series of increases to the Federal Funds Rate. As of September 30, 2023, the Federal Reserve benchmark rate ranges from 5.25% to 5.50%. If inflation were to continue to rise, it is possible the Federal Reserve would continue to take action they deem necessary to bring inflation down and to ensure price stability, including further rate increases, which could have the effects of raising the cost of capital and depressing economic growth, either or both of which could negatively impact our business.
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As a result of these factors, we cannot accurately predict future commodity prices and, therefore, we cannot determine with any degree of certainty what effect increases or decreases in these prices will have on our drilling program, production volumes or revenues.
Planned and Unplanned Downtime
We are subject to downtime events impacting production, transportation, gathering and processing of our production. Unplanned or planned downtime may be caused, for example, by certain regulatory requirements and inspections or third-party pipeline maintenance. During such downtime, our operating income is negatively impacted. During the first quarter of 2023, our production was temporarily impacted by planned maintenance at Mobile Bay and unplanned downtime at other non-operated fields. During the second quarter of 2023, our production was negatively impacted by unplanned downtime due to third-party pipeline maintenance and production downtime at non-operated fields. During the third quarter of 2023, our production was negatively impacted by well and maintenance issues, particularly at our Mobile Bay Properties.
Financial Assurance for Decommissioning Obligations
In order to cover the various decommissioning obligations of lessees on the outer continental shelf, the Bureau of Ocean Energy Management (the “BOEM”) generally requires that lessees post some form of acceptable financial assurance that such obligations will be met, such as surety bonds. The cost of such bonds or other financial assurance can be substantial, and we can provide no assurance that we can continue to obtain bonds or other surety in all cases. The Department of Interior is reviewing many BOEM regulations and proposed a rule in June 2023 that would revise the BOEM’s criteria for determining whether lessees are required to provide supplemental financial insurance. Accordingly, we may be subject to additional financial assurance requirements in the future. As of the filing date of this Quarterly Report, we are in compliance with our financial assurance obligations to the BOEM and have no outstanding BOEM orders related to supplemental financial assurance obligations. We and other offshore Gulf of Mexico producers may, in the ordinary course of business, receive requests or demands in the future for financial assurances from the BOEM.
Surety Bond Collateral
Some of the sureties that provide us surety bonds used for supplemental financial assurance purposes or bonds associated with our appeals of Department of the Interior orders or demands have on occasion requested and received collateral from us, and may request additional collateral from us in the future, which could be significant and materially impact our liquidity. In addition, pursuant to the terms of our agreements with various sureties under our existing bonds or under any additional bonds we may obtain, we are required to post collateral at any time, on demand, at the surety’s discretion. No additional demands were made to us by sureties during the nine months ended September 30, 2023 and we do not have surety bond collateral outstanding as of the filing date of this Quarterly Report. The issuance of any additional surety bonds or other security to satisfy future BOEM orders, collateral requests from surety bond providers, and collateral requests from other third parties may require the posting of cash collateral, which may be significant, and may require the creation of escrow accounts.
RESULTS OF OPERATIONS
Three Months Ended September 30, 2023 Compared to the Three Months Ended September 30, 2022
Revenues
Our revenues are derived from the sale of our oil and natural gas production, as well as the sale of NGLs. Our oil, NGL and natural gas revenues do not include the effects of derivatives, which are reported in Derivative (gain) loss, net in our Condensed Consolidated Statements of Operations.
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The following table presents our sources of revenue as a percentage of total revenue:
Three Months Ended September 30, | |||||
2023 |
| 2022 | |||
Oil | 70.5 | % | 49.0 | % | |
NGLs | 5.2 | % | 6.3 | % | |
Natural gas | 22.8 | % | 42.7 | % | |
Other | 1.5 | % | 2.0 | % |
The information below provides a discussion and an analysis of significant variances in, our oil, NGL and natural gas revenues, production volumes and realized sales prices (which exclude the effect of hedging unless otherwise stated) for the three months ended September 30, 2023 and 2022 (in thousands, except sales price data):
Three Months Ended September 30, | |||||||||
| 2023 |
| 2022 |
| Change | ||||
Revenues: | |||||||||
Oil | $ | 100,331 | $ | 130,560 | $ | (30,229) | |||
NGLs |
| 7,415 |
| 16,875 |
| (9,460) | |||
Natural gas |
| 32,515 |
| 113,673 |
| (81,158) | |||
Other |
| 2,150 |
| 5,377 |
| (3,227) | |||
Total revenues |
| 142,411 |
| 266,485 |
| (124,074) | |||
Production Volumes: |
|
|
|
|
|
| |||
Oil (MBbls) (1) |
| 1,227 |
| 1,447 |
| (220) | |||
NGLs (MBbls) (1) |
| 348 |
| 454 |
| (106) | |||
Natural gas (MMcf) (20 |
| 10,359 |
| 11,499 |
| (1,140) | |||
Total oil equivalent (MBoe) (3) |
| 3,302 |
| 3,818 |
| (516) | |||
Average daily equivalent sales (Boe/day) | 35,891 | 41,500 | (5,609) | ||||||
Average realized sales prices: |
|
|
| ||||||
Oil ($/Bbl) | $ | 81.77 | $ | 90.23 | $ | (8.46) | |||
NGLs ($/Bbl) |
| 21.31 |
| 37.17 |
| (15.86) | |||
Natural gas ($/Mcf) (4) |
| 3.14 |
| 9.89 |
| (6.75) | |||
Oil equivalent ($/Boe) | 42.48 | 68.39 | (25.91) | ||||||
Oil equivalent ($/Boe), including realized commodity derivatives (5) |
| 41.88 |
| 50.86 |
| (8.98) |
(1) | MBbls — thousands of barrels of oil, condensate or NGLs |
(2) | MMcf — million cubic feet |
(3) | MBoe — thousand barrels of oil equivalent |
(4) | Mcf — thousand cubic feet |
(5) | Excludes the effects of premium amortization. |
Changes in average sales prices (which does not give effect to hedging) and sales volumes caused the following changes to our oil, NGL and natural gas revenues between the three months ended September 30, 2023 and 2022 (in thousands):
Price |
| Volume | Total | |||||
Oil | $ | (10,367) | $ | (19,862) | $ | (30,229) | ||
NGLs |
| (5,526) | (3,934) |
| (9,460) | |||
Natural gas |
| (69,892) | (11,266) |
| (81,158) | |||
$ | (85,785) | $ | (35,062) | $ | (120,847) |
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Realized Prices on the Sale of Oil, NGLs and Natural Gas – Our average realized sales price for oil and natural gas differs from the WTI average price and the NYMEX Henry Hub average price, respectively, primarily due to premiums or discounts, quality adjustments, location adjustments and volume weighting (collectively referred to as differentials). Our average realized NGL sales price is mostly a function of the change in oil prices.
Oil, NGLs, and Natural Gas Volumes – Production volumes decreased by 516 Mboe to 3,302 Mboe during the three months ended September 30, 2023 compared to the same period in 2022, primarily due to well and maintenance issues, particularly at our Mobile Bay Properties.
Operating Expenses
The following table presents information regarding costs and expenses and selected average costs and expenses per Boe sold for the periods presented and corresponding changes (in thousands, except average data):
Three Months Ended September 30, | |||||||||
| 2023 |
| 2022 |
| Change | ||||
Operating expenses: | |||||||||
Lease operating expenses | $ | 61,826 | $ | 59,010 | $ | 2,816 | |||
Gathering, transportation and production taxes | 6,692 | 12,199 | (5,507) | ||||||
Depreciation, depletion, amortization and accretion |
| 36,632 | 34,113 |
| 2,519 | ||||
General and administrative expenses | 19,978 | 23,047 | (3,069) | ||||||
Total operating expenses | $ | 125,128 | $ | 128,369 | $ | (3,241) | |||
Average per Boe ($/Boe): |
|
|
|
|
|
| |||
Lease operating expenses | $ | 18.72 | $ | 15.46 | $ | 3.26 | |||
Gathering, transportation and production taxes |
| 2.03 | 3.20 |
| (1.17) | ||||
Depreciation, depletion, amortization and accretion |
| 11.09 | 8.93 |
| 2.16 | ||||
General and administrative expenses |
| 6.05 | 6.04 |
| 0.01 | ||||
Total operating expenses | $ | 37.89 | $ | 33.63 | $ | 4.26 |
Lease operating expenses – Lease operating expenses, which include base lease operating expenses, workovers, and facilities maintenance expense, increased $2.8 million to $61.8 million for the three months ended September 30, 2023 compared to $59.0 million for the three months ended September 30, 2022. On a component basis, base lease operating expenses increased $1.3 million, workover expenses increased $0.4 million, and facilities maintenance expense increased $1.1 million.
Base lease operating expenses increased primarily due to higher repair, maintenance and labor costs at various fields, and increased insurance premiums. The increases in workover expenses and facilities maintenance expenses were due to an increase in projects undertaken. Workovers and facilities maintenance expenses consist of costs associated with major remedial operations on completed wells to restore, maintain or improve production. Since these remedial operations are not regularly scheduled, workover and maintenance expense are not necessarily comparable from period to period.
Gathering, transportation and production taxes – Gathering, transportation and production taxes decreased $5.5 million for the three months ended September 30, 2023 compared to the three months ended September 30, 2022 primarily due to lower production volumes and realized prices.
Depreciation, depletion, amortization and accretion (“DD&A”) – DD&A, which includes accretion for ARO, increased $2.5 million for the three months ended September 30, 2023 as compared to the three months ended September 30, 2022. The DD&A rate increased to $11.09 per Boe for the three months ended September 30, 2023 from $8.93 per Boe for the three months ended September 30, 2022. The change in DD&A expense was due to a higher DD&A rate per Boe driven by the increase in the depreciable base due to capital spending and future development costs and lower proved reserves as compared to the third quarter of 2022, partially offset by lower production volumes.
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General and administrative expenses (“G&A”) – G&A decreased $3.1 million, to $20.0 million for the three months ended September 30, 2023 as compared to $23.0 million for the three months ended September 30, 2022. The decrease is primarily due to decreased legal expenses, partially offset by higher contract labor, professional fees and medical claims. Legal expenses decreased primarily due to non-recurring legal fees incurred during the third quarter of 2022 related to a review of processes and controls within our information technology department. Contract labor and professional fees increased due to placement fees, engineering services and IT-related projects.
Other Income and Expense Items
The following table presents the components of other income and expense items for the periods presented and corresponding changes (in thousands):
Three Months Ended September 30, | |||||||||
| 2023 |
| 2022 |
| Change | ||||
Derivative (gain) loss, net | $ | (1,491) | $ | 38,749 | $ | (40,240) | |||
Interest expense, net |
| 9,925 | 16,849 |
| (6,924) | ||||
Other expense (income), net |
| 1,927 | (600) |
| 2,527 | ||||
Income tax expense |
| 4,777 | 16,397 |
| (11,620) |
Derivative (gain) loss, net – During the three months ended September 30, 2023, the $1.5 million derivative gain recorded for our natural gas derivative contracts consists of $3.5 million of unrealized gain from the increase in the fair value of open contracts, partially offset by $2.0 million of realized losses. During the three months ended September 30, 2022, the $38.7 million derivative loss recorded for our oil and natural gas derivative contracts consisted of $132.3 million in realized losses and $93.5 million of unrealized gain from the increase in the fair value of our open oil and natural gas contracts.
The following table summarizes the effect of our derivative contracts on the Condensed Consolidated Statements of Operations:
| Three Months Ended September 30, |
| |||||
2023 | 2022 | ||||||
Oil ($/Bbl): |
|
|
|
|
| ||
Average realized sales price, before the effects of derivative settlements | $ | 81.77 | $ | 90.23 | |||
Effects of realized commodity derivatives |
| — |
| (9.97) | |||
Average realized sales price, including realized commodity derivatives | $ | 81.77 | $ | 80.26 | |||
Natural Gas ($/Mcf) |
|
|
|
| |||
Average realized sales price, before the effects of derivative settlements | $ | 3.14 | $ | 9.89 | |||
Effects of realized commodity derivatives |
| (0.19) |
| (4.56) | |||
Average realized sales price, including realized commodity derivatives | $ | 2.95 | $ | 5.33 |
Unrealized gains or losses on open derivative contracts relate to production for future periods; however, changes in the fair value of our open derivative contracts are recorded as a gain or loss on our Condensed Consolidated Statements of Operations at the end of each month. As a result of the derivative contracts we have on our anticipated production volumes through April 2028, we expect these activities to continue to impact net income (loss) based on fluctuations in market prices for natural gas. See Financial Statements – Note 4 – Derivative Financial Instruments of this Quarterly Report for additional information.
Interest expense, net – Interest expense, net, was $9.9 million and $16.8 million for the three months ended September 30, 2023 and 2022, respectively. The decrease of $6.9 million in 2023 is due to the redemption of the 9.75% Notes in February 2023, lower interest expense on the lower outstanding principal balance of the Term Loan, partially offset by interest expense incurred on the 11.75% Notes issued in late January 2023.
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Income tax expense – Our effective tax rate for the three months ended September 30, 2023 is not meaningful primarily as a result of changes in the valuation allowance on our deferred tax assets. Our effective tax rate for the three months ended September 30, 2022 was 19.7%. For the three months ended September 30, 2023, the effective tax rate differed from the statutory federal tax rate primarily due to the impact of state income taxes, nondeductible compensation, and adjustments to the valuation allowance. For the three months ended September 30, 2022, the effective tax rate differed from the statutory federal tax rate primarily due to the impact of state income taxes and adjustments to the valuation allowance.
Nine Months Ended September 30, 2023 Compared to the Nine Months Ended September 30, 2022
Revenues
Our revenues are derived from the sale of our oil and natural gas production, as well as the sale of NGLs. Our oil, NGL and natural gas revenues do not include the effects of derivatives, which are reported in Derivative (gain) loss, net in our Condensed Consolidated Statements of Operations. The following table presents our sources of revenue as a percentage of total revenue:
Nine Months Ended September 30, | |||||
2023 |
| 2022 | |||
Oil | 71.9 | % | 56.4 | % | |
NGLs | 6.4 | % | 6.5 | % | |
Natural gas | 20.2 | % | 35.2 | % | |
Other | 1.7 | % | 1.9 | % |
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The information below provides a discussion of, and an analysis of significant variance in, our oil, NGL and natural gas revenues, production volumes and realized sales prices (which exclude the effect of hedging unless otherwise stated) for the nine months ended September 30, 2023 and 2022 (in thousands, except sales price data):
Nine Months Ended September 30, | |||||||||
2023 |
| 2022 |
| Change | |||||
Revenues: | |||||||||
Oil | $ | 287,313 | $ | 412,526 | $ | (125,213) | |||
NGLs |
| 25,595 |
| 47,430 |
| (21,835) | |||
Natural gas |
| 80,757 |
| 257,452 |
| (176,695) | |||
Other |
| 6,651 |
| 13,889 |
| (7,238) | |||
Total revenues | $ | 400,316 | $ | 731,297 | $ | (330,981) | |||
Production Volumes: |
|
|
|
|
|
| |||
Oil (MBbls) |
| 3,831 |
| 4,227 |
| (396) | |||
NGLs (MBbls) |
| 1,086 |
| 1,187 |
| (101) | |||
Natural gas (MMcf) |
| 28,058 |
| 33,965 |
| (5,907) | |||
Total oil equivalent (MBoe) |
| 9,593 | 11,075 | (1,482) | |||||
Average daily equivalent sales (Boe/day) | 35,139 | 40,568 | (5,429) | ||||||
Average realized sales prices: |
| ||||||||
Oil ($/Bbl) | $ | 75.00 | $ | 97.59 | $ | (22.59) | |||
NGLs ($/Bbl) |
| 23.57 |
| 39.96 |
| (16.39) | |||
Natural gas ($/Mcf) |
| 2.88 |
| 7.58 |
| (4.70) | |||
Oil equivalent ($/Boe) | 41.04 | 64.78 | (23.74) | ||||||
Oil equivalent ($/Boe), including realized commodity derivatives(1) |
| 40.78 |
| 63.76 |
| (22.98) |
(1) | Excludes the effects of premium amortization and write-offs. |
Changes in average sales prices (which does not give effect to hedging) and sales volumes caused the following changes to our oil, NGL and natural gas revenues between the nine months ended September 30, 2023 and 2022 (in thousands):
Price |
| Volume | Total | |||||
Oil | $ | (86,552) | $ | (38,661) | $ | (125,213) | ||
NGLs |
| (17,950) | (3,885) |
| (21,835) | |||
Natural gas |
| (131,925) | (44,770) |
| (176,695) | |||
$ | (236,427) | $ | (87,316) | $ | (323,743) |
Realized Prices on the Sale of Oil, NGLs and Natural Gas – Our average realized sales price for oil and natural gas differs from the WTI average price and the NYMEX Henry Hub average price, respectively, primarily due to premiums or discounts, quality adjustments, location adjustments and volume weighting (collectively referred to as differentials). Our average realized NGL sales price is mostly a function of the change in oil prices.
Oil, NGLs, and Natural Gas Volumes – Production volumes decreased by 1,482 MBoe to 9,593 MBoe during the nine months ended September 30, 2023 compared to the same period in 2022 primarily due to unplanned field and well maintenance at Mobile Bay as well as third party deepwater pipeline maintenance and production downtime at non-operated fields.
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Operating Expenses
The following table presents information regarding costs and expenses and selected average costs and expenses per Boe sold for the periods presented and corresponding changes (in thousands, except average data):
Nine Months Ended September 30, | |||||||||
| 2023 |
| 2022 |
| Change | ||||
Operating expenses: | |||||||||
Lease operating expenses | $ | 193,033 | $ | 155,397 | $ | 37,636 | |||
Gathering, transportation and production taxes | 19,630 | 26,647 | (7,017) | ||||||
Depreciation, depletion, amortization and accretion |
| 102,660 | 99,384 |
| 3,276 | ||||
General and administrative expenses | 57,290 | 51,790 | 5,500 | ||||||
Total operating expenses | $ | 372,613 | $ | 333,218 | $ | 39,395 | |||
Average per Boe ($/Boe): |
|
|
|
|
|
| |||
Lease operating expenses | $ | 20.12 | $ | 14.03 | $ | 6.09 | |||
Gathering, transportation and production taxes |
| 2.05 |
| 2.41 |
| (0.36) | |||
Depreciation, depletion, amortization and accretion |
| 10.70 |
| 8.97 |
| 1.73 | |||
General and administrative expenses |
| 5.97 |
| 4.68 |
| 1.29 | |||
Total operating expenses | $ | 38.84 | $ | 30.09 | $ | 8.75 |
Lease operating expenses – Lease operating expenses, which include base lease operating expenses, workovers, and facilities maintenance expense, increased $37.6 million to $193.0 million for the nine months ended September 30, 2023 compared to $155.4 million for the nine months ended September 30, 2022. On a component basis, base lease operating expenses increased $17.2 million, workover expenses increased $9.0 million, facilities maintenance expense increased $11.8 million, and hurricane repairs decreased $0.4 million.
Base lease operating expenses increased due to increased expenses related to a full nine months of expenses at the fields acquired during February 2022 as well as higher repair, maintenance and labor costs at various fields, and increased insurance premiums. The increases in workover expenses and facilities maintenance expenses were due to an increase in projects undertaken. Workovers and facilities maintenance expenses consist of costs associated with major remedial operations on completed wells to restore, maintain or improve production. Since these remedial operations are not regularly scheduled, workover and maintenance expenses are not necessarily comparable from period to period.
Gathering, transportation and production taxes – Gathering, transportation and production taxes decreased $7.0 million in the nine months ended September 30, 2023 compared to the nine months ended September 30, 2022 primarily due to lower production volumes and realized prices partially offset by the transportation contract related to the properties acquired in February 2022.
Depreciation, depletion, amortization and accretion – DD&A increased $3.3 million for the nine months ended September 30, 2023 as compared to the nine months ended September 30, 2022. The DD&A rate increased to $10.70 per Boe for the nine months ended September 30, 2023 from $8.97 per Boe for the nine months ended September 30, 2022. The change in DD&A expense was due to a higher DD&A rate per Boe driven by the increase in the depreciable base due to capital spending and future development costs and lower proved reserves as compared to the nine months ended September 30, 2022, partially offset by lower production volumes.
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General and administrative expenses – G&A increased $5.5 million to $57.3 million for the nine months ended September 30, 2023 as compared to $51.8 million for the nine months ended September 30, 2022. The increase is primarily due to increased payroll costs, incentive compensation costs and professional fees, partially offset by a decrease in legal expenses and a $2.2 million employee retention credit recorded during the nine months ended September 30, 2023. Incentive compensation costs were higher due to the higher value of the short-term cash based incentive compensation awards granted in 2022 and paid in 2023 as compared to the awards paid for in the prior year, the higher grant date fair value of RSU and PSU awards granted during 2022 as compared to the awards granted in 2021 and the share-based compensation awards granted during the second quarter of 2023. Legal expenses decreased primarily due to non-recurring legal fees incurred during the nine months ended September 30, 2022 related to a review of processes and controls within our information technology department.
Other Income and Expense Items
The following table presents the components of other income and expense items for the periods presented and corresponding changes (in thousands):
Nine Months Ended September 30, | |||||||||
| 2023 |
| 2022 |
| Change | ||||
Derivative (gain) loss, net | $ | (41,560) | $ | 109,892 | $ | (151,452) | |||
Interest expense, net |
| 34,960 | 54,915 |
| (19,955) | ||||
Other expense (income), net |
| 1,849 | (1,229) |
| 3,078 | ||||
Income tax expense |
| 16,413 | 46,801 |
| (30,388) |
Derivative (gain) loss, net – During the nine months ended September 30, 2023, the $41.6 million derivative gain recorded for our natural gas derivative contracts consisted of $2.5 million of realized losses on settled contracts and $44.1 million of unrealized gains from the increase in the fair value of open contracts. During the nine months ended September 30, 2022, the $109.9 million derivative loss recorded for our oil and natural gas derivative contracts consisted of $96.3 million in realized losses on settled contracts and $13.6 million of unrealized losses from the decrease in the fair value of our open oil and natural gas contracts.
The following table summarizes the effect of our derivative contracts on the Condensed Consolidated Statements of Operations:
Nine Months Ended September 30, | ||||||
2023 | 2022 | |||||
Oil ($/Bbl): |
|
|
| |||
Average realized sales price, before the effects of derivative settlements | $ | 75.00 | $ | 97.59 | ||
Effects of realized commodity derivatives(2) |
| — |
| (14.90) | ||
Average realized sales price, including realized commodity derivatives | $ | 75.00 | $ | 82.69 | ||
Natural Gas ($/Mcf) |
|
|
|
| ||
Average realized sales price, before the effects of derivative settlements | $ | 2.88 | $ | 7.58 | ||
Effects of realized commodity derivatives (1) (2) |
| (0.09) |
| 1.52 | ||
Average realized sales price, including realized commodity derivatives | $ | 2.79 | $ | 9.10 |
(1) | The nine months ended September 30, 2022 includes the effect of the $138.0 million realized gain related to the monetization of certain natural gas call contracts through restructuring of strike prices. |
(2) | Excludes the effects of premium amortization and write-offs. |
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In the second quarter of 2022, the Company monetized a portion of existing hedge positions through restructuring of certain outstanding purchased calls covering the second half of 2022 through the first quarter of 2025 by increasing the weighted-average strike prices. These transactions resulted in net cash proceeds of $105.3 million.
Unrealized gains or losses on open derivative contracts relate to production for future periods; however, changes in the fair value of all of our open derivative contracts are recorded as a gain or loss on our Condensed Consolidated Statements of Operations at the end of each month. As a result of the derivative contracts we have on our anticipated production volumes through April 2028, we expect these activities to continue to impact net income based on fluctuations in market prices for natural gas. See Financial Statements – Note 4 – Derivative Financial Instruments of this Quarterly Report for additional information.
Interest expense, net – Interest expense, net was $35.0 million and $54.9 million for the nine months ended September 30, 2023 and 2022, respectively. The decrease of $20.0 million in 2023 is due to the redemption of the 9.75% Notes which occurred in February 2023, lower interest expense on the lower outstanding principal balance of the Term Loan, partially offset by interest expense incurred on the 11.75% Notes issued in late January 2023.
Income tax expense – The effective tax rate for the nine months ended September 30, 2023 and 2022 was 50.6% and 20.0%, respectively. For the nine months ended September 30, 2023, the effective tax rate differed from the statutory federal tax rate primarily due to the impact of state income taxes, nondeductible compensation, and adjustments to the valuation allowance. For the nine months ended September 30, 2022, the effective tax rate differed from the statutory federal tax rate primarily due to the impact of state income taxes and adjustments to the valuation allowance.
THE SUBSIDIARY BORROWERS
On May 19, 2021, we formed Aquasition LLC (“AI LLC”) and Aquasition-II LLC (“A-II, LLC”), both indirect wholly-owned subsidiaries of W&T Offshore, Inc., through their parent, Aquasition Energy LLC (collectively, the “Aquasition Entities”). Concurrently, A-I LLC and A-II LLC entered into a credit agreement providing for the Term Loan. See Financial Statements – Note 2 – Debt of this Quarterly Report for additional information.
We designated the Aquasition Entities as unrestricted subsidiaries under the Indenture (the “Unrestricted Subsidiaries”). Having been so designated, the Unrestricted Subsidiaries do not guarantee the 11.75% Notes and the liens on the assets sold to the Unrestricted Subsidiaries have been released under the Credit Agreement. The Unrestricted Subsidiaries are not bound by the covenants contained in the Credit Agreement or the Indenture. Under the Subsidiary Credit Agreement and related instruments, assets of the Aquasition Entities may not be available to mortgage or pledge as security to secure new indebtedness of the Company and its other subsidiaries.
35
Below is consolidating balance sheet information reflecting the elimination of the accounts of our Unrestricted Subsidiaries from our Condensed Consolidated Balance Sheet as of September 30, 2023 (in thousands):
Consolidated | Elimination of Unrestricted Subsidiaries | Restricted Subsidiaries | |||||||
Assets |
|
|
|
|
|
| |||
Current assets: |
|
|
|
|
|
| |||
Cash and cash equivalents | $ | 148,993 | $ | (1,408) | $ | 147,585 | |||
Restricted cash | 4,417 | — | 4,417 | ||||||
Receivables: |
|
|
|
|
|
| |||
Oil and natural gas sales |
| 48,522 |
| (22,988) |
| 25,534 | |||
Joint interest, net |
| 16,049 |
| 25,446 |
| 41,495 | |||
Income taxes | 275 | — | 275 | ||||||
Prepaid expenses and other current assets |
| 30,476 |
| 55 |
| 30,531 | |||
Total current assets |
| 248,732 |
| 1,105 |
| 249,837 | |||
Oil and natural gas properties and other, net |
| 771,454 |
| (290,686) |
| 480,768 | |||
Restricted deposits for asset retirement obligations |
| 22,168 |
| — |
| 22,168 | |||
Deferred income taxes |
| 42,633 |
| — |
| 42,633 | |||
Other assets |
| 40,386 |
| (9,328) |
| 31,058 | |||
Total assets | $ | 1,125,373 | $ | (298,909) | $ | 826,464 | |||
Liabilities and Shareholders’ Equity (Deficit) |
|
|
|
|
|
| |||
Current liabilities: |
|
|
|
|
|
| |||
Accounts payable | $ | 83,518 | $ | (10,432) | $ | 73,086 | |||
Undistributed oil and natural gas proceeds |
| 34,649 |
| (4,480) |
| 30,169 | |||
Asset retirement obligations |
| 33,169 |
| — |
| 33,169 | |||
Accrued liabilities |
| 34,264 |
| (17,982) |
| 16,282 | |||
Current portion of long-term debt | 30,015 | (29,451) | 564 | ||||||
Income tax payable |
| 53 |
| — |
| 53 | |||
Total current liabilities |
| 215,668 |
| (62,345) |
| 153,323 | |||
Long-term debt, net |
| 367,144 |
| (88,783) |
| 278,361 | |||
Asset retirement obligations, less current portion |
| 465,245 |
| (67,402) |
| 397,843 | |||
Other liabilities |
| 47,257 |
| (16,531) |
| 30,726 | |||
Deferred income taxes |
| 72 |
| — |
| 72 | |||
Common stock |
| 1 |
| — |
| 1 | |||
Shareholders' equity (deficit): | |||||||||
Additional paid-in capital |
| 582,900 |
| — |
| 582,900 | |||
Retained deficit |
| (528,747) |
| (63,848) |
| (592,595) | |||
Treasury stock, at cost |
| (24,167) |
| — |
| (24,167) | |||
Total shareholders’ equity (deficit) |
| 29,987 |
| (63,848) |
| (33,861) | |||
Total liabilities and shareholders’ equity (deficit) | $ | 1,125,373 | $ | (298,909) | $ | 826,464 |
36
Below is consolidating statement of operations information reflecting the elimination of the accounts of our Unrestricted Subsidiaries from our Condensed Consolidated Statement of Operations for the nine months ended September 30, 2023 (in thousands):
Consolidated | Elimination of Unrestricted Subsidiaries | Restricted Subsidiaries | |||||||
Revenues: | |||||||||
Oil | $ | 287,313 | $ | (485) | $ | 286,828 | |||
NGLs |
| 25,595 |
| (16,317) |
| 9,278 | |||
Natural gas |
| 80,757 |
| (55,299) |
| 25,458 | |||
Other |
| 6,651 |
| (3,324) |
| 3,327 | |||
Total revenues |
| 400,316 |
| (75,425) |
| 324,891 | |||
Operating expenses: |
|
|
|
|
|
| |||
Lease operating expenses |
| 193,033 |
| (63,665) |
| 129,368 | |||
Gathering, transportation and production taxes | 19,630 | (6,318) | 13,312 | ||||||
Depreciation, depletion, amortization and accretion |
| 102,660 |
| 1,648 |
| 104,308 | |||
General and administrative expenses |
| 57,290 |
| (962) |
| 56,328 | |||
Total operating expenses |
| 372,613 |
| (69,297) |
| 303,316 | |||
Operating income |
| 27,703 |
| (6,128) |
| 21,575 | |||
Interest expense, net |
| 34,960 |
| (8,517) |
| 26,443 | |||
Derivative (gain) loss, net |
| (41,560) |
| 55,041 |
| 13,481 | |||
Other income, net |
| 1,849 |
| 570 |
| 2,419 | |||
Income (loss) before income taxes |
| 32,454 |
| (53,222) |
| (20,768) | |||
Income tax expense |
| 16,413 |
| — |
| 16,413 | |||
Net (loss) income | $ | 16,041 | $ | (53,222) | $ | (37,181) |
Our produced oil, NGLs and natural gas volumes (net to our interests) from the Subsidiary Borrowers are as follows:
Nine Months Ended September 30, | ||||
Production Volumes: | 2023 | 2022 | ||
Oil (MBbls) |
| 12 |
| 13 |
NGLs (MBbls) |
| 699 |
| 729 |
Natural gas (MMcf) |
| 18,565 |
| 22,919 |
Total oil equivalent (MBoe) |
| 3,805 |
| 4,562 |
37
LIQUIDITY AND CAPITAL RESOURCES
Liquidity Overview
Our primary liquidity needs are to fund capital and operating expenditures and strategic acquisitions to allow us to replace our oil and natural gas reserves, repay and service outstanding borrowings, operate our properties and satisfy our ARO obligations. We have funded such activities in the past with cash on hand, net cash provided by operating activities, sales of property, securities offerings and bank and other borrowings, and expect to continue to do so in the future.
We expect to support our business requirements primarily with cash generated from operations and, if necessary, through borrowings under our Credit Agreement. As of September 30, 2023, we had $149.0 million cash on hand and $50.0 million available under our Credit Agreement, based on a borrowing base of $50.0 million. We also have up to approximately $83.0 million of availability through our “at-the-market” equity offering program, pursuant to which we may offer and sell shares or our common stock from time to time. Based on our current financial condition and current expectations of future market conditions, we believe our cash on hand, cash flows from operating activities, availability under our Credit Agreement and access to the equity markets from our “at-the-market” equity offering program will provide us with additional liquidity to continue our growth to take advantage of the current commodity environment and will allow us to meet our cash requirements for at least the next 12 months.
We continuously review our liquidity and capital resources. We have commenced discussions with potential lenders and institutions regarding potential replacement or augmentation of our current Credit Agreement which matures on January 3, 2024. The terms of such replacement could vary significantly from those under the current Credit Agreement. If market conditions were to change, for instance due to uncertainty created by geopolitical events, a pandemic or a significant decline in oil and natural gas prices, and our revenue was reduced significantly or operating costs were to increase significantly, our cash flows and liquidity could be negatively impacted.
Sources and Uses of Cash
Nine Months Ended September 30, | |||||||||
2023 | 2022 | Change | |||||||
Operating activities | $ | 79,662 | $ | 326,851 | $ | (247,189) | |||
Investing activities |
| (79,451) |
| (89,677) |
| 10,226 | |||
Financing activities |
| (312,575) |
| (35,843) |
| (276,732) |
Operating Activities – Net cash provided by operating activities decreased $247.2 million for the nine months ended September 30, 2023 compared to the corresponding period in 2022. This was primarily due to (i) a $331.0 million decrease in revenues and (ii) a $42.6 million increase in operating expenses, partially offset by (iii) a $41.0 million decrease in derivative cash settlements and (iv) a $18.7 million decrease in cash interest expense. These decreases in operating cash flow were partially offset by the changes in operating assets and liabilities which increased operating cash flows by $46.6 million primarily related to (i) lower accounts receivable balance due to decreased realized prices, (ii) and lower accounts payable and accrued liabilities balances in the current period and (ii) a $36.4 million decrease in ARO settlements.
Investing Activities – Net cash used in investing activities decreased $10.2 million for the nine months ended September 30, 2023 compared to the corresponding period in 2022. This was primarily due to decreases of $22.6 million in acquisition of property interests and $8.5 million in investment in oil and natural gas properties, partially offset by increases of $8.9 million in deposits related to acquisition of property interests and $12.1 million in purchases of the corporate aircraft and furniture, fixtures and other.
38
Financing Activities –Net cash used in financing activities increased by $276.7 million for the nine months ended September 30, 2023 compared to the corresponding period in 2022. This was due to the redemption of the $552.5 million principal amount outstanding 9.75% Notes partially offset by the net cash proceeds of $275.0 million received from the issuance of the 11.75% Notes.
Income Taxes
We made income tax payments of $2.2 million for federal and $0.3 million for state purposes and have income taxes receivable of $0.2 million for federal and $0.1 million for state purposes for the nine months ended September 30, 2023. See Financial Statements – Note 10 –Income Taxes of this Quarterly Report for additional information.
Capital Expenditures
The level of our investment in oil and natural gas properties changes from time to time depending on numerous factors, including the prices of oil, NGLs and natural gas, acquisition opportunities, available liquidity and the results of our exploration and development activities. The following table presents our capital expenditures for exploration, development and other leasehold costs (in thousands):
Nine Months Ended September 30, | ||||||
| 2023 |
| 2022 | |||
Exploration (1) | $ | 3,974 | $ | 10,065 | ||
Development (1) |
| 26,041 |
| 12,743 | ||
Acquisitions of interests |
| 28,863 |
| 51,474 | ||
Seismic and other |
| 944 |
| 7,158 | ||
Investments in oil and gas property/equipment – accrual basis | $ | 59,822 | $ | 81,440 |
(1) | Reported geographically in the subsequent table. |
The following table presents our exploration and development capital expenditures geographically in the Gulf of Mexico (in thousands):
Nine Months Ended September 30, | ||||||
| 2023 |
| 2022 | |||
Conventional shelf (1) | $ | 10,461 | $ | 10,473 | ||
Deepwater |
| 19,554 |
| 12,335 | ||
Exploration and development capital expenditures – accrual basis | $ | 30,015 | $ | 22,808 |
(1) | Includes exploration and development capital expenditures in Alabama state waters. |
Acquisitions
We have grown the Company by making strategic acquisitions of producing properties in the Gulf of Mexico. We seek opportunities where we can exploit additional drilling projects and can reduce costs. In September 2023, we acquired eight shallow water oil and natural gas producing assets in the central and eastern shelf region of Gulf of Mexico for $28.9 million, after normal and customary post-effective date adjustments (including net operating cash flow attributable to the properties from the effective date to the respective closing date). The transaction was funded with cash on hand.
On September 26, 2023, we entered into a purchase and sale agreement to acquire rights, titles and interests in and to certain leases, wells and personal property in the central shelf region of the Gulf of Mexico, among other assets, for a gross purchase price of $88.5 million, subject to customary purchase price adjustments. In accordance with the purchase and sale agreement, the Company made an $8.9 million deposit. On October 20, 2023, the Company terminated the purchase and sale agreement pursuant to and in accordance with section 14.1(f) thereof, which provided that either the Company or the seller could terminate the agreement at any time following 5:00 p.m. Central Time on October 20, 2023.
39
In conjunction with the termination of the purchase and sale agreement, the $8.9 million deposit was returned to the Company.
Any future acquisitions are subject to the completion of satisfactory due diligence, the negotiation and resolution of significant legal issues, the negotiation, documentation and completion of mutually satisfactory definitive agreements among the parties, the consent of our lenders, our ability to finance the acquisition and approval of our Board of Directors. We cannot guarantee that any such potential transaction would be completed on acceptable terms, if at all.
Asset Retirement Obligations
We have obligations to plug and abandon wells, remove platforms, pipelines, facilities and equipment and restore the land or seabed at the end of oil and natural gas production operations. Through the nine months ended September 30, 2023, we have paid $24.8 million related to these obligations, and we expect to incur $33.2 million of payments in the next twelve months. Our ARO estimates as of September 30, 2023 and December 31, 2022 were $498.4 million and $466.4 million, respectively. As our ARO estimates are for work to be performed in the future, and in the case of our non-current ARO, extend from one to many years in the future, actual expenditures could be substantially different than our estimates. See Part I, Item 1A, Risk Factors, of our 2022 Annual Report for additional information.
Drilling Activity
We did not drill any wells during the nine months ended September 30, 2023. During September 30, 2022, we completed the East Cameron 349 B-1 well (Cota). The Cota well is in the Monza Joint Venture Drilling Program. See Financial Statements – Note 7 –Joint Venture Drilling Program of this Quarterly Report for additional information.
Debt
As of September 30, 2023, we have $407.9 million in aggregate principal amount of long-term debt outstanding, with $31.9 million in aggregate principal coming due over the next twelve months.
On May 15, 2023, we acquired a corporate aircraft from a company affiliated with and controlled by our CEO. The purchase price of the aircraft was $19.1 million, which was paid using $9.0 million of cash on hand and through the assumption of the TVPX Loan, which had a fair market value of $10.1 million on the date of assumption. A valuation prepared by an independent third-party appraiser was one of the components used in determining the purchase price value. Factors considered for purchasing the aircraft were the primary use in making business travel efficient as well as our intent to charter out the aircraft to defray a portion of the operating costs and certain tax considerations and benefits. The terms of this transaction were reviewed and approved by the Audit Committee of the Company’s Board of Directors. See Financial Statements – Note 2 – Debt and Note 13 – Related Party Transactions for additional information.
For additional information about our long-term debt, see Financial Statements – Note 2 – Debt of this Quarterly Report and Part II, Item 8, Financial Statements and Supplementary Data, in our 2022 Annual Report.
Contractual Obligations
During the nine months ended September 30, 2023, we entered into a contract for a drilling rig. The contract is to begin in February 2024 and terminate in October 2024. We expect the total obligation under the contract to be $16.8 million.
Except as disclosed herein, contractual obligations as of September 30, 2023 did not change materially from the disclosures in Part II, Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, of our 2022 Annual Report.
40
Critical Accounting Policies and Estimates
There have been no changes to our critical accounting policies which are summarized in Part II, Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, of our 2022 Annual Report.
Recent Accounting Pronouncements
No new accounting pronouncements issued or effective during the nine months ended September 30, 2023, have had or are expected to have a material impact on our condensed consolidated financial statements.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We do not utilize financial instruments for trading or other speculative purposes. Our exposure to other market risks has not changed materially from the disclosures in Part II, Item 7A, Quantitative and Qualitative Disclosures About Martket Risk, of our 2022 Annual Report.
ITEM 4. CONTROLS AND PROCEDURES
We have established disclosure controls and procedures designed to ensure that material information required to be disclosed in our reports filed under the Exchange Act is recorded, processed, summarized and reported within the time periods specified by the SEC and that any material information relating to us is accumulated and communicated to our management, including our CEO and Chief Financial Officer (“CFO”), as appropriate to allow timely decisions regarding required disclosures. In designing and evaluating our disclosure controls and procedures, our management recognizes that controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving desired control objectives. In reaching a reasonable level of assurance, our management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.
As required by Exchange Act Rule 13a-15(b), our CEO and CFO performed an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of the end of the period covered by this Quarterly Report. Based on that evaluation, our CEO and CFO have each concluded that as of September 30, 2023, our disclosure controls and procedures are effective to ensure that information we are required to disclose in reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that our controls and procedures are designed to ensure that information required to be disclosed by us in such reports is accumulated and communicated to our management, including our CEO and CFO, as appropriate to allow timely decisions regarding required disclosure.
During the quarter ended September 30, 2023, there was no change in our internal control over financial reporting that materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
41
PART II – OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
See Financial Statements – Note 12 – Contingencies of this Quarterly Report for information on various legal proceedings to which we are a party or our properties are subject.
ITEM 1A. RISK FACTORS
In addition to the information set forth in this Quarterly Report, investors should carefully consider the risk factors and other cautionary statements included under Part I, Item 1A, Risk Factors, in our 2022 Annual Report, together with all of the other information included in this Quarterly Report, and in our other public filings, which could materially affect our business, financial condition or future results. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition or future results.
Notwithstanding the matters discussed herein, there have been no material changes in our risk factors as previously disclosed in Part I, Item 1A, Risk Factors, in our 2022 Annual Report.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES, USE OF PROCEEDS AND ISSUER PURCHASES OF EQUITY SECURITIES
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. MINE SAFETY DISCLOSURES
None.
ITEM 5. OTHER INFORMATION
During the three months ended September 30, 2023,
ITEM 6. EXHIBITS
Exhibit |
| Description |
|
|
|
3.1 |
| |
|
|
|
3.2 | ||
42
10.1† | ||
10.2 | ||
10.3+* | ||
10.4+* | ||
10.5+* | ||
31.1* |
| |
|
|
|
31.2* |
| |
|
|
|
32.1** |
| Section 906 Certification of Chief Executive Officer and Chief Financial Officer |
|
|
|
101.INS* |
| Inline XBRL Instance Document |
|
|
|
101.SCH* |
| Inline XBRL Schema Document |
|
|
|
101.CAL* |
| Inline XBRL Calculation Linkbase Document |
|
|
|
101.DEF* |
| Inline XBRL Definition Linkbase Document |
|
|
|
101.LAB* |
| Inline XBRL Label Linkbase Document |
|
|
|
101.PRE* |
| Inline XBRL Presentation Linkbase Document |
|
|
|
104* |
| Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) |
* | Filed herewith. |
** | Furnished herewith. |
+ | Management contract or compensatory plan or arrangement. |
† | Certain schedules and similar attachments to this agreement have been omitted pursuant to Item 601(a)(5) of Regulation S-K. The Company hereby undertakes to furnish a supplemental copy to each some omitted schedule or similar attachment to the SEC upon request. |
43
SIGNATURE
Pursuant to the requirements of Section 13 or 15(d) of the Exchange Act, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on November 8, 2023.
W&T OFFSHORE, INC. | ||
| ||
By: | /s/ Sameer Parasnis | |
| Sameer Parasnis | |
| Executive Vice President and Chief Financial Officer (Principal Financial Officer), duly authorized to sign on behalf of the registrant |
44
Exhibit 10.3
W&T OFFSHORE, INC.
2023 INCENTIVE COMPENSATION PLAN
RESTRICTED STOCK UNIT GRANT NOTICE
(Performance Vesting)
Pursuant to the terms and conditions of the W&T Offshore, Inc. 2023 Incentive Compensation Plan, as amended from time to time (the “Plan”), W&T Offshore, Inc., a Texas Corporation (the “Company”), hereby grants to the individual listed below (“you” or the “Participant”) the number of performance-based restricted stock units (the “PSUs”). This award of PSUs (this “Award”) is subject to the terms and conditions set forth herein and in the Restricted Stock Unit Agreement attached hereto as Exhibit A (the “Agreement”) and the Plan, each of which is incorporated herein by reference. Capitalized terms used but not defined herein shall have the meanings set forth in the Plan.
Vesting Date] (the “Service Vesting Date”) to be eligible to receive payment of this Award, which is also based on the level of achievement with respect to the Performance Goal (as defined below). | |
Performance Goal: | Subject to the terms and conditions set forth in the Plan, the Agreement and herein, the number of Target PSUs, if any, that become Earned PSUs during the Performance Period will be determined in accordance with the following table: |
| Level of Achievement Percentage of Target PSUs Earned* < Threshold |
| *The percentage of Target PSUs that become Earned PSUs for performance between the threshold, target and maximum achievement levels shall be calculated using linear interpolation. |
| The “Performance Goal” for the Performance Period is based on the [insert performance goal description], as described in Exhibit B attached hereto. |
Settlement: | Settlement of the Vested PSUs shall be made in Shares, cash, or a combination of Shares and cash, in accordance with Section 5 of the Agreement. |
| |
By your signature below, you agree to be bound by the terms and conditions of the Plan, the Agreement and this Restricted Stock Unit Grant Notice (this “Grant Notice”). You acknowledge that you have reviewed the Agreement, the Plan and this Grant Notice in their entirety and fully understand all provisions of the Agreement, the Plan and this Grant Notice. You hereby agree to accept as binding, conclusive and final all decisions or interpretations of the Committee regarding any questions or determinations that arise under the Agreement, the Plan or this Grant Notice. This Grant Notice may be executed in one or more counterparts (including portable document format (.pdf) and facsimile counterparts), each of which shall be deemed to be an original, but all of which together shall constitute one and the same agreement.
2
Notwithstanding any provision of this Grant Notice or the Agreement, if you have not executed this Grant Notice within 90 days following the Date of Grant set forth above, you will be deemed to have accepted this Award, subject to all of the terms and conditions of this Grant Notice, the Agreement and the Plan.
[Signature Page Follows]
3
IN WITNESS WHEREOF, the Company has caused this Grant Notice to be executed by an officer thereunto duly authorized, and the Participant has executed this Grant Notice, effective for all purposes as provided above.
W&T OFFSHORE, INC.
By:
Name:
Title:
PARTICIPANT
Name:
EXHIBIT A
RESTRICTED STOCK UNIT AGREEMENT
This Restricted Stock Unit Agreement (together with the Grant Notice to which this Agreement is attached, this “Agreement”) is made as of the Date of Grant set forth in the Grant Notice to which this Agreement is attached by and between W&T Offshore, Inc., a Texas corporation (the “Company”), and you (“you” or the “Participant”). Capitalized terms used but not specifically defined herein shall have the meanings specified in the Plan or the Grant Notice.
A-1
1 Note to Draft: To include for employee awards.
2 Note to Draft: To include for Executive awards.
A-2
been settled, the Company shall record the amount of such dividend in a bookkeeping account and pay to the Participant an amount in cash equal to the cash dividends the Participant would have received if the Participant was the holder of record, as of such record date, of a number of Shares equal to the number of PSUs held by the Participant that have not yet been settled as of such record date and such payment will be made on the date on which any Vested PSUs are settled in accordance with Section 5. For purposes of clarity, if the PSUs (or any portion thereof) are forfeited by the Participant pursuant to the terms of this Agreement, then the Participant shall also forfeit the Dividend Equivalent Rights, if any, accrued with respect to such forfeited PSUs. No interest will accrue on the Dividend Equivalent Rights between the declaration and payment of the applicable dividends and the settlement of the Dividend Equivalent Rights.
A-3
from the Shares to be issued the number of Shares necessary to satisfy the applicable tax obligation for that portion of the Award, unless the Committee takes action to provide for a different withholding method prior to the date of the event giving rise to the tax withholding obligation, and (b) for any Participant that is not subject to Section 16(b) of the Exchange Act, or with respect to any portion of the Award that is settled in the form of a cash payment, the Participant shall make arrangements satisfactory to the Company for the satisfaction of obligations for the payment of withholding taxes and other tax obligations relating to the Award, which arrangements include the delivery of cash or cash equivalents, Shares (including previously owned Shares, net settlement, a broker-assisted sale, or other cashless withholding or reduction of the amount of shares otherwise issuable or delivered pursuant to the Award), other property, or any other legal consideration the Committee deems appropriate. If such tax obligations are satisfied through net settlement or the surrender of previously owned Shares, the maximum number of Shares that may be so withheld (or surrendered) shall be the number of Shares that have an aggregate Fair Market Value on the date of withholding or surrender equal to the aggregate amount of such tax liabilities determined based on the greatest withholding rates for federal, state, local and/or foreign tax purposes, including payroll taxes, that may be utilized without creating adverse accounting treatment for the Company with respect to the Award, as determined by the Committee. The Participant acknowledges that there may be adverse tax consequences upon the receipt, vesting or settlement of the Award or disposition of the underlying shares and that the Participant has been advised, and hereby is advised, to consult a tax advisor. The Participant represents that the Participant is in no manner relying on the Board, the Committee, the Company or an Affiliate or any of their respective managers, directors, officers, employees or authorized representatives (including, without limitation, attorneys, accountants, consultants, bankers, lenders, prospective lenders and financial representatives) for tax advice or an assessment of such tax consequences.
A-4
of such issuance with respect to the shares to be issued or (b) in the opinion of legal counsel to the Company, the shares to be issued are permitted to be issued in accordance with the terms of an applicable exemption from the registration requirements of the Securities Act. The inability of the Company to obtain from any regulatory body having jurisdiction the authority, if any, deemed by the Company’s legal counsel to be necessary for the lawful issuance and sale of any Shares hereunder will relieve the Company of any liability in respect of the failure to issue such shares as to which such requisite authority has not been obtained. As a condition to any issuance of Shares hereunder, the Company may require the Participant to satisfy any requirements that may be necessary or appropriate to evidence compliance with any applicable law or regulation and to make any representation or warranty with respect to such compliance as may be requested by the Company. The Participant acknowledges that the Plan, the Grant Notice and this Agreement are intended to conform to the extent necessary with all applicable laws and, to the extent applicable laws permit, will be deemed amended as necessary to conform to applicable laws.
A-5
whatsoever, with or without cause or notice. Any question as to whether and when there has been a termination of such employment, and the cause of such termination, shall be determined by the Committee or its delegate, and such determination shall be final, conclusive and binding for all purposes. The grant of the Award is a one-time benefit and does not create any contractual or other right to receive a grant of Awards or benefits in lieu of Awards in the future. Any future Awards will be granted at the sole discretion of the Company.
If to the Company, unless otherwise designated by the Company in a written notice to the Participant (or other holder):
W&T Offshore, Inc.
Attn: Executive Vice President and General Counsel
5718 Westheimer Rd., Suite 700
Houston, Texas 77057
If to the Participant, at the Participant’s last known address on file with the Company.
Any notice that is delivered personally or by overnight courier or telecopier in the manner provided herein shall be deemed to have been duly given to the Participant when it is mailed by the Company or, if such notice is not mailed to the Participant, upon receipt by the Participant. Any notice that is addressed and mailed in the manner herein provided shall be conclusively presumed to have been given to the party to whom it is addressed at the close of business, local time of the recipient, on the fourth day after the day it is so placed in the mail.
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Consumer Protection Act of 2010, any SEC rule or any applicable securities exchange listing standards and/or (b) any policy that may be adopted or amended by the Board from time to time, all Shares issued or any benefits received hereunder shall be subject to clawback, rescission, payback, reduction, forfeiture, repurchase, recoupment, cancellation and/or other similar action to the extent necessary to comply with any such law(s) and/or Company policy. The Participant’s acceptance of an Award will constitute the Participant’s acknowledgment of and consent to the Company’s application, implementation and enforcement of any applicable Company clawback or similar policy that may apply to the Participant, whether adopted before or after the Date of Grant and any applicable law relating to clawback, rescission, payback, reduction, forfeiture, repurchase, recoupment, cancellation and/or other similar action of compensation and the Participant agrees that the Company may take any actions that may be necessary to effectuate any such policy or applicable law without further consideration or action.
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according to the ordinary meaning of the words used so as to fairly accomplish the purposes and intentions of the parties hereto.
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EXHIBIT B
PERFORMANCE GOAL FOR AWARD
[Insert description or formula for performance goal applicable to Award]
B-1
Exhibit 10.4
2023 INCENTIVE COMPENSATION PLAN
RESTRICTED STOCK UNIT GRANT NOTICE
(Service-based Vesting)
Pursuant to the terms and conditions of the W&T Offshore, Inc. 2023 Incentive Compensation Plan, as amended from time to time (the “Plan”), W&T Offshore, Inc., a Texas Corporation (the “Company”), hereby grants to the individual listed below (“you” or the “Participant”) the number of Restricted Stock Units (the “RSUs”). This award of RSUs (this “Award”) is subject to the terms and conditions set forth herein and in the Restricted Stock Unit Agreement attached hereto as Exhibit A (the “Agreement”) and the Plan, each of which is incorporated herein by reference. Capitalized terms used but not defined herein shall have the meanings set forth in the Plan.
Participant: | ________________ |
Date of Grant: | ________________ |
Total Number of Restricted Stock Units: | ________________ |
Vesting Commencement Date: | ________________ |
Vesting Schedule: | Subject to Section 2 of the Agreement, the Plan and the other terms and conditions set forth herein, the Award shall vest and become exercisable according to the following schedule: [vesting schedule to be inserted]. |
By your signature below, you agree to be bound by the terms and conditions of the Plan, the Agreement and this Restricted Stock Unit Grant Notice (this “Grant Notice”). You acknowledge that you have reviewed the Agreement, the Plan and this Grant Notice in their entirety and fully understand all provisions of the Agreement, the Plan and this Grant Notice. You hereby agree to accept as binding, conclusive and final all decisions or interpretations of the Committee regarding any questions or determinations that arise under the Agreement, the Plan or this Grant Notice. This Grant Notice may be executed in one or more counterparts (including portable document format (.pdf) and facsimile counterparts), each of which shall be deemed to be an original, but all of which together shall constitute one and the same agreement.
Notwithstanding any provision of this Grant Notice or the Agreement, if you have not executed this Grant Notice within 90 days following the Date of Grant set forth above, you will be deemed to have accepted this Award, subject to all of the terms and conditions of this Grant Notice, the Agreement and the Plan.
[Signature Page Follows]
2
IN WITNESS WHEREOF, the Company has caused this Grant Notice to be executed by an officer thereunto duly authorized, and the Participant has executed this Grant Notice, effective for all purposes as provided above.
W&T OFFSHORE, INC.
By:
Name:
Title:
PARTICIPANT
Name:
3
EXHIBIT A
RESTRICTED STOCK UNIT AGREEMENT
This Restricted Stock Unit Agreement (together with the Grant Notice to which this Agreement is attached, this “Agreement”) is made as of the Date of Grant set forth in the Grant Notice to which this Agreement is attached by and between W&T Offshore, Inc., a Texas corporation (the “Company”), and you (“you” or the “Participant”). Capitalized terms used but not specifically defined herein shall have the meanings specified in the Plan or the Grant Notice.
A-1
1 Note to Draft: To include for Executives.
2 Note to Draft: To include for employee awards.
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the passage of time. Neither this Section 4 nor any action taken pursuant to or in accordance with this Agreement shall be construed to create a trust or a funded or secured obligation of any kind.
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review period under such release will not modify the date of settlement with respect to vested Award.
If to the Company, unless otherwise designated by the Company in a written notice to the Participant (or other holder):
W&T Offshore, Inc.
Attn: Executive Vice President and General Counsel
5718 Westheimer Rd., Suite 700
Houston, Texas 77057
If to the Participant, at the Participant’s last known address on filed with the Company.
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Any notice that is delivered personally or by overnight courier or telecopier in the manner provided herein shall be deemed to have been duly given to the Participant when it is mailed by the Company or, if such notice is not mailed to the Participant, upon receipt by the Participant. Any notice that is addressed and mailed in the manner herein provided shall be conclusively presumed to have been given to the party to whom it is addressed at the close of business, local time of the recipient, on the fourth day after the day it is so placed in the mail.
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deprive the party of the right to take action at any time while or after such breach or condition giving rise to such rights continues.
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the corresponding masculine, feminine or neuter forms, and the singular form of nouns and pronouns shall include the plural and vice versa. Neither this Agreement nor any uncertainty or ambiguity herein shall be construed or resolved against any party hereto, whether under any rule of construction or otherwise. On the contrary, this Agreement has been reviewed by each of the parties hereto and shall be construed and interpreted according to the ordinary meaning of the words used so as to fairly accomplish the purposes and intentions of the parties hereto.
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Exhibit 10.5
2023 Incentive Compensation Plan
NON-EMPLOYEE DIRECTOR RESTRICTED STOCK UNIT GRANT NOTICE
Pursuant to the terms and conditions of the W&T Offshore, Inc. 2023 Incentive Compensation Plan, as amended from time to time (the “Plan”), W&T Offshore, Inc., a Texas corporation (the “Company”), hereby grants to the individual listed below (“you” or the “Participant”) the number of restricted stock units (the “RSUs”) set forth below. This award of RSUs (this “Award”) is subject to the terms and conditions set forth herein and in the Restricted Stock Unit Agreement attached hereto as Exhibit A (the “Agreement”) and the Plan, each of which is incorporated herein by reference. Capitalized terms used but not defined herein shall have the meanings set forth in the Plan.
Type of Award: | Restricted Stock Units |
Participant: | [●] |
Date of Grant: | [●] |
Total Number of Restricted Stock Units: | [●] |
Vesting Schedule: | Subject to Section 2(b) of the Agreement, the Plan and the other terms and conditions set forth herein, the RSUs shall vest 100% on the earlier of (i) the first anniversary of the Date of Grant and |
By your signature below, you agree to be bound by the terms and conditions of the Plan, the Agreement and this Restricted Stock Unit Grant Notice (this “Grant Notice”). You acknowledge that you have reviewed the Agreement, the Plan and this Grant Notice in their entirety and fully understand all provisions of the Agreement, the Plan and this Grant Notice, and have had an opportunity to obtain the advice of counsel prior to executing this Grant Notice. You hereby agree to accept as binding, conclusive and final all decisions or interpretations of the Committee regarding any questions or determinations arising under the Agreement, the Plan or this Grant Notice. This Grant Notice may be executed in one or more counterparts (including portable document format (.pdf) and facsimile counterparts), each of which shall be deemed to be an original, but all of which together shall constitute one and the same agreement.
Notwithstanding any provision of this Grant Notice or the Agreement, if you have not executed this Grant Notice within 90 days following the Date of Grant set forth above, you will be
deemed to have accepted this Award, subject to all of the terms and conditions of this Grant Notice, the Agreement and the Plan.
[Signature Page Follows]
2
IN WITNESS WHEREOF, the Company has caused this Grant Notice to be executed by an officer thereunto duly authorized, and the Participant has executed this Grant Notice, effective for all purposes as provided above.
W&T OFFSHORE, INC.
By:
Name:
Title:
PARTICIPANT
Name: [●]
Signature Page to
Non-Employee Director Restricted Stock Unit Grant Notice
EXHIBIT A
RESTRICTED STOCK UNIT AGREEMENT
This Restricted Stock Unit Agreement (together with the Grant Notice to which this Agreement is attached, this “Agreement”) is made as of the Date of Grant set forth in the Grant Notice to which this Agreement is attached by and between W&T Offshore, Inc., a Texas corporation (the “Company”), and [●] (the “Participant”). Capitalized terms used but not specifically defined herein shall have the meanings specified in the Plan or the Grant Notice.
A-1
A-2
A-3
If to the Company, unless otherwise designated by the Company in a written notice to the Participant (or other holder):
W&T Offshore, Inc.
Attn: Executive Vice President and General Counsel
5718 Westheimer Rd., Suite 700
Houston, Texas 77057
If to the Participant, at the Participant’s last known address on file with the Company.
Any notice that is delivered personally or by overnight courier or telecopier in the manner provided herein shall be deemed to have been duly given to the Participant when it is mailed by the Company or, if such notice is not mailed to the Participant, upon receipt by the Participant. Any notice that is addressed and mailed in the manner herein provided shall be conclusively presumed to have been given to the party to whom it is addressed at the close of business, local time of the recipient, on the fourth day after the day it is so placed in the mail.
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[Remainder of Page Intentionally Blank]
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Exhibit 31.1
CERTIFICATION OF CHIEF EXECUTIVE OFFICER
PURSUANT TO RULE 13a – 14(a) AND 15d – 14(a)
OF §302 OF THE SARBANES-OXLEY ACT OF 2002
I, Tracy W. Krohn, certify that:
1. | I have reviewed this Quarterly Report on Form 10-Q of W&T Offshore, Inc. (the “registrant”); |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting. |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: November 8, 2023 |
| /s/ Tracy W. Krohn |
| | Tracy W. Krohn |
| | Chairman, Chief Executive Officer, President and Director |
| | (Principal Executive Officer) |
Exhibit 31.2
CERTIFICATION OF CHIEF FINANCIAL OFFICER
PURSUANT TO RULE 13a – 14(a) AND 15d – 14(a)
OF §302 OF THE SARBANES-OXLEY ACT OF 2002
I, Sameer Parasnis, certify that:
1. | I have reviewed this Quarterly Report on Form 10-Q of W&T Offshore, Inc. (the “registrant”); |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting. |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: November 8, 2023 | /s/ Sameer Parasnis |
| Sameer Parasnis |
| Executive Vice President and Chief Financial Officer (Principal Financial Officer), duly authorized to sign on behalf of the registrant |
|
Exhibit 32.1
CERTIFICATION OF CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER
PURSUANT TO 18 U.S.C. § 1350, AS ADOPTED
PURSUANT TO §906 OF THE SARBANES-OXLEY ACT OF 2002
Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, each of the undersigned officers of W&T Offshore, Inc. (the “Company”), hereby certifies, to the best of his or her knowledge, that the Company’s Quarterly Report on Form 10-Q for the period ended September 30, 2023 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, and that information contained in such Quarterly Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
Date: November 8, 2023 |
| /s/ Tracy Krohn |
| | Tracy W. Krohn |
| | Chairman, Chief Executive Officer, President and Director |
| | (Principal Executive Officer) |
Date: November 8, 2023 |
| /s/ Sameer Parasnis |
| | Sameer Parasnis |
| | Executive Vice President and Chief Financial Officer (Principal Financial Officer) |
| |
CONDENSED CONSOLIDATED BALANCE SHEETS (Parentheticals) - $ / shares shares in Thousands |
Sep. 30, 2023 |
Dec. 31, 2022 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Preferred stock, par value (in dollars per share) | $ 0.00001 | $ 0.00001 |
Preferred stock, shares authorized (in shares) | 20,000 | 20,000 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.00001 | $ 0.00001 |
Common stock, shares authorized (in shares) | 200,000 | 200,000 |
Common stock, shares issued (in shares) | 149,443 | 149,002 |
Common stock, shares outstanding (in shares) | 146,574 | 146,133 |
Treasury stock, shares (in shares) | 2,869 | 2,869 |
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands, $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
|
Revenues: | ||||
Total revenues | $ 142,411 | $ 266,485 | $ 400,316 | $ 731,297 |
Operating expenses: | ||||
Lease operating expenses | 61,826 | 59,010 | 193,033 | 155,397 |
Gathering, transportation and production taxes | 6,692 | 12,199 | 19,630 | 26,647 |
Depreciation, depletion, and amortization | 30,218 | 27,493 | 81,019 | 79,848 |
Asset retirement obligations accretion | 6,414 | 6,620 | 21,641 | 19,536 |
General and administrative expenses | 19,978 | 23,047 | 57,290 | 51,790 |
Total operating expenses | 125,128 | 128,369 | 372,613 | 333,218 |
Operating income | 17,283 | 138,116 | 27,703 | 398,079 |
Interest expense, net | 9,925 | 16,849 | 34,960 | 54,915 |
Derivative (gain) loss, net | (1,491) | 38,749 | (41,560) | 109,892 |
Other expense (income), net | 1,927 | (600) | 1,849 | (1,229) |
Income before income taxes | 6,922 | 83,118 | 32,454 | 234,501 |
Income tax expense | 4,777 | 16,397 | 16,413 | 46,801 |
Net income | $ 2,145 | $ 66,721 | $ 16,041 | $ 187,700 |
Net income per common share: | ||||
Basic | $ 0.01 | $ 0.46 | $ 0.11 | $ 1.30 |
Diluted | $ 0.01 | $ 0.46 | $ 0.11 | $ 1.30 |
Weighted average common shares outstanding: | ||||
Basic | 146,483 | 143,116 | 146,451 | 143,026 |
Diluted | 151,459 | 145,882 | 149,856 | 144,696 |
Oil and Condensate [Member] | ||||
Revenues: | ||||
Total revenues | $ 100,331 | $ 130,560 | $ 287,313 | $ 412,526 |
Natural Gas Liquids [Member] | ||||
Revenues: | ||||
Total revenues | 7,415 | 16,875 | 25,595 | 47,430 |
Natural Gas, Production [Member] | ||||
Revenues: | ||||
Total revenues | 32,515 | 113,673 | 80,757 | 257,452 |
Product and Service, Other [Member] | ||||
Revenues: | ||||
Total revenues | $ 2,150 | $ 5,377 | $ 6,651 | $ 13,889 |
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Parentheticals) |
Sep. 30, 2023 |
Feb. 08, 2023 |
Jan. 27, 2023 |
Dec. 31, 2022 |
Sep. 30, 2022 |
---|---|---|---|---|---|
9.75% Senior Second Lien Notes due 2023 | |||||
Debt instrument, interest rate, stated percentage | 9.75% | 9.75% | 9.75% | 9.75% | |
11.75% Senior Second Lien Notes due 2026 | |||||
Debt instrument, interest rate, stated percentage | 11.75% | 11.75% | 11.75% | 11.75% | 11.75% |
BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Notes to Financial Statements | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES | NOTE 1 — BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES Nature of Operations W&T Offshore, Inc. (with subsidiaries referred to herein as “W&T” or the “Company”) is an independent oil and natural gas producer with substantially all of its operations offshore in the Gulf of Mexico. The Company is active in the exploration, development and acquisition of oil and natural gas properties. The Company operates in one reportable segment. Basis of Presentation The accompanying unaudited condensed consolidated financial statements include the accounts of the Company, its wholly-owned subsidiaries and an interest in Monza Energy LLC (“Monza”), which is accounted for under the proportional consolidation method. All intercompany accounts and transactions have been eliminated in consolidation. These condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). Accordingly, certain information and disclosures normally included in annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) have been condensed or omitted. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for interim periods are not necessarily indicative of the results that may be expected for the entire year. These unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes included in Item 8 “Financial Statements and Supplementary Data” of the Company’s Annual Report on Form 10-K for the year ended December 31, 2022 (the “2022 Annual Report”). Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, the reported amounts of revenues and expenses during the reporting periods and the reported amounts of proved oil and natural gas reserves. Actual results could differ from those estimates. Allowance for Credit Losses The Company has receivables related to joint interest arrangements primarily with mid-size oil and natural gas companies with a substantial majority of the net receivable balance concentrated in less than ten companies. A loss methodology is used to develop the allowance for credit losses on material receivables to estimate the net amount to be collected. The loss methodology uses historical data, current market conditions and forecasts of future economic conditions. The Company’s maximum exposure at any time would be the receivable balance. Joint interest receivables on the Condensed Consolidated Balance Sheets are presented net of allowance for credit losses of $11.2 million and $12.1 million as of September 30, 2023 and December 31, 2022, respectively. Employee Retention Credit Under the Consolidated Appropriations Act of 2021, the Company recognized a $2.2 million employee retention credit during the nine months ended September 30, 2023, which is included as a credit to General and administrative expenses in the Condensed Consolidated Statement of Operations. Prepaid Expenses and Other Current Assets Prepaid expenses and other current assets consist of the following (in thousands):
Oil and Natural Gas Properties and Other, Net Oil and natural gas properties and other, net consist of the following (in thousands):
Other Assets Other assets consist of the following (in thousands):
Accrued Liabilities Accrued liabilities consist of the following (in thousands):
Other Liabilities Other liabilities consist of the following (in thousands):
|
DEBT |
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Notes to Financial Statements | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
DEBT | NOTE 2 — DEBT The components comprising the Company’s debt are presented in the following table (in thousands):
Current Portion of Long-Term Debt, Net As of September 30, 2023, the current portion of long-term debt of $30.0 million represented principal payments due within one year on the TVPX Loan and Term Loan (defined below), net of current unamortized debt issuance costs. TVPX Loan On May 15, 2023, the Company acquired a corporate aircraft from a company affiliated with and controlled by W&T’s Chairman, Chief Executive Officer (“CEO”) and President, Tracy W. Krohn. The terms of the transactions were reviewed and approved by the Audit Committee of the Company’s Board of Directors. See Note 13 – Related Party Transactions. The purchase price of the aircraft was $19.1 million, which was paid using $9.0 million of the Company’s cash on hand and through the assumption of an approximately $11.8 million amortizing loan by TVPX Aircraft Solutions Inc. (the “TVPX Loan”), not in its individual capacity but as owner trustee of the trust which holds title to the aircraft, a wholly owned indirect subsidiary of the Company, as the borrower. The TVPX Loan bears a fixed interest rate of 2.49% per annum for a term of 41 months and requires monthly amortization payments of $91.7 thousand plus accrued interest, and a balloon payment of $8.0 million at the end of the loan term. The TVPX Loan is guaranteed by the Company on an unsecured basis. At the date of assumption, the Company determined that the fair market value of the TVPX Loan was $10.1 million using current market rates. The aircraft was purchased as part of a series of transactions pursuant to which the Company restructured the compensation for its Named Executive Officers. Prior to the Company’s purchase of the aircraft, the Company used the aircraft for business purposes, and the CEO also used the aircraft for personal purposes. Both the Company’s use for business purposes and the CEO’s unlimited use for personal purposes were paid for by the Company pursuant to the CEO’s prior employment agreement. In connection with the Company’s efforts to significantly reduce overall executive compensation, including perquisite compensation Mr. Krohn was receiving for personal use of the aircraft, on April 20, 2023, the Company entered into an amendment to the employment agreement with the CEO which requires that the Company be reimbursed for personal use of the aircraft in accordance with the Company’s aircraft use policy. Term Loan On May 19, 2021, Aquasition LLC and Aquasition-II LLC (collectively, the “Subsidiary Borrowers”), both indirect wholly owned subsidiaries of the Company, entered into a credit agreement (the “Subsidiary Credit Agreement”) providing for a $215.0 million term loan (the “Term Loan”). The Term Loan matures on May 19, 2028. The Term Loan requires quarterly amortization payments and bears interest at a fixed rate of 7.0% per annum. The Subsidiary Credit Agreement required the Company to enter into certain natural gas swaps and put derivative contracts (see Note 4 – Derivative Financial Instruments). The Term Loan is non-recourse to the Company and any subsidiaries other than the Subsidiary Borrowers and the subsidiary that owns the equity in the Subsidiary Borrowers (the “Subsidiary Parent”) and is secured by the first lien security interests in the equity of the Subsidiary Borrowers and a first lien mortgage security interest and mortgages on certain assets of the Subsidiary Borrowers (see Note 6 – Subsidiary Borrowers for additional information). Credit Agreement The Company entered into a Credit Agreement with Calculus Lending, LLC (“Calculus”), a company affiliated with and controlled by the Company’s CEO, as sole lender under the Credit Agreement (as amended from time to time, the “Credit Agreement”). The Credit Agreement currently has a maturity date of January 3, 2024. As of September 30, 2023, the primary terms and covenants associated with the Credit Agreement are as follows:
Availability under the Credit Agreement is subject to redetermination of the borrowing base that may be requested at the discretion of either the lender or the Company in accordance with the Credit Agreement. Any redetermination by the lender to change the borrowing base will result in a similar change in the availability under the Credit Agreement. The borrowing base was reconfirmed at $50.0 million on October 2023. The Credit Agreement is secured by a first priority lien on substantially all of the Company’s and its guarantor subsidiaries’ assets, excluding those assets of the Subsidiary Borrowers (as described in Note 6 – Subsidiary Borrowers). As of September 30, 2023, there were no borrowings outstanding under the Credit Agreement and no borrowings had been incurred under the Credit Agreement during the nine months ended September 30, 2023. As of September 30, 2023 and December 31, 2022, the Company had $4.4 million outstanding in letters of credit which have been cash collateralized. 11.75% Senior Second Lien Notes due 2026 On January 27, 2023, the Company issued at par $275 million in aggregate principal amount of its 11.75% Senior Second Lien Notes (the “11.75% Notes”) under an indenture dated January 27, 2023 (the “Indenture”). The 11.75% Notes mature on February 1, 2026, and interest is payable in arrears on February 1 and August 1. The 11.75% Notes are secured by second-priority liens on the same collateral that is secured under the Credit Agreement, which does not include the assets of the Subsidiary Borrowers (as described in Note 6 – Subsidiary Borrowers). The estimated annual effective interest rate on the 11.75% Notes is 12.7%, which includes amortization of deferred interest costs. Prior to August 1, 2024, the Company may redeem all or any portion of the 11.75% Notes at a redemption price equal to 100% of the principal amount of the notes outstanding plus accrued and unpaid interest, if any, to the redemption date, plus the “Applicable Premium” (as defined in the Indenture). In addition, prior to August 1, 2024, the Company may, at its option, on one or more occasions redeem up to 35% of the aggregate original principal amount of the 11.75% Notes in an amount not greater than the net cash proceeds from certain equity offerings at a redemption price of 111.750% of the principal amount of the outstanding plus accrued and unpaid interest, if any, to the redemption date. On and after August 1, 2024, the Company may redeem the 11.75% Notes, in whole or in part, at redemption prices (expressed as percentages of the principal amount thereof) equal to 105.875% for the 12-month period beginning August 1, 2024, and 100.000% on August 1, 2025 and thereafter, plus accrued and unpaid interest, if any, to the redemption date. The 11.75% Notes are guaranteed by the Guarantors. The 11.75% Notes contain covenants that limit or prohibit the Company’s ability and the ability of certain of its subsidiaries to: (i) make investments; (ii) incur additional indebtedness or issue certain types of preferred stock; (iii) create certain liens; (iv) sell assets; (v) enter into agreements that restrict dividends or other payments from the Company’s subsidiaries to the Company; (vi) consolidate, merge or transfer all or substantially all of the assets of the Company; (vii) engage in transactions with affiliates; (viii) pay dividends or make other distributions on capital stock or subordinated indebtedness; and (ix) create subsidiaries that would not be restricted by the covenants of the Indenture. These covenants are subject to important exceptions and qualifications set forth in the Indenture. In addition, most of the above-described covenants will terminate if both S&P Global Ratings, a division of S&P Global Inc., and Moody’s Investors Service, Inc. assign the 11.75% Notes an investment grade rating and no default exists with respect to the 11.75% Notes. Redemption of 9.75% Senior Second Lien Notes due 2023 On February 8, 2023, the Company redeemed all of the $552.5 million of aggregate principal outstanding of its 9.75% Senior Second Lien Notes (the 9.75% Notes”) at a redemption price of 100.0%, plus accrued and unpaid interest to the redemption date. The Company used the net proceeds of $270.8 million from the issuance of the 11.75% Notes and cash on hand of $296.1 million to fund the redemption. Covenants As of September 30, 2023 and for all prior measurement periods presented, the Company was in compliance with all applicable covenants of the Credit Agreement and the Indenture. |
FAIR VALUE MEASUREMENTS |
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Notes to Financial Statements | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
FAIR VALUE MEASUREMENTS | NOTE 3 — FAIR VALUE MEASUREMENTS Derivative Financial Instruments Derivative financial instruments are reported in the Condensed Consolidated Balance Sheets using fair value. See Note 4 – Derivative Financial Instruments for additional information on derivative financial instruments. The following table presents the fair value of the Company’s derivative financial instruments (in thousands):
The Company measures the fair value of derivative financial instruments by applying the income approach, using models with inputs that are classified within Level 2 of the valuation hierarchy. The income approach converts expected future cash flows to a present value amount based on market expectations. The inputs used for the fair value measurement of derivative financial instruments are the exercise price, the expiration date, the settlement date, notional quantities, the implied volatility, the discount curve with spreads and published commodity future prices. Debt Instruments The following table presents the net value and fair value of the Company’s debt (in thousands):
The fair value of the TVPX Loan and the Term Loan were measured using a discounted cash flows model and current market rates. The fair value of the 11.75% Notes and 9.75% Notes were measured using quoted prices, although the market is not a highly liquid market. The fair value of debt was classified as Level 2 within the valuation hierarchy. |
DERIVATIVE FINANCIAL INSTRUMENTS |
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DERIVATIVE FINANCIAL INSTRUMENTS | NOTE 4 — DERIVATIVE FINANCIAL INSTRUMENTS W&T’s market risk exposure relates primarily to commodity prices. The Company attempts to mitigate a portion of its commodity price risk and stabilize cash flows associated with sales of oil and natural gas production through the use of oil and natural gas swaps, costless collars, sold calls and purchased puts. The Company is exposed to credit loss in the event of nonperformance by the derivative counterparties; however, the Company currently anticipates that the derivative counterparties will be able to fulfill their contractual obligations. The Company is not required to provide additional collateral to the derivative counterparties and does not require collateral from the derivative counterparties. W&T has elected not to designate commodity derivative contracts for hedge accounting. Accordingly, commodity derivatives are recorded on the Condensed Consolidated Balance Sheets at fair value with settlements of such contracts, and changes in the unrealized fair value, recorded as Derivative (gain) loss, net on the Condensed Consolidated Statements of Operations in each period presented. The natural gas contracts are based off the Henry Hub prices, which is quoted off the New York Mercantile Exchange (“NYMEX”). The following table reflects the contracted volumes and weighted average prices under the terms of the Company’s open derivative contracts as of September 30, 2023:
Financial Statement Presentation The fair value of the Company’s derivative financial instruments was recorded in the Condensed Consolidated Balance Sheets as follows (in thousands):
Although the Company has master netting arrangements with its counterparties, the amounts recorded on the Condensed Consolidated Balance Sheets are on a gross basis. The impact of commodity derivative contracts on the Condensed Consolidated Statements of Operations were as follows (in thousands):
Cash payments on commodity derivative contract settlements, net, are included within Net cash provided by operating activities on the Condensed Consolidated Statements of Cash Flows and were as follows (in thousands):
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ACQUISITION |
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ACQUISITION | NOTE 5 —– ACQUISITION On September 20, 2023, the Company entered into a purchase and sale agreement to acquire working interests in certain oil and natural gas producing properties in eight shallow water oil and natural gas producing assets in the central and eastern shelf region of Gulf of Mexico for $32.0 million. The transaction closed on September 20, 2023, and after normal and customary post-effective date adjustments (including net operating cash flow attributable to the properties from the effective date of June 1, 2023 to the close date), cash consideration of $28.9 million was paid to the sellers. The transaction was funded using cash on hand. The Company also assumed the related asset retirement obligations (“AROs”) associated with these assets. The acquisition was accounted for as an asset acquisition, which requires that the total purchase price, including transaction costs, be allocated to the assets acquired and the liabilities assumed based on their relative fair values. The fair value measurements of the oil and natural gas properties acquired and ARO assumed were derived utilizing an income approach and based, in part, on significant inputs not observable in the market. These inputs represent Level 3 measurements in the fair value hierarchy and include, but are not limited to, estimates of reserves, future operating and development costs, future commodity prices, estimated future cash flows and appropriate discount rates. These inputs required significant judgments and estimates by the Company’s management at the time of the valuation. The following table represents the Company’s preliminary allocation of total purchase consideration to the identifiable assets acquired and liabilities assumed based on the fair values on the date of acquisition (in thousands):
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SUBSIDIARY BORROWERS |
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SUBSIDIARY BORROWERS | NOTE 6 — SUBSIDIARY BORROWERS The Subsidiary Borrowers used the net proceeds from the Term Loan (see Note 2 – Debt) to acquire all of the Company’s interests in certain oil and gas leasehold interests and associated wells and units located in State of Alabama waters and U.S. federal waters in the offshore Gulf of Mexico, Mobile Bay region (such assets, the “Mobile Bay Properties”) and the Company’s interest in certain gathering and processing assets located offshore Gulf of Mexico, Mobile Bay region and onshore near Mobile, Alabama, including offshore gathering pipelines, an onshore crude oil treating and sweetening facility, an onshore gathering pipeline, and associated assets (such assets, the “Midstream Assets”). The Subsidiary Borrowers are wholly-owned subsidiaries of the Company; however, the assets of the Subsidiary Borrowers are not available to satisfy the debt or contractual obligations of any other entities, including debt securities or other contractual obligations of the Company, and the Subsidiary Borrowers do not bear any liability for the indebtedness or other contractual obligations of any other entities, and vice versa. During the year ended December 31, 2022, the Subsidiary Borrowers paid cash distributions to W&T of $30.2 million. During the nine months ended September 30, 2023, no such distributions were paid. Consolidation and Carrying Amounts The following table presents the amounts recorded by the Company on the Condensed Consolidated Balance Sheets related to the consolidation of the Subsidiary Borrowers and the Subsidiary Parent (in thousands):
The following table presents the amounts recorded by the Company in the Condensed Consolidated Statement of Operations related to the consolidation of the operations of the Subsidiary Borrowers and the Subsidiary Parent (in thousands):
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JOINT VENTURE DRILLING PROGRAM |
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JOINT VENTURE DRILLING PROGRAM | NOTE 7 — JOINT VENTURE DRILLING PROGRAM In March 2018, W&T and other members formed and funded Monza, which jointly participates with the Company in the exploration, drilling and development of certain drilling projects (the “Joint Venture Drilling Program”) in the Gulf of Mexico. The total commitments by all members, including W&T’s commitment to fund its retained interest in Monza projects held outside of Monza, was $361.4 million. W&T contributed 88.94% of its working interest in certain identified undeveloped drilling projects to Monza and retained 11.06% of its working interest. The Joint Venture Drilling Program is structured so that W&T initially receives an aggregate of 30.0% of the revenues less expenses, through the direct ownership from the retained working interest in the Monza projects and the Company’s indirect interest through its interest in Monza, for contributing 20.0% of the estimated total well costs plus associated leases and providing access to available infrastructure at agreed-upon rates. Any exceptions to this structure are approved by the Monza board of directors. The members of Monza are third-party investors, W&T and an entity owned and controlled by W&T’s CEO. The entity affiliated with the Company’s CEO invested as a minority investor on the same terms and conditions as the third-party investors. Its investment is limited to 4.5% of total invested capital within Monza, and it made a capital commitment to Monza of $14.5 million. Monza is an entity separate from any other entity with its own separate creditors who will be entitled, upon its liquidation, to be satisfied out of Monza’s assets prior to any value in Monza becoming available to holders of its equity. The assets of Monza are not available to pay creditors of the Company and its affiliates. Through September 30, 2023, ten wells have been completed since the inception of the Joint Venture Drilling Program, and W&T is the operator for eight of these wells. Since inception through September 30, 2023, members of Monza have made partner capital contributions, including W&T’s contributions of working interest in the drilling projects, to Monza totaling $302.4 million and received cash distributions totaling $206.4 million. Since inception through September 30, 2023, W&T has made capital contributions, including the contributions of working interest in the drilling projects, to Monza totaling $68.2 million and received cash distributions totaling $44.5 million. Consolidation and Carrying Amounts W&T’s interest in Monza is considered to be a variable interest that is proportionally consolidated. Through September 30, 2023, there have been no events or changes that would cause a redetermination of the variable interest status. W&T does not fully consolidate Monza because the Company is not considered the primary beneficiary of Monza. The following table presents the amounts recorded by W&T on the Condensed Consolidated Balance Sheets related to the consolidation of the proportional interest in Monza’s operations (in thousands):
As required, W&T may call on Monza to provide cash to fund its portion of certain Joint Venture Drilling Program projects in advance of capital expenditure spending. As of September 30, 2023 and December 31, 2022, the unused advances were $2.8 million and $2.9 million, respectively, which are included in Advances from joint interest partners in the Condensed Consolidated Balance Sheets. The following table presents the amounts recorded by W&T in the Condensed Consolidated Statement of Operations related to the consolidation of the proportional interest in Monza’s operations (in thousands):
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ASSET RETIREMENT OBLIGATIONS |
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ASSET RETIREMENT OBLIGATIONS | NOTE 8 — ASSET RETIREMENT OBLIGATIONS AROs represent the estimated present value of the amount incurred to plug, abandon and remediate the Company’s properties at the end of their productive lives. A summary of the changes to ARO is as follows (in thousands):
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SHARE-BASED AWARDS AND CASH-BASED INCENTIVE COMPENSATION |
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SHARE-BASED AWARDS AND CASH-BASED INCENTIVE COMPENSATION | NOTE 9 — SHARE-BASED AWARDS AND CASH-BASED INCENTIVE COMPENSATION On June 16, 2023, the 2023 Incentive Compensation Plan (the “2023 Plan”) was approved by the Company’s shareholders. The 2023 Plan is effective June 16, 2023, and the Company will no longer grant awards pursuant to the W&T Offshore, Inc. Amended and Restated Incentive Compensation Plan, as amended from time to time, or the 2004 Directors Compensation Plan of W&T Offshore, Inc., as amended from time to time (collectively, the “Prior Plans”). Under the 2023 Plan, the Company may issue, subject to the approval of the Board of Directors, stock options, stock appreciation rights, restricted stock (“RSAs”), restricted stock units (“RSUs”), performance awards (“PSUs”), stock awards, dividend equivalents, other stock-based awards, performance units or shares, cash awards, substitute awards or any combination of the foregoing to eligible employees, non-employee directors, and consultants. Any awards granted prior to the effective date of the 2023 Plan are considered to have been granted under the applicable Prior Plan. Share-Based Awards Restricted Stock Units During 2023, the Company granted RSUs to certain employees and non-employee directors under both the 2023 Plan and the Prior Plan. The RSUs granted to employees are a long-term compensation component, subject to service conditions, and generally vest in three equal annual installments. The fair value of the RSUs granted to employees on the date of grant was $6.6 million. The RSUs granted to non-employee directors generally vest one year from the date of the grant or on the date of W&T’s next annual shareholder meeting, subject to certain conditions. The fair value of the RSUs granted to non-employee directors on the date of grant was $0.6 million. A summary of activity related to RSUs during the nine months ended September 30, 2023 is as follows:
Performance Share Units In June 2023, the Company granted PSUs to certain employees under both the 2023 Plan and the Prior Plan. These PSUs vest subject to continued employment and the Company’s total shareholder return (“TSR”) ranking against peer companies’ TSR over a three-year performance period, which ends on December 31, 2025. As these PSUs had both service and market conditions, the Company estimated the fair value of these PSUs using the Monte Carlo simulation model. The fair value of the PSUs on the date of grant was $6.3 million. A summary of activity related to PSUs during the nine months ended September 30, 2023 is as follows:
The following table summarizes the assumptions used in the Monte Carlo simulation model to calculate the fair value of the PSUs granted:
Share-Based Awards to Non-Employee Directors Under the Prior Plan, the Company issued RSAs to non-employee directors. These RSAs vested over a one-year period. There were no RSAs granted to non-employee directors during the nine months ended September 30, 2023. The non-employee directors were granted RSUs in July 2023 under the 2023 Plan. A summary of activity related to restricted shares during the nine months ended September 30, 2023 is as follows:
Share-Based Compensation Expense The following table presents the compensation costs included in General and administrative expenses in the Condensed Consolidated Statements of Operations (in thousands):
Cash-Based Incentive Compensation In addition to share-based awards, the Company also grants short-term cash-based incentive awards to all eligible employees. These awards provide for an annual cash payment equal to an established target cash incentive amount multiplied by a target performance score for the Company (as determined by a set of pre-defined performance metrics) and multiplied by an individual performance multiplier for all eligible employees except Named Executive Officers. The following table presents the cash-based incentive compensation costs in the Condensed Consolidated Statements of Operations (in thousands):
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INCOME TAXES |
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Sep. 30, 2023 | |
Notes to Financial Statements | |
INCOME TAXES | NOTE 10 — INCOME TAXES Tax Expense and Effective Tax Rate For the three months ended September 30, 2023 and 2022, the Company recognized income tax expense of $4.8 million and $16.4 million, respectively. The effective tax rate for the three months ended September 30, 2023 is not meaningful primarily as a result of changes in the valuation allowance on the Company’s deferred tax assets. For the three months ended September 30, 2022, the effective tax rate was 19.7%. For the nine months ended September 30, 2023 and 2022, the Company recognized income tax expense of $16.4 million and $46.8 million, respectively, for an effective tax rate of 50.6% and 20.0%, respectively. For both the three and nine months ended September 30, 2023, the Company’s effective tax rate differed from the statutory federal tax rate primarily due to the impact of state income taxes, nondeductible compensation, and adjustments to the valuation allowance. For both the three and nine months ended September 30, 2022, the Company’s effective tax rate differed from the statutory federal tax rate primarily due to the impact of state income taxes and adjustments to the valuation allowance. Valuation Allowance Deferred tax assets are recorded related to net operating losses and temporary differences between the book and tax basis of assets and liabilities expected to produce tax deductions in future periods. The realization of the Company’s deferred tax assets depends on recognition of sufficient future taxable income in specific tax jurisdictions in which those temporary differences or net operating losses are deductible. In assessing the need for a valuation allowance on deferred tax assets, the Company considers whether it is more likely than not that some portion or all of them will not be realized. As of September 30, 2023 and December 31, 2022, the valuation allowance was $21.7 million and $15.3 million, respectively, and relates primarily to state net operating losses and the disallowed interest expense limitation carryover. Income Taxes Receivable, Refunds and Payments As of September 30, 2023, the Company has a federal income tax receivable of $0.2 million and state income tax receivable of $0.1 million. As of December 31, 2022, the Company did not have any outstanding current income taxes receivable. During the nine months ended September 30, 2023, the Company did not receive any income tax refunds and made federal income tax payments of $2.2 million and state income tax payments of $0.3 million. The tax years 2019 through 2022 remain open to examination by the tax jurisdictions to which the Company is subject. |
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EARNINGS PER SHARE | NOTE 11 — EARNINGS PER SHARE The following table presents the calculation of basic and diluted (loss) earnings per common share (in thousands, except per share amounts):
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CONTINGENCIES |
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Notes to Financial Statements | |
CONTINGENCIES | NOTE 12 — CONTINGENCIES Appeal with the Office of Natural Resources Revenue In 2009, W&T recognized allowable reductions of cash payments for royalties owed to the Office of Natural Resources Revenue (the “ONRR”) for transportation of their deepwater production through subsea pipeline systems owned by the Company. In 2010, the ONRR audited calculations and support related to this usage fee, and ONRR notified the Company that they had disallowed approximately $4.7 million of the reductions taken. The Company disagrees with the position taken by the ONRR and filed an appeal with the ONRR. The Company was required to post a surety bond in order to appeal the Interior Board of Land Appeals decision. As of September 30, 2023, the value of the surety bond posted is $8.9 million. The Company has continued to pursue its legal rights and, at present, the case is in front of the U.S. District Court for the Eastern District of Louisiana where both parties have filed cross-motions for summary judgment and opposition briefs. W&T has filed a Reply in support of its Motion for Summary Judgment and the government has in turn filed its Reply brief. With briefing now completed, the Company is waiting for the district court’s ruling on the merits. ONRR Audit of Historical Refund Claims On September 18, 2023, the Company received notification from the ONRR regarding results of an audit performed on W&T’s historical refund claims taken on various properties for alleged royalties owed to the ONRR. The Company’s review and the ONRR appeal process are ongoing and the Company does not believe any accrual is necessary at this time. Civil Penalties In January 2021, W&T entered into a Settlement Agreement with the Bureau of Safety and Environmental Enforcement (the “BSEE”) which resolved nine pending civil penalties issued by the BSEE. The civil penalties pertained to Incidents of Non-Compliance issued by the BSEE alleging regulatory non-compliance at separate offshore locations between July 2012 and January 2018. Under the Settlement Agreement, W&T agreed to pay a total of $0.7 million in three annual installments. The final installment was paid in February 2023. Contingent Decommissioning Obligations The Company may be subject to retained liabilities with respect to certain divested property interests by operation of law. Certain counterparties in past divestiture transactions or third parties in existing leases that have filed for bankruptcy protection or undergone associated reorganizations may not be able to perform required abandonment obligations. Due to operation of law, W&T may be required to assume decommissioning obligations for those interests. The Company may be held jointly and severally liable for the decommissioning of various facilities and related wells. W&T no longer owns these assets nor are they related to current operations. During 2021 and 2022, as a result of the declaration of bankruptcy by a third party that is the indirect successor in title to certain offshore interests that were previously divested by the Company, W&T recorded a total contingent loss accrual of $20.4 million related to anticipated decommissioning obligations, which was reflected in Other (income) expense, net on the Condensed Consolidated Statements of Operations in the period recorded. During the nine months ended September 30, 2023, the Company incurred $4.7 million in costs related to these decommissioning obligations and reassessed the existing decommissioning obligations, recording an additional $2.1 million. As of September 30, 2023, the remaining loss contingency recorded related to the anticipated decommissioning obligations was $17.8 million. Although it is reasonably possible that the Company could receive additional state or federal decommissioning orders in the future or be notified of defaulting third parties in existing leases, the Company cannot predict with certainty, if, how or when such orders or notices will be resolved or estimate a possible loss or range of loss that may result from such orders. However, the Company could incur judgments, enter into settlements or revise the Company’s opinion regarding the outcome of certain notices or matters, and such developments could have a material adverse effect on the Company’s results of operations in the period in which the amounts are accrued and the Company’s cash flows in the period in which the amounts are paid. To the extent that the Company does incur costs associated with these properties in future periods, W&T intends to seek contribution from other parties that owned an interest in the facilities. Other Claims In the ordinary course of business, the Company is a party to various pending or threatened claims and complaints seeking damages or other remedies concerning commercial operations and other matters. In addition, claims or contingencies may arise related to matters occurring prior to the Company’s acquisition of properties or related to matters occurring subsequent to the Company’s sale of properties. In certain cases, W&T has indemnified the sellers of properties acquired, and in other cases, W&T has indemnified the buyers of properties sold. The Company is also subject to federal and state administrative proceedings conducted in the ordinary course of business including matters related to alleged royalty underpayments on certain federal-owned properties. Although W&T can give no assurance about the outcome of pending legal and federal or state administrative proceedings and the effect such an outcome may have, the Company believes that any ultimate liability resulting from the outcome of such proceedings, to the extent not otherwise provided for or covered by insurance, will not have a material adverse effect on the consolidated financial position, results of operations or liquidity of the Company. |
RELATED PARTY TRANSACTIONS |
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Sep. 30, 2023 | |
Notes to Financial Statements | |
RELATED PARTY TRANSACTIONS | NOTE 13 — RELATED PARTY TRANSACTIONS On May 15, 2023, the Company acquired a corporate aircraft from a company affiliated with and controlled by the Company’s CEO. The purchase price of the aircraft was $19.1 million, which was paid using $9.0 million of cash on hand and through the assumption of the TVPX Loan (see Note 2 – Debt). The terms of this transaction were reviewed and approved by the Audit Committee of the Company’s Board of Directors. The aircraft was purchased as part of a series of transactions pursuant to which the Company restructured the compensation for its Named Executive Officers. Prior to the Company’s purchase of the aircraft, the Company used the aircraft for business purposes, and the CEO also used the aircraft for personal purposes. Both the Company’s use for business purposes and the CEO’s unlimited use for personal purposes were paid for by the Company pursuant to the CEO’s prior employment agreement. In connection with the Company’s efforts to significantly reduce overall executive compensation, including perquisite compensation the CEO was receiving for personal use of the aircraft, on April 20, 2023, the Company entered into an amendment to the employment agreement with the CEO which requires that the Company be reimbursed for personal use of the aircraft in accordance with the Company’s aircraft use policy. |
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SUBSEQUENT EVENT | |
SUBSEQUENT EVENT | NOTE 14 — SUBSEQUENT EVENT On September 26, 2023, the Company entered into a purchase and sale agreement to acquire rights, titles and interests in and to certain leases, wells and personal property in the central shelf region of the Gulf of Mexico, among other assets, for a gross purchase price of $88.5 million, subject to customary purchase price adjustments. On October 20, 2023, the Company terminated the purchase and sale agreement pursuant to and in accordance with section 14.1(f) thereof, which provided that either the Company or the seller could terminate the agreement at any time following 5:00 p.m. Central Time on October 20, 2023. In conjunction with the termination of the purchase and sale agreement, the $8.9 million deposit was returned to the Company. |
BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES (Policies) |
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Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Basis of Presentation | Basis of Presentation The accompanying unaudited condensed consolidated financial statements include the accounts of the Company, its wholly-owned subsidiaries and an interest in Monza Energy LLC (“Monza”), which is accounted for under the proportional consolidation method. All intercompany accounts and transactions have been eliminated in consolidation. These condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). Accordingly, certain information and disclosures normally included in annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) have been condensed or omitted. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for interim periods are not necessarily indicative of the results that may be expected for the entire year. These unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes included in Item 8 “Financial Statements and Supplementary Data” of the Company’s Annual Report on Form 10-K for the year ended December 31, 2022 (the “2022 Annual Report”). |
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Use of Estimates | Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, the reported amounts of revenues and expenses during the reporting periods and the reported amounts of proved oil and natural gas reserves. Actual results could differ from those estimates. |
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Allowance for Credit Losses | Allowance for Credit Losses The Company has receivables related to joint interest arrangements primarily with mid-size oil and natural gas companies with a substantial majority of the net receivable balance concentrated in less than ten companies. A loss methodology is used to develop the allowance for credit losses on material receivables to estimate the net amount to be collected. The loss methodology uses historical data, current market conditions and forecasts of future economic conditions. The Company’s maximum exposure at any time would be the receivable balance. Joint interest receivables on the Condensed Consolidated Balance Sheets are presented net of allowance for credit losses of $11.2 million and $12.1 million as of September 30, 2023 and December 31, 2022, respectively. |
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Employee Retention Credit | Employee Retention Credit Under the Consolidated Appropriations Act of 2021, the Company recognized a $2.2 million employee retention credit during the nine months ended September 30, 2023, which is included as a credit to General and administrative expenses in the Condensed Consolidated Statement of Operations. |
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Prepaid Expenses and Other Current Assets | Prepaid Expenses and Other Current Assets Prepaid expenses and other current assets consist of the following (in thousands):
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Oil and Natural Gas Properties and Other, Net | Oil and Natural Gas Properties and Other, Net Oil and natural gas properties and other, net consist of the following (in thousands):
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Other Assets | Other Assets Other assets consist of the following (in thousands):
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Accrued Liabilities | Accrued Liabilities Accrued liabilities consist of the following (in thousands):
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Other Liabilities | Other Liabilities Other liabilities consist of the following (in thousands):
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BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES (Tables) |
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Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Table Text Block] | Prepaid expenses and other current assets consist of the following (in thousands):
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Property, Plant and Equipment [Table Text Block] | Oil and natural gas properties and other, net consist of the following (in thousands):
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Schedule of Other Assets, Noncurrent [Table Text Block] | Other assets consist of the following (in thousands):
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Schedule of Accrued Liabilities [Table Text Block] | Accrued liabilities consist of the following (in thousands):
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Other Noncurrent Liabilities [Table Text Block] | Other liabilities consist of the following (in thousands):
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DEBT (Tables) |
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Schedule of Debt Instruments [Table Text Block] | The components comprising the Company’s debt are presented in the following table (in thousands):
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Schedule of Derivative Assets at Fair Value [Table Text Block] |
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Schedule of Carrying Values and Estimated Fair Values of Debt Instruments [Table Text Block] | The following table presents the net value and fair value of the Company’s debt (in thousands):
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Schedule of Notional Amounts of Outstanding Derivative Positions [Table Text Block] | The following table reflects the contracted volumes and weighted average prices under the terms of the Company’s open derivative contracts as of September 30, 2023:
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Schedule of Derivatives Instruments Statements of Financial Performance and Financial Position, Location [Table Text Block] | The fair value of the Company’s derivative financial instruments was recorded in the Condensed Consolidated Balance Sheets as follows (in thousands):
The impact of commodity derivative contracts on the Condensed Consolidated Statements of Operations were as follows (in thousands):
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Schedule of Cash Receipts and Payments on Commodity Derivative Contract Settlements [Table Text Block] | Cash payments on commodity derivative contract settlements, net, are included within Net cash provided by operating activities on the Condensed Consolidated Statements of Cash Flows and were as follows (in thousands):
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ACQUISITION (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||
ACQUISITION | |||||||||||||||||||||||||||||||||||||||||
Schedule of the preliminary allocation of total purchase consideration | The following table represents the Company’s preliminary allocation of total purchase consideration to the identifiable assets acquired and liabilities assumed based on the fair values on the date of acquisition (in thousands):
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SUBSIDIARY BORROWERS (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SUBSIDIARY BORROWERS | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Consolidation of Subsidiary Borrowers [Table Text Block] | The following table presents the amounts recorded by the Company on the Condensed Consolidated Balance Sheets related to the consolidation of the Subsidiary Borrowers and the Subsidiary Parent (in thousands):
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Schedule of Subsidiary Borrowers and the subsidiary that owns the equity [Table Text Block] | The following table presents the amounts recorded by the Company in the Condensed Consolidated Statement of Operations related to the consolidation of the operations of the Subsidiary Borrowers and the Subsidiary Parent (in thousands):
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JOINT VENTURE DRILLING PROGRAM (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Note 6 - Joint Venture Drilling Program | ||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Condensed Consolidated Balance Sheet related to the consolidation of the proportional interest in Monza's operations | The following table presents the amounts recorded by W&T on the Condensed Consolidated Balance Sheets related to the consolidation of the proportional interest in Monza’s operations (in thousands):
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Schedule of Condensed Consolidated Statement of Operations related to the consolidation of the proportional interest in Monza's operations | The following table presents the amounts recorded by W&T in the Condensed Consolidated Statement of Operations related to the consolidation of the proportional interest in Monza’s operations (in thousands):
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ASSET RETIREMENT OBLIGATIONS (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Notes Tables | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Change in Asset Retirement Obligation [Table Text Block] |
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SHARE-BASED AWARDS AND CASH-BASED INCENTIVE COMPENSATION (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Notes Tables | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Unvested Restricted Stock Units Roll Forward [Table Text Block] | A summary of activity related to RSUs during the nine months ended September 30, 2023 is as follows:
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Schedule of Nonvested Performance-based Units Activity [Table Text Block] | A summary of activity related to PSUs during the nine months ended September 30, 2023 is as follows:
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Share-based Payment Arrangement, Nonemployee Director Award Plan, Activity [Table Text Block] | A summary of activity related to restricted shares during the nine months ended September 30, 2023 is as follows:
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Share-based Payment Arrangement, Cost by Plan [Table Text Block] | The following table presents the compensation costs included in General and administrative expenses in the Condensed Consolidated Statements of Operations (in thousands):
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Performance Share Units [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Notes Tables | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Share-based Payment Award, Equity Instrument Other Than Options, Valuation Assumptions [Table Text Block] |
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Long-term Cash-Based Incentive Compensation [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Notes Tables | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Incentive Compensation Expense [Table Text Block] | The following table presents the cash-based incentive compensation costs in the Condensed Consolidated Statements of Operations (in thousands):
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EARNINGS PER SHARE (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Notes Tables | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Earnings Per Share, Basic and Diluted [Table Text Block] | The following table presents the calculation of basic and diluted (loss) earnings per common share (in thousands, except per share amounts):
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BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES (Details) $ in Millions |
9 Months Ended | |
---|---|---|
Sep. 30, 2023
USD ($)
company
segment
|
Dec. 31, 2022
USD ($)
|
|
Number of reportable segment | segment | 1 | |
Maximum number of companies | company | 10 | |
Oil and Gas Joint Interest Billing Receivables, Allowance for Credit Loss, Current | $ 11.2 | $ 12.1 |
General and Administrative Expense [Member] | ||
Employee Retention Credit | $ 2.2 |
BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES - Schedule of Amounts Recorded in Prepaid Expenses and Other Current Assets (Details) - USD ($) $ in Thousands |
Sep. 30, 2023 |
Dec. 31, 2022 |
||
---|---|---|---|---|
BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES - Schedule of Amounts Recorded in Prepaid Expenses and Other Current Assets (Details) | ||||
Derivatives | [1] | $ 1,294 | $ 4,954 | |
Insurance/bond premiums | 8,955 | 6,046 | ||
Deposit related to acquisition (Note 14) | 8,850 | |||
Prepaid deposits related to royalties | 7,322 | 9,139 | ||
Prepayments to vendors | 1,520 | 1,767 | ||
Prepayments to joint interest partners | 2,242 | 1,717 | ||
Current portion of debt issuance costs | 213 | 687 | ||
Other | 80 | 33 | ||
Prepaid expenses and other current assets | $ 30,476 | $ 24,343 | ||
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BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES - Schedule of Oil and Natural Gas Properties and Other, Net at Cost (Details) - USD ($) $ in Thousands |
Sep. 30, 2023 |
Dec. 31, 2022 |
---|---|---|
BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES - Schedule of Oil and Natural Gas Properties and Other, Net at Cost (Details) | ||
Oil and natural gas properties and equipment | $ 8,908,490 | $ 8,813,404 |
Furniture, fixtures and other | 43,087 | 20,915 |
Total property and equipment | 8,951,577 | 8,834,319 |
Less: Accumulated depreciation, depletion, amortization and impairment | (8,180,123) | (8,099,104) |
Oil and natural gas properties and other, net | $ 771,454 | $ 735,215 |
BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES - Schedule of Other Assets (Details) - USD ($) $ in Thousands |
Sep. 30, 2023 |
Dec. 31, 2022 |
||
---|---|---|---|---|
BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES - Schedule of Other Assets (Details) | ||||
Operating lease right-of-use assets | $ 10,623 | $ 10,364 | ||
Operating Lease, Right-of-Use Asset, Statement of Financial Position [Extensible Enumeration] | Total other assets | Total other assets | ||
Investment in White Cap, LLC | $ 2,924 | $ 2,453 | ||
Proportional consolidation of Monza | 10,805 | 9,321 | ||
Derivatives | [1] | 14,372 | 23,236 | |
Other | 1,662 | 2,175 | ||
Total other assets | $ 40,386 | $ 47,549 | ||
|
BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES - Schedule of Accrued Liabilities (Details) - USD ($) $ in Thousands |
Sep. 30, 2023 |
Dec. 31, 2022 |
||
---|---|---|---|---|
Note 1 - Significant Accounting Policies - Schedule of Accrued Liabilities (Details) | ||||
Accrued interest | $ 5,430 | $ 8,967 | ||
Accrued salaries/payroll taxes/benefits | 9,065 | 15,097 | ||
Litigation accruals | 56 | 396 | ||
Operating lease liabilities | $ 871 | $ 1,628 | ||
Operating Lease, Liability, Current, Statement of Financial Position [Extensible Enumeration] | Total accrued liabilities | Total accrued liabilities | ||
Derivatives | [1] | $ 17,659 | $ 46,595 | |
Other | 1,183 | 1,358 | ||
Total accrued liabilities | $ 34,264 | $ 74,041 | ||
|
BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES - Schedule of Other Liabilities (Details) - USD ($) $ in Thousands |
Sep. 30, 2023 |
Dec. 31, 2022 |
---|---|---|
Note 1 - Significant Accounting Policies - Schedule of Other Liabilities (Details) | ||
Dispute related to royalty deductions | $ 5,250 | $ 4,937 |
Derivatives | 11,790 | 43,061 |
Operating lease liabilities | $ 11,700 | $ 10,527 |
Operating Lease, Liability, Noncurrent, Statement of Financial Position [Extensible Enumeration] | Total other liabilities | Total other liabilities |
Other | $ 708 | $ 609 |
Total other liabilities | $ 29,448 | $ 59,134 |
DEBT - Components of Long-term Debt (Details) - USD ($) $ in Thousands |
Sep. 30, 2023 |
Feb. 08, 2023 |
Jan. 27, 2023 |
Dec. 31, 2022 |
Sep. 30, 2022 |
May 19, 2021 |
---|---|---|---|---|---|---|
Total | $ 397,159 | $ 693,437 | ||||
Less current portion, net | (30,015) | (582,249) | ||||
Long-term debt, net | 367,144 | 111,188 | ||||
TVPX Loan [Member] | ||||||
Principal | 11,300 | |||||
Unamortized discount | (1,434) | |||||
Unamortized debt issuance costs | (246) | |||||
Total | 9,620 | |||||
Term Loan [Member] | ||||||
Principal | 121,571 | 147,899 | ||||
Unamortized debt issuance costs | (3,337) | (4,592) | ||||
Total | 118,234 | $ 143,307 | ||||
Debt instrument, interest rate, stated percentage | 7.00% | |||||
11.75% Senior Second Lien Notes due 2026 [Member] | ||||||
Principal | 275,000 | |||||
Unamortized debt issuance costs | (5,695) | |||||
Total | $ 269,305 | |||||
Debt instrument, interest rate, stated percentage | 11.75% | 11.75% | 11.75% | 11.75% | 11.75% | |
9.75% Senior Second Lien Notes due November 2023 [Member] | ||||||
Principal | $ 552,500 | $ 552,460 | ||||
Unamortized debt issuance costs | (2,330) | |||||
Total | $ 550,130 | |||||
Debt instrument, interest rate, stated percentage | 9.75% | 9.75% | 9.75% | 9.75% |
FAIR VALUE MEASUREMENTS - Fair Value of Derivative Financial Instruments (Details) - USD ($) $ in Thousands |
Sep. 30, 2023 |
Dec. 31, 2022 |
||||
---|---|---|---|---|---|---|
Derivative instruments - current | [1] | $ 1,294 | $ 4,954 | |||
Derivative instruments - long-term | [2] | 14,372 | 23,236 | |||
Derivative instruments - current | [1] | 17,659 | 46,595 | |||
Derivative instruments - long-term | 11,790 | 43,061 | ||||
Open Contracts [Member] | ||||||
Derivative instruments - current | 1,294 | 4,954 | ||||
Derivative instruments - long-term | 14,372 | 23,236 | ||||
Derivative instruments - current | 17,659 | 46,595 | ||||
Derivative instruments - long-term | $ 11,790 | $ 43,061 | ||||
|
FAIR VALUE MEASUREMENTS - Net Value and Fair Value of Debt (Details) - USD ($) $ in Thousands |
Sep. 30, 2023 |
Feb. 08, 2023 |
Jan. 27, 2023 |
Dec. 31, 2022 |
Sep. 30, 2022 |
May 19, 2021 |
---|---|---|---|---|---|---|
Long-term debt, net value | $ 397,159 | $ 693,437 | ||||
Long-term debt, fair value | 406,841 | 683,958 | ||||
TVPX Loan [Member] | ||||||
Long-term debt, net value | 9,620 | |||||
Long-term debt, fair value | 9,783 | |||||
Term Loan [Member] | ||||||
Long-term debt, net value | 118,234 | 143,307 | ||||
Long-term debt, fair value | 113,478 | $ 139,056 | ||||
Debt instrument, interest rate, stated percentage | 7.00% | |||||
11.75% Senior Second Lien Notes due 2026 [Member] | ||||||
Long-term debt, net value | 269,305 | |||||
Long-term debt, fair value | $ 283,580 | |||||
Debt instrument, interest rate, stated percentage | 11.75% | 11.75% | 11.75% | 11.75% | 11.75% | |
9.75% Senior Second Lien Notes due November 2023 [Member] | ||||||
Long-term debt, net value | $ 550,130 | |||||
Long-term debt, fair value | $ 544,902 | |||||
Debt instrument, interest rate, stated percentage | 9.75% | 9.75% | 9.75% | 9.75% |
DERIVATIVE FINANCIAL INSTRUMENTS - Financial Statement Presentation - Statements of Operations (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
|
Derivative Financial Instruments. | ||||
Realized loss | $ 1,971 | $ 132,289 | $ 2,501 | $ 96,315 |
Unrealized (gain) loss | (3,462) | (93,540) | (44,061) | 13,577 |
Derivative (gain) loss, net | $ (1,491) | $ 38,749 | $ (41,560) | 109,892 |
Realized gain through restructuring of strike prices | $ 138,000 |
DERIVATIVE FINANCIAL INSTRUMENTS - Financial Statement Presentation - Statements of Cash Flows (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
|
Derivative Financial Instruments. | ||||
Derivative (gain) loss | $ (1,491) | $ 38,749 | $ (41,560) | $ 109,892 |
Derivative cash payments, net | $ (6,123) | (1,022) | ||
Derivative cash premium payments | (46,111) | |||
Cash receipts related to natural gas call contracts through restructuring of strike prices | $ 105,300 |
ACQUISITION (Details) $ in Thousands |
Sep. 20, 2023
USD ($)
item
|
Sep. 30, 2023
USD ($)
|
Dec. 31, 2022
USD ($)
|
Sep. 30, 2022
USD ($)
|
Dec. 31, 2021
USD ($)
|
---|---|---|---|---|---|
Asset Acquisition [Line Items] | |||||
Oil and natural gas properties and other, net | $ 771,454 | $ 735,215 | |||
Asset retirement obligations | $ (498,414) | $ (466,429) | $ (453,610) | $ (424,495) | |
Interests in certain oil and natural gas producing properties | |||||
Asset Acquisition [Line Items] | |||||
Number of shallow water oil and natural gas producing assets | item | 8 | ||||
Total consideration | $ 32,000 | ||||
Cash consideration | 28,900 | ||||
Oil and natural gas properties and other, net | 45,215 | ||||
Asset retirement obligations | (16,352) | ||||
Allocated purchase price | $ 28,863 |
SUBSIDIARY BORROWERS (Details) - Term Loan [Member] - USD ($) $ in Millions |
9 Months Ended | 12 Months Ended | |
---|---|---|---|
Sep. 30, 2023 |
Dec. 31, 2022 |
May 19, 2021 |
|
Subsidiary or Equity Method Investee [Line Items] | |||
Principal | $ 215.0 | ||
Subsidiary Borrowers | |||
Subsidiary or Equity Method Investee [Line Items] | |||
Cash Distributions Received | $ 0.0 | $ 30.2 |
SUBSIDIARY BORROWERS - Consolidation of Subsidiary Borrowers - Balance Sheets (Details) - USD ($) $ in Thousands |
Sep. 30, 2023 |
Dec. 31, 2022 |
Sep. 30, 2022 |
---|---|---|---|
Assets: | |||
Cash and cash equivalents | $ 148,993 | $ 461,357 | |
Accounts receivable: | |||
Oil and natural gas sales | 48,522 | 66,146 | |
Joint interest, net | 16,049 | 14,000 | |
Prepaid expenses and other current assets (Note 1) | 30,476 | 24,343 | |
Oil and natural gas properties and other, net | 771,454 | 735,215 | |
Other assets | 40,386 | 47,549 | |
Liabilities: | |||
Accounts payable | 80,412 | 65,158 | |
Undistributed oil and natural gas proceeds | 34,649 | 41,934 | |
Accrued liabilities | 34,264 | 74,041 | |
Current portion of long-term debt, net (Note 2) | 30,015 | 582,249 | |
Long-term debt, net | 367,144 | 111,188 | |
Current portion of asset retirement obligation (Note 8) | 33,169 | 25,359 | $ 54,886 |
Other liabilities (Note 1) | 29,448 | 59,134 | |
Subsidiary Borrowers | |||
Assets: | |||
Cash and cash equivalents | 1,408 | 21,764 | |
Accounts receivable: | |||
Oil and natural gas sales | 22,988 | 37,344 | |
Joint interest, net | 25,446 | 5,760 | |
Prepaid expenses and other current assets (Note 1) | (55) | 417 | |
Oil and natural gas properties and other, net | 290,686 | 280,649 | |
Other assets | 9,328 | 8,473 | |
Liabilities: | |||
Accounts payable | 10,432 | 27,387 | |
Undistributed oil and natural gas proceeds | 4,480 | 7,930 | |
Accrued liabilities | 17,982 | 45,102 | |
Current portion of long-term debt, net (Note 2) | 29,451 | 32,119 | |
Long-term debt, net | 88,783 | 111,188 | |
Current portion of asset retirement obligation (Note 8) | 67,402 | 61,138 | |
Other liabilities (Note 1) | $ 16,531 | $ 47,398 |
SUBSIDIARY BORROWERS - Consolidation of Subsidiary Borrowers - Statement of Operations (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
|
Subsidiary or Equity Method Investee [Line Items] | ||||
Total revenues | $ 142,411 | $ 266,485 | $ 400,316 | $ 731,297 |
Total operating expenses | 125,128 | 128,369 | 372,613 | 333,218 |
Interest expense, net | 9,925 | 16,849 | 34,960 | 54,915 |
Derivative (gain) loss, net | (1,491) | 38,749 | (41,560) | 109,892 |
Subsidiary Borrowers | ||||
Subsidiary or Equity Method Investee [Line Items] | ||||
Total revenues | 28,865 | 94,264 | 75,425 | 218,625 |
Total operating expenses | 18,807 | 19,776 | 69,297 | 52,961 |
Interest expense, net | 2,536 | 3,405 | 7,947 | 11,841 |
Derivative (gain) loss, net | $ (2,652) | $ 55,850 | $ (55,041) | $ 187,896 |
JOINT VENTURE DRILLING PROGRAM (Details) $ in Millions |
1 Months Ended | ||
---|---|---|---|
Mar. 31, 2018
USD ($)
|
Sep. 30, 2023
USD ($)
item
|
Dec. 31, 2022
USD ($)
|
|
JV Drilling Program [Member] | |||
Number of wells completed | item | 10 | ||
Number of completed wells in operation | item | 8 | ||
Capital Contribution Payments From Related Party | $ 68.2 | ||
Capital Contributions From Related Party During Period | 44.5 | ||
Monza Energy, LLC [Member] | |||
Cash Call Balance | 2.8 | $ 2.9 | |
Monza Energy, LLC [Member] | JV Drilling Program [Member] | |||
Amount committed by investors | $ 361.4 | ||
Joint Venture Working Interest Percentage Contributed to Related Party | 88.94% | ||
Joint Venture Working Interest Percent | 11.06 | ||
Oil And Gas Revenue Percent | 30.0 | ||
Well Cost Percent | 20.0 | ||
Capital Contribution Payments From Related Party | 302.4 | ||
Capital Contributions From Related Party During Period | $ 206.4 | ||
Monza Energy, LLC [Member] | JV Drilling Program [Member] | Mr. Tracy W. Krohn [Member] | |||
Minority Interest Ownership Percentage By Joint Venture | 4.5 | ||
Capital Commitment To Joint Venture | $ 14.5 |
JOINT VENTURE DRILLING PROGRAM - Consolidation - Balance Sheet (Details) - USD ($) $ in Thousands |
Sep. 30, 2023 |
Dec. 31, 2022 |
Sep. 30, 2022 |
---|---|---|---|
Oil and natural gas properties and other, net | $ 771,454 | $ 735,215 | |
Current portion of asset retirement obligation (Note 8) | 33,169 | 25,359 | $ 54,886 |
Other assets | 40,386 | 47,549 | |
Monza Energy, LLC [Member] | |||
Working capital | 1,471 | 2,515 | |
Oil and natural gas properties and other, net | 33,104 | 37,260 | |
Current portion of asset retirement obligation (Note 8) | 572 | 467 | |
Other assets | $ 10,805 | $ 11,571 |
JOINT VENTURE DRILLING PROGRAM - Consolidation - Statement of Operations (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
|
Total revenues | $ 142,411 | $ 266,485 | $ 400,316 | $ 731,297 |
Monza Energy, LLC [Member] | ||||
Total revenues | 9,635 | 23,681 | ||
Total operating expenses | 7,046 | $ 10,805 | ||
Interest income | $ 147 |
ASSET RETIREMENT OBLIGATIONS - Changes to Asset Retirement Obligation (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | |||
---|---|---|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
Dec. 31, 2022 |
|
Asset Retirement Obligations - Changes to Asset Retirement Obligation (Details) | |||||
Asset retirement obligations, beginning of period | $ 466,429 | $ 424,495 | |||
Liabilities settled | (24,918) | (61,285) | |||
Accretion expense | $ 6,414 | $ 6,620 | 21,641 | 19,536 | |
Liabilities acquired | 16,352 | 33,202 | |||
Liabilities incurred | 113 | 138 | |||
Revisions of estimated liabilities | 18,797 | 37,524 | |||
Asset retirement obligations, end of period | 498,414 | 453,610 | 498,414 | 453,610 | |
Less: Current portion | (33,169) | (54,886) | (33,169) | (54,886) | $ (25,359) |
Asset retirement obligations, less current portion | $ 465,245 | $ 398,724 | $ 465,245 | $ 398,724 |
SHARE-BASED AWARDS AND CASH-BASED INCENTIVE COMPENSATION (Details) |
1 Months Ended | 3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|---|
Jun. 30, 2023 |
Sep. 30, 2023
USD ($)
|
Sep. 30, 2022
USD ($)
|
Sep. 30, 2023
USD ($)
installment
shares
|
Sep. 30, 2022
USD ($)
|
|
Cash-based incentive compensation | $ 3,751,000 | $ 5,091,000 | $ 12,188,000 | $ 8,158,000 | |
Restricted Stock Units [Member] | |||||
Granted, restricted stock units (in shares) | shares | 1,785,960 | ||||
Restricted Stock Units [Member] | Employees | |||||
Number of equal annual installments for vesting of units | installment | 3 | ||||
Fair value of award on the date of grant | $ 6.6 | ||||
Restricted Stock Units [Member] | Non-employees | |||||
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period (Year) | 1 year | ||||
Fair value of the RSUs granted on the date of grant | $ 600,000 | $ 600,000 | |||
Restricted Stock [Member] | Non-employees | Non-employee Directors | |||||
Granted, restricted stock units (in shares) | shares | 0 | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period (Year) | 1 year | ||||
Performance Share Units [Member] | |||||
Granted, restricted stock units (in shares) | shares | 1,289,720 | ||||
Performance period | 3 years | ||||
Fair value of award on the date of grant | $ 6,300,000 |
SHARE-BASED AWARDS AND CASH-BASED INCENTIVE COMPENSATION - Summary of Share Activity Related to Restricted Stock Units (Details) - Restricted Stock Units [Member] |
9 Months Ended |
---|---|
Sep. 30, 2023
$ / shares
shares
| |
Nonvested, beginning of period, restricted stock units (in shares) | shares | 1,221,461 |
Nonvested, beginning of period, weighted average grant date fair value per unit (in dollars per share) | $ / shares | $ 5.76 |
Granted, restricted stock units (in shares) | shares | 1,785,960 |
Granted, weighted average grant date fair value per unit (in dollars per share) | $ / shares | $ 4.06 |
Vested, restricted stock units (in shares) | shares | (486,134) |
Vested, weighted average grant date fair value per unit (in dollars per share) | $ / shares | $ 5.62 |
Forfeited, restricted stock units (in shares) | shares | (111,717) |
Forfeited, weighted average grant date fair value per unit (in dollars per share) | $ / shares | $ 5.72 |
Nonvested, end of period, restricted stock units (in shares) | shares | 2,409,570 |
Nonvested, end of period, weighted average grant date fair value per unit (in dollars per share) | $ / shares | $ 4.53 |
SHARE-BASED AWARDS AND CASH-BASED INCENTIVE COMPENSATION - Summary of Share Activity Related to Performance Share Units (Details) - Performance Share Units [Member] |
9 Months Ended |
---|---|
Sep. 30, 2023
$ / shares
shares
| |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Nonvested, beginning of period, restricted stock units (in shares) | shares | 1,502,239 |
Nonvested, beginning of period, weighted average grant date fair value per unit (in dollars per share) | $ / shares | $ 9.78 |
Granted, restricted stock units (in shares) | shares | 1,289,720 |
Granted, weighted average grant date fair value per unit (in dollars per share) | $ / shares | $ 4.85 |
Vested, restricted stock units (in shares) | shares | (9,308) |
Vested, weighted average grant date fair value per unit (in dollars per share) | $ / shares | $ 8.13 |
Forfeited, restricted stock units (in shares) | shares | (231,175) |
Forfeited, weighted average grant date fair value per unit (in dollars per share) | $ / shares | $ 9.69 |
Nonvested, end of period, restricted stock units (in shares) | shares | 2,551,476 |
Nonvested, end of period, weighted average grant date fair value per unit (in dollars per share) | $ / shares | $ 7.30 |
SHARE-BASED AWARDS AND CASH-BASED INCENTIVE COMPENSATION - Summary of Assumptions Used to Calculate Fair Value of PSUs granted (Details) - Performance Share Units [Member] |
9 Months Ended |
---|---|
Sep. 30, 2023 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Expected term for performance period (in years) | 2 years 7 months 6 days |
Expected volatility | 76.10% |
Risk-free interest rate | 4.20% |
SHARE-BASED AWARDS AND CASH-BASED INCENTIVE COMPENSATION - Summary of Restricted Stock Activity (Details) - Restricted Stock [Member] |
9 Months Ended |
---|---|
Sep. 30, 2023
$ / shares
shares
| |
Nonvested, beginning of period, restricted stock units (in shares) | shares | 42,426 |
Nonvested, beginning of period, weighted average grant date fair value per unit (in dollars per share) | $ / shares | $ 4.95 |
Vested, restricted stock units (in shares) | shares | (42,426) |
Vested, weighted average grant date fair value per unit (in dollars per share) | $ / shares | $ 4.95 |
SHARE-BASED AWARDS AND CASH-BASED INCENTIVE COMPENSATION - Summary of Share-Based Compensation Expense (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
|
Share-based compensation expense | $ 3,250 | $ 2,645 | $ 7,259 | $ 5,179 |
Restricted Stock Units [Member] | ||||
Share-based compensation expense | 1,506 | 1,240 | 2,949 | 2,852 |
Performance Share Units [Member] | ||||
Share-based compensation expense | $ 1,744 | 1,352 | 4,240 | 2,154 |
Restricted Stock [Member] | ||||
Share-based compensation expense | $ 53 | $ 70 | $ 173 |
SHARE-BASED AWARDS AND CASH-BASED INCENTIVE COMPENSATION - Summary of Cash-Based Incentive Compensation (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
|
Cash-based incentive compensation | $ 3,751 | $ 5,091 | $ 12,188 | $ 8,158 |
Lease Operating Expense [Member] | ||||
Cash-based incentive compensation | 1,142 | 1,532 | 2,710 | 1,994 |
General and Administrative Expense [Member] | ||||
Cash-based incentive compensation | $ 2,609 | $ 3,559 | $ 9,478 | $ 6,164 |
INCOME TAXES (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | |||
---|---|---|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
Dec. 31, 2022 |
|
Income tax expense | $ 4,777 | $ 16,397 | $ 16,413 | $ 46,801 | |
Effective Income Tax Rate Reconciliation, Percent, Total | 19.70% | 50.60% | 20.00% | ||
Deferred Tax Assets, Valuation Allowance, Total | 21,700 | $ 21,700 | $ 15,300 | ||
Federal | |||||
Income tax receivable | 200 | 200 | |||
Income tax payments | 2,200 | ||||
State | |||||
Income tax receivable | $ 100 | 100 | |||
Income tax payments | $ 300 |
EARNINGS PER SHARE - Schedule of Basic and Diluted (Loss) Earnings Per Common Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
|
EARNINGS PER SHARE - Schedule of Basic and Diluted (Loss) Earnings Per Common Share (Details) | ||||
Net income | $ 2,145 | $ 66,721 | $ 16,041 | $ 187,700 |
Weighted average common shares outstanding - basic (in shares) | 146,483 | 143,116 | 146,451 | 143,026 |
Dilutive effect of securities (in shares) | 4,976 | 2,766 | 3,405 | 1,670 |
Weighted average common shares outstanding - diluted (in shares) | 151,459 | 145,882 | 149,856 | 144,696 |
Earnings per common share - Basic (in dollars per share) | $ 0.01 | $ 0.46 | $ 0.11 | $ 1.30 |
Earnings per common share - Diluted (in dollars per share) | $ 0.01 | $ 0.46 | $ 0.11 | $ 1.30 |
CONTINGENCIES (Details) $ in Millions |
1 Months Ended | 9 Months Ended | 12 Months Ended | ||
---|---|---|---|---|---|
Jan. 31, 2021
USD ($)
item
installment
|
Sep. 30, 2023
USD ($)
|
Dec. 31, 2022
USD ($)
|
Dec. 31, 2021
USD ($)
|
Dec. 31, 2010
USD ($)
|
|
Additional royalty due to disallowed deductions | $ 4.7 | ||||
Decommissioning obligations | $ 4.7 | ||||
Additional decommissioning obligations | 2.1 | ||||
Loss of decommissioning obligations | 17.8 | ||||
Loss contingency in period | $ 20.4 | $ 20.4 | |||
Surety bond | |||||
Loss contingency | 8.9 | ||||
Value of surety bond | $ 8.9 | ||||
Resolved | |||||
Number of pending civil penalties | item | 9 | ||||
Annual installment | $ 0.7 | ||||
Number of annual installments | installment | 3 |
RELATED PARTY TRANSACTIONS (Details) - USD ($) $ in Thousands |
9 Months Ended | |
---|---|---|
May 15, 2023 |
Sep. 30, 2023 |
|
Repayments of Related Party Debt | $ 458 | |
Related party | TVPX Loan | ||
Purchase price of aircraft | $ 19,100 | |
Purchase price paid using cash on hand | $ 9,000 |
SUBSEQUENT EVENT (Details) - Assets in Central Shelf Region of the Gulf of Mexico [Member] - USD ($) $ in Millions |
Oct. 20, 2023 |
Sep. 26, 2023 |
---|---|---|
SUBSEQUENT EVENT | ||
Gross purchase price | $ 88.5 | |
Subsequent Event | ||
SUBSEQUENT EVENT | ||
Deposit returned | $ 8.9 |
Pay vs Performance Disclosure - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
|
Pay vs Performance Disclosure | ||||
Net Income (Loss) | $ 2,145 | $ 66,721 | $ 16,041 | $ 187,700 |
Insider Trading Arrangements |
3 Months Ended |
---|---|
Sep. 30, 2023 | |
Trading Arrangements, by Individual | |
Rule 10b5-1 Arrangement Adopted | false |
Non-Rule 10b5-1 Arrangement Adopted | false |
Rule 10b5-1 Arrangement Terminated | false |
Non-Rule 10b5-1 Arrangement Terminated | false |
1 Year W and T Offshore Chart |
1 Month W and T Offshore Chart |
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