W&T Offshore Announces Fourth Quarter and Full Year 2021 Results Including Year-End 2021 Proved Reserves; Provides Guidance for 2022
W&T Offshore reported its operational and financial results for Q4 and the full year 2021, with notable highlights including a 7% increase in production to 37.2 MBoe/d. The company generated Q4 net income of $48.9 million, while the full year resulted in a net loss of $41.5 million. Adjusted EBITDA rose 42% quarter-over-quarter to $65.7 million, with significant Free Cash Flow of $22.5 million in Q4. W&T also reduced its Net Debt by $96.5 million year-over-year to $485.1 million. The acquisition of oil and gas properties for approximately $30.2 million adds proved reserves and aligns with their capital expenditure plans for 2022.
- Increased production by 7% to 37.2 MBoe/d in Q4 2021.
- Generated $22.5 million in Free Cash Flow for Q4 2021.
- Adjusted EBITDA grew by 42% to $65.7 million in Q4 2021.
- Reduced Net Debt by $96.5 million year-over-year to $485.1 million.
- Acquired properties adding proved reserves estimated at 5.5 MMBoe.
- Full year 2021 resulted in a net loss of $41.5 million.
- Production declined by 3% compared to Q4 2020.
HOUSTON, March 08, 2022 (GLOBE NEWSWIRE) -- W&T Offshore, Inc. (NYSE: WTI) (“W&T” or the “Company”) today reported operational and financial results for the fourth quarter and full year 2021, including the Company’s year-end 2021 reserve report. Guidance for 2022 was also provided. This press release includes non-GAAP financial measures, including Adjusted Net Income, Adjusted EBITDA, Free Cash Flow, and Net Debt, which are described and reconciled to the most comparable GAAP measures below in the accompanying tables under “Non-GAAP Information.”
Key highlights for the fourth quarter and full year 2021 included:
- Increased production by
7% to 37.2 thousand barrels of oil equivalent per day (“MBoe/d”) (45% liquids), or 3.4 million barrels of oil equivalent (“MMBoe”), in the fourth quarter of 2021 compared to the prior quarter and above the midpoint of guidance; - Generated net income of
$48.9 million or$0.34 per diluted share in the fourth quarter of 2021 and net loss for the full year 2021 of$41.5 million or$0.29 per diluted share; - Reported Adjusted Net Income of
$14.8 million or$0.10 per diluted share in the fourth quarter of 2021, and Adjusted Net Income of$33.3 million or$0.23 per diluted share for the full year; - Grew Adjusted EBITDA by
42% quarter-over-quarter to$65.7 million for the fourth quarter of 2021, and full year 2021 Adjusted EBITDA increased35% year-over-year to$220.3 million ; - Generated significant Free Cash Flow of
$22.5 million in the fourth quarter of 2021 and$90.9 million for the full year 2021; - Reduced Net Debt to
$485.1 million at year-end 2021, representing decreases of$96.5 million over a one-year period and$202.0 million over a two-year period; and - Increased year-end 2021 proved reserves at SEC pricing by
9% to 157.6 MMBoe and increased the present value of SEC proved reserves discounted at10% (“PV-10”) by119% to$1.6 billion compared to year-end 2020, despite no additions from drilling activities and negligible acquisition activity during 2021;- Benefited from positive well performance and technical revisions of 5.2 MMBoe and 21.9 MMBoe of positive price revisions; and
- Highlighted value of resource base in the current commodity environment with PV-10 of year-end 2021 proved reserves of
$2.0 billion using NYMEX strip pricing as of March 2, 2022.
Important developments following year-end included:
- Closed the previously-announced acquisition of oil and gas producing properties from ANKOR E&P Holdings Corporation and KOA Energy LP (“ANKOR”) in Federal shallow waters in the central region of the Gulf of Mexico (“GOM”) for approximately
$30.2 million (after normal and customary post-effective date adjustments) which was funded using cash on hand;- The transaction included internally-estimated proved reserves of 5.5 MMBoe (
69% oil) and proved and probable, or 2P, reserves of 7.6 MMBoe (75% oil) as of July 1, 2021 assuming NYMEX strip pricing as of December 7, 2021 and adds over 50 gross producing wells (average working interest of80% ) across three shallow water fields; and
- The transaction included internally-estimated proved reserves of 5.5 MMBoe (
- Announced 2022 capital spending budget of
$70 t o$90 million while maintaining focus on generating free cash flow to fund potential acquisitions and the reduction of debt.
Tracy W. Krohn, Chairman and Chief Executive Officer, stated “We are very pleased with our ability to deliver solid operational and financial results in 2021. We ended the year strong with fourth quarter production of 37.2 MBoe/d, which was above the midpoint of guidance. Our fourth quarter Adjusted EBITDA grew to
“So far in 2022, we have announced and closed an attractive acquisition of shallow water producing properties with a solid base of proved reserves and strong free cash flow with upside potential, but without significant amounts of ongoing capital costs. Favorable industry conditions provide us confidence to expand our drilling program in 2022, but we will not lose our commitment to generating free cash flow. We plan to spend between
“In early 2021, we issued our inaugural Environmental, Social and Governance (“ESG”) report with key metrics for the prior three years. In the coming weeks, we will be releasing an updated ESG report with 2021 data that will demonstrate our continued commitment to our employees and the communities in which we operate and live, as well as our commitment to protecting and preserving the environment in all aspects of our business. We will build on the foundation that we established in our initial report and discuss our accomplishments over the past year and areas where we can continue to show improvement. We take ESG seriously and it is a key part of our core values and the culture that we have built over the past 40 years that will allow us to sustainably and profitably grow into the future.”
“Entering 2022, we are encouraged with the strong pricing environment which, together with the additional production volumes from our recently completed acquisition and our Cota well which was placed online this month, should allow us to generate increased cash flow this year. We are well-positioned to increase our capital spending and implement a more active drilling program to take advantage of our substantial inventory of drilling opportunities with potentially high rates of return. Additionally, with enhanced liquidity, improved financial flexibility, and a meaningful amount of cash on hand, we will continue to evaluate accretive opportunities that meet our criteria, while systematically paying down debt. We have a successful track record of executing our strategic vision and are committed to growing shareholder value.”
Production, Prices, and Revenue: Production for the fourth quarter of 2021 was 37.2 MBoe/d, which was above the midpoint of the guidance range provided for the quarter. This represented an increase of
W&T’s average realized price per barrel of oil equivalent (“Boe”) before realized derivative settlements was
Revenues for the fourth quarter of 2021 were
Lease Operating Expense: Lease operating expense (“LOE”), which includes base lease operating expenses, insurance premiums, workovers, facilities maintenance, and hurricane repairs, was
Gathering, Transportation Costs, and Production Taxes: Gathering, transportation costs, and production taxes totaled
Depreciation, Depletion, Amortization, and Accretion (“DD&A”): DD&A, including accretion expense related to asset retirement obligations, was
General & Administrative Expenses (“G&A”): G&A was
Derivative (Gain) Loss: In the fourth quarter of 2021, W&T recognized a net gain of
A summary of the Company’s current outstanding derivative positions is provided on W&T’s website in the “Investors” section under the “Financial Information” tab.
Interest Expense: Net interest expense in the fourth quarter of 2021 was
Other Income: In the fourth quarter of 2021, the Company reported net other income of
Income Tax: W&T recognized
Balance Sheet and Liquidity: As of December 31, 2021, W&T had available liquidity of
Subsequent to quarter end, W&T agreed to an extension of the Credit Agreement with Calculus Lending until January 3, 2023.
Capital Expenditures: Capital expenditures (excluding changes in working capital associated with investing activities) in the fourth quarter and full year 2021 were
ACQUISITION OF PRODUCING PROPERTIES
In early February 2022, W&T closed its previously announced ANKOR acquisition of oil and gas producing properties in Federal shallow waters in the central region of the GOM at Ship Shoal 230, South Marsh Island 27/Vermilion 191, and South Marsh Island 73 fields from privately-held entities. After normal and customary post-effective date adjustments to reflect an effective date of July 1, 2021, cash consideration of approximately
The transaction included internally-estimated proved reserves of 5.5 MMBoe (
2022 CAPITAL INVESTMENT PROGRAM
W&T’s capital expenditure budget for 2022 is expected to be in the range of
Plugging and abandonment expenditures are expected to be in the range of
Environmental, Social, and Governance (“ESG”) Commentary
W&T issued its initial corporate ESG report in March of 2021 and expects to issue its updated 2021 corporate ESG report in the coming weeks. The 2021 report will build on the solid foundation of the inaugural report as W&T remains committed to its ESG journey. In the creation of its ESG reports, the Company consulted the Sustainability Accounting Standards Board’s (“SASB”) Oil and Gas Exploration and Production Sustainability Accounting Standard, the recommendations of the Task Force on Climate-related Financial Disclosures (“TCFD”), and other reporting guidance from industry frameworks and standards.
Full Year-End 2021 Financial Review
W&T reported a net loss for the full year 2021 of
Production for 2021 averaged 38.1 MBoe/d for a total of 13.9 MMBoe, comprised of 5.0 MMBbl of oil, 1.5 MMBbl of NGLs, and 44.8 Bcf of natural gas. Full year 2020 production averaged 42.0 MBoe/d or 15.4 MMBbl in total and was composed of 5.6 MMBbl of oil, 1.7 MMBbl of NGLs, and 48.4 Bcf of natural gas. Minimal capital expenditures were incurred in 2021 to bring on new production, nor were there any material acquisitions of producing properties during the year. Accordingly, the decline in production year-over-year reflects the natural decline of the producing assets in W&T’s portfolio.
For the full year 2021, W&T’s realized crude oil sales price was
For the full year 2021, LOE was
Gathering, transportation, and production taxes totaled
For the full year 2021, G&A was
OPERATIONS UPDATE
The Cota well at East Cameron 338/349 was placed online earlier this week and is currently on flowback. The well was delayed due to issues mobilizing the contracted completion rig into US waters from Mexico. The well, which is in over 290 feet of water and was drilled to a total depth of 6,000 feet, encountered approximately 100 feet of net oil pay. W&T has an initial working interest of
The previously disclosed “Flex Trend” exploratory well in the Mississippi Canyon area has completed drilling to its targeted depth. While the well encountered hydrocarbon-bearing sands, it was determined there were not sufficient quantities to develop the project at this time. W&T and the other working interest owners will continue to evaluate information derived from drilling the well along with further seismic and geologic analysis to determine if additional drilling is warranted. W&T has a
W&T participated in the federal Gulf of Mexico Lease Sale 257 in late 2021 and was the apparent high bidder on two shallow water blocks – Eugene Island South Addition block 385 and Ship Shoal South Addition block 360 – for a total cost of approximately
Well Recompletions and Workovers
During the fourth quarter of 2021, the Company performed 14 workovers on properties at Mobile Bay that positively impacted production for the quarter. W&T plans to continue to perform recompletions and workovers that meet economic thresholds.
Year-End 2021 Proved Reserves
The Company’s year-end 2021 SEC proved reserves were 157.6 MMBoe, up
Approximately
Using average realized NYMEX strip prices as of March 2, 2022, year-end 2021 proved reserves are estimated to be 159.5 MMBoe, comprised of 37.5 MMBbl of oil, 19.3 MMBbl of NGLs, and 615.7 Bcf of natural gas. The PV-10 of the proved reserves at this price scenario is
| Summary Reconciliation of Proved Reserves | ||||||||||
| Oil | NGL | Natural Gas | Equivalents | PV-101 | ||||||
| MMBbl | MMBbl | Bcf | MMBoe | $MM | ||||||
| Balance, December 31, 2020 | 32.2 | 17.4 | 569.3 | 144.4 | $ | 740.9 | ||||
| Revisions of Previous Estimates | 5.8 | 0.9 | (9.1 | ) | 5.2 | |||||
| Revisions Due to SEC Price Change | 4.2 | 2.3 | 92.2 | 21.9 | ||||||
| Extensions & discoveries | -- | -- | -- | -- | ||||||
| Purchases of minerals in place | -- | -- | 0.1 | -- | ||||||
| Sales of minerals in place | -- | -- | -- | -- | ||||||
| Production | (5.0 | ) | (1.4 | ) | (44.8 | ) | (13.9 | ) | ||
| Balance, December 31, 2021 | 37.2 | 19.1 | 607.6 | 157.6 | $ | 1,621.9 | ||||
(1) PV-10 for this presentation excludes any provision for asset retirement obligations or income taxes.
In accordance with guidelines established by the SEC, estimated proved reserves as of December 31, 2021 were determined to be economically producible under existing economic conditions, which requires the use of the 12-month average of the first-day-of-the-month price for the year ended December 31, 2021. The WTI spot price and the Henry Hub spot price were utilized as the reference prices and after adjusting for quality, transportation, fees, energy content, and regional price differentials, the average realized prices were
The standardized measure of future net cash flows was (i)
First Quarter and Full Year 2022 Production and Expense Guidance
The guidance for the first quarter and full year 2022 in the table below represents the Company’s current expectations. Please refer to the section entitled “Forward-Looking and Cautionary Statements” below for risk factors that could impact guidance.
| Production | First Quarter 2022 | Full Year 2022 | |
| Oil (MBbl) | 1,190 – 1,320 | 5,200 – 5,800 | |
| NGLs (MBbl) | 325 – 360 | 1,400 – 1,600 | |
| Natural gas (MMcf) | 9,600 – 10,600 | 42,300 – 46,800 | |
| Total equivalents (MBoe) | 3,120 – 3,450 | 13,700 – 15,200 | |
| Average daily equivalents (MBoe/d) | 34.6 – 38.3 | 37.5 – 41.5 | |
| Expenses | First Quarter 2022 | Full Year 2022 | |
| Lease operating expense ($MM) | |||
| Gathering, transportation & production taxes ($MM) | |||
| General & administrative - cash ($MM) | |||
| General & administrative – non-cash ($MM) | |||
| DD&A ($ per Boe) | |||
| Interest expense, net ($MM) | |||
| Effective income tax expense rate | |||
| % of income tax expense expected to be cash taxes | |||
The guidance above reflects the impact of the previously announced ANKOR acquisition that closed on February 1, 2022. The increase in LOE and gathering, transportation & production tax expense primarily reflects the addition of the aforementioned ANKOR properties. W&T is currently evaluating opportunities to reduce the operating costs associated with the ANKOR assets.
Conference Call Information: W&T will hold a conference call to discuss its financial and operational results on Wednesday, March 9, 2022 at 9:00 a.m. Central Time (10:00 Eastern Time). Interested parties may dial 1-844-739-3797. International parties may dial 1-412-317-5713. Participants should request to connect to the “W&T Offshore Conference Call”. This call will also be webcast and available on W&T’s website at www.wtoffshore.com under “Investors”. An audio replay will be available on the Company’s website following the call.
About W&T Offshore
W&T Offshore, Inc. is an independent oil and natural gas producer with operations offshore in the Gulf of Mexico and has grown through acquisitions, exploration, and development. As of December 31, 2021, the Company had working interests in 43 fields in federal and state waters and has under lease approximately 606,000 gross acres, including approximately 419,000 gross acres on the Gulf of Mexico Shelf and approximately 187,000 gross acres in the Gulf of Mexico deepwater. A majority of the Company’s daily production is derived from wells it operates. For more information on W&T, please visit the Company’s website at www.wtoffshore.com.
Forward-Looking and Cautionary Statements
This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements reflect our current views with respect to future events, based on what we believe are reasonable estimates and assumptions. No assurance can be given, however, that these events will occur or that our estimates will be correct. These statements are subject to risks and uncertainties that could cause actual results to differ materially including, among other things, market conditions, oil and gas price volatility, uncertainties inherent in oil and gas production operations and estimating reserves, uncertainties of the timing and impact of bringing new wells online and repairing and restoring infrastructure hurricane damage, unexpected future capital expenditures, competition, the success of our risk management activities, governmental regulations, uncertainties and other factors discussed in W&T Offshore’s Annual Report on Form 10-K for the year ended December 31, 2020 and subsequent Form 10-Q reports found at www.sec.gov or at our website at www.wtoffshore.com under the Investor Relations section. The Form 10-K for the year-ended December 31, 2021 is expected to be filed on or about March 9, 2022. Investors are urged to consider closely the disclosures and risk factors in these reports.
| W&T OFFSHORE, INC. AND SUBSIDIARIES | ||||||||||||||||||||
| Condensed Consolidated Statements of Operations | ||||||||||||||||||||
| (In thousands, except per share data) | ||||||||||||||||||||
| (Unaudited) | ||||||||||||||||||||
| Three Months Ended | Twelve Months Ended | |||||||||||||||||||
| December 31, | September 30, | December 31, | December 31, | |||||||||||||||||
| 2021 | 2021 | 2020 | 2021 | 2020 | ||||||||||||||||
| Revenues: | ||||||||||||||||||||
| Oil | $ | 89,139 | $ | 74,265 | $ | 54,535 | $ | 329,557 | $ | 216,419 | ||||||||||
| NGLs | 13,945 | 12,205 | 6,267 | 44,343 | 19,101 | |||||||||||||||
| Natural gas | 59,934 | 45,137 | 29,423 | 173,749 | 99,300 | |||||||||||||||
| Other | 2,571 | 2,339 | 4,523 | 10,361 | 11,814 | |||||||||||||||
| Total revenues | 165,589 | 133,946 | 94,748 | 558,010 | 346,634 | |||||||||||||||
| Operating costs and expenses: | ||||||||||||||||||||
| Lease operating expenses | 45,183 | 39,490 | 43,332 | 174,582 | 162,857 | |||||||||||||||
| Gathering, transportation costs and production taxes | 8,233 | 6,593 | 5,313 | 27,919 | 20,947 | |||||||||||||||
| Depreciation, depletion, amortization and accretion | 29,567 | 26,291 | 26,547 | 113,447 | 120,284 | |||||||||||||||
| General and administrative expenses | 14,310 | 13,391 | 7,678 | 52,400 | 41,745 | |||||||||||||||
| Total costs and expenses | 97,293 | 85,765 | 82,870 | 368,348 | 345,833 | |||||||||||||||
| Operating income (loss) | 68,296 | 48,181 | 11,878 | 189,662 | 801 | |||||||||||||||
| Interest expense, net | 19,574 | 18,910 | 15,402 | 70,049 | 61,463 | |||||||||||||||
| Derivative (gain) loss | (3,843 | ) | 73,137 | 11,529 | 175,313 | (23,808 | ) | |||||||||||||
| Gain on debt transactions | - | - | - | - | (47,469 | ) | ||||||||||||||
| Other (income) expense, net | (7,128 | ) | - | 752 | (6,165 | ) | 2,978 | |||||||||||||
| Income (loss) before income taxes | 59,693 | (43,866 | ) | (15,805 | ) | (49,535 | ) | 7,637 | ||||||||||||
| Income tax expense (benefit) | 10,789 | (5,902 | ) | (6,858 | ) | (8,057 | ) | (30,153 | ) | |||||||||||
| Net income (loss) | $ | 48,904 | $ | (37,964 | ) | $ | (8,947 | ) | $ | (41,478 | ) | $ | 37,790 | |||||||
| Net income (loss) per common share | ||||||||||||||||||||
| Basic | $ | 0.34 | $ | (0.27 | ) | $ | (0.06 | ) | $ | (0.29 | ) | $ | 0.26 | |||||||
| Diluted | $ | 0.34 | $ | (0.27 | ) | $ | (0.06 | ) | $ | (0.29 | ) | $ | 0.26 | |||||||
| Weighted average common shares outstanding | ||||||||||||||||||||
| Basic | 142,389 | 142,297 | 141,721 | 142,271 | 141,622 | |||||||||||||||
| Diluted | 144,138 | 142,297 | 141,721 | 142,271 | 143,277 | |||||||||||||||
| W&T OFFSHORE, INC. AND SUBSIDIARIES | ||||||||||||||||
| Condensed Operating Data | ||||||||||||||||
| (Unaudited) | ||||||||||||||||
| Three Months Ended | Twelve Months Ended | |||||||||||||||
| December 31, | September 30, | December 31, | December 31, | |||||||||||||
| 2021 | 2021 | 2020 | 2021 | 2020 | ||||||||||||
| Net sales volumes: | ||||||||||||||||
| Oil (MBbls) | 1,186 | 1,083 | 1,273 | 4,998 | 5,629 | |||||||||||
| NGL (MBbls) | 345 | 376 | 385 | 1,450 | 1,696 | |||||||||||
| Natural gas (MMcf) | 11,321 | 10,481 | 11,174 | 44,790 | 48,384 | |||||||||||
| Total oil and natural gas (MBoe) (1) | 3,418 | 3,206 | 3,520 | 13,913 | 15,389 | |||||||||||
| Average daily equivalent sales (MBoe/d) | 37.2 | 34.8 | 38.3 | 38.1 | 42.0 | |||||||||||
| Average realized sales prices (before the impact of derivative settlements): | ||||||||||||||||
| Oil ($/Bbl) | $ | 75.14 | $ | 68.57 | $ | 42.84 | $ | 65.94 | $ | 38.45 | ||||||
| NGLs ($/Bbl) | 40.46 | 32.46 | 16.30 | 30.59 | 11.26 | |||||||||||
| Natural gas ($/Mcf) | 5.29 | 4.31 | 2.63 | 3.88 | 2.05 | |||||||||||
| Barrel of oil equivalent ($/Boe) | 47.70 | 41.05 | 25.63 | 39.36 | 21.76 | |||||||||||
| Average costs and expenses per Boe ($/Boe): | ||||||||||||||||
| Lease operating expenses | $ | 13.22 | $ | 12.32 | $ | 12.31 | $ | 12.55 | $ | 10.58 | ||||||
| Gathering, transportation costs and production taxes | 2.41 | 2.06 | 1.51 | 2.01 | 1.36 | |||||||||||
| Depreciation, depletion, amortization and accretion | 8.65 | 8.20 | 7.54 | 8.15 | 7.82 | |||||||||||
| General and administrative expenses | 4.19 | 4.18 | 2.18 | 3.77 | 2.71 | |||||||||||
(1) MBoe is determined using the ratio of six Mcf of natural gas to one Bbl of crude oil, condensate or NGLs (totals may not compute due to rounding). The conversion ratio does not assume price equivalency and the price on an equivalent basis for oil, NGLs and natural gas may differ significantly. The realized prices presented above are volume-weighted for production in the respective period.
| W&T OFFSHORE, INC. AND SUBSIDIARIES | ||||||||
| Condensed Consolidated Balance Sheets | ||||||||
| (In thousands) | ||||||||
| (Unaudited) | ||||||||
| December 31, | December 31, | |||||||
| 2021 | 2020 | |||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 245,799 | $ | 43,726 | ||||
| Restricted Cash | 4,417 | - | ||||||
| Receivables: | ||||||||
| Oil and natural gas sales | 54,919 | 38,830 | ||||||
| Joint interest, net | 9,745 | 10,840 | ||||||
| Income taxes | - | - | ||||||
| Total receivables | 64,664 | 49,670 | ||||||
| Prepaid expenses and other assets | 43,379 | 13,832 | ||||||
| Total current assets | 358,259 | 107,228 | ||||||
| Oil and natural gas properties and other, net - at cost | 8,657,252 | 8,588,356 | ||||||
| Less accumulated depreciation, depletion, amortization and impairment | 7,992,000 | 7,901,478 | ||||||
| Oil and natural gas properties and other, net | 665,252 | 686,878 | ||||||
| Restricted deposits for asset retirement obligations | 16,019 | 29,675 | ||||||
| Deferred income taxes | 102,505 | 94,331 | ||||||
| Other assets | 51,172 | 22,470 | ||||||
| Total assets | $ | 1,193,207 | $ | 940,582 | ||||
| Liabilities and Shareholders’ Deficit | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 67,409 | $ | 41,304 | ||||
| Undistributed oil and natural gas proceeds | 36,243 | 19,167 | ||||||
| Advances from joint interest partners | 15,072 | 7,308 | ||||||
| Asset retirement obligations | 56,419 | 17,188 | ||||||
| Accrued liabilities | 106,273 | 30,033 | ||||||
| Current portion of long-term debt | 42,960 | - | ||||||
| Total current liabilities | 324,376 | 115,000 | ||||||
| Long-term debt, net | 687,938 | 625,286 | ||||||
| Asset retirement obligations, less current portion | 368,076 | 375,516 | ||||||
| Other liabilities | 59,997 | 33,066 | ||||||
| Shareholders’ deficit: | ||||||||
| Common stock, | ||||||||
| outstanding at December 31, 2021; 145,174 issued and 142,305 outstanding at December 31, 2020 | ||||||||
| 1 | 1 | |||||||
| Additional paid-in capital | 552,923 | 550,339 | ||||||
| Retained deficit | (775,937 | ) | (734,459 | ) | ||||
| Treasury stock, at cost; 2,869 shares for both dates presented | (24,167 | ) | (24,167 | ) | ||||
| Total shareholders’ deficit | (247,180 | ) | (208,286 | ) | ||||
| Total liabilities and shareholders’ deficit | $ | 1,193,207 | $ | 940,582 | ||||
| W&T OFFSHORE, INC. AND SUBSIDIARIES | ||||||||||||||||||||
| Condensed Consolidated Statements of Cash Flows | ||||||||||||||||||||
| (In thousands) | ||||||||||||||||||||
| (Unaudited) | ||||||||||||||||||||
| Three Months Ended | Twelve Months Ended | |||||||||||||||||||
| December 31, | September 30, | December 31, | December 31, | |||||||||||||||||
| 2021 | 2021 | 2020 | 2021 | 2020 | ||||||||||||||||
| Operating activities: | ||||||||||||||||||||
| Net income (loss) | $ | 48,904 | $ | (37,964 | ) | $ | (8,947 | ) | $ | (41,478 | ) | $ | 37,790 | |||||||
| Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||||||||||||||||||||
| Depreciation, depletion, amortization and accretion | 29,568 | 26,292 | 26,547 | 113,447 | 120,284 | |||||||||||||||
| Amortization of debt items and other items | 2,460 | 1,128 | 1,583 | 6,555 | 6,834 | |||||||||||||||
| Share-based compensation | 1,585 | 859 | 817 | 3,364 | 3,959 | |||||||||||||||
| Derivative (gain) loss | (3,843 | ) | 73,137 | 11,529 | 175,313 | (23,808 | ) | |||||||||||||
| Derivative cash settlements receipts (payments), net | (41,744 | ) | (24,000 | ) | 3,168 | (81,298 | ) | 45,196 | ||||||||||||
| Derivative cash premium (payments) | (8,116 | ) | (6,793 | ) | - | (40,484 | ) | - | ||||||||||||
| Gain on debt transactions | - | - | - | - | (47,469 | ) | ||||||||||||||
| Deferred income taxes | 10,637 | (5,820 | ) | (6,880 | ) | (8,189 | ) | (30,287 | ) | |||||||||||
| Changes in operating assets and liabilities: | ||||||||||||||||||||
| Oil and natural gas receivables | (16,593 | ) | 11,894 | (17,423 | ) | (16,089 | ) | 18,537 | ||||||||||||
| Joint interest receivables | 3,267 | (1,262 | ) | (479 | ) | 1,095 | 8,561 | |||||||||||||
| Prepaid expenses and other assets | 25,370 | (12,868 | ) | 1,612 | (5,103 | ) | 9,563 | |||||||||||||
| Income tax | 133 | (61 | ) | 22 | (20 | ) | 2,014 | |||||||||||||
| Asset retirement obligation settlements | (7,565 | ) | (8,531 | ) | (551 | ) | (27,309 | ) | (3,339 | ) | ||||||||||
| Cash advances from JV partners | (2,234 | ) | 13,924 | (414 | ) | 7,765 | 2,028 | |||||||||||||
| Accounts payable, accrued liabilities and other | (19,453 | ) | 35,162 | (16,813 | ) | 46,099 | (41,354 | ) | ||||||||||||
| Net cash provided by (used in) operating activities | 22,376 | 65,097 | (6,229 | ) | 133,668 | 108,509 | ||||||||||||||
| Investing activities: | ||||||||||||||||||||
| Investment in oil and natural gas properties and equipment | (16,037 | ) | (10,169 | ) | (4,678 | ) | (32,062 | ) | (17,632 | ) | ||||||||||
| Changes in operating assets and liabilities associated with investing activities | 1,660 | 6,695 | 1,694 | 5,277 | (26,535 | ) | ||||||||||||||
| Acquisition of property interests | (661 | ) | - | (2,463 | ) | (661 | ) | (2,919 | ) | |||||||||||
| Purchases of furniture, fixtures and other | - | - | (460 | ) | 2 | (530 | ) | |||||||||||||
| Net cash used in investing activities | (15,038 | ) | (3,474 | ) | (5,907 | ) | (27,444 | ) | (47,616 | ) | ||||||||||
| Financing activities: | ||||||||||||||||||||
| Borrowings on credit facility | - | - | - | - | 25,000 | |||||||||||||||
| Repayments on credit facility | - | - | - | (80,000 | ) | (50,000 | ) | |||||||||||||
| Purchase of Senior Second Lien Notes | - | - | - | - | (23,930 | ) | ||||||||||||||
| Proceeds from Term Loan | - | - | - | 215,000 | - | |||||||||||||||
| Repayments on Term Loan | (12,364 | ) | (11,778 | ) | - | (24,142 | ) | - | ||||||||||||
| Debt issuance costs | (1,561 | ) | (1,409 | ) | - | (9,810 | ) | - | ||||||||||||
| Other | (781 | ) | - | (670 | ) | (782 | ) | (670 | ) | |||||||||||
| Net cash (used in) provided by financing activities | (14,706 | ) | (13,187 | ) | (670 | ) | 100,266 | (49,600 | ) | |||||||||||
| (Decrease) increase in cash and cash equivalents | (7,368 | ) | 48,436 | (12,806 | ) | 206,490 | 11,293 | |||||||||||||
| Cash and cash equivalents and restricted cash, beginning of period | 257,584 | 209,148 | 56,532 | 43,726 | 32,433 | |||||||||||||||
| Cash and cash equivalents and restricted cash, end of period | $ | 250,216 | $ | 257,584 | $ | 43,726 | $ | 250,216 | $ | 43,726 | ||||||||||
W&T OFFSHORE, INC. AND SUBSIDIARIES
Non-GAAP Information
Certain financial information included in W&T’s financial results are not measures of financial performance recognized by accounting principles generally accepted in the United States, or GAAP. These non-GAAP financial measures are “Net Debt”, “Adjusted Net (Loss) Income”, “Adjusted EBITDA” and “Free Cash Flow”. Management uses these non-GAAP financial measures in its analysis of performance. These disclosures may not be viewed as a substitute for results determined in accordance with GAAP and are not necessarily comparable to non-GAAP performance measures which may be reported by other companies.
We calculate Net Debt as total debt (current and long-term portions), less cash and cash equivalents.
Reconciliation of Net (Loss) Income to Adjusted Net (Loss) Income
Adjusted Net (Loss) Income adjusts for certain items that the Company believes affect comparability of operating results, including items that are generally non-recurring in nature or whose timing and/or amount cannot be reasonably estimated. These items include unrealized commodity derivative loss (gain), amortization of derivative premium, bad debt reserve, deferred tax benefit, gain on debt transactions, release of restricted funds, and litigation and other.
| Three Months Ended | Twelve Months Ended | |||||||||||||||||||
| December 31, | September 30, | December 31, | December 31, | |||||||||||||||||
| 2021 | 2021 | 2020 | 2021 | 2020 | ||||||||||||||||
| (In thousands, except per share amounts) | ||||||||||||||||||||
| (Unaudited) | ||||||||||||||||||||
| Net income (loss) | $ | 48,904 | $ | (37,964 | ) | $ | (8,947 | ) | $ | (41,478 | ) | $ | 37,790 | |||||||
| Selected items | ||||||||||||||||||||
| Unrealized commodity derivative (gain) loss | (42,770 | ) | 43,111 | 11,456 | 82,758 | 10,040 | ||||||||||||||
| Amortization of derivative premium | 3,299 | 805 | 1,483 | 5,143 | 10,722 | |||||||||||||||
| Bad debt reserve | 315 | 1 | (1,063 | ) | 323 | (981 | ) | |||||||||||||
| Gain on debt transactions | - | - | - | - | (47,469 | ) | ||||||||||||||
| Write-off debt issue costs | 989 | - | 1,230 | 444 | ||||||||||||||||
| Litigation and other contingent loss | 4,541 | - | (2,708 | ) | 4,621 | (2,708 | ) | |||||||||||||
| Release of restricted funds | (11,102 | ) | - | - | (11,102 | ) | - | |||||||||||||
| Deferred tax expense (benefit) | 10,637 | (5,820 | ) | (6,880 | ) | (8,189 | ) | (30,287 | ) | |||||||||||
| Adjusted Net Income (Loss) | $ | 14,813 | $ | 133 | $ | (6,659 | ) | $ | 33,306 | $ | (22,449 | ) | ||||||||
| Adjusted earnings (loss) per common share | ||||||||||||||||||||
| Basic | $ | 0.10 | $ | - | $ | (0.05 | ) | $ | 0.23 | $ | (0.16 | ) | ||||||||
| Diluted | $ | 0.10 | $ | - | $ | (0.05 | ) | $ | 0.23 | $ | (0.16 | ) | ||||||||
| Weighted Average Shares Outstanding | ||||||||||||||||||||
| Basic | 142,389 | 142,297 | 141,721 | 142,271 | - | - | 141,622 | |||||||||||||
| Diluted | 144,138 | 144,270 | 141,721 | 143,277 | 141,622 | |||||||||||||||
| W&T OFFSHORE, INC. AND SUBSIDIARIES | ||||||||||||||||||||
| Non-GAAP Information | ||||||||||||||||||||
| Adjusted EBITDA/ Free Cash Flow Reconciliations | ||||||||||||||||||||
| The Company also presents the non-GAAP financial measures Adjusted EBITDA and Free Cash Flow. The Company defines Adjusted EBITDA as net (loss) income plus income tax (benefit) expense, net interest expense, and depreciation, depletion, amortization and accretion, excluding the unrealized commodity derivative gain or loss, amortization of derivative premium, bad debt reserve, gain on debt transactions, release of restricted funds, and litigation and other. Company management believes this presentation is relevant and useful because it helps investors understand W&T’s operating performance and makes it easier to compare its results with those of other companies that have different financing, capital and tax structures. Adjusted EBITDA should not be considered in isolation from or as a substitute for net income, as an indication of operating performance or cash flows from operating activities or as a measure of liquidity. Adjusted EBITDA, as W&T calculates it, may not be comparable to Adjusted EBITDA measures reported by other companies. In addition, Adjusted EBITDA does not represent funds available for discretionary use. | ||||||||||||||||||||
| The Company defines Free Cash Flow as Adjusted EBITDA (defined above), less capital expenditures, plugging and abandonment costs and interest expense (all on an accrual basis). For this purpose, the Company’s definition of capital expenditures includes costs incurred related to oil and natural gas properties (such as drilling and infrastructure costs and the lease maintenance costs) and equipment, furniture and fixtures, but excludes acquisition costs of oil and gas properties from third parties that are not included in the Company’s capital expenditures guidance provided to investors. Company management believes that Free Cash Flow is an important financial performance measure for use in evaluating the performance and efficiency of its current operating activities after the impact of accrued capital expenditures, plugging and abandonment costs and interest expense and without being impacted by items such as changes associated with working capital, which can vary substantially from one period to another. There is no commonly accepted definition of Free Cash Flow within the industry. Accordingly, Free Cash Flow, as defined and calculated by the Company, may not be comparable to Free Cash Flow or other similarly named non-GAAP measures reported by other companies. While the Company includes interest expense in the calculation of Free Cash Flow, other mandatory debt service requirements of future payments of principal at maturity (if such debt is not refinanced) are excluded from the calculation of Free Cash Flow. These and other non-discretionary expenditures that are not deducted from Free Cash Flow would reduce cash available for other uses. | ||||||||||||||||||||
| The following tables present (i) a reconciliation of cash flow from operating activities, a GAAP measure, to Free Cash Flow, as defined by the Company and (ii) a reconciliation of the Company’s net (loss) income, a GAAP measure, to Adjusted EBITDA and Free Cash Flow, as such terms are defined by the Company. | ||||||||||||||||||||
| Three Months Ended | Twelve Months Ended | |||||||||||||||||||
| December 31, | September 30, | December 31, | December 31, | |||||||||||||||||
| 2021 | 2021 | 2020 | 2021 | 2020 | ||||||||||||||||
| (In thousands) | ||||||||||||||||||||
| (Unaudited) | ||||||||||||||||||||
| Net income (loss) | $ | 48,904 | (37,964 | ) | (8,947 | ) | $ | (41,478 | ) | $ | 37,790 | |||||||||
| Interest expense, net | 19,574 | 18,910 | 15,402 | 70,049 | 61,463 | |||||||||||||||
| Income tax benefit | 10,789 | (5,902 | ) | (6,858 | ) | (8,057 | ) | (30,153 | ) | |||||||||||
| Depreciation, depletion, amortization and accretion | 29,567 | 26,291 | 26,547 | 113,447 | 120,284 | |||||||||||||||
| Unrealized commodity derivative (gain) loss | (42,770 | ) | 43,111 | 11,456 | 82,758 | 10,040 | ||||||||||||||
| Amortization of derivative premium | 3,299 | 805 | 1,483 | 5,143 | 10,722 | |||||||||||||||
| Bad debt reserve | 315 | 1 | (1,063 | ) | 323 | (981 | ) | |||||||||||||
| Write-off debt issue costs | 989 | - | - | 1,230 | 444 | |||||||||||||||
| Non-cash incentive compensation | 1,585 | 859 | 817 | 3,364 | 3,959 | |||||||||||||||
| Gain on debt transactions | - | - | - | - | (47,469 | ) | ||||||||||||||
| Litigation and other contingent loss | 4,541 | - | (2,708 | ) | 4,621 | (2,708 | ) | |||||||||||||
| Release of restricted funds | (11,102 | ) | - | - | (11,102 | ) | - | |||||||||||||
| Adjusted EBITDA | $ | 65,691 | $ | 46,111 | $ | 36,129 | $ | 220,298 | $ | 163,391 | ||||||||||
| Investment in oil and natural gas properties and equipment | (16,037 | ) | (10,169 | ) | (4,678 | ) | (32,062 | ) | (17,632 | ) | ||||||||||
| Purchases of furniture, fixtures and other | - | - | (460 | ) | 2 | (530 | ) | |||||||||||||
| Asset retirement obligation settlements | (7,565 | ) | (8,531 | ) | (551 | ) | (27,309 | ) | (3,339 | ) | ||||||||||
| Interest expense, net | (19,574 | ) | (18,910 | ) | (15,402 | ) | (70,049 | ) | (61,463 | ) | ||||||||||
| Free Cash Flow | $ | 22,515 | $ | 8,501 | $ | 15,038 | $ | 90,880 | $ | 80,427 | ||||||||||
| Three Months Ended | Twelve Months Ended | ||||||||||||||||||
| December 31, | September 30, | December 31, | December 31, | December 31, | |||||||||||||||
| 2021 | 2021 | 2020 | 2021 | 2020 | |||||||||||||||
| (In thousands) | |||||||||||||||||||
| (Unaudited) | |||||||||||||||||||
| Net cash provided by operating activities | $ | 22,376 | $ | 65,097 | $ | (6,229 | ) | $ | 133,668 | $ | 108,509 | ||||||||
| Bad debt reserve | 315 | 1 | (1,063 | ) | 323 | (981 | ) | ||||||||||||
| Litigation and other contingent loss | 4,541 | - | (2,708 | ) | 4,621 | (2,708 | ) | ||||||||||||
| Release of restricted funds | (11,102 | ) | - | - | (11,102 | ) | - | ||||||||||||
| Amortization of debt items and other items | (1,471 | ) | (1,128 | ) | (1,583 | ) | (5,325 | ) | (6,390 | ) | |||||||||
| Current tax benefit (expense) (1) | 152 | (82 | ) | 22 | 132 | 134 | |||||||||||||
| Changes in derivatives receivable (payable) (1) | 14,231 | 1,571 | (1,758 | ) | 34,370 | (626 | ) | ||||||||||||
| Changes in operating assets and liabilities, excluding asset retirement obligation settlements | 9,510 | (46,789 | ) | 33,495 | (33,747 | ) | 651 | ||||||||||||
| Investment in oil and natural gas properties and equipment | (16,037 | ) | (10,169 | ) | (4,678 | ) | (32,062 | ) | (17,632 | ) | |||||||||
| Purchases of furniture, fixtures and other | - | - | (460 | ) | 2 | (530 | ) | ||||||||||||
| Free Cash Flow | $ | 22,515 | $ | 8,501 | $ | 15,038 | $ | 90,880 | $ | 80,427 | |||||||||
| (1) A reconciliation of the adjustments used to calculate Free Cash Flow to the Condensed Consolidated Financial Statements is included below: | |||||||||||||||||||
| Current tax benefit: | |||||||||||||||||||
| Income tax (benefit) expense | $ | 10,789 | $ | (5,902 | ) | $ | (6,858 | ) | $ | (8,057 | ) | $ | (30,153 | ) | |||||
| Less: Deferred income taxes | 10,637 | (5,820 | ) | (6,880 | ) | (8,189 | ) | (30,287 | ) | ||||||||||
| Current tax benefit (expense) | $ | 152 | $ | (82 | ) | $ | 22 | $ | 132 | $ | 134 | ||||||||
| Changes in derivatives receivable: | |||||||||||||||||||
| Derivatives receivable (payable), end of period | $ | (6,396 | ) | $ | (12,511 | ) | $ | (281 | ) | $ | (6,396 | ) | $ | (281 | ) | ||||
| Derivatives receivable (payable), beginning of period | 12,511 | 7,289 | (1,477 | ) | 282 | (345 | ) | ||||||||||||
| Derivative premiums paid | 8,116 | 6,793 | - | 40,484 | - | ||||||||||||||
| Change in derivatives receivable (payable) | $ | 14,231 | $ | 1,571 | $ | (1,758 | ) | $ | 34,370 | $ | (626 | ) | |||||||
| CONTACT: | Al Petrie | Brent Collins |
| Investor Relations Coordinator | Director of Investor Relations | |
| apetrie@wtoffshore.com | bcollins1@wtoffshore.com | |
| 713-297-8024 | 713-624-7364 |
FAQ
What were W&T Offshore's Q4 2021 production figures?
How much Free Cash Flow did W&T Offshore generate in Q4 2021?
What is the Net Debt figure for W&T Offshore at year-end 2021?
What acquisition did W&T Offshore complete in early 2022?
What was the net income for W&T Offshore in Q4 2021?
