W&T Offshore Announces Second Quarter 2020 Results
W&T Offshore (NYSE: WTI) reported its Q2 2020 results with a production of 42,037 Boe/d, a 20% increase from Q2 2019. The company faced a net loss of $5.9 million, or $0.04 per share, with an Adjusted EBITDA of $42.1 million. Revenues fell 59% to $55.2 million, attributed to low commodity prices. Total proved reserves remained relatively unchanged at 157.5 MMBoe. W&T successfully reduced long-term debt by $72.5 million, saving $7.1 million in annual interest. Operationally, the company curtailed production and suspended drilling due to price declines, while maintaining cash flow and financial flexibility.
- Increased production of 42,037 Boe/d, a 20% rise from Q2 2019.
- Reduced long-term debt by $72.5 million, resulting in annualized interest savings of $7.1 million.
- Operational cost reductions led to a 42% decrease in LOE per Boe year-over-year.
- Reported a net loss of $5.9 million or $0.04 per share, compared to a net income of $36.4 million in Q2 2019.
- Adjusted EBITDA decreased by 44% from $75 million in Q2 2019 to $42.1 million in Q2 2020.
- Revenues declined 59% to $55.2 million primarily due to lower commodity prices.
HOUSTON, Aug. 05, 2020 (GLOBE NEWSWIRE) -- W&T Offshore, Inc. (NYSE: WTI) (“W&T” or the “Company”) today reported operational and financial results for the second quarter 2020.
Key highlights included:
- Produced 42,037 barrels of oil equivalent per day (“Boe/d”), or 3.8 million Boe (
48% liquids), in the second quarter of 2020, reflecting a20% increase from the second quarter of 2019; - Reported a net loss of
$5.9 million or$0.04 per share and Adjusted Net Loss of$2.2 million or$0.02 per share in the second quarter of 2020; - Generated Adjusted EBITDA of
$42.1 million for the second quarter of 2020, despite a significantly lower pricing environment, and capital expenditures were held to just$6.4 million ; Adjusted EBITDA for the first six months of 2020 totaled$104.2 million ; - Reported mid-year 2020 SEC proved reserves, based on a reserve report prepared by Netherland, Sewell and Associates, Inc. (“NSAI”), were 157.5 MMBoe, essentially unchanged from 157.4 MMBoe at year-end 2019, that included positive reserve revisions from field performance that were offset by revisions due to lower SEC base pricing and year-to-date production;
- Reduced long-term debt associated with its Senior Second Lien Notes since year-end 2019 by
$72.5 million for a total cost of$23.9 million , resulting in annualized interest savings of$7.1 million ; - Awarded two blocks on which W&T was the apparent high bidder in the recent Gulf of Mexico Lease Sale 254 held by the Bureau of Ocean Energy Management ("BOEM") on March 18, 2020, which includes Eugene Island 345 and Garden Banks 782;
- Responded to the current low oil price environment with definitive actions to maintain financial flexibility, protect cash flow and preserve future value:
- Suspended all drilling activities and significantly reduced its estimate of 2020 capital expenditures to
$15 million to$25 million ; - Proactively curtailed production at selected oil-weighted fields operated by W&T;
- Implemented reductions in lease operating expenses (“LOE”) without compromising safety or operational capabilities that resulted in LOE per Boe declining significantly from the first quarter of 2020; and
- Suspended all drilling activities and significantly reduced its estimate of 2020 capital expenditures to
- Completed the semi-annual redetermination of the borrowing base under the revolving credit facility in June 2020 which was reduced modestly from
$250 million to$215 million .
Tracy W. Krohn, W&T's Chairman and Chief Executive Officer, stated, “The continued global COVID-19 pandemic coupled with supply and demand imbalances created an environment of uncertainty across the oil sector and temporarily reduced oil prices to unprecedented low levels in the second quarter of 2020. Despite numerous downturns in the past, we have succeeded for nearly 40 years in this cyclical business by focusing on cash flow and operating efficiently. We quickly responded to the most recent commodity price decline and stopped all drilling and completion activity, shut-in oil-weighted operated properties and experienced production curtailments from non-operated oil and gas properties, and reduced LOE per Boe over
“After successfully addressing the unprecedented sharp decline in oil prices in March and April, we are encouraged by the recent stabilization in crude oil prices and the outlook for natural gas prices. We remain confident in our strong asset base and I am proud of how we continue to operate in this environment, which is a testament to our operations team. This was clearly evident in our mid-year 2020 reserve report that included 17.6 MMBoe of positive revisions due to field performance which was more than double our year-to-date production of 8.7 MMBoe.”
“We have completed accretive acquisitions over the past year and we will continue to evaluate opportunities presented by the current market backdrop that meet all the criteria we have outlined in the past which target producing properties that generate free cash flow with upside potential. We believe that we are well positioned to deliver near-term and long-term value creation at W&T,” concluded Mr. Krohn.
For the second quarter of 2020, W&T reported a net loss of
Adjusted EBITDA for the second quarter of 2020 totaled
Adjusted Net Income and Adjusted EBITDA are non-GAAP financial measures, which are described in more detail and reconciled to net income, their most comparable GAAP measure, in the attached tables below under “Non-GAAP Information.”
Production, Prices and Revenues: Production for the second quarter of 2020 was 42,037 Boe/d or 3.8 million Boe, up
For the second quarter of 2020, W&T’s average realized crude oil sales price was
Revenues for the second quarter of 2020 decreased
Lease Operating Expenses: LOE, which includes base lease operating expenses, insurance premiums, workovers and facilities maintenance was
On a unit of production basis, LOE 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 for asset retirement obligations, was
General and Administrative Expenses (“G&A”): G&A was
COVID-19 Response:
W&T is committed to the health and safety of all its employees and contractors and has taken steps to ensure their continued safety in its response to the COVID-19 pandemic. At W&T’s corporate offices, the Company has implemented actions to protect its employees working in its offices including temperature checks, social distancing and facemask requirements. The Company continues to monitor the situation and will follow the advice of government and health leaders.
For its field operations, the Company instituted screening of all personnel prior to entry to heliports and shorebases as well as its two Alabama gas plants, which includes a questionnaire and temperature check. The Company conducts daily temperature screenings at all offshore facilities and implemented procedures for distancing and hygiene at its field locations, as well as facemask requirements, where practicable.
Derivative (Gain) Loss: In the second quarter of 2020, W&T recorded a net loss of
In the second quarter of 2020, W&T added the following derivative positions:
| Production Period | Instrument | Avg. Daily Volumes | Weighted Avg Swap Price | Weighted Avg Put Price | Weighted Avg Call Price | ||||||||
| Crude Oil - WTI NYMEX: | (bbls) | (per Bbl) | (per Bbl) | (per Bbl) | |||||||||
| Jan 2021 - Dec 2021 | Swaps | 1,000 | |||||||||||
| Natural Gas - Henry Hub NYMEX: | (MMBTU) | (per MMBTU) | (per MMBTU) | (per MMBTU) | |||||||||
| Aug 2020 - Dec 2020 | Costless Collars | 10,000 | |||||||||||
| Sep 2020 - Dec 2020 | Swaps | 10,000 | |||||||||||
| Jan 2021 - Dec 2021 | Costless Collars | 20,000 | |||||||||||
| Jan 2021 - Dec 2021 | Costless Collars | 10,000 | |||||||||||
| Jan 2022 - Feb 2022 | Costless Collars | 30,000 | |||||||||||
| Since the end of the second quarter 2020, W&T added the following derivative positions: | |||||||||||||
| Production Period | Instrument | Avg. Daily Volumes | Weighted Avg Swap Price | Weighted Avg Put Price | Weighted Avg Call Price | ||||||||
| Crude Oil - WTI NYMEX: | (bbls) | (per Bbl) | (per Bbl) | (per Bbl) | |||||||||
| Jan 2021 - Dec 2021 | Swaps | 1,000 | |||||||||||
| Jan 2021 - Dec 2021 | Swaps | 1,000 | |||||||||||
| Jan 2021 - Dec 2021 | Swaps | 1,000 | |||||||||||
| Jan 2022 - Feb 2022 | Swaps | 1,000 | |||||||||||
| Jan 2022 - Feb 2022 | Swaps | 1,000 | |||||||||||
| Jan 2022 - Feb 2022 | Swaps | 1,000 | |||||||||||
| Natural Gas - Henry Hub NYMEX: | (MMBTU) | (per MMBTU) | (per MMBTU) | (per MMBTU) | |||||||||
| Sep 2020 - Dec 2020 | Swaps | 15,000 | |||||||||||
| Jan 2021 - Dec 2021 | Swaps | 10,000 | |||||||||||
| Jan 2022 - Jan 2022 | Swaps | 20,000 | |||||||||||
| Feb 2022 - Feb 2022 | Swaps | 30,000 | |||||||||||
A listing of the Company’s current outstanding derivative positions is included in the tables below as well as in the Investor Relations section of W&T’s web site under the “Financial Info” tab.
Interest Expense: Interest expense, net of interest income, as reported in the income statement, in the second quarter of 2020 was
Income Tax: W&T recorded an income tax benefit of
As of June 30, 2020, W&T’s deferred tax asset valuation allowance was
During the second quarter of 2020, W&T received a refund of income taxes of
Balance Sheet, Cash Flow and Liquidity: Net cash provided by operating activities for the second quarter of 2020 was
During the three months ended June, 2020, W&T repurchased
In the second quarter of 2020, W&T’s bank group completed its regularly scheduled spring borrowing base redetermination. The borrowing base was set by the bank group at
Capital Expenditures: Due to the uncertain commodity outlook in the light of the COVID-19 pandemic, W&T suspended drilling and completion activities in March and significantly reduced its estimate of 2020 capital expenditures to
Mid-Year 2020 Proved Reserves: As calculated by NSAI, W&T’s independent reserve engineering consultants, SEC proved reserves as of June 30, 2020 totaled 157.5 MMBoe compared with 157.4 MMBoe at year-end 2019. Strong positive revisions of previous estimates from field performance of 17.6 MMBoe in the first six months of 2020 was offset by a combination of negative revisions due to SEC price changes of 9.9 MMBoe and year-to-date 2020 production of 8.7 MMBoe. The mid-year 2020 reserves, which were
OPERATIONS UPDATE
W&T successfully drilled one well in the first quarter of 2020 at East Cameron 338/349 but has since suspended all other drilling activity in the current uncertain pricing environment.
Well Recompletions and Workovers: During the second quarter of 2020, the Company performed three recompletions and two workovers that in total added approximately 600 net Boe/d to production. W&T currently plans to continue to perform recompletions and workovers that meet economic thresholds.
Gulf of Mexico Lease Sale 254:
W&T was awarded two blocks on which it was the apparent high bidder in the Gulf of Mexico Lease Sale 254 held by the BOEM on March 18, 2020, which included one deepwater block, Garden Banks block 782, and one shallow water block, Eugene Island Area South Addition block 345.
Guidance
Due to the recent sharp decline in oil prices, W&T significantly reduced its 2020 capital spending expectations to
| Third Quarter | Full Year | ||||||
| Production | 2020 | 2020 | |||||
| Oil (MMBbls) | 1.3 - 1.4 | 5.5 - 6.5 | |||||
| NGL's (MMBbls) | 0.49 - 0.55 | 1.85 - 1.95 | |||||
| Natural Gas (Bcf) | 11.8 - 13.1 | 51.5 - 52.5 | |||||
| Total (MMBoe) | 3.8 - 4.1 | 16.0 - 17.0 | |||||
| Total (Boe/d) | 40,900 - 45,100 | 43,750 - 46,500 | |||||
| Operating Expenses | Third Quarter | Full Year | |||||
| ($ in millions) | 2020 | 2020 | |||||
| Lease operating expenses | |||||||
| Gathering, transportation & | |||||||
| production taxes | |||||||
| General and administrative | |||||||
| Cash income tax rate | |||||||
Conference Call Information: W&T will hold a conference call to discuss its financial and operational results on August 6, 2020, at 11:00 a.m. Central Time (12:00 p.m. Eastern Time). Interested parties may participate by dialing (844) 739-3797. International parties may dial (412) 317-5713. Participants should request to connect to the “W&T Offshore Call.” This call will also be webcast and available on W&T’s website at www.wtoffshore.com on the “Overview” page under the “Investor Relations” section. An audio replay will be available on the Company’s website following the call.
About W&T Offshore
W&T Offshore, Inc. is an independent oil and natural gas producer with operations offshore in the Gulf of Mexico and has grown through acquisitions, exploration and development. The Company currently has working interests in 51 producing fields in federal and state waters and has under lease approximately 772,000 gross acres, including approximately 557,000 gross acres on the Gulf of Mexico Shelf and approximately 215,000 gross acres in the Gulf of Mexico deepwater. A majority of the Company’s daily production is derived from wells it operates. For more information on W&T, please visit the Company’s website at www.wtoffshore.com.
Forward-Looking and Cautionary Statements
This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements reflect our current views with respect to future events, based on what we believe are reasonable assumptions. No assurance can be given, however, that these events will occur. These statements are subject to risks and uncertainties that could cause actual results to differ materially including, among other things, market conditions, oil and gas price volatility, uncertainties inherent in oil and gas production operations and estimating reserves, unexpected future capital expenditures, competition, the success of our risk management activities, governmental regulations, uncertainties and other factors discussed in W&T Offshore’s Annual Report on Form 10-K for the year ended December 31, 2019 and subsequent Form 10-Q reports found at www.sec.gov or at our website at www.wtoffshore.com under the Investor Relations section. Investors are urged to consider closely the disclosures and risk factors in these reports. We refer to feet of “pay” in our discussions concerning the evaluation of our recently drilled wells. This refers to geological indications, typically obtained from well logging, of the estimated thickness of sands which we believe are capable of producing hydrocarbons in commercial quantities. These indications of “pay” may not necessarily forecast the amount of future production or reserve quantities from the well, which can be dependent upon numerous other factors.
| W&T OFFSHORE, INC. AND SUBSIDIARIES | ||||||||||||||||||||
| Condensed Consolidated Statements of Operations | ||||||||||||||||||||
| (In thousands, except per share data) | ||||||||||||||||||||
| (Unaudited) | ||||||||||||||||||||
| Three Months Ended | Six Months Ended | |||||||||||||||||||
| June 30, | March 31, | June 30, | June 30, | |||||||||||||||||
| 2020 | 2020 | 2019 | 2020 | 2019 | ||||||||||||||||
| Revenues: | ||||||||||||||||||||
| Oil | $ | 30,645 | $ | 84,650 | $ | 109,195 | $ | 115,295 | $ | 195,898 | ||||||||||
| NGLs | 1,917 | 6,452 | 4,640 | 8,369 | 11,088 | |||||||||||||||
| Natural gas | 21,364 | 29,300 | 19,567 | 50,664 | 41,405 | |||||||||||||||
| Other | 1,315 | 3,726 | 1,299 | 5,041 | 2,390 | |||||||||||||||
| Total revenues | 55,241 | 124,128 | 134,701 | 179,369 | 250,781 | |||||||||||||||
| Operating costs and expenses: | ||||||||||||||||||||
| Lease operating expenses | 28,313 | 54,775 | 40,341 | 83,088 | 83,797 | |||||||||||||||
| Gathering, transportation costs and production taxes | 4,444 | 6,365 | 7,385 | 10,809 | 14,224 | |||||||||||||||
| Depreciation, depletion, amortization and accretion | 29,483 | 39,126 | 38,073 | 68,609 | 71,839 | |||||||||||||||
| General and administrative expenses | 5,628 | 13,963 | 13,328 | 19,591 | 27,437 | |||||||||||||||
| Derivative loss (gain) | 15,414 | (61,912 | ) | (1,805 | ) | (46,498 | ) | 47,081 | ||||||||||||
| Total costs and expenses | 83,282 | 52,317 | 97,322 | 135,599 | 244,378 | |||||||||||||||
| Operating (loss) income | (28,041 | ) | 71,811 | 37,379 | 43,770 | 6,403 | ||||||||||||||
| Interest expense, net | 14,816 | 17,110 | 12,207 | 31,926 | 28,489 | |||||||||||||||
| Gain on purchase of debt | (28,968 | ) | (18,501 | ) | - | (47,469 | ) | - | ||||||||||||
| Other expense | 751 | 723 | 478 | 1,474 | 809 | |||||||||||||||
| (Loss) income before income tax (benefit) expense | (14,640 | ) | 72,479 | 24,694 | 57,839 | (22,895 | ) | |||||||||||||
| Income tax (benefit) expense | (8,736 | ) | 6,499 | (11,695 | ) | (2,237 | ) | (11,523 | ) | |||||||||||
| Net (loss) income | $ | (5,904 | ) | $ | 65,980 | $ | 36,389 | $ | 60,076 | $ | (11,372 | ) | ||||||||
| Basic and diluted earnings (loss) per common share | $ | (0.04 | ) | $ | 0.46 | $ | 0.25 | $ | 0.42 | $ | (0.08 | ) | ||||||||
| Weighted average common shares outstanding | 141,597 | 141,546 | 140,567 | 141,571 | 140,507 | |||||||||||||||
| W&T OFFSHORE, INC. AND SUBSIDIARIES | ||||||||||||||||||
| Condensed Operating Data | ||||||||||||||||||
| (Unaudited) | ||||||||||||||||||
| Three Months Ended | Six Months Ended | |||||||||||||||||
| June 30, | March 31, | June 30, | June 30, | |||||||||||||||
| 2020 | 2020 | 2019 | 2020 | 2019 | ||||||||||||||
| Net sales volumes: | ||||||||||||||||||
| Oil (MBbls) | 1,414 | 1,827 | 1,683 | 3,241 | 3,161 | |||||||||||||
| NGL (MBbls) | 410 | 495 | 264 | 905 | 573 | |||||||||||||
| Oil and NGLs (MBbls) | 1,824 | 2,322 | 1,947 | 4,146 | 3,734 | |||||||||||||
| Natural gas (MMcf) | 12,006 | 15,307 | 7,450 | 27,313 | 14,738 | |||||||||||||
| Total oil and natural gas (MBoe) (1) | 3,826 | 4,873 | 3,189 | 8,699 | 6,190 | |||||||||||||
| Average daily equivalent sales (MBoe/d) | 42.0 | 53.6 | 35.0 | 47.8 | 34.2 | |||||||||||||
| Average realized sales prices: | ||||||||||||||||||
| Oil ($/Bbl) | $ | 21.67 | $ | 46.33 | $ | 64.86 | $ | 35.57 | $ | 61.96 | ||||||||
| NGLs ($/Bbl) | 4.67 | 13.03 | 17.59 | 9.25 | 19.36 | |||||||||||||
| Oil and NGLs ($/Bbl) | 17.85 | 39.23 | 58.46 | 29.82 | 55.43 | |||||||||||||
| Natural gas ($/Mcf) | 1.78 | 1.91 | 2.63 | 1.85 | 2.81 | |||||||||||||
| Barrel of oil equivalent ($/Boe) | 14.10 | 24.71 | 41.83 | 20.04 | 40.13 | |||||||||||||
| Average costs and expenses per Boe ($/Boe): | ||||||||||||||||||
| Lease operating expenses | $ | 7.40 | $ | 11.24 | $ | 12.65 | $ | 9.55 | $ | 13.54 | ||||||||
| Gathering, transportation costs and production taxes | 1.16 | 1.31 | 2.32 | 1.25 | 2.30 | |||||||||||||
| Depreciation, depletion, amortization and accretion | 7.71 | 8.03 | 11.94 | 7.89 | 11.61 | |||||||||||||
| General and administrative expenses | 1.47 | 2.87 | 4.18 | 2.25 | 4.43 | |||||||||||||
(1) MBoe is determined using the ratio of six Mcf of natural gas to one Bbl of crude oil, condensate or NGLs (totals may not compute due to rounding). The conversion ratio does not assume price equivalency and the price on an equivalent basis for oil, NGLs and natural gas may differ significantly.
| W&T OFFSHORE, INC. AND SUBSIDIARIES | ||||||||||
| Condensed Consolidated Balance Sheets | ||||||||||
| (In thousands) | ||||||||||
| June 30, | December 31, | |||||||||
| 2020 | 2019 | |||||||||
| (Unaudited) | ||||||||||
| Assets | ||||||||||
| Current assets: | ||||||||||
| Cash and cash equivalents | $ | 36,506 | $ | 32,433 | ||||||
| Receivables: | ||||||||||
| Oil and natural gas sales | 22,383 | 57,367 | ||||||||
| Joint interest and other, net | 14,657 | 19,400 | ||||||||
| Income taxes | - | 1,861 | ||||||||
| Total receivables | 37,040 | 78,628 | ||||||||
| Prepaid expenses and other assets | 32,566 | 30,691 | ||||||||
| Total current assets | 106,112 | 141,752 | ||||||||
| Oil and natural gas properties and other | 8,573,693 | 8,552,513 | ||||||||
| Less accumulated depreciation, depletion and amortization | 7,860,630 | 7,803,715 | ||||||||
| Oil and natural gas properties and other, net | 713,063 | 748,798 | ||||||||
| Restricted deposits for asset retirement obligations | 29,912 | 15,806 | ||||||||
| Deferred income taxes | 66,124 | 63,916 | ||||||||
| Other assets | 27,535 | 33,447 | ||||||||
| Total assets | $ | 942,746 | $ | 1,003,719 | ||||||
| Liabilities and Shareholders’ Deficit | ||||||||||
| Current liabilities: | ||||||||||
| Accounts payable | $ | 52,368 | $ | 102,344 | ||||||
| Undistributed oil and natural gas proceeds | 15,776 | 29,450 | ||||||||
| Advance from joint interest partner | 11,129 | 5,279 | ||||||||
| Asset retirement obligations | 12,506 | 21,991 | ||||||||
| Accrued liabilities | 22,668 | 30,896 | ||||||||
| Total current liabilities | 114,447 | 189,960 | ||||||||
| Long-term debt | 624,222 | 719,533 | ||||||||
| Asset retirement obligations | 362,301 | 333,603 | ||||||||
| Other liabilities | 28,998 | 9,988 | ||||||||
| Commitments and contingencies | - | - | ||||||||
| Shareholders’ deficit: | ||||||||||
| Common stock, | ||||||||||
| 141,669 outstanding for both dates presented | 1 | 1 | ||||||||
| Additional paid-in capital | 549,117 | 547,050 | ||||||||
| Retained deficit | (712,173 | ) | (772,249 | ) | ||||||
| Treasury stock, at cost; 2,869 shares for both dates presented | (24,167 | ) | (24,167 | ) | ||||||
| Total shareholders’ deficit | (187,222 | ) | (249,365 | ) | ||||||
| Total liabilities and shareholders’ deficit | $ | 942,746 | $ | 1,003,719 | ||||||
| W&T OFFSHORE, INC. AND SUBSIDIARIES | ||||||||||||||||||||||||
| Condensed Consolidated Statements of Cash Flows | ||||||||||||||||||||||||
| (In thousands) | ||||||||||||||||||||||||
| (Unaudited) | ||||||||||||||||||||||||
| Three Months Ended | Six Months Ended | |||||||||||||||||||||||
| June 30, | March 31, | June 30, | June 30, | |||||||||||||||||||||
| 2020 | 2020 | 2019 | 2020 | 2019 | ||||||||||||||||||||
| Operating activities: | ||||||||||||||||||||||||
| Net (loss) income | $ | (5,904 | ) | $ | 65,980 | $ | 36,389 | $ | 60,076 | $ | (11,372 | ) | ||||||||||||
| Adjustments to reconcile net (loss) income to net cash provided by operating activities: | ||||||||||||||||||||||||
| Depreciation, depletion, amortization and accretion | 29,483 | 39,126 | 38,073 | 68,609 | 71,839 | |||||||||||||||||||
| Amortization of debt items and other items | 2,057 | 1,625 | 1,333 | 3,682 | 2,485 | |||||||||||||||||||
| Share-based compensation | 1,019 | 1,048 | 1,259 | 2,067 | 1,181 | |||||||||||||||||||
| Derivative loss (gain) | 15,414 | (61,912 | ) | (1,805 | ) | (46,498 | ) | 47,081 | ||||||||||||||||
| Cash receipts on derivative settlements, net | 33,162 | 4,404 | 844 | 37,566 | 12,792 | |||||||||||||||||||
| Gain on purchase of debt | (28,968 | ) | (18,501 | ) | - | (47,469 | ) | - | ||||||||||||||||
| Deferred income taxes | (8,706 | ) | 6,499 | (11,695 | ) | (2,207 | ) | (11,523 | ) | |||||||||||||||
| Changes in operating assets and liabilities: | - | |||||||||||||||||||||||
| Oil and natural gas receivables | 13,030 | 21,954 | (504 | ) | 34,984 | 5,992 | ||||||||||||||||||
| Joint interest receivables | (2,380 | ) | 7,123 | (21,176 | ) | 4,743 | (24,162 | ) | ||||||||||||||||
| Prepaid expenses and other assets | (7,506 | ) | 11,011 | (3,865 | ) | 3,505 | (8,134 | ) | ||||||||||||||||
| Income tax | 2,008 | - | - | 2,008 | - | |||||||||||||||||||
| Asset retirement obligation settlements | (1,915 | ) | (249 | ) | (2,387 | ) | (2,164 | ) | (2,641 | ) | ||||||||||||||
| Cash advance from JV partner | (7,156 | ) | 13,006 | (26,117 | ) | 5,850 | 18,527 | |||||||||||||||||
| Accounts payable, accrued liabilities and other | (24,484 | ) | (6,790 | ) | 11,122 | (31,274 | ) | 4,251 | ||||||||||||||||
| Net cash provided by operating activities | 9,154 | 84,324 | 21,471 | 93,478 | 106,316 | |||||||||||||||||||
| Investing activities: | ||||||||||||||||||||||||
| Investment in oil and natural gas properties and equipment | (6,374 | ) | (33,575 | ) | (31,568 | ) | (39,949 | ) | (63,149 | ) | ||||||||||||||
| Acquisition of property interest in oil and natural gas properties | 1,546 | (2,002 | ) | (10,000 | ) | (456 | ) | (10,000 | ) | |||||||||||||||
| Purchases of furniture, fixtures and other | - | (70 | ) | - | (70 | ) | - | |||||||||||||||||
| Net cash used in investing activities | (4,828 | ) | (35,647 | ) | (41,568 | ) | (40,475 | ) | (73,149 | ) | ||||||||||||||
| Financing activities: | ||||||||||||||||||||||||
| Borrowings on credit facility | 25,000 | - | - | 25,000 | - | |||||||||||||||||||
| Repayments on credit facility | (25,000 | ) | (25,000 | ) | - | (50,000 | ) | - | ||||||||||||||||
| Purchase of Senior Second Lien Notes | (15,394 | ) | (8,536 | ) | - | (23,930 | ) | - | ||||||||||||||||
| Debt issuance costs and other | - | - | (310 | ) | - | (751 | ) | |||||||||||||||||
| Net cash used in financing activities | (15,394 | ) | (33,536 | ) | (310 | ) | (48,930 | ) | (751 | ) | ||||||||||||||
| Increase (decrease) in cash and cash equivalents | (11,068 | ) | 15,141 | (20,407 | ) | 4,073 | 32,416 | |||||||||||||||||
| Cash and cash equivalents, beginning of period | 47,574 | 32,433 | 86,116 | 32,433 | 33,293 | |||||||||||||||||||
| Cash and cash equivalents, end of period | $ | 36,506 | $ | 47,574 | $ | 65,709 | $ | 36,506 | $ | 65,709 | ||||||||||||||
| W&T OFFSHORE, INC. AND SUBSIDIARIES | ||||||||||||||
| Financial Commodity Derivative Positions | ||||||||||||||
| As of August 5, 2020 | ||||||||||||||
| Production Period | Instrument | Avg. Daily Volumes | Weighted Avg Swap Price | Weighted Avg Put Price | Weighted Avg Call Price | |||||||||
| Crude Oil - WTI NYMEX: | (bbls) | (per Bbl) | (per Bbl) | (per Bbl) | ||||||||||
| Aug 2020 - Dec 2020 | Costless Collars | 1,000 | ||||||||||||
| Aug 2020 - Dec 2020 | Costless Collars | 9,000 | ||||||||||||
| Aug 2020 - Dec 2020 | Calls (long) | 10,000 | ||||||||||||
| Jan 2021 - Dec 2021 | Swaps | 1,000 | ||||||||||||
| Jan 2021 - Dec 2021 | Swaps | 1,000 | ||||||||||||
| Jan 2021 - Dec 2021 | Swaps | 1,000 | ||||||||||||
| Jan 2021 - Dec 2021 | Swaps | 1,000 | ||||||||||||
| Jan 2022 - Feb 2022 | Swaps | 1,000 | ||||||||||||
| Jan 2022 - Feb 2022 | Swaps | 1,000 | ||||||||||||
| Jan 2022 - Feb 2022 | Swaps | 1,000 | ||||||||||||
| Natural Gas - Henry Hub NYMEX: | (MMBTU) | (per MMBTU) | (per MMBTU) | (per MMBTU) | ||||||||||
| Aug 2020 - Dec 2022 | Calls (long) | 40,000 | ||||||||||||
| Aug 2020 - Dec 2022 | Costless Collars | 40,000 | ||||||||||||
| Aug 2020 - Dec 2020 | Costless Collars | 10,000 | ||||||||||||
| Sep 2020 - Dec 2020 | Swaps | 10,000 | ||||||||||||
| Sep 2020 - Dec 2020 | Swaps | 15,000 | ||||||||||||
| Jan 2021 - Dec 2021 | Costless Collars | 20,000 | ||||||||||||
| Jan 2021 - Dec 2021 | Swaps | 10,000 | ||||||||||||
| Jan 2021 - Dec 2021 | Costless Collars | 10,000 | ||||||||||||
| Jan 2022 - Feb 2022 | Costless Collars | 30,000 | ||||||||||||
| Jan 2022 - Jan 2022 | Swaps | 20,000 | ||||||||||||
| Feb 2022 - Feb 2022 | Swaps | 30,000 | ||||||||||||
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 “Adjusted Net Income” and “Adjusted EBITDA.” Management uses these non-GAAP financial measures in its analysis of performance. In addition, Adjusted EBITDA is a key metric used to determine the Company’s incentive compensation awards. These disclosures may not be viewed as a substitute for results determined in accordance with GAAP and are not necessarily comparable to non-GAAP performance measures which may be reported by other companies.
Reconciliation of Net Income to Adjusted Net Income
Adjusted Net Income does not include the unrealized commodity derivative loss (gain), amortization of derivative premium, bad debt reserve, deferred tax benefit, gain on debt transactions, write-off contingent liability, litigation and other. Adjusted Net Income is presented because the timing and amount of these items cannot be reasonably estimated and affect the comparability of operating results from period to period, and current periods to prior periods.
| Three Months Ended | Six Months Ended | ||||||||||||||||||||||||
| June 30, | March 31, | June 30, | June 30, | ||||||||||||||||||||||
| 2020 | 2020 | 2019 | 2020 | 2019 | |||||||||||||||||||||
| (In thousands, except per share amounts) | |||||||||||||||||||||||||
| (Unaudited) | |||||||||||||||||||||||||
| Net (loss) income | $ | (5,904 | ) | $ | 65,980 | $ | 36,389 | $ | 60,076 | $ | (11,372 | ) | |||||||||||||
| Unrealized commodity derivative loss (gain) | 37,992 | (52,520 | ) | (3,839 | ) | (14,528 | ) | 46,621 | |||||||||||||||||
| Amortization of derivative premium | 3,407 | 4,349 | 3,888 | 7,756 | 7,733 | ||||||||||||||||||||
| Bad debt reserve | 47 | 36 | 18 | 83 | 138 | ||||||||||||||||||||
| Income tax (benefit) expense | (8,736 | ) | 6,499 | - | (2,237 | ) | - | ||||||||||||||||||
| Gain on debt transactions | (28,968 | ) | (18,501 | ) | - | (47,469 | ) | - | |||||||||||||||||
| Adjusted Net (Loss) Income | $ | (2,162 | ) | $ | 5,843 | $ | 36,456 | $ | 3,681 | $ | 43,120 | ||||||||||||||
| Basic and diluted adjusted (loss) earnings per common share | $ | (0.02 | ) | $ | 0.04 | $ | 0.25 | $ | 0.03 | $ | 0.30 | ||||||||||||||
W&T OFFSHORE, INC. AND SUBSIDIARIES
Non-GAAP Information
Reconciliation of Net Income to Adjusted EBITDA
The Company defines Adjusted EBITDA as net 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, litigation and other. W&T believes the presentation of Adjusted EBITDA provides useful information regarding its ability to service debt and to fund capital expenditures. The Company 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 following table presents a reconciliation of W&T’s net income to Adjusted EBITDA.
| Three Months Ended | Six Months Ended | |||||||||||||||||||||||
| June 30, | March 31, | June 30, | June 30, | |||||||||||||||||||||
| 2020 | 2020 | 2019 | 2020 | 2019 | ||||||||||||||||||||
| (In thousands) | ||||||||||||||||||||||||
| (Unaudited) | ||||||||||||||||||||||||
| Net (loss) income | $ | (5,904 | ) | $ | 65,980 | $ | 36,389 | $ | 60,076 | $ | (11,372 | ) | ||||||||||||
| Interest expense, net | 14,816 | 17,110 | 12,207 | 31,926 | 28,489 | |||||||||||||||||||
| Income tax (benefit) expense | (8,736 | ) | 6,499 | (11,695 | ) | (2,237 | ) | (11,523 | ) | |||||||||||||||
| Depreciation, depletion, amortization and accretion | 29,483 | 39,126 | 38,073 | 68,609 | 71,839 | |||||||||||||||||||
| Unrealized commodity derivative loss (gain) | 37,992 | (52,520 | ) | (3,839 | ) | (14,528 | ) | 46,621 | ||||||||||||||||
| Amortization of derivative premium | 3,407 | 4,349 | 3,888 | 7,756 | 7,733 | |||||||||||||||||||
| Bad debt reserve | 47 | 36 | 18 | 83 | 138 | |||||||||||||||||||
| Gain on debt transactions | (28,968 | ) | (18,501 | ) | - | (47,469 | ) | - | ||||||||||||||||
| Adjusted EBITDA | $ | 42,137 | $ | 62,079 | $ | 75,041 | $ | 104,216 | $ | 131,925 | ||||||||||||||
CONTACT:
Al Petrie
Investor Relations Coordinator
apetrie@wtoffshore.com
713-297-8024
Janet Yang
EVP & CFO
investorrelations@wtoffshore.com
713-624-7326
FAQ
What were W&T Offshore's Q2 2020 production figures?
What was W&T Offshore's net loss in Q2 2020?
How did W&T Offshore's revenues change in Q2 2020?
What was the Adjusted EBITDA for W&T Offshore in Q2 2020?
What actions did W&T Offshore take in response to low oil prices?
