SEC Filings


10-Q
W&T OFFSHORE INC filed this Form 10-Q on 05/04/2017
Entire Document
 

W&T OFFSHORE, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)

3.  Fair Value Measurements  

We measure the fair value of our open derivative financial instruments by applying the income approach, using models with inputs that are classified within Level 2 of the valuation hierarchy.  The inputs used for the fair value measurement of our derivative financial instruments are the exercise price, the expiration date, the settlement date, notional quantities, the implied volatility, the discount curve with spreads, credit risk and published commodity futures prices.  The fair value of the 1.5 Lien Term Loan was estimated using the carrying value of the principal as no market has developed and the holder of the 1.5 Lien Term Loan was the largest holder of our Unsecured Senior Notes prior to the Exchange Transaction.  The fair values of our Second Lien Term Loan, Second Lien PIK Toggle Notes, Third Lien PIK Toggle Notes and Unsecured Senior Notes were based on quoted prices, although the market is not an active market; therefore, the fair value is classified within Level 2.  

The following table presents the fair value of our open derivatives and long-term debt, all of which are classified as Level 2 within the valuation hierarchy (in thousands):

 

 

March 31, 2017

 

 

December 31, 2016

 

 

 

Assets

 

 

Liabilities

 

 

Assets

 

 

Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Derivatives - open contracts

 

$

3,242

 

 

$

 

 

$

 

 

$

 

11.00% 1.5 Term Loan, due November 2019 (1)

 

 

 

 

 

75,000

 

 

 

 

 

 

75,000

 

9.00% Second Lien Term Loan, due May 2020 (1)

 

 

 

 

 

273,000

 

 

 

 

 

 

255,000

 

9.00%/10.75% Second Lien PIK Toggle Notes, due May 2020 (1)

 

 

 

 

 

142,631

 

 

 

 

 

 

122,255

 

8.50%/10.00% Third Lien PIK Toggle Notes, due June 2021 (1)

 

 

 

 

 

106,505

 

 

 

 

 

 

80,243

 

8.50% Unsecured Senior Notes, due June 2019  (1)

 

 

 

 

 

152,812

 

 

 

 

 

 

123,389

 

 

(1)

The long-term debt items are reported on the Condensed Consolidated Balance Sheets at their carrying value as described in Note 2.  

 

4.  Asset Retirement Obligations

Our ARO primarily represents the estimated present value of the amount we will incur to plug, abandon and remediate our producing properties at the end of their productive lives.  

A summary of the changes to our ARO is as follows (in thousands):  

 

Balance, December 31, 2016

$

334,438

 

Liabilities settled

 

(14,499

)

Accretion of discount

 

4,201

 

Revisions of estimated liabilities (1)

 

2,660

 

Balance, March 31, 2017

 

326,800

 

Less current portion

 

66,150

 

Long-term

$

260,650

 

 

 

(1)

Revisions were primarily related to changes in scope of work at both our West Cameron fields and Eugene Island fields.  

 

13