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)

  Share-Based Compensation.  Share-based compensation expense is recorded in the line General and administrative expenses in the Condensed Consolidated Statements of Operations.  A summary of incentive compensation expense under share-based payment arrangements and the related tax benefit is as follows (in thousands):

 

 

Three Months Ended

 

 

March 31,

 

 

2017

 

 

2016

 

Share-based compensation expense from:

 

 

 

 

 

 

 

Restricted stock units

$

1,858

 

 

$

2,449

 

Restricted Shares

 

70

 

 

 

87

 

Total

$

1,928

 

 

$

2,536

 

Share-based compensation tax benefit:

 

 

 

 

 

 

 

Tax benefit computed at the statutory rate

$

675

 

 

$

888

 

 

Unrecognized Share-Based Compensation.  As of March 31, 2017, unrecognized share-based compensation expense related to our awards of RSUs and Restricted Shares was $12.6 million and $0.3 million, respectively.  Unrecognized share-based compensation expense will be recognized through November 2019 for RSUs and April 2019 for Restricted Shares.

Cash-Based Incentive Compensation. As defined by the Plan, annual incentive awards may be granted to eligible employees and are typically payable in cash.  These awards are performance-based awards consisting of one or more business or individual performance criteria and a targeted level or levels of performance with respect to each such criterion.  Generally, the performance period is the calendar year and determination and payment is made in cash in the first quarter of the following year.  

During 2017, 2016 and 2015, the Company issued cash-based incentive awards that, in addition to being performance-based awards related to respective 2017, 2016 and 2015 criteria, the payment of such awards is contingent on the Company achieving the following financial condition on or before December 31, 2019, December 31, 2018 and December 31, 2017, respectively:  Adjusted EBITDA less Interest Expense, as reported by the Company in its announced Earnings Release with respect to the end of any fiscal quarter plus three preceding quarters, exceeds $200.0 million for the 2017 awards and exceeds $300.0 million for the 2016 and 2015 awards.  As the Company did not achieve either financial condition up through March 31, 2017, no amounts have been recognized to date related to the 2017, 2016 and 2015 cash-based incentive awards.         

7.  Income Taxes

Our income tax benefit for the three months ended March 31, 2017 and 2016 was $7.6 million and $4.9 million, respectively.  Our annualized effective tax rate for both periods was not meaningful.  The income tax benefit for both periods relates to net operating loss (“NOL”) carryback claims made pursuant to Internal Revenue Code (“IRC”) Section 172(f) (related to rules for “specified liability losses”), which permit certain platform dismantlement, well abandonment and site clearance costs to be carried back 10 years.

During the three months ended March 31, 2017 and 2016, we did not pay any income tax or receive any income tax refunds of significance.         

 As of March 31, 2017 and December 31, 2016, our valuation allowance was $276.5 million and $290.2 million, respectively, related to Federal, Louisiana and Alabama NOL’s and other deferred taxes.  Net deferred tax assets were recorded related to NOL’s and temporary differences between the book and tax basis of assets and liabilities expected to produce tax deductions in future periods.  The realization of these assets depends on recognition of sufficient future taxable income in specific tax jurisdictions in which those temporary differences or NOL’s are deductible.  In addition, the realization depends on the ability to carryback certain items to prior years for refunds of taxes previously paid.  In assessing the need for a valuation allowance on our deferred tax assets, we consider whether it is more likely than not that some portion or all of them will not be realized.  

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