SEC Filings


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

 

Credit Agreement.  Availability on our revolving bank credit facility as of March 31, 2017 was $149.5 million.  At March 31, 2017 and December 31, 2016, no amounts were outstanding and letters of credit were $0.5 million.  During the three months ended March 31, 2017, no borrowings were made on the revolving bank credit facility.

Availability under our revolving bank credit facility is subject to a semi-annual redetermination of our borrowing base that occurs in the spring and fall of each year and is calculated by our lenders based on their evaluation of our proved reserves and their own internal criteria.  The 2017 spring redetermination reaffirmed the borrowing base amount at $150.0 million.  Any redetermination by our lenders to change our borrowing base will result in a similar change in the availability under our revolving bank credit facility.    The revolving bank credit facility is secured and is collateralized by substantially all of our oil and natural gas properties.  

The Credit Agreement contains financial covenants calculated as of the last day of each fiscal quarter, which include thresholds on financial ratios, as defined in the Credit Agreement.  We were in compliance with all applicable covenants of the Credit Agreement and the other debt instruments as of March 31, 2017.

Long-Term Debt.  The recorded amounts of our long-term debt and the primary terms are disclosed in Financial Statements - Note 2 – Long-Term Debt under Part I, Item 1 of this Form 10-Q.  

BOEM Matters.  During the first quarter of 2017, the BOEM extended the implementation timeline by an additional six months for NTL #2016-N01 as to OCS leases, ROWs or RUEs for which there are co-lessees and/or predecessors in interest (non-sole liability properties), with certain exceptions.  Also, in the first quarter of 2017, the BOEM withdrew the sole liability orders it had issued in December 2016 to allow time for the new President’s administration to review the complex financial assurance program.  We are in final stages of resolving a matter with the BOEM that began over a year ago with its demand that we secure financial assurances (such as supplemental bonding) in the aggregate of $260.8 million.  We recently received a letter from the BOEM that indicated that in order for the BOEM to rescind the orders, we must first satisfy our financial assurance requirement related to sole liability properties.  We believe that we can satisfy our obligation under the most recent BOEM request for financial assurance of sole liability properties and we will request that the previous orders pertaining to the $260.8 million of financial assurances be rescinded.

Surety Bond Collateral.  Some of the sureties under our existing supplemental surety bonds have requested and received collateral from us, and may request additional collateral from us in the future, which could be significant and could 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.

The issuance of any additional surety bonds or other security to satisfy the BOEM orders, any 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 the creation of escrow accounts.  

Cash Flow and Working Capital.  Net cash provided by operating activities for the three months ended March 31, 2017 and 2016 was $81.2 million and $29.7 million, respectively.  Cash flows from operating activities, before changes in working capital, insurance reimbursements and ARO, were $63.4 million for the three months ended March 31, 2017, compared to a negative $9.6 million in the comparable period.  The increase in cash flows was primarily due to higher realized prices for all our commodities - oil, NGLs and natural gas, lower operating costs and lower interest payments, partially offset by lower production volumes.  Our combined average realized sales price per Boe increased 66.2%, which increased revenues $49.9 million.  Lease operating expenses decreased $4.3 million and G&A expenses decreased $3.2 million.  Partially offsetting were volume decreases of 2.5% on a per Boe basis, which lowered revenues by $2.6 million.  

Other items affecting operating cash flows for the three months ended March 31, 2017 were insurance reimbursements of $30.1 million and changes in receivables, accounts payable and accrued liabilities of $2.2 million, partially offset by ARO settlements of $14.5 million.  

39