W&T Offshore draws $340 million of loans, hires advisers; supplemental bonding needed

By Susanna Moon

Chicago, Feb. 26 – W&T Offshore, Inc. said it drew about $340 million under its bank credit facility to add to its cash coffers and hired advisers.

Kirkland & Ellis LLP will be the legal adviser and Evercore its financial adviser, according to a company press release.

In addition, the company was ordered to provide $159.8 million of additional supplemental bonding by March 29 to cover its obligations under federal offshore oil and gas leases operated by the company in a letter from the U.S. Department of the Interior’s Bureau of Ocean Energy Management, according to an 8-K filing with the Securities and Exchange Commission.

The issue of any more surety bonds to satisfy this order could require the posting of cash collateral, which could be substantial, the company said.

Failure to comply with the order may result in the agency taking enforcement actions, which include assessing civil penalties, ordering suspension of operations or production or beginning procedures to cancel leases, the company said.

The company said it will continue talks with the agency to resolve its issues concerning supplemental financial assurances and, after reviewing the order, may appeal the order.

The company said it has been in talks with the bureau about “providing supplemental financial assurances with respect to its federal offshore lease obligations, including the cost of plugging and abandoning wells and decommissioning and removal of platforms.”

Proceeds of the drawdown will be used for general corporate purposes.

The funds boost the company’s cash position to about $447 million, the release noted.

After the draw, the aggregate utilization under the facility was about $341 million.

Interest on the loans ranges from Libor plus 225 basis points to 325 bps, based on total borrowings.

“We continue to reduce costs and note that our exploration success for nearly three years has been 100%,” Tracy W. Krohn, the company’s chairman and chief executive officer, said in the press release.

“We expect to place our recent discovery, the Ewing Bank 954 A-8, on line in March.”

W&T Offshore is a Houston-based oil and natural gas producer.

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