W&T Offshore Announces Liquidity-Enhancing Modifications to the Non-Recourse Term Loan with Munich Re
March 18 2024 - 6:45AM
W&T Offshore, Inc. (NYSE: WTI) (“W&T” or the “Company”)
today announced modifications to the first-lien non-recourse term
loan (the “Term Loan”) between its wholly-owned special purpose
vehicles (the “SPVs”) and Munich Re Reserve Risk Financing, Inc.
("MRRF"), which is expected to provide additional liquidity to the
Company over 2024 without increasing the Company’s net leverage.
The Term Loan was initially arranged on May 19, 2021 (“Closing
Date”) and had a principal balance of $215 million which has been
amortized down to around $114 million as of December 31, 2023.
There have been a few alterations to the Credit Agreement signed by
the SPVs and MRRF on May 19, 2021 (the “Original Credit
Agreement”).
Key highlights of the transaction are as
follows:
- Effective extension
of weighted average maturity by deferring principal payments of
around $30 million that would have been due over the four quarters
of 2024 – no change in the final maturity date of May 19, 2028
(“Maturity Date”); Mandatory principal repayments to restart in
first quarter of 2025 with the option, but not obligation, to catch
up on deferred amortization through excess cash flow sweep;
- No change in coupon
(will stay at 7.00% fixed rate) and cash interest will be due each
quarter of 2024 on the remaining principal balance (around $114
million as of December 31, 2023);
- The revised
optional prepayment premium schedule will be as follows:
-
Through and including the third anniversary of the Closing Date, a
cash amount equal to the present value at 7.00% discount rate of
the aggregate dollar amount of scheduled interest payments on the
Term Loan that would have become due and payable from the
applicable prepayment date through and including the Maturity Date
(similar to the Original Credit Agreement),
-
If such prepayment or repayment is made on any date from the third
anniversary of the Closing Date through and including the fourth
anniversary of the Closing Date, a cash amount equal to 3.0% (3.0%
in the Original Credit Agreement as well) of the prepaid or repaid
principal amount of the Term Loan,
-
If such prepayment or repayment is made on any date from the fourth
anniversary of the Closing Date through and including the fifth
anniversary of the Closing Date, a cash amount equal to 3.0% (2.0%
in the Original Credit Agreement) of the prepaid or repaid
principal amount of the Term Loan,
-
If such prepayment or repayment is made on any date from the fifth
anniversary of the Closing Date through and including the sixth
anniversary of the Closing Date, a cash amount equal to 2.0% (1.0%
in the Original Credit Agreement) of the prepaid or repaid
principal amount of the Loan, and
- From the sixth
anniversary of the Closing Date through and including the Maturity
Date, a cash amount equal to 1.0% (no premium in the Original
Credit Agreement) of the prepaid or repaid principal amount of the
Loan.
- Amendment fee of
$200,000 to be paid in four quarterly installments of $50,000 each
starting in first quarter of 2024 (no other fees); and
In the original transaction, the Company
transferred 100% of its Mobile Bay Area producing assets and
related gas treatment facilities to the SPVs in return for the net
cash proceeds from a $215 million Term Loan amortized over seven
years. Through its 100% ownership in the SPVs, W&T retains the
upside value in the Mobile Bay Assets.
Tracy W. Krohn, W&T’s Board Chair and Chief
Executive Officer, commented, “We are pleased to have enhanced our
already-strong liquidity with a modification to our term loan with
Munich Re that defers principal payments of around $30 million that
would otherwise have been due in 2024. The collateral value of our
Mobile Bay asset remains strong which helped facilitate this change
in terms and demonstrates W&T’s track record as a prudent
custodian of MRRF’s capital. Our strong liquidity position and
ability to generate meaningful free cash flow continues to position
W&T to pursue additional accretive acquisitions which has been
the foundation of our strategy for many years.”
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. As
of December 31, 2023, the Company had working interests in 53
fields in federal and state waters (which include 44 fields in
federal waters and nine in state waters). The Company has under
lease approximately 597,100 gross acres (440,000 net acres)
spanning across the outer continental shelf off the coasts of
Louisiana, Texas, Mississippi and Alabama, with approximately
435,600 gross acres on the conventional shelf, approximately
153,500 gross acres in the deepwater and 8,000 gross acres in
Alabama state waters. 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. All statements other than statements of
historical facts included in this release, including those
regarding the impact of the Term Loan amendment on the Company’s
leverage profile, the potential benefits of the Term Loan
amendment, the potential benefits of the Mobil Bay properties, the
Company’s future performance and indebtedness are forward-looking
statements. When used in this release, forward-looking statements
are generally accompanied by terms or phrases such as “estimate,”
“project,” “predict,” “believe,” “expect,” “continue,”
“anticipate,” “target,” “could,” “plan,” “intend,” “seek,” “goal,”
“will,” “should,” “may” or other words and similar expressions that
convey the uncertainty of future events or outcomes, although not
all forward-looking statements contain such identifying words.
These statements are subject to risks and
uncertainties that could cause actual results to differ materially
including, among other things, market conditions, commodity price
volatility, uncertainties inherent in oil and gas production
operations and estimating reserves, uncertainties of the timing and
impact of bringing new wells online and repairing and restoring
infrastructure due to hurricane damage, the ability to achieve
leverage targets, unexpected future capital expenditures,
competition, the success of our risk management activities,
governmental regulations, uncertainties and other factors described
or referenced in W&T’s most recent Annual Report on Form 10-K
and subsequent Quarterly Reports on Form 10-Q found at www.sec.gov
or on our website at www.wtoffshore.com.
These forward-looking statements are based on
the Company’s current expectations and assumptions about future
events and speak only as of the date of this release. Accordingly,
you are cautioned not to place undue reliance on these
forward-looking statements, as results actually achieved may differ
materially from expected results described in these statements. The
Company does not undertake, and specifically disclaims, any
obligation to update any forward-looking statements to reflect
events or circumstances occurring after the date of such
statements, unless required by law.
CONTACTS: |
Al PetrieInvestor Relations
Coordinatorapetrie@wtoffshore.com713-297-8024 |
Sameer ParasnisExecutive VP and
CFOsparasnis@wtoffshore.com713-513-8654 |
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