Business Context and Reporting Period
This Form 8-K Current Report is filed by W&T Offshore, Inc. for the reporting period of June 1, 2017. The filing primarily addresses a significant legal development regarding a lawsuit styled Apache Corporation v. W&T Offshore, Inc.
Key Financial Metrics and Material Changes
The filing does not provide standard financial metrics such as revenue, profit, cash flow, margins, or debt levels. The material financial impact disclosed is a final trial court judgment received on May 31, 2017, directing the Company to pay Apache Corporation the following amounts:
- Principal Judgment: $43.2 million
- Prejudgment Interest, Attorney's Fees, and Costs: $4.4 million
- Total Liability: $47.6 million
The lawsuit concerned a dispute over the use of drilling rigs versus a contracted intervention vessel for plugging and abandoning three deepwater wells in the Mississippi Canyon area. The Company had previously paid $24.9 million as an undisputed amount for this work. The judgment also nullified a $17.0 million offset claim previously found in the Company's favor by a jury.
Management Commentary, Risks, and Outlook
Management contends that the judgment is contrary to applicable law, citing a prior jury finding in October 2016 that Apache acted in bad faith. The Company argues that Apache's use of drilling rigs was unnecessary, unreasonable, and in breach of the joint operating agreement, particularly since another vessel had been contracted a year in advance.
Future Actions: The Company is considering its options, including post-judgment motions and an appeal. The filing notes that the information contained herein shall not be deemed filed for purposes of Section 18 of the Securities Exchange Act of 1934.
Investor Verification Checklist
- Verify the exact total cash outflow required immediately versus amounts subject to appeal.
- Confirm the status of the $17.0 million offset claim and its impact on the net liability.
- Review the Company's liquidity position to assess the ability to fund the $47.6 million judgment while operations continue.
- Monitor for subsequent filings regarding the outcome of any post-judgment motions or appeals.
- Check if the Company has established a reserve for this liability in prior financial statements.