W&T OFFSHORE INC: Significant Definitive Agreement, FD Regulatory Disclosure, Other Events (Form 8-K)

Article 1.01 Entry into an important final agreement.

Management services contract

On the Closing Date, AI LLC and A-II LLC (collectively as such, the “Service Recipient”) has entered into a management services agreement (the “Services Agreement”) with the Company, under which the Company will provide (a) certain operational and management services for ( Isle Properties of Mobile Bay and (II) intermediate assets and (b) certain corporate, general and administrative services for AI LLC and A-II LLC. Under the Services Agreement, the Company (i) will charge all operating and capital expenses incurred by (X) AI LLC in connection with the ownership and operation of the
Properties of Mobile Bay Andy) A-II LLC in connection with the ownership and operation of intermediate assets and (ii) receive on (A) AI LLC recognize all income related to the sale of production Properties of Mobile Bay and (B) AI LLC recognize all revenues related to the provision of oil collection, transportation, treatment, treatment, handling and related services on intermediate assets. AI LLC and A-II LLC collectively pay quarterly service charges to the Company to compensate the Company for its overhead costs incurred in providing the services contemplated under the Services Agreement.

Under the Service Contract, the Company will indemnify the Service Recipient with respect to claims, losses or liabilities incurred by the Parties to the Service Contract which relate to bodily injury or death or property damage of the Company, in each case, resulting from the performance of the Service Contract, except to the extent of gross negligence or willful misconduct of the recipient of the services. The Recipient of the Services will indemnify the Company in the event of any claims, losses or liabilities incurred by the Company relating to bodily injury or death of the Recipient of Services or to material damage of the Recipient of Services, in each case, resulting from the performance of the Services Contract. , except in cases of gross negligence or willful misconduct of the Company.

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The Services Agreement will terminate on the earliest of the following: (a) termination of the Subsidiary Credit Agreement and payment and fulfillment of all obligations hereunder or (b) the exercise of certain remedies by the parties guaranteed under the Subsidiary Credit Agreement and the realization by this guarantee. parties to any of the guarantees under the subsidiary credit agreement.

Modification of the business credit agreement

On the closing date, the company amended its sixth amended and restated credit agreement, dated October 18, 2018 (as amended, updated, amended and updated, supplemented or otherwise amended from time to time, the “Company Credit Agreement”), by and between the Company, the guarantor subsidiaries that are parties thereto, the lenders who are parties to it, Toronto Dominion (Texas) LLC (“Toronto Dominion”), as administrative agent, the issuers of letters of credit are parties thereto and the other parties, in entering into this Waiver, Consent and Sixth Amendment to the Sixth Amended and Restated Credit Agreement (the “Sixth amendment”) to the Company’s credit agreement, by and between the Company, the guarantor subsidiaries that are parties thereto, the various financial institutions that are parties thereto, as lenders, the issuers of letters of credit therein are parties and the Toronto Dominion, individually and as agent of the lenders.

The Sixth Amendment, among others, (i) amended the Company’s credit agreement to effect the transaction by specifically authorizing the transaction and related transactions under certain covenants and (ii) consented to and waived certain resulting technical faults. the training of certain subsidiaries of the company. who have been trained before and to complete the Transaction and related transactions.

The Company used part of the proceeds of the transfer to borrowers from the Properties of Mobile Bay and intermediate assets to repay the $ 48.0 million
outstanding balance on its reserve-based loan facility under the corporate credit agreement. All privileges on the Properties of Mobile Bay and the intermediate assets granted to secure the obligations under the Company’s credit agreement have been released as part of the transfer of these assets to the borrowers.

The summary of the Sixth Amendment in this current report on Form 8-K does not purport to be complete and is qualified in its entirety by reference to the full text of the Sixth Amendment, which is filed attached as Exhibit 10.1 and is incorporated. in this Section 1.01 by reference.

Subsidiary credit agreement

On the closing date, the borrowers entered into the subsidiary credit agreement providing for the non-recourse term loan of an aggregate principal amount equal to $ 215.0 million. The non-recourse term loan will mature on May 19, 2028 (the due date”). The proceeds of the loan were used by the borrowers to (i) finance the acquisition of the Properties of Mobile Bay and the Midstream Assets, in each case of the Company and (ii) pay fees, commissions and expenses in connection with the transactions contemplated by the Subsidiary Credit Agreement and other related loan documents, including to enter into certain swaps and to set up derivative contracts described in more detail in point 8.01 of this report.

The non-recourse term loan is non-recourse against the Company and its subsidiaries other than the borrowers and is not secured by any asset other than first collateral in the equity of the borrowers and a first mortgage collateral and mortgages. on almost all of the borrowers’ assets (which consists of Properties of Mobile Bay and intermediate assets).

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Non-recourse term loan requires quarterly amortization payments starting
September 30, 2021. The non-recourse term loan bears interest at a fixed rate of 7% per annum from the closing date. The subsidiary credit agreement requires borrowers to prepay any loan outstanding under it, subject to certain exceptions, with the proceeds of indebtedness, unwinding, termination or assignment of certain agreements. coverage, certain provisions or certain accidental events, in each case, subject to certain exceptions and on condition that borrowers can reinvest this proceeds in certain permitted assets within 90 days of receipt of such proceeds. Optional prepayments under the Non-Recourse Term Loan are subject to certain premiums. Any optional early repayment made during the first three years of the loan is subject to a premium equal to the total amount of interest payments that would have become due and payable until the due date. Optional prepayments in each year following the third anniversary of the closing date are subject to a premium equal to 3.0% of the amount of the prepayment and this premium is reduced by 1.0% each subsequent year.

Under the Subsidiary Credit Agreement, borrowers are subject to various representations and warranties and affirmative commitments customary for financing of this type and size. The subsidiary credit agreement includes restrictive covenants, subject to certain exceptions, restricting or limiting the capacity of borrowers and the capacity of its restricted subsidiaries to, among other things: (i) incur debts; (ii) create privileges, effect alienations of assets in the unusual course; (iii) carry out certain mergers and acquisitions; (iv) dispose of certain goods; (v) pay dividends or make early repayments of subordinated debt; (vi) make capital expenditures; (vii) grant certain loans and investments; (viii) carry out transactions with affiliated companies; (ix) change the affairs of borrowers; (x) enter into hedging agreements and (xi) modify the financial year. In addition, the ability to make certain restricted payments in cash, capital expenditures and investments is subject to a financial commitment in which the sum of the present value of the estimated future net cash flows Properties of Mobile Bay plus the positive difference between borrowers’ excess cash balance minus the total amount of expected payments for the next two quarterly payment periods divided by the total principal amount outstanding on the non-recourse term loan is not less than 1 , 50: 1.00.

The subsidiary credit agreement provides for the usual events of default, including, but not limited to, in the event of non-payment of principal, interest, charges or other amounts, a declaration or guarantee proving to be inaccurate in any material respect. once made, the company ceasing to be the service provider under the Service Contract, the non-fulfillment or non-fulfillment of the commitments within a specified period, the bankruptcy or insolvency of the Borrowers or any of their subsidiaries respective, and changes in control over the Borrowers. In the event of default, the lender is entitled to declare all amounts due under the subsidiary credit agreement immediately due and payable and to terminate the lender’s commitments to grant loans under the subsidiary credit agreement.

Article 7.01 Disclosure of FD regulations.

Also on May 20, 2021, the Partnership has issued a press release announcing the closing of the Transaction and related transactions, a copy of which is provided as Exhibit 99.1 of this Current Report on Form 8-K and is incorporated herein by reference.

The information provided in this Section 7.01 will not be deemed “filed” for the purposes of the Securities Exchange Act of 1934, as amended (the “Act of 1934”), and will not be deemed to be incorporated by reference in any filing with the
Security and Trade Commissionwhether or not they were filed under the 1934 Act, regardless of any general language of incorporation into this document

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Item 8.01 Other items.

As part of the transaction, the borrowers entered into certain natural gas swaps and entered into derivative contracts with an affiliate of the lender at a cash cost of $ 19.2 million with the terms summarized below:

Natural gas – Open Swap and Put Contracts, tariffed Henry hub (NYMEX)

                                                 Weighted Average
                                Notional               Swap
  Production                    Quantity        Or Put Strike Price
    Period       Instrument     (MMBTU)              ($/MMBTU)

Jun - Dec 2021     Swaps        17,500,000               $3.00
Jan - Dec 2022     Swaps        28,800,000               $2.69
Jan - Dec 2023     Swaps        26,400,000               $2.48
Jan - Dec 2024     Swaps        24,000,000               $2.46
Jan - Mar 2025     Swaps        5,700,000                $2.72
Apr - Dec 2025      Puts        17,100,000               $2.27
Jan - Dec 2026      Puts        20,400,000               $2.35
Jan - Dec 2027      Puts        19,200,000               $2.37
Jan - Apr 2028      Puts        6,000,000                $2.50

The introductory note included in this report is incorporated by reference in this point 8.01.

Item 9.01     Exhibits.

Exhibit
Number                Description
 10.1       Waiver, Consent and Sixth
          Amendment to Sixth Amended and
          Restated Credit Agreement, dated May
          19, 2021, by and among W&T Offshore,
          Inc., the guarantor subsidiaries
          party thereto, the lenders party
          thereto, the issuers of letters of
          credit party thereto and Toronto
          Dominion (Texas) LLC

 99.1       Press Release, dated May 20,
          2021

  104     Cover Page Interactive Data File
          (embedded within the Inline XBRL
          document)



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