W&T Offshore entered into the second amendment to its credit agreement with Texas Capital Bank as administrative agent and its bank group, converting its existing $50 million revolving credit facility into a conventional reserve-based lending (RBL) facility.
Key Highlights of the Amended Facility
- Conventional RBL structure: Initial borrowing base of $50 million, fully supporting $50 million of elected commitments, with an aggregate maximum credit amount of $100 million that provides capacity, subject to borrowing base availability and lender consent, to increase commitments to support future growth. The borrowing base will be redetermined semi-annually each May 1 and Nov. 1, beginning Nov. 1, 2026
- Removal of restrictive features: Eliminates the 75% excess cash flow sweep, the requirement to repay any outstanding revolving credit facility balance every three months (clean-down) and the $100 million minimum PDP PV-10 asset coverage covenant, giving the company greater control over its cash flow and liquidity
- Increased shareholder return capacity: The annual restricted payments basket was increased by 50%, from $10 million to $15 million
- Unchanged pricing and covenants: No change to interest rate margins, the Term SOFR floor, maturity, collateral or the company’s financial covenants, including a maximum net leverage ratio of 2.50x and a minimum current ratio of 1.00x
- No amendment fees: The lenders did not charge any amendment fees in connection with the transaction, other than the reimbursement of customary fees and expenses of the administrative agent
- Continued bank group support: Each of the company’s continuing lenders maintained their full commitment, and CIBC rejoined the bank group with a $10 million commitment, replacing an exiting lender.
“This amendment is an important step in the evolution of W&T’s capital structure,” Tracy W. Krohn, chairman of the board and CEO, said. “Moving to a conventional reserve-based facility removes the cash sweep, clean-down and asset coverage requirements that constrained our liquidity management. It also provides the potential to expand borrowing capacity up to $100 million as we grow our reserve base, and increases our flexibility to grow the company and return capital to shareholders, all with no change to pricing or financial covenants and without any amendment fees. We are thankful for the continued support of our bank group, led by Texas Capital Bank. We are delighted to welcome back CIBC, a past lender to W&T, with whom we look forward to growing our relationship further. Additionally, we are entering the fourth quarter of 2026 with total liquidity of approximately $234 million. This solid base will help us execute the goals we have set for 2026 and 2027.”
