W&T OFFSHORE INC (WTI)

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) should be read in conjunction with the unaudited condensed consolidated financial statements and the related notes included in Part I, Item 1. Financial Statements, of this Quarterly Report, as well as our audited consolidated financial statements and the notes thereto in the 2025 Annual Report and the related MD&A included in Part II, Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, of our 2025 Annual Report. Unless otherwise indicated or the context otherwise requires, references in this Quarterly Report to “us,” “we” and “our” are to W&T Offshore, Inc. and its wholly owned subsidiaries.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

The information in this Quarterly Report includes “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 (the “Exchange Act”). All statements, other than statements of historical fact included in this Quarterly Report, regarding our strategy, future operations, financial position, estimated revenues and losses, projected costs, prospects, plans and objectives of management are forward-looking statements. These forward-looking statements are based on certain assumptions and analyses made by us in light of our experience and perception of historical trends, current conditions, expected future developments and other factors we believe are appropriate under the circumstances. Although we believe that these forward-looking statements are based upon reasonable assumptions, they are subject to several risks and uncertainties and are made in light of information currently available to us. If the risks or uncertainties materialize or the assumptions prove incorrect, our results may differ materially from those expressed or implied by such forward-looking statements and assumptions. When used in this Quarterly Report, the words “could,” “believe,” “anticipate,” “intend,” “estimate,” “expect,” “project,” “forecast,” “may,” “objective,” “plan,” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain such identifying words. Readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date hereof. We assume no obligation, nor do we intend, to update these forward-looking statements, unless required by law.

The information included in this Quarterly Report includes forward-looking statements that involve risks and uncertainties that could materially affect our expected results of operations, liquidity, cash flows and business prospects. Such statements specifically include our expectations as to our future financial position, liquidity, cash flows, results of operations and business strategy, potential acquisition opportunities, other plans and objectives for operations, capital for sustained production levels, expected production and operating costs, reserves, hedging activities, capital expenditures, return of capital, improvement of recovery factors and other guidance. Actual results may differ from anticipated results, sometimes materially, and reported results should not be considered an indication of future performance. For any such forward-looking statement that includes a statement of the assumptions or bases underlying such forward-looking statement, we caution that, while we believe such assumptions or bases to be reasonable and make them in good faith, assumed facts or bases almost always vary from actual results, sometimes materially. Known material risks that may affect our financial condition and results of operations are discussed in Part I, Item 1A. Risk Factors, and market risks are discussed in Part II, Item 7A. Quantitative and Qualitative Disclosures About Market Risk, of our 2025 Annual Report, and may be discussed or updated from time to time in subsequent reports filed with the SEC.

Reserve engineering is a process of estimating underground accumulations of crude oil, NGLs and natural gas that cannot be measured in an exact manner. The accuracy of any reserve estimate depends on the quality of available data, the interpretation of such data, and the price and cost assumptions made by reservoir engineers. In addition, the results of drilling, testing, and production activities, or changes in commodity prices, may justify revisions of estimates that were made previously. If significant, such revisions would change the schedule of any further production and development drilling. Accordingly, reserve estimates may differ significantly from the quantities of crude oil, NGLs and natural gas that are ultimately recovered.

All forward-looking statements, expressed or implied, included in this Quarterly Report are expressly qualified in their entirety by this cautionary statement. This cautionary statement should also be considered in connection with any subsequent written or oral forward-looking statements that we or persons acting on our behalf may issue.

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BUSINESS OVERVIEW

We are an independent oil and natural gas producer, active in the exploration, development and acquisition of oil and natural gas properties in the Gulf of America. As of June 30, 2026, we hold working interests in 48 offshore fields in federal and state waters (which include 41 fields in federal waters and seven in state waters). We currently have under lease approximately 591,000 gross acres (457,100 net acres) spanning across the outer continental shelf off the coasts of Louisiana, Texas, Mississippi and Alabama, with approximately 5,600 gross acres in Alabama state waters, 449,200 gross acres on the conventional shelf and approximately 136,200 gross acres in the deepwater. A majority of our daily production is derived from wells we operate.

Recent Developments

On August 5, 2026, we declared a regular quarterly dividend of $0.01 per share of common stock for the third quarter of 2026. We expect to pay the dividend on August 26, 2026 to stockholders of record as of the close of business on August 19, 2026.

Business Outlook

Our financial condition, cash flow and results of operations are significantly affected by the volume of our oil, NGLs and natural gas production and the prices that we receive for such production. Changes in the prices that we receive for our production impact all aspects of our business; most notably our cash flows from operations, revenues, capital allocation and budgeting decisions and our reserves volumes. Prices of oil, NGLs and natural gas have historically been volatile and can fluctuate significantly over short periods of time for many factors outside of our control, including changes in market supply and demand, which are impacted by weather conditions, pipeline capacity constraints, inventory storage levels, domestic production activities and political issues, and international geopolitical and economic events.

On June 18, 2026, the United States and Iran signed a memorandum of understanding (“MOU”) related to the conflict between the two countries, including with respect to the re-opening of the Strait of Hormuz, which had been closed earlier in 2026 and had contributed to elevated oil prices. Expectations of increasing oil supply and moderating inventory draws have caused oil prices to fall. The average spot price for WTI oil averaged $84.81 per barrel in June 2026, down $17.32 per barrel from May 2026. In the Energy Information Administration’s (the “EIA”) Short-Term Energy Outlook published in July 2026, the EIA is forecasting that spot prices for WTI will average $68.50 per barrel for the remainder of 2026 and $60.83 per barrel in 2027. The EIA expects that ongoing oil inventory accumulation over the next year will continue to put downward pressure on oil prices.

Just over a week after signing the MOU, Iran launched a drone strike against a ship in the Strait of Hormuz. The attack, interpreted by the United States as a violation of the ceasefire agreement, prompted a round of contained strikes against Iran. In addition, Yemen’s Houthis opened a new front in the war by targeting vessels carrying Saudi oil, further disrupting global oil shipping as the Red Sea is another strategic waterway that oil companies use to transport their oil from the Middle East. Although oil prices rose as a result of these disruptions, prices are still significantly lower than the high prices experienced in the middle of May 2026. Workarounds via pipelines and the use of the southern shipping route through the Strait of Oman have kept the cost of oil from skyrocketing, and production worldwide has also stepped up in response to the off-and-on closure of the Strait of Hormuz.

The Henry Hub spot price averaged $2.95 per MMBtu for the second quarter of 2026, and the EIA expects the spot prices for Henry Hub natural gas to average $3.47 per MMBtu for the remainder of 2026 and average $3.49 per MMBtu in 2027. The EIA expects that record natural gas production will help meet rising demand from the electric power sector, putting moderate downward pressure on natural gas prices.

Our average realized sales price for oil and natural gas differs from the WTI average price and the NYMEX Henry Hub average price, respectively, primarily due to premiums or discounts, quality adjustments, location adjustments and volume weighting (collectively referred to as differentials). Oil price differentials primarily represent the transportation costs in moving produced oil at the wellhead to a refinery and are based on the availability of pipeline, rail and other transportation. Natural gas price differentials are strongly impacted by local market fundamentals, availability of transportation capacity from producing areas and seasonal impacts. Prices and differentials for NGLs are related to the supply and demand for the products making up these liquids. Some of them more typically correlate to the price

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of oil while others are affected by natural gas prices as well as the demand for certain chemical products which are used as feedstock.

RESULTS OF OPERATIONS

Three Months Ended June 30, 2026 Compared to the Three Months Ended June 30, 2025

Revenues

Our revenues are derived from the sale of our oil and natural gas production, as well as the sale of NGLs. Our oil, NGL and natural gas revenues do not include the effects of derivatives, which are reported in Derivative loss (gain), net in our Condensed Consolidated Statements of Operations.

The following table presents information regarding our revenues, production volumes and average realized sales prices (which exclude the effect of hedging unless otherwise stated) for the periods presented and corresponding changes (in thousands, except average realized sales prices data):

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ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of our financial condition and results of operations is based on, and should be read in conjunction with Part I, Item 1. Business, Item 1A. Risk Factors, Item 2. Properties and Item 7A. Quantitative and Qualitative Disclosures About Market Risk and with Part II, Item 8. Financial Statements and Supplementary Data and other financial information appearing elsewhere in this 2025 Form 10-K. The following discussion and analysis includes forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those anticipated in these forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those discussed below and elsewhere in this Form 10-K, particularly in Part I, Item 1A. Risk Factors.

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This section primarily discusses 2025 and 2024 items and comparisons between 2025 and 2024. Discussions of 2024 items and comparisons between 2024 and 2023 that are not included in this Form 10-K are incorporated by reference to Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations of our Annual Report on Form 10-K for the year ended December 31, 2024.

Business Overview

We are an independent oil and natural gas producer, active in the exploration, development and acquisition of oil and natural gas properties in the Gulf of America. As of December 31, 2025, we held working interests in 49 offshore producing fields in federal and state waters (which include 42 fields in federal waters and seven in state waters). We currently have under lease approximately 624,700 gross acres (490,200 net acres) spanning across the outer continental shelf off the coasts of Louisiana, Texas, Mississippi and Alabama, with approximately 5,600 gross acres in Alabama state waters, 477,200 gross acres on the conventional shelf and approximately 141,900 gross acres in the deepwater. A majority of our daily production is derived from wells we operate. Our interests in fields, leases, structures and equipment are primarily owned by our wholly-owned subsidiaries and through our proportionately consolidated interest in Monza Energy LLC.

In managing our business, we are focused on optimizing production and making profitable investments, pursuing high rate of return projects and developing oil and natural gas resources in a manner that allows us to grow our production, reserves and cash flow in a capital efficient manner, organically enhancing the value of our assets.

Significant Developments

Receipt of Insurance Proceeds

In January 2025, we received $58.5 million related to the settlement of claims related to the Mobile Bay plant turnaround in February 2023. During the turnaround, the MB 78-1 well was shut-in and did not return to production following completion of the planned maintenance. We filed a claim under our Energy Package Policy and in December 2024, we and the underwriters of the Energy Package Policy agreed to a settlement of claims.

Issuance of 10.75% Notes and Related Transactions

On January 28, 2025, we issued $350.0 million of 10.75% Notes. The 10.75% Notes were issued at par and mature on February 1, 2029. The net proceeds from the issuance of the 10.75% Notes along with cash on hand were used to (i) purchase for cash pursuant to a tender offer (the “Tender Offer”), such of our 11.75% Senior Second Lien Notes due 2026 (the “11.75% Notes”) that were validly tendered (and not validly withdrawn) pursuant to the Tender Offer, (ii) on or after August 1, 2025, redeem in full any remaining 11.75% Notes not validly tendered and accepted for purchase in the Tender Offer and, pending such redemptions, satisfy and discharge the indenture governing the 11.75% Notes; (iii) repay outstanding amounts under the credit agreement of certain of our indirect, wholly-owned subsidiaries (the “Term Loan”), and (iv) pay any premiums, fees and expenses relating to these transactions.

Termination of Legacy Credit Agreement and Entry into Credit Agreement

On January 28, 2025, in conjunction with the issuance of the 10.75% Notes, we terminated our Sixth Amended and Restated Credit Agreement (the “Legacy Credit Agreement”) and entered into the Credit Agreement which provides us a revolving credit and letter of credit facility with initial bank lending commitments of $50.0 million with a letter of credit sublimit of $10.0 million. The Credit Agreement matures on July 28, 2028.

Appeal with the Office of Natural Resources Revenue

On August 26, 2025, the United States District Court for the Eastern District of Louisiana issued a favorable order on the Company’s motion for summary judgment regarding the disallowance of allowable reduction of cash payments for royalties owed to the ONRR. On December 15, 2025 and December 16, 2025, the ONRR released the Company’s administrative appeal bonds. The Company remains in discussions with the ONRR regarding the related litigation bond and the amount, if any, to be refunded or credited to the Company. As a result of the order, the Company reversed its $5.3 million accrual related to this matter.

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Bonding Disputes

On June 14, 2025, we entered into the USSIC Settlement Agreement and, on June 15, 2025, we entered into the PIIC Settlement Agreement to dismiss all claims with the applicable parties related to the Sureties Litigation without prejudice. Pursuant to the applicable Settlement Agreement, USSIC and PIIC agree that: (i) there will be no change to the 2024 premium rates paid by us or any of its affiliates, subsidiaries or joint venture entities, for any currently existing surety bond executed by USSIC or PIIC until after December 31, 2026, at the earliest, (ii) USSIC and PIIC withdraw all demands for collateral and agree not to request, demand, or otherwise insist on collateral, whether related to a surety bond or pursuant to the indemnity agreements, until after December 31, 2026, at the earliest; provided that such restriction shall not apply if (a) we do not pay premiums owed to USSIC or PIIC when due; (b) a claim is made by a third party against any bond issued by USSIC or PIIC to us or its affiliates or subsidiaries; (c) there is an initiation of an insolvency proceeding for us or any of its affiliates, subsidiaries or joint venture entities, whether voluntary or involuntary; (d) there is an uncured event of default under the indenture governing our second lien notes due 2029 that results in an acceleration, in whole or in part, of the indebtedness thereunder; or (e) we or our affiliates or subsidiaries initiate a lawsuit against USSIC or PIIC. Each of the Settlement Agreements also provides that, in the event that we enter into an agreement to provide collateral to another party in settlement of the Sureties Litigation on bonds existing as of the date of the Settlement Agreement, we shall, on a pro rata basis, provide substantially similar collateral to USSIC or PIIC as it does to such other party. The entry into the Settlement Agreements resulted in the withdrawal of approximately $94 million in collateral demands.

On June 30, 2025, we announced that the presiding judge in the Sureties Litigation recommended denying the requests for preliminary injunction submitted by two surety providers. The preliminary injunction would have required us to immediately post $105 million of collateral. The recommendation would effectively nullify all current collateral requests related to the surety litigation by the surety providers and we will not be required to post collateral (if at all) until a determination on the merits of the Sureties Litigation with the remaining surety providers.

All of the remaining parties to the Sureties Litigation previously agreed to mediate the case until the mediator declares an impasse. Mediation is no longer active as the mediator has declared an impasse with respect to the surety providers that did not enter into the Settlement Agreements. We continue to evaluate potential avenues for resolution of the remaining related premium and collateral-related matters.

First Quarter 2026 Dividend

On March 5, 2026, we declared a first quarter dividend of $0.01 per share. We expect to pay the dividend on March 26, 2026 to stockholders of record on March 19, 2026.

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Business Outlook

Our financial condition, cash flow and results of operations are significantly affected by the volume of our oil, NGLs and natural gas production and the prices that we receive for such production. Changes in the prices that we receive for our production impact all aspects of our business; most notably our cash flows from operations, revenues, capital allocation and budgeting decisions and our reserves volumes. Prices of oil, NGLs and natural gas have historically been volatile and can fluctuate significantly over short periods of time for many factors outside of our control, including changes in market supply and demand, which are impacted by weather conditions, pipeline capacity constraints, inventory storage levels, domestic production activities and political issues, and international geopolitical and economic events.

The EIA published its latest Short-Term Energy Outlook in January 2026. The EIA expects oil prices to decline in 2026, as global oil production exceeds global oil demand, causing inventories to rise. The EIA forecasts that the spot price for WTI oil will average $52.25 per barrel in 2026, 20% less than the average price of $65.46 per barrel in 2025 and then average $50.33 per barrel in 2027. The unwinding of OPEC+ production cuts and strong growth in oil production outside of OPEC+ results in global oil production growing in the EIA forecast. Although the EIA is forecasting OPEC+ will increase production, they expect the group will produce less oil than stated in its most recent production target in an effort to avoid significant inventory builds.

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The EIA expects the spot prices for Henry Hub natural gas to average $3.46 per MMBtu in 2026, down 2% from the 2025 average of $3.53 per MMBtu, and average $4.59 per MMBtu in 2027. The EIA expects wholesale natural gas prices to increase due to growth in demand, led by expanding liquified natural gas exports, and more natural gas consumption in the electric power sector from growing demand for power in the commercial and industrial sectors.

Our average realized sales price for oil and natural gas differs from the WTI average price and the NYMEX Henry Hub average price, respectively, primarily due to premiums or discounts, quality adjustments, location adjustments and volume weighting (collectively referred to as differentials). Oil price differentials primarily represent the transportation costs in moving produced oil at the wellhead to a refinery and are based on the availability of pipeline, rail and other transportation. Natural gas price differentials are strongly impacted by local market fundamentals, availability of transportation capacity from producing areas and seasonal impacts. Prices and differentials for NGLs are related to the supply and demand for the products making up these liquids. Some of them more typically correlate to the price of oil while others are affected by natural gas prices as well as the demand for certain chemical products which are used as feedstock.

We are also monitoring the impact of the tariffs announced by the United States federal government in 2025 and 2026. While there is significant uncertainty as to the duration of these and any further tariffs, and the impacts these tariffs and any corresponding retaliatory tariffs will have on the oil and gas industry and on commodity prices, we do not currently expect that the financial impact of the tariffs will be material to capital expenditures or operating expenses in 2026.

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