1288403--3/31/2006--W&T_OFFSHORE

related topics

{gas, price, oil}

{loss, insurance, financial}

{stock, price, operating}

{cost, regulation, environmental}

{acquisition, growth, future}

{personnel, key, retain}

{loan, real, estate}

{stock, price, share}

{operation, natural, condition}

{interest, director, officer}

{capital, credit, financial}

Risks Relating to the Oil and Natural Gas Industry and Our Business A substantial or extended decline in oil and natural gas prices may adversely affect our business, financial condition, cash flow, liquidity or results of operations and our ability to meet our capital expenditure obligations and financial commitments and to implement our business strategy. Hedging transactions may limit our potential gains. Lower oil and gas prices could negatively impact our ability to borrow. Approximately 76% of our total proved reserves are undeveloped or non-producing and there can be no assurance that those reserves will ultimately be developed or produced. Relatively short production periods for our properties subject us to high reserve replacement needs and require significant capital expenditures to replace our reserves at a faster rate than companies whose reserves have longer production periods. Our failure to replace those reserves would result in decreasing reserves and production over time. Significant capital expenditures are required to replace our reserves. If we are not able to replace reserves, we may not be able to sustain production. Competition for oil and natural gas properties and prospects is intense; some of our competitors have larger financial, technical and personnel resources that give them an advantage in evaluating and obtaining properties and prospects. We conduct exploration, exploitation and production operations on the deep shelf and in the deepwater of the Gulf of Mexico, which presents unique operating risks. We are not the operator on the properties representing 26% of our proved developed non-producing and proved undeveloped reserves, and therefore, we may not be in a position to control the timing of development efforts, the associated costs, or the rate of production of the reserves. Our business involves many uncertainties and operating risks that can prevent us from realizing profits and can cause substantial losses. The geographic concentration of our properties in the Gulf of Mexico subjects us to an increased risk of loss of revenue or curtailment of production from factors affecting the Gulf of Mexico specifically. Substantial acquisitions and exploitation activities could require significant external capital and could change our risk and property profile. The market price of our common stock could be adversely affected by sales of substantial amounts of our common stock in the public markets and the issuance of shares of common stock in future acquisitions. Properties that we buy may not produce as projected and we may be unable to identify liabilities associated with the properties or obtain protection from sellers against them. We may encounter difficulties integrating the operations of newly acquired oil and gas properties or businesses. If oil and natural gas prices decrease, we may be required to write-down the carrying values and/or the estimates of total reserves of our oil and natural gas properties. Management s Discussion and Analysis of Financial Condition and Results of Operations Critical Accounting Policies Impairment of oil and natural gas properties for a discussion of the ceiling test. Our reserve estimates depend on many assumptions that may turn out to be inaccurate. Any material inaccuracies in our reserve estimates or underlying assumptions will materially affect the quantities and present value of our reserves. Prospects that we decide to drill may not yield oil or natural gas in commercially viable quantities or quantities sufficient to meet our targeted rate of return. Market conditions or operational impediments may hinder our access to oil and natural gas markets or delay our production. In some cases, our wells are tied back to platforms owned by parties who do not have an economic interest in the well and we cannot be assured that such parties will continue to process our oil and natural gas. We are subject to numerous laws and regulations that can adversely affect the cost, manner or feasibility of doing business. Our operations may incur substantial liabilities to comply with environmental laws and regulations. We operate a production platform in a National Marine Sanctuary. The loss of senior management could adversely affect us. Executive Officers of the Registrant The unavailability or high cost of drilling rigs, equipment, supplies, personnel and oil field services could adversely affect our ability to execute our exploration and exploitation plans on a timely basis and within our budget. Counterparty credit risk may negatively impact the conversion of our accounts receivables to cash. Our insurance coverage may not be sufficient or may not be available to cover some liabilities or losses that we may incur. Risks Related to Our Principal Shareholder, Tracy W. Krohn We will be controlled by Tracy W. Krohn as long as he owns a majority of our outstanding common stock and you will be unable to affect the outcome of shareholder voting during that time. This control may adversely affect the value of our common stock and inhibit potential changes of control.

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1288403--3/31/2006--W&T_OFFSHORE_INC