W&T Offshore (WTI)

Fair Value of Financial Instruments

We include fair value information in the notes to consolidated financial statements when the fair value of our financial instruments is different from the book value. We believe that the book value of our cash and cash equivalents, receivables, accounts payable and accrued liabilities materially approximates fair value due to the short-term nature and the terms of these instruments.

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Table of Contents

Index to Financial Statements

W&T OFFSHORE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Effective January 1, 2008, we adopted SFAS No. 157, Fair Value Measurements, on a prospective basis. In February 2008, the Financial Accounting Standards Board (“FASB”) issued FASB Staff Position (“FSP”) FAS 157-2, Effective Date of FASB Statement No. 157, which granted a one-year deferral of SFAS No. 157 for certain non-financial assets and liabilities. We do not expect SFAS No. 157 to have a material impact on our non-financial assets and liabilities.

At December 31, 2008, our interest rate swap was our only financial instrument to which SFAS No. 157 applied. In accordance with SFAS No. 157, we measure the fair value of our interest rate swap by applying the income approach, using inputs that are derived principally from observable market data. The impact of the adoption of SFAS No. 157 did not have a material impact on our financial statements.

Effective January 1, 2008, we adopted SFAS No. 159, The Fair Value Option for Financial Assets and Financial Liabilities—Including an amendment of FASB Statement No. 115. The adoption of SFAS No. 159 did not have an impact on our financial position, results of operations or cash flows as we elected not to measure any additional financial assets and liabilities at fair value that were not already required to be measured at fair value.

Fair Value of Financial Instruments

We include fair value information in the notes to consolidated financial statements when the fair value of our financial instruments is different from the book value. We believe that the book value of our cash and cash equivalents, receivables, accounts payable and accrued liabilities materially approximates fair value due to the short-term nature and the terms of these instruments.

61

Table of Contents

Index to Financial Statements

W&T OFFSHORE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Fair Value of Financial Instruments

Fair Value of Financial Instruments

We include fair value information in the notes to consolidated financial statements when the fair value of our financial instruments is different from the book value. We believe that the book value of our cash and cash equivalents, receivables, accounts payable, accrued liabilities and long-term debt materially approximates fair value due to the short-term nature and the terms of these instruments.

Fair Value of Financial Instruments

We include fair value information in the notes to consolidated financial statements when the fair value of our financial instruments is different from the book value. We believe that the book value of our cash and cash equivalents, receivables, accounts payable, accrued liabilities and long-term debt materially approximates fair value due to the short-term nature and the terms of these instruments.

Fair Value of Financial Instruments

We include fair value information in the notes to consolidated financial statements when the fair value of our financial instruments is different from the book value. We believe that the book value of our cash and cash equivalents, receivables, accounts payable, accrued liabilities and long-term debt materially approximates fair value due to the short-term nature and the terms of these instruments.