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Here's Why W&T Offshore (WTI) is an Attractive Investment Bet Now

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·3 min read
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W&T Offshore, Inc. WTI has witnessed upward earnings estimate revisions for 2021 and 2022 in the past 30 days. Also, this independent oil and natural gas producer’s stock price has surged 87.1% year to date versus the industry’s rise of 52.5%.

Factors Favoring the Stock

The price of West Texas Intermediate crude, which is trading near $65 per barrel (at pre-pandemic levels), has improved significantly from the negative territory touched in April 2020. The momentum is likely to continue as the coronavirus vaccine rollout will likely help the economy recover strongly this year, thereby aiding fuel demand.

The recent rally in oil price has mostly been supported by OPEC+ (OPEC and its non-OPEC partners) since the cartel and its allies extend production cut in April. Under the agreement reached on Mar 4, following a meeting through videoconferencing between OPEC led by Saudi Arabia and Russia-led non-OPEC producers, majority of OPEC+ members decided to keep output unchanged.

Overall, the massive improvement in the oil price is a boon for oil explorers and producers. Thus, W&T Offshore, involved in operating offshore resources in the Gulf of Mexico, is well-placed to capitalize on the favorable pricing scenario. On the Gulf of Mexico Shelf, the company operates roughly 557,000 gross acres. Moreover, in the Gulf of Mexico deepwater resources, the company operates roughly 215,000 gross acres.

The company’s strategic capital allocation plan is encouraging. The upstream energy player, currently carrying a Zacks Rank #2 (Buy), has a prudent balance sheet and utilizes its free cashflow to lower debt burden and invest in key projects with multiple drilling locations.

Other Stocks to Consider

A few other better-ranked players in the energy space include EOG Resources, Inc. EOG, ConocoPhillips COP and Diamondback Energy, Inc. FANG. All the stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

EOG Resources is likely to see earnings growth of 206% in 2021.

ConocoPhillips has seen upward estimate revisions for 2021 earnings in the past 30 days.

Diamondback is likely to see earnings growth of 55% in 2021.

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