We are upbeat about W&T Offshore, Inc.’s WTI prospects and believe that it is a promising pick at the moment.
The company currently carries a Zacks Rank #2 (Buy) and a VGM Score of A. Our research shows that stocks with a VGM Score of A or B when combined with a Zacks Rank #1 (Strong Buy) or 2 offer the best opportunities for investors.
Let’s take a look at the other factors that make this upstream energy player an attractive bet.
W&T Offshore has a strong presence across the resources located off the coast of Gulf of Mexico. In the state and federal waters, the company owns stakes in 48 oil and natural gas fields, spreading across roughly 650,000 gross acres.
In the deepwater, the company has interest in 210,000 gross acres, while in the Gulf of Mexico Shelf, it covers 440,000 gross acres. Investors should know that after the prolific Permian basin, Gulf of Mexico contributes to the nation’s total production, per the company’s presentation.
The upstream firm reported 21.7 million barrel of oil equivalent (MMBoe) of 1P reserves in the deepwater Gulf of Mexico. In the Gulf of Mexico shelf, the company estimated its 1P reserves at 56.3 MMBoe. The proved reserves will likely back W&T Offshore’s production.
Notably, the company’s operations are getting efficient as reflected by almost flat production despite the massive fall in capital spending over the past few years. The company also has solid cost control measures. Since fourth-quarter 2014, W&T Offshore’s lease operating expenses have declined by more than 50%.
Importantly, the breakeven oil price for deepwater drilling has dramatically decreased to $30 a barrel, Royal Dutch Shell plc RDS.A told Financial Times. This reflects that offshore projects are still profitable despite crude price tumbled to its lowest settlement of the year.
Following these developments, W&T Offshore has rallied 85.5% in the past year, outpacing the collective decline of 16.1% of the stocks belonging to the industry. The company also has a strong earnings surprise history and has managed to beat the Zacks Consensus Estimate in the prior four quarters.
Other Stocks to Consider
Other prospective players in the energy space are TC PipeLines, LP TCP, Enterprise Products Partners L.P. EPD and Energen Corporation EGN. All the stocks sport a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
TC PipeLines beat the Zacks Consensus Estimate in three of the last four quarters, the average positive earnings surprise being 15.6%.
Enterprise Products surpassed the Zacks Consensus Estimate in the last four quarters, the average positive earnings surprise being 9.3%.
Energen has average positive earnings surprise of 18.6% for the prior four quarters.
Will You Make a Fortune on the Shift to Electric Cars?
Here's another stock idea to consider. Much like petroleum 150 years ago, lithium power may soon shake the world, creating millionaires and reshaping geo-politics. Soon electric vehicles (EVs) may be cheaper than gas guzzlers. Some are already reaching 265 miles on a single charge.
With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks research.
It's not the one you think.
See This Ticker Free >>
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Energen Corporation (EGN) : Free Stock Analysis Report
TC PipeLines, LP (TCP) : Free Stock Analysis Report
Enterprise Products Partners L.P. (EPD) : Free Stock Analysis Report
Royal Dutch Shell PLC (RDS.A) : Free Stock Analysis Report
W&T Offshore, Inc. (WTI) : Free Stock Analysis Report
To read this article on Zacks.com click here.