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W&T Offshore (WTI) Beats Q4 Earnings Estimates, Reserves Grow

Zacks Equity Research

W&T Offshore, Inc. WTI reported adjusted fourth-quarter 2018 earnings (excluding onetime items) of 22 cents per share, beating the Zacks Consensus Estimate of 15 cents and improving from the year-ago 17 cents.

Revenues increased to $143.4 million in the quarter from $129.1 million a year ago. The top line surpassed the Zacks Consensus Estimate of $138 million.

Higher oil and natural gas price realizations primarily supported the strong fourth-quarter results.

Production Falls, Prices Rise

The production of oil and natural gas was recorded at 3.2 million barrels of oil equivalent (MMBoE) (62% liquids), down almost 9% from 3.5 MMBoE in the year-ago quarter. Despite hurricane and downtime for pipelines and facilities through the December quarter, W&T Offshore produced roughly at the mid-point of its guidance.

W&T Offshore’s oil and NGL production was 2 million barrels (MMBbls), in line with the prior-year quarter. Meanwhile, natural gas output came in at 7.3 billion cubic feet (Bcf), down 16.1%.

The average realized price for oil during the fourth quarter was $62.94 a barrel, representing an increase of roughly 13% from the year-ago $55.83. The average realized price of NGL, however, fell 3% from $27.55 per barrel to $26.84. Nevertheless, the average realized price of natural gas during the December quarter of 2018 was $3.83 per thousand cubic feet (Mcf), representing an increase of 30% year over year.

Balance Sheet & Capital Spending

As of Dec 31, 2018, the company had approximately $33.3 million in cash and cash equivalents. The company had long-term debt of $633.5 million.

W&T Offshore spent $20.7 million capital through the December quarter of 2018.

Proved Reserves Grow

As of Dec 31, 2018, the company reported proved reserves of 84 million barrels of oil equivalent (MMBoE), marking an improvement of 13% from 74.2 MMBoE at 2017-end.

Guidance

The company expects production for first-quarter 2019 between 2.9 million barrels of oil equivalent (MMBoe) and 3.2 MMBoe. For 2019, W&T Offshore expects production in the band of 12.9-14.3 MMBoe.

Through 2019, the offshore oil and gas explorer expects lease operating expenses between $153 million and $169 million.

Zacks Rank and Key Picks

Currently, W&T Offshore carries a Zacks Rank #3 (Hold). Meanwhile, better-ranked players in the energy space include Jones Energy Inc. JONE, Golar LNG Partners LP GMLP and Sunoco LP SUN. Jones Energy and Golar LNG carry a Zacks Rank #2 (Buy), while Sunoco sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.  

Jones Energy expects 2019 earnings growth of 19% year over year.

Golar LNG delivered average positive earnings surprise of 92.8% in the preceding four quarters.

Sunoco LP has average positive earnings surprise of 18.39% for the trailing four quarters.

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