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W&T Offshore (WTI) Gains Marginally Since Q2 Earnings Beat

Zacks Equity Research
·4 min read

W&T Offshore Inc. WTI has witnessed a marginal 0.8% improvement in stock price over the past six trading sessions despite reporting narrower-than-expected loss for the second quarter on Aug 5. It seems that the earnings beat failed to impress the market since investors are still worried about the uncertain commodity price outlook owing to the coronavirus pandemic.

The upstream energy firm reported second-quarter 2020 adjusted loss (excluding one-time items) of 2 cents per share, narrower than the Zacks Consensus Estimate of loss of 21 cents. However, in the year-ago period, the company reported earnings of 25 cents per share.

Meanwhile, quarterly revenues plunged to $55 million from $135 million a year ago. Moreover, the top line missed the Zacks Consensus Estimate of $73 million.

WT Offshore, Inc. Price, Consensus and EPS Surprise

 

WT Offshore, Inc. Price, Consensus and EPS Surprise
WT Offshore, Inc. Price, Consensus and EPS Surprise

WT Offshore, Inc. price-consensus-eps-surprise-chart | WT Offshore, Inc. Quote

The narrower-than-expected loss was supported by higher oil equivalent production volumes and lower lease operating expenses, partially offset by a decline in average realized prices of commodities.

Overall Production Rises

Total oil equivalent production averaged 42 thousand barrels of oil equivalent per day (MBoe/D), up from the year-ago quarter’s 35 MBoe/D.

Oil production was recorded at 1.4 million barrels (MMBbls), down from the year-ago level of 1.7 MMBbls. Natural gas liquids output totaled 410 MBbls, higher than 264 MBbls a year ago. Natural gas production of 12,006 million cubic feet (MMcf) in the reported quarter was considerably higher than 7,450 MMcf in the year-earlier period. Of the total production in the quarter, almost 48% comprised liquids.

Realized Prices Decline

The average realized price for oil during the second quarter was $21.67 a barrel, lower than the year-ago level of $64.86. The average realized price of NGL dropped to $4.67 from $17.59 per barrel in the prior year. The average realized price of natural gas during the June quarter was $1.78 per thousand cubic feet, down from $2.63 in the comparable period last year. Average realized price for oil equivalent output declined to $14.10 per barrel from $41.83 a year ago.

Operating Expenses

Lease operating expenses contracted to $7.40 per Boe in the second quarter from $12.65 a year ago. General and administrative expenses fell to $1.47 per Boe from $4.18 in the year-ago period.

Overall, total costs and expenses significantly fell to $83.3 million from the year-ago level of $97.3 million.

Capital Spending & Balance Sheet

W&T Offshore spent $6.4 million capital through the June quarter (excluding acquisitions) on oil and gas resources.

As of Jun 30, 2020, the company’s cash and cash equivalents were $36.5 million. The upstream firm has $128.9 million of availability under revolving bank credit facility. The company’s long-term debt as of the June quarter was recorded at $624.2 million.

Guidance

W&T Offshore projects 2020 production at 43.8-46.5 MBoE/D, suggesting a rise from 40.6 MBoE/D in 2019. For the September quarter, the company expects production in the range of 40.9-45.1 MBoE/D.

For 2020, the upstream company expects lease operating expenses in the band of $158 to $165 million.

Zacks Rank & Stocks to Consider

The company currently has a Zacks Rank #3 (Hold). Meanwhile, a few better-ranked players in the energy space include Concho Resources Inc. CXO, Noble Energy Inc. NBL and EOG Resources, Inc. EOG, each holding a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Concho is likely to see earnings growth of 21.6% in 2020.

Noble Energy has witnessed upward estimate revisions for its 2020 bottom line in the past 30 days. 

EOG Resources’ 2020 bottom-line estimates have risen more than 200% over the past 30 days.

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Noble Energy Inc. (NBL) : Free Stock Analysis Report
 
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