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W&T Offshore (WTI) Q1 Earnings Beat on Higher Production

Zacks Equity Research
·4 min read

W&T Offshore, Inc. WTI reported first-quarter 2020 adjusted earnings (excluding one-time items) of 4 cents per share, beating the Zacks Consensus Estimate of 3 cents but declining from the year-ago figure of 5 cents.

Meanwhile, quarterly revenues increased to $124.1 million from $116.1 million a year ago. However, the top line missed the Zacks Consensus Estimate of $130 million.

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

The company was the highest bidder on two blocks in the Gulf of Mexico Lease Sale 254 on Mar 18. The lease sale incorporated deepwater Garden Banks block 782 and shallow water Eugene Island Area South Addition block 345. It also closed the remaining 25% stake acquisition in the Magnolia Field during the first quarter.

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

Overall Production Rises

Total oil equivalent production averaged 53,553 barrels of oil equivalent per day (Boe/d), up 61% from 33,349 Boe/d in the year-ago quarter. Oil production was recorded at 1.8 million barrels (MMBbls), up from the year-ago level of 1.5 MMBbls. Natural gas liquids output totaled 495 MBbls, higher than 309 MBbls a year ago. Natural gas production of 15,307 million cubic feet (MMcf) in the reported quarter was considerably higher than 7,288 MMcf in the year-earlier period. Of the total production in the quarter, 48% comprised liquids.

The rise in production was supported by the company’s Mobile Bay area assets acquisition from Exxon Mobil Corporation XOM.

Realized Prices Decline

The average realized price for oil during the first quarter was $46.33 a barrel, lower than the year-ago level of $58.66. The average realized price of NGL dropped to $13.03 from $20.88 per barrel in the prior year. The average realized price of natural gas during the March quarter was $1.91 per thousand cubic feet, down from $3.00 in the comparable period last year. Average realized price for oil equivalent output declined to $24.71 per barrel from $38.31 a year ago.

Operating Expenses

Lease operating expenses contracted to $11.24 per Boe in the first quarter from $14.48 a year ago. General and administrative expenses fell to $2.87 per Boe from $4.70 in the year-ago period.

Overall, total costs and expenses significantly fell to $52.3 million from the year-ago level of $147.1 million.

Capital Spending & Balance Sheet,

W&T Offshore spent $33.6 million capital through the March quarter on oil and gas resources.

As of Mar 31, 2020, the company’s cash and cash equivalents rose to $47.6 million from $32.4 million in the fourth quarter. It had $164.2 million remaining under the revolving bank credit facility. The company’s long-term debt reduced to $668.1 million from $719.5 million in the fourth quarter.


W&T Offshore reduced 2020 capital spending estimate to $15-$25 million due to the coronavirus outbreak. The company temporarily paused 3,300 Boe/d production in selected fields as energy demand is currently hovering in the bearish territory.

Zacks Rank & Stocks to Consider

Currently, W&T Offshore has a Zacks Rank #3 (Hold). Some better-ranked players in the energy space include Chaparral Energy, Inc. CHAP and CNX Resources Corporation CNX, each holding a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Chaparral Energy’s bottom line for 2020 is expected to rise 57.8% year over year.

CNX Resources beat earnings estimates thrice and met once in the last four quarters, with average positive surprise of 111.5%.

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Exxon Mobil Corporation (XOM) : Free Stock Analysis Report
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