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W&T Offshore (WTI) Q3 Earnings Beat on Higher Production

Zacks Equity Research

W&T Offshore, Inc. WTI reported third-quarter 2019 adjusted earnings (excluding one-time items) of 13 cents per share, beating the Zacks Consensus Estimate of 1 cent but declining from the year-ago figure of 30 cents.

Meanwhile, quarterly revenues decreased to $132.2 million from $153.5 million a year ago. Moreover, the top line missed the Zacks Consensus Estimate of $134 million.

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

W&T Offshore, Inc. Price, Consensus and EPS Surprise

W&T Offshore, Inc. Price, Consensus and EPS Surprise

W&T Offshore, Inc. price-consensus-eps-surprise-chart | W&T Offshore, Inc. Quote

Overall Production Rises

Total oil equivalent production averaged 41,149 barrels of oil equivalent per day (Boe/d), which rose 13% from 36,508 Boe/d in the year-ago quarter. Oil production was recorded at 1.7 million barrels of oil (MMBbls), flat year over year. Natural gas liquids output totaled 283 MBbls, lower than 318 MBbls a year ago. Natural gas production of 10,606 million cubic feet (MMcf) in the reported quarter was higher than 7,939 MMcf in the year-earlier period. Of the total production in the quarter, 53% comprised liquids.

The rise in production was supported by the company’s Mobile Bay acquisition from Exxon Mobil Corporation XOM, which added 74 million BOE of net proved reserves to its portfolio. Moreover, W&T Offshore brought online its Gladden Deep first exploration well, which achieved an initial output rate of around 4,600 gross Boe/d.

Realized Prices Decline

The average realized price for oil during the third quarter was $59.24 a barrel, lower than the year-ago level of $69.57. The average realized price of NGL softened to $15.45 from $31.70 per barrel in the prior year. The average realized price of natural gas during the September quarter was $2.23 per thousand cubic feet, down from $2.85 in the comparable period last year. Average realized price for oil equivalent output declined to $34.56 per barrel from $45.32 a year ago.

Operating Expenses

Lease operating expenses increased to $12.46 per Boe in the third quarter from $11.14 a year ago.

Capital Spending & Balance Sheet

W&T Offshore spent $188.1 million capital through the September quarter on oil and gas resources.

As of Sep 30, 2019, the company had approximately $41.7 million in cash and cash equivalents. It also had $137.8 million remaining under its revolving bank credit facility. The company had $719 million in long-term debt.

Guidance

W&T Offshore expects production for fourth-quarter 2019 within 49,300-54,500 Boe/d. For the full year, its production view has been marginally lowered to 39,800-41,100 Boe/d.

This offshore oil and gas explorer expects lease operating expenses through 2019 between $187 million and $193 million. For the fourth quarter, the metric is expected in the range of $57-$62 million.

Full-year 2019 capital expenditures, excluding acquisitions, are expected in the range of $130-$150 million.

Zacks Rank and Stocks to Consider

Currently, Jagged Peak has a Zacks Rank #4 (Sell). Some better-ranked players in the energy space are Lonestar Resources US Inc. LONE and Contango Oil & Gas Company MCF, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Lonestar’s 2020 earnings per share are expected to rise 77% year over year.

Contango Oil & Gas’ bottom line for the current year is expected to rise around 87% year over year.

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