A month has gone by since the last earnings report for W&T Offshore (WTI). Shares have lost about 3.1% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is W&T due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
W&T Offshore reported adjusted second-quarter 2018 earnings — excluding onetime items — of 29 cents per share, beating the Zacks Consensus Estimate of 17 cents and improving from the year-ago 22 cents.
Revenues increased to $149.6 million in the quarter from $123.3 million a year ago. The top line also surpassed the Zacks Consensus Estimate of $147 million.
Higher oil and natural gas liquids (NGLs) price realizations primarily attributed to the strong second-quarter results.
Production Falls, Prices Rise
The production of oil and natural gas was recorded at 3,419 thousand barrels of oil equivalent (MBoe) (60.1% liquids), down 12.8% from 3,921 Mboe a year ago. The maintenance activities for wells, outages of pipelines, unfavorable weather and natural declines of wells attributed to the lower output.
W&T Offshore’s production for oil and NGLs was 2,055 thousand barrels (MBbls), down 9.6% from the prior-year quarter, while natural gas output came in at 8,186 million cubic feet (MMcf), down 17.2%.
The average realized crude oil price during the second quarter was $67.09 a barrel, representing an increase of 50.6% from the year-ago $44.54. The average realized price of NGL jumped 37% to $27.61 per barrel from $20.15 in second-quarter 2017. However, the average realized natural gas price during the June quarter of 2018 was $2.81 per thousand cubic feet (Mcf), down 5.1% from the year-ago period.
Through second-quarter 2018, W&T Offshore witnessed an 11.8% rise in total cost and expenses to $101.2 million. The jump in total cost was primarily supported by almost 13% rise in lease operating expenses to $35.6 million.
Balance Sheet & Capital Spending
As of Jun 30, 2018, the company had approximately $129.4 million in cash and cash equivalents. The company had long-term debt of $985.7 million — including the current maturities of debt.
For the oil and natural gas resources, W&T Offshore spent $10.7 million capital, on an accrual basis, through the April-to-June quarter of 2018.
Proved Reserves Rise
As of Jun 30, 2018, the oil-equivalent proved reserves of W&T Offshore was reported at 78 million Boe, up 5% from the reserves at the end of 2017.
The company expects production for third-quarter 2018 between 3.1 million barrels of oil equivalent (MMBoe) and 3.4 MMBoe. For 2018, W&T Offshore expects production in the range of 13.2-14.6 MMBoe.
Through the January-to-December quarter of 2018, the offshore oil and gas explorer expects lease operating expenses between $159 million and $176 million.
How Have Estimates Been Moving Since Then?
Fresh estimates followed a downward path over the past two months.
At this time, W&T has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with a C. However, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Based on our scores, the stock is equally suitable for value and growth investors while momentum investors may want to look elsewhere.
W&T has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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