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Why Is W&T (WTI) Up 3.5% Since Last Earnings Report?
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A month has gone by since the last earnings report for W&T Offshore (WTI - Free Report) . Shares have added about 3.5% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is W&T due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
W&T Offshore Beats Q1 Earnings on Higher Production
W&T Offshore 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.
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 ExxonMobil.
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.
Guidance
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.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates revision. The consensus estimate has shifted 16.67% due to these changes.
VGM Scores
At this time, W&T has an average Growth Score of C, however its Momentum Score is doing a bit better with a B. Charting a somewhat similar path, the stock was allocated a grade of A on the value side, putting it in the top 20% 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.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, 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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Why Is W&T (WTI) Up 3.5% Since Last Earnings Report?
A month has gone by since the last earnings report for W&T Offshore (WTI - Free Report) . Shares have added about 3.5% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is W&T due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
W&T Offshore Beats Q1 Earnings on Higher Production
W&T Offshore 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.
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 ExxonMobil.
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.
Guidance
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.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates revision. The consensus estimate has shifted 16.67% due to these changes.
VGM Scores
At this time, W&T has an average Growth Score of C, however its Momentum Score is doing a bit better with a B. Charting a somewhat similar path, the stock was allocated a grade of A on the value side, putting it in the top 20% 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.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, W&T has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.