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Why Is W&T (WTI) Down 19.9% Since Last Earnings Report?
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It has been about a month since the last earnings report for W&T Offshore (WTI - Free Report) . Shares have lost about 19.9% 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 its most recent earnings report in order to get a better handle on the important drivers.
W&T Offshore reported third-quarter break-even adjusted earnings (excluding one-time items) versus the Zacks Consensus Estimate of a loss of 9 cents per share. The bottom line also improved from the year-ago loss of 14 cents per share.
Total quarterly revenues of $133.9 million surpassed the Zacks Consensus Estimate of $117 million. Also, the top line increased from $72.5 million in the prior-year quarter.
The strong quarterly results were supported by higher realization of commodity prices.
Production Stats
Total production averaged 34.8 thousand barrels of oil equivalent per day (MBoe/d), marginally up from the year-ago quarter’s 34.5 MBoe/d.
Oil production was recorded at 1,083 thousand barrels (MBbls), down from the year-ago level of 1,115 MBbls. Also, natural gas liquids’ output totaled 376 MBbls, lower than 407 MBbls a year ago. Yet, natural gas production of 10,481 million cubic feet (MMcf) for the reported quarter was higher than 9,897 MMcf in the year-earlier period. Of the total production for the reported quarter, almost 45.5% comprised liquids.
Realized Commodity Prices
The average realized price for oil for the third quarter was $68.57 a barrel, higher than the year-ago level of $41.81. The average realized price of NGL increased to $32.46 from $10.99 per barrel in the prior year. The average realized price of natural gas for the September quarter was $4.31 per thousand cubic feet, up from $1.94 in the last year’s comparable period. Average realized price for oil equivalent output increased to $41.05 per barrel from $22.16 a year ago.
Operating Expenses
Lease operating expenses rose to $12.32 per Boe for the third quarter from $11.49 a year ago. Nevertheless, general and administrative expenses decreased to $4.18 per Boe from $4.57 in the year-ago period.
Overall, total costs and expenses increased to $158.9 million from the year-ago level of $92 million.
Cash Flow
Net cash from operations for the third quarter was $65.1 million compared with $21.3 million in the year-ago period.
Free cash flow for the reported quarter increased to $7.6 million from $5.9 million in the year-ago quarter.
Capital Spending & Balance Sheet
W&T Offshore spent $10.2 million in capital through the September quarter (excluding acquisitions) on oil and gas resources.
As of Sep 30, 2021, the company’s cash and cash equivalents were $257.6 million, up from the second-quarter 2021 level of $209.1 million. Its net long-term debt as of the September-end quarter was recorded at $696.2 million, down from the previous-quarter level of $717.9 million. The current portion of the long-term debt was $46.2 million.
Guidance
For fourth-quarter 2021, W&T Offshore expects total production within 34.8-38.5 MBoe/d. Production of oil is expected within 1.06-1.17 MMBbls, while that of natural gas will likely be in the range of 10.76-11.90 Bcf. The upstream company expects fourth-quarter lease operating expenses within $44.6-$50.6 million.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates revision. The consensus estimate has shifted 166.67% due to these changes.
VGM Scores
Currently, W&T has a strong Growth Score of A, a grade with the same score on the momentum front. Following the exact same course, 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 trending upward for the stock, and the magnitude of this revision looks promising. 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) Down 19.9% Since Last Earnings Report?
It has been about a month since the last earnings report for W&T Offshore (WTI - Free Report) . Shares have lost about 19.9% 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 its most recent earnings report in order to get a better handle on the important drivers.
W&T Offshore Q3 Earnings & Revenues Beat Estimates
W&T Offshore reported third-quarter break-even adjusted earnings (excluding one-time items) versus the Zacks Consensus Estimate of a loss of 9 cents per share. The bottom line also improved from the year-ago loss of 14 cents per share.
Total quarterly revenues of $133.9 million surpassed the Zacks Consensus Estimate of $117 million. Also, the top line increased from $72.5 million in the prior-year quarter.
The strong quarterly results were supported by higher realization of commodity prices.
Production Stats
Total production averaged 34.8 thousand barrels of oil equivalent per day (MBoe/d), marginally up from the year-ago quarter’s 34.5 MBoe/d.
Oil production was recorded at 1,083 thousand barrels (MBbls), down from the year-ago level of 1,115 MBbls. Also, natural gas liquids’ output totaled 376 MBbls, lower than 407 MBbls a year ago. Yet, natural gas production of 10,481 million cubic feet (MMcf) for the reported quarter was higher than 9,897 MMcf in the year-earlier period. Of the total production for the reported quarter, almost 45.5% comprised liquids.
Realized Commodity Prices
The average realized price for oil for the third quarter was $68.57 a barrel, higher than the year-ago level of $41.81. The average realized price of NGL increased to $32.46 from $10.99 per barrel in the prior year. The average realized price of natural gas for the September quarter was $4.31 per thousand cubic feet, up from $1.94 in the last year’s comparable period. Average realized price for oil equivalent output increased to $41.05 per barrel from $22.16 a year ago.
Operating Expenses
Lease operating expenses rose to $12.32 per Boe for the third quarter from $11.49 a year ago. Nevertheless, general and administrative expenses decreased to $4.18 per Boe from $4.57 in the year-ago period.
Overall, total costs and expenses increased to $158.9 million from the year-ago level of $92 million.
Cash Flow
Net cash from operations for the third quarter was $65.1 million compared with $21.3 million in the year-ago period.
Free cash flow for the reported quarter increased to $7.6 million from $5.9 million in the year-ago quarter.
Capital Spending & Balance Sheet
W&T Offshore spent $10.2 million in capital through the September quarter (excluding acquisitions) on oil and gas resources.
As of Sep 30, 2021, the company’s cash and cash equivalents were $257.6 million, up from the second-quarter 2021 level of $209.1 million. Its net long-term debt as of the September-end quarter was recorded at $696.2 million, down from the previous-quarter level of $717.9 million. The current portion of the long-term debt was $46.2 million.
Guidance
For fourth-quarter 2021, W&T Offshore expects total production within 34.8-38.5 MBoe/d. Production of oil is expected within 1.06-1.17 MMBbls, while that of natural gas will likely be in the range of 10.76-11.90 Bcf. The upstream company expects fourth-quarter lease operating expenses within $44.6-$50.6 million.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates revision. The consensus estimate has shifted 166.67% due to these changes.
VGM Scores
Currently, W&T has a strong Growth Score of A, a grade with the same score on the momentum front. Following the exact same course, 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 trending upward for the stock, and the magnitude of this revision looks promising. Notably, W&T has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.