W&T Offshore, Inc. (WTI - Free Report) stock jumped 8.6% since it reported better-than-expected results on Nov 4. The company expects to consolidate Mobile Bay natural gas treatment plants by fourth quarter-end, which will likely result in significant cost savings.
It reported third-quarter 2020 adjusted loss (excluding one-time items) of 14 cents per share, narrower than the Zacks Consensus Estimate of a loss of 24 cents. However, in the year-ago period, the company reported earnings of 13 cents per share.
Meanwhile, quarterly revenues plunged to $72.5 million from $132.2 million a year ago. The top line, however, beat the Zacks Consensus Estimate of $69 million.
The better-than-expected results was supported by lower costs and expenses. This was partially offset by a decline in average realized prices of commodities and lower oil equivalent production volumes.
Production Stats
Total oil equivalent production averaged 34,459 barrels of oil equivalent per day (Boe/d), down from the year-ago quarter’s 41,149 Boe/d. Production was affected by the hurricane season in the Gulf of Mexico.
Oil production was recorded at 1,115 thousand barrels (MBbls), down 35.7% from the year-ago level of 1,735 MBbls. Natural gas production of 9,897 million cubic feet (MMcf) for the reported quarter was 6.7% lower than 10,606 MMcf in the year-earlier period. However, natural gas liquids output totaled 407 MBbls, 43.8% higher than 283 MBbls a year ago. Of the total production in the quarter, almost 48% comprised liquids.
Realized Commodity Prices
The average realized price for oil for the third quarter was $41.81 a barrel, lower than the year-ago level of $59.24. The average realized price of NGL dropped to $10.99 from $15.45 per barrel in the prior year. The average realized price of natural gas for the June quarter was $1.94 per thousand cubic feet, down from $2.23 in the comparable period last year. Average realized price for oil equivalent output declined to $22.16 per barrel from $34.56 a year ago.
Operating Expenses
Lease operating expenses contracted to $11.49 per Boe for the third quarter from $12.46 a year ago. However, general and administrative expenses rose to $4.57 per Boe from $2.67 in the year-ago period.
Overall, total costs and expenses fell to $92 million from the year-ago level of $96.8 million.
Cash Flow
Net cash provided by operations in the third quarter was $21.3 million, down from $80.3 million in the year-ago period.
Free cash flow for the quarter declined to $5.9 million from $13.3 million in the year-ago quarter.
Capital Spending & Balance Sheet
W&T Offshore spent $1.2 million capital through the September quarter (excluding acquisitions) on oil and gas resources.
As of Sep 30, 2020, the company’s cash and cash equivalents were $56.5 million. The upstream firm had $130.6 million of availability under the revolving bank credit facility. Its long-term debt as of the September quarter was recorded at $624.7 million.
Guidance
For the December quarter, the company expects production in the range of 31,500-35,000 Boe/d. Oil production is expected in the range of 1-1.1 MMBbls for the fourth quarter.
For fourth-quarter 2020, the upstream company expects lease operating expenses in the band of $43-$48 million. General and administrative expenses are expected within $11.7-$12.9 million.
W&T Offshore expects to consolidate Mobile Bay natural gas treatment plants by fourth quarter-end, which will decrease costs by $5 million per annum. It has suspended drilling activities and reduced capex budget for 2020 to $15-$25 million.
Zacks Rank & Stocks to Consider
The company currently has a Zacks Rank #3 (Hold). Some better-ranked players in the energy space include Matador Resources Company (MTDR - Free Report) , Antero Resources Corporation (AR - Free Report) and Global Partners LP (GLP - Free Report) , each holding a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Matador Resources’ bottom line for 2021 is expected to surge 187% year over year.
Antero Resources’ bottom line for 2021 is expected to rise 30.5% year over year.
Global Partners’ bottom line for 2020 is expected to rise 150.5% year over year.
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W&T Offshore, Inc. (WTI - Free Report) stock jumped 8.6% since it reported better-than-expected results on Nov 4. The company expects to consolidate Mobile Bay natural gas treatment plants by fourth quarter-end, which will likely result in significant cost savings.
It reported third-quarter 2020 adjusted loss (excluding one-time items) of 14 cents per share, narrower than the Zacks Consensus Estimate of a loss of 24 cents. However, in the year-ago period, the company reported earnings of 13 cents per share.
Meanwhile, quarterly revenues plunged to $72.5 million from $132.2 million a year ago. The top line, however, beat the Zacks Consensus Estimate of $69 million.
The better-than-expected results was supported by lower costs and expenses. This was partially offset by a decline in average realized prices of commodities and lower oil equivalent production volumes.
Production Stats
Total oil equivalent production averaged 34,459 barrels of oil equivalent per day (Boe/d), down from the year-ago quarter’s 41,149 Boe/d. Production was affected by the hurricane season in the Gulf of Mexico.
Oil production was recorded at 1,115 thousand barrels (MBbls), down 35.7% from the year-ago level of 1,735 MBbls. Natural gas production of 9,897 million cubic feet (MMcf) for the reported quarter was 6.7% lower than 10,606 MMcf in the year-earlier period. However, natural gas liquids output totaled 407 MBbls, 43.8% higher than 283 MBbls a year ago. Of the total production in the quarter, almost 48% comprised liquids.
Realized Commodity Prices
The average realized price for oil for the third quarter was $41.81 a barrel, lower than the year-ago level of $59.24. The average realized price of NGL dropped to $10.99 from $15.45 per barrel in the prior year. The average realized price of natural gas for the June quarter was $1.94 per thousand cubic feet, down from $2.23 in the comparable period last year. Average realized price for oil equivalent output declined to $22.16 per barrel from $34.56 a year ago.
Operating Expenses
Lease operating expenses contracted to $11.49 per Boe for the third quarter from $12.46 a year ago. However, general and administrative expenses rose to $4.57 per Boe from $2.67 in the year-ago period.
Overall, total costs and expenses fell to $92 million from the year-ago level of $96.8 million.
Cash Flow
Net cash provided by operations in the third quarter was $21.3 million, down from $80.3 million in the year-ago period.
Free cash flow for the quarter declined to $5.9 million from $13.3 million in the year-ago quarter.
Capital Spending & Balance Sheet
W&T Offshore spent $1.2 million capital through the September quarter (excluding acquisitions) on oil and gas resources.
As of Sep 30, 2020, the company’s cash and cash equivalents were $56.5 million. The upstream firm had $130.6 million of availability under the revolving bank credit facility. Its long-term debt as of the September quarter was recorded at $624.7 million.
Guidance
For the December quarter, the company expects production in the range of 31,500-35,000 Boe/d. Oil production is expected in the range of 1-1.1 MMBbls for the fourth quarter.
For fourth-quarter 2020, the upstream company expects lease operating expenses in the band of $43-$48 million. General and administrative expenses are expected within $11.7-$12.9 million.
W&T Offshore expects to consolidate Mobile Bay natural gas treatment plants by fourth quarter-end, which will decrease costs by $5 million per annum. It has suspended drilling activities and reduced capex budget for 2020 to $15-$25 million.
Zacks Rank & Stocks to Consider
The company currently has a Zacks Rank #3 (Hold). Some better-ranked players in the energy space include Matador Resources Company (MTDR - Free Report) , Antero Resources Corporation (AR - Free Report) and Global Partners LP (GLP - Free Report) , each holding a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Matador Resources’ bottom line for 2021 is expected to surge 187% year over year.
Antero Resources’ bottom line for 2021 is expected to rise 30.5% year over year.
Global Partners’ bottom line for 2020 is expected to rise 150.5% year over year.
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by referendums and legislation, this industry is expected to blast from an already robust $17.7 billion in 2019 to a staggering $73.6 billion by 2027. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
See the pot stocks we're targeting >>
Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
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