W&T Offshore, Inc.’s (WTI - Free Report) shares have declined 18% since it reported weaker-than-expected second-quarter earnings on Aug 3. It increased lease operating, and general and administrative expenses guidance for 2021. The potential increase in the same can further reduce profits.
It reported second-quarter adjusted earnings (excluding one-time items) of 2 cents per share, missing the Zacks Consensus Estimate of 9 cents. Yet, the bottom line improved from the year-ago loss of 2 cents per share.
Total quarterly revenues of $132.8 million surpassed the Zacks Consensus Estimate of $122 million. Also, the top line increased from $55.2 million in the prior-year quarter.
Weaker-than-expected quarterly earnings were caused by lower production volumes and increased costs & expenses, which were partially offset by higher realization of commodity prices.
Production Stats
Total production averaged 40,888 barrels of oil equivalent per day (Boe/d), down from the year-ago quarter’s 42,037 Boe/d.
Oil production was recorded at 1,352 thousand barrels (MBbls), down from the year-ago level of 1,414 MBbls. Also, natural gas liquids’ output totaled 337 MBbls, lower than 410 MBbls a year ago. Natural gas production of 12,189 million cubic feet (MMcf) for the reported quarter was marginally higher than 12,006 MMcf in the year-earlier period. Of the total production for the reported quarter, almost 45.4% comprised liquids.
Realized Commodity Prices
The average realized price for oil for the second quarter was $65.11 a barrel, higher than the year-ago level of $21.67. The average realized price of NGL increased to $26.18 from $4.67 per barrel in the prior year. The average realized price of natural gas for the June-end quarter was $2.66 per thousand cubic feet, up from $1.78 in the last year’s comparable period. Average realized price for oil equivalent output increased to $34.75 per barrel from $14.10 a year ago.
Operating Expenses
Lease operating expenses rose to $12.78 per Boe for the second quarter from $7.40 a year ago. Further, general and administrative expenses increased to $3.76 per Boe from $1.47 in the year-ago period.
Overall, total costs and expenses increased to $180.7 million from the year-ago level of $83.3 million.
Cash Flow
Net cash from operations for the second quarter was $1.2 million compared with $9.2 million in the year-ago period.
Free cash flow for the reported quarter decreased to $18.7 million from $20.8 million in the year-ago quarter.
Capital Spending & Balance Sheet
W&T Offshore spent $4.3 million in capital through the June-end quarter (excluding acquisitions) on oil and gas resources.
As of Jun 30, 2021, the company’s cash and cash equivalents were $209.1 million, up from the first-quarter 2020 level of $53.4 million. Its net long-term debt as of the June-end quarter was recorded at $717.9 million, up from the previous-quarter level of $593.8 million. The current portion of the long-term debt was $36.8 million.
Guidance
For 2021, W&T Offshore narrowed its total production view to 39,000-41,000 Boe/d from previous expectation of 38,000-42,000 Boe/d. Oil production is now expected within 5.19-5.44 MMBbls compared with the previous guided range of 4.97-5.57 MMBbls.
The upstream company reiterated its guidance for lease operating expenses of $158-$174 million, reflecting an increase from the previously expected $153-$169 million. General and administrative expenses’ guidance has been increased to $52-$55 million. Capital expenditure guidance has been reiterated at $30-$60 million for 2021, of which the majority will be used in the second half of the year.
For third-quarter 2021, the company projects total production of 38,500-42,500 Boe/d. Oil production is expected within 1.28-1.41 MMBbls.
Zacks Rank & Stocks to Consider
The company currently has a Zacks Rank #3 (Hold). Some better-ranked stocks from the energy space include Range Resources Corporation (RRC - Free Report) , Hess Corporation (HES - Free Report) and Summit Midstream Partners, LP (SMLP - Free Report) , each having a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for Range Resources’ earnings for 2021 is pegged at $1.53 per share, indicating a massive improvement from the year-ago loss of 9 cents.
Hess’ profits for 2021 are expected to jump 177.1% year over year.
Summit Midstream’s bottom line has witnessed two upward estimate revisions and no downward movement in the past 30 days.
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W&T Offshore, Inc.’s (WTI - Free Report) shares have declined 18% since it reported weaker-than-expected second-quarter earnings on Aug 3. It increased lease operating, and general and administrative expenses guidance for 2021. The potential increase in the same can further reduce profits.
It reported second-quarter adjusted earnings (excluding one-time items) of 2 cents per share, missing the Zacks Consensus Estimate of 9 cents. Yet, the bottom line improved from the year-ago loss of 2 cents per share.
Total quarterly revenues of $132.8 million surpassed the Zacks Consensus Estimate of $122 million. Also, the top line increased from $55.2 million in the prior-year quarter.
Weaker-than-expected quarterly earnings were caused by lower production volumes and increased costs & expenses, which were partially offset by higher realization of commodity prices.
Production Stats
Total production averaged 40,888 barrels of oil equivalent per day (Boe/d), down from the year-ago quarter’s 42,037 Boe/d.
Oil production was recorded at 1,352 thousand barrels (MBbls), down from the year-ago level of 1,414 MBbls. Also, natural gas liquids’ output totaled 337 MBbls, lower than 410 MBbls a year ago. Natural gas production of 12,189 million cubic feet (MMcf) for the reported quarter was marginally higher than 12,006 MMcf in the year-earlier period. Of the total production for the reported quarter, almost 45.4% comprised liquids.
Realized Commodity Prices
The average realized price for oil for the second quarter was $65.11 a barrel, higher than the year-ago level of $21.67. The average realized price of NGL increased to $26.18 from $4.67 per barrel in the prior year. The average realized price of natural gas for the June-end quarter was $2.66 per thousand cubic feet, up from $1.78 in the last year’s comparable period. Average realized price for oil equivalent output increased to $34.75 per barrel from $14.10 a year ago.
Operating Expenses
Lease operating expenses rose to $12.78 per Boe for the second quarter from $7.40 a year ago. Further, general and administrative expenses increased to $3.76 per Boe from $1.47 in the year-ago period.
Overall, total costs and expenses increased to $180.7 million from the year-ago level of $83.3 million.
Cash Flow
Net cash from operations for the second quarter was $1.2 million compared with $9.2 million in the year-ago period.
Free cash flow for the reported quarter decreased to $18.7 million from $20.8 million in the year-ago quarter.
Capital Spending & Balance Sheet
W&T Offshore spent $4.3 million in capital through the June-end quarter (excluding acquisitions) on oil and gas resources.
As of Jun 30, 2021, the company’s cash and cash equivalents were $209.1 million, up from the first-quarter 2020 level of $53.4 million. Its net long-term debt as of the June-end quarter was recorded at $717.9 million, up from the previous-quarter level of $593.8 million. The current portion of the long-term debt was $36.8 million.
Guidance
For 2021, W&T Offshore narrowed its total production view to 39,000-41,000 Boe/d from previous expectation of 38,000-42,000 Boe/d. Oil production is now expected within 5.19-5.44 MMBbls compared with the previous guided range of 4.97-5.57 MMBbls.
The upstream company reiterated its guidance for lease operating expenses of $158-$174 million, reflecting an increase from the previously expected $153-$169 million. General and administrative expenses’ guidance has been increased to $52-$55 million. Capital expenditure guidance has been reiterated at $30-$60 million for 2021, of which the majority will be used in the second half of the year.
For third-quarter 2021, the company projects total production of 38,500-42,500 Boe/d. Oil production is expected within 1.28-1.41 MMBbls.
Zacks Rank & Stocks to Consider
The company currently has a Zacks Rank #3 (Hold). Some better-ranked stocks from the energy space include Range Resources Corporation (RRC - Free Report) , Hess Corporation (HES - Free Report) and Summit Midstream Partners, LP (SMLP - Free Report) , each having a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for Range Resources’ earnings for 2021 is pegged at $1.53 per share, indicating a massive improvement from the year-ago loss of 9 cents.
Hess’ profits for 2021 are expected to jump 177.1% year over year.
Summit Midstream’s bottom line has witnessed two upward estimate revisions and no downward movement in the past 30 days.
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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