W&T Offshore, Inc.’s ( WTI Quick Quote 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.
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.
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.
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.
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 Quick Quote RRC - Free Report) , Hess Corporation ( HES Quick Quote HES - Free Report) and Summit Midstream Partners, LP ( SMLP Quick Quote 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.