It has been about a month since the last earnings report for W&T Offshore (
WTI Quick Quote WTI - Free Report) . Shares have added about 1.6% 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 catalysts.
W&T Offshore Q2 Earnings Miss Estimates
W&T Offshore, Inc. reported second-quarter 2021 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.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates. The consensus estimate has shifted -19.23% due to these changes.
Currently, W&T has an average Growth Score of C, though it is lagging a lot on the Momentum Score front with an F. However, 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 C. If you aren't focused on one strategy, this score is the one you should be interested in.
Estimates have been broadly trending downward for the stock, and the magnitude of this revision 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.