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W&T (WTI) Up 24.2% Since Last Earnings Report: Can It Continue?

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A month has gone by since the last earnings report for W&T Offshore (WTI - Free Report) . Shares have added about 24.2% in that time frame, outperforming 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 drivers.

W&T Offshore Q1 Earnings & Revenues Beat Estimates

W&T Offshore reported first-quarter 2022 adjusted earnings (excluding one-time items) of 21 cents per share, beating the Zacks Consensus Estimate of 18 cents. The bottom line significantly improved from the year-ago quarter’s 11 cents per share.

Total quarterly revenues of $191 million surpassed the Zacks Consensus Estimate of $159 million. Also, the top line increased from $125.6 million in the prior-year quarter.

The strong quarterly results were supported by the higher realization of commodity prices.

Production Statistics

Total production averaged 37.8 thousand barrels of oil equivalent per day (MBoe/d), down from the year-ago quarter’s 39.7 MBoe/d.

Oil production was recorded at 1,304 thousand barrels (MBbls), down from the year-ago level of 1,377 MBbls. Also, natural gas liquids’ output totaled 349 MBbls, lower than 392 MBbls a year ago. Natural gas production of 10,471 million cubic feet (MMcf) for the reported quarter was lower than 10,799 MMcf in the year-earlier period. Of the total production for the reported quarter, about 48.7% comprised liquids.

Realized Commodity Prices

The average realized price for oil in the first quarter was $94.10 a barrel, higher than the year-ago level of $56.73. The average realized price of NGL increased to $39.60 from $23.88 per barrel in the prior year. The average realized price of natural gas for the March-end quarter was $4.91 per thousand cubic feet, up from $3.35 in the last year’s comparable period. The average realized price for oil-equivalent output increased to $55.29 per barrel from $34.66 a year ago.

Operating Expenses

Lease operating expenses rose to $12.78 per Boe in the first quarter from $11.87 a year ago. Also, general and administrative expenses increased to $4.05 per Boe from $3 in the year-ago period.

Overall, total costs and expenses increased to $93.4 million from the year-ago level of $86 million.

Cash Flow

Net cash from operations for the first quarter was $27.5 million, which declined from $45 million in the year-ago period.

Free cash flow for the reported quarter increased to $46.9 million from $40.4 million in the year-ago quarter.

Capital Spending & Balance Sheet

W&T Offshore spent $17.4 million in capital through the March-end quarter (excluding acquisitions) on oil and gas resources.

As of Mar 31, 2022, the company’s cash and cash equivalents were $215.5 million, down from the fourth-quarter 2021 level of $245.8 million. Its net long-term debt as of the March-end quarter was recorded at $680 million, down from the prior-quarter level of $688 million. The current portion of the long-term debt was $39.9 million.

Guidance

For 2022, W&T Offshore revised its average daily oil-equivalent production upward to 38.2-42.2 MBoe/d from 37.5-41.5 MBoe/d mentioned earlier. The metric also suggests an improvement from 38.1 MBoe/d reported in 2021. Oil production is expected to be 5.3-5.9 MMBbls, while that of natural gas will likely be 43-47.5 Bcf.

The upstream company reiterated its capital spending budget for 2022 at $70-$90 million, which excludes acquisition opportunities. It expects lease operating expenses of $200-$220 million for the year.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in estimates revision.

The consensus estimate has shifted -16.46% due to these changes.

VGM Scores

At this time, W&T has a strong Growth Score of A, 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 quintile 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 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.

Performance of an Industry Player

W&T belongs to the Zacks Oil and Gas - Exploration and Production - United States industry. Another stock from the same industry, Viper Energy Partners (VNOM - Free Report) , has gained 7.7% over the past month. More than a month has passed since the company reported results for the quarter ended March 2022.

Viper Energy reported revenues of $201.9 million in the last reported quarter, representing a year-over-year change of +108.2%. EPS of $0.23 for the same period compares with -$0.08 a year ago.

For the current quarter, Viper Energy is expected to post earnings of $0.43 per share, indicating a change of +377.8% from the year-ago quarter. The Zacks Consensus Estimate has changed +2.7% over the last 30 days.

Viper Energy has a Zacks Rank #2 (Buy) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of C.


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