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W&T (WTI) Up 14% Since Last Earnings Report: Can It Continue?

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It has been about a month since the last earnings report for W&T Offshore (WTI - Free Report) . Shares have added about 14% 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 the most recent earnings report in order to get a better handle on the important catalysts.

W&T Offshore Q2 Earnings & Revenues Beat Estimates

W&T Offshore reported second-quarter 2022 adjusted earnings (excluding one-time items) of $1.32 per share, beating the Zacks Consensus Estimate of 37 cents. The bottom line significantly improved from the year-ago quarter’s 1 cent per share.

Total quarterly revenues of $273.8 million surpassed the Zacks Consensus Estimate of $228 million. Also, the top line increased from $132.8 million in the prior-year quarter.

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

Production Statistics

The total production averaged 42.4 thousand barrels of oil equivalent per day (MBoe/d), up from the year-ago quarter’s 40.9 MBoe/d.

Oil production was 1,476 thousand barrels (MBbls), up from the year-ago level of 1,352 MBbls. Also, natural gas liquids’ output totaled 384 MBbls, higher than 337 MBbls a year ago. However, natural gas production of 11,995 million cubic feet (MMcf) for the reported quarter was lower than 12,189 MMcf in the year-earlier period. Of the total production for the reported quarter, 48.2% comprised liquids.

Realized Commodity Prices

The average realized price for oil in the second quarter was $107.90 a barrel, higher than the year-ago level of $65.11. The average realized price of NGL increased to $43.58 from $26.18 per barrel in the prior year. The average realized price of natural gas for the June-end quarter was $7.70 per thousand cubic feet, up from $2.66 in the last year’s comparable period. The average realized price for oil-equivalent output increased to $69.55 per barrel from $34.75 a year ago.

Operating Expenses

Lease operating expenses rose to $13.73 per Boe in the second quarter from $12.78 a year ago. Also, general and administrative expenses increased to $3.88 per Boe from $3.76 in the year-ago period.

Overall, total costs and expenses increased to $111.5 million from the year-ago level of $99.3 million.

Cash Flow

Net cash from operations for the second quarter was $210.2 million, which significantly increased from $1.2 million in the year-ago period.

Free cash flow for the reported quarter increased to $233.5 million from $19.2 million in the year-ago quarter.

Capital Spending & Balance Sheet

W&T Offshore spent $8.1 million in capital through the June-end quarter (excluding acquisitions) on oil and gas resources.

As of Jun 30, 2022, the company’s cash and cash equivalents were $377.7 million, up from the first-quarter 2021 level of $215.5 million. Its net long-term debt as of the June-end quarter was $672 million, down from the prior-quarter level of $680 million. The current portion of the long-term debt is $37.2 million.

How Have Estimates Been Moving Since Then?

It turns out, estimates revision have trended downward during the past month.

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

VGM Scores

At this time, W&T has a great Growth Score of A, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the second 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. It's no surprise W&T has a Zacks Rank #5 (Strong Sell). We expect a below average return from the stock in the next few months.

Performance of an Industry Player

W&T is part of the Zacks Oil and Gas - Exploration and Production - United States industry. Over the past month, EQT Corporation (EQT - Free Report) , a stock from the same industry, has gained 5.9%. The company reported its results for the quarter ended June 2022 more than a month ago.

EQT Corporation reported revenues of $1.61 billion in the last reported quarter, representing a year-over-year change of +61.7%. EPS of $0.83 for the same period compares with $0.07 a year ago.

For the current quarter, EQT Corporation is expected to post earnings of $0.99 per share, indicating a change of +725% from the year-ago quarter. The Zacks Consensus Estimate has changed +4.9% over the last 30 days.

The overall direction and magnitude of estimate revisions translate into a Zacks Rank #1 (Strong Buy) for EQT Corporation. Also, the stock has a VGM Score of B.


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