On Sep 25, W&T Offshore, Inc. (WTI - Free Report) was raised to a Zacks Rank #1 (Strong Buy), implying that the stock will significantly outperform the broader U.S. equity market over the next one to three months.
Why the Upgrade?
Over the past 60 days, the Zacks Consensus Estimate for W&T Offshore’s 2018 earnings has been revised upward from 86 cents to 90 cents. The Zacks Consensus Estimate for 2019 earnings also moved up to 69 cents from 65 cents over the same time frame. This has enhanced the company’s impressive earnings profile. W&T Offshore has surpassed the Zacks Consensus Estimate in three of the last four quarters, the average positive earnings surprise being 27.5%.
W&T Offshore is among the leading oil and natural gas exploration and production players, with key focus on resources located off the coast of Gulf of Mexico. In the shelf plays of Gulf of Mexico, lying in water depths of less than 500 feet, the company has presence in over 250,000 net acres. The upstream energy firm also has foothold in 80,000 net acres in the deepwater Gulf of Mexico, lying at a water depth of more than 500 feet.
The shelf resources contribute to 58% of W&T Offshore’s daily oil-equivalent production. The company recorded proven or 1 P reserves in the Gulf of Mexico shelf at 56.3 million barrels of oil equivalent (MMBoE). In the deepwater Gulf of Mexico, the company has 21.7 MMBoE of 1 P reserves.
Significant proved reserve bases in both the shelf and deepwater resources will likely drive the company’s production. Since, W&T Offshore’s production comprises of 50% oil, the company is well positioned to capitalize on the massive recovery in the crude pricing environment.
The positive developments are reflected in the oil and gas explorer’s impressive earnings chart. Over the past year, the stock has rallied 153.2%, significantly outperforming the 8.7% gain of the stocks belonging to the industry.
Other Stocks to Consider
Other prospective players in the energy space are Shell Midstream Partners LP (SHLX - Free Report) , Petroleo Brasileiro S.A. or Petrobras (PBR - Free Report) and Denbury Resources Inc. (DNR - Free Report) . Shell Midstream Partners and Petrobras sport a Zacks Rank #1, while Denbury carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Shell Midstream Partners has an average positive earnings surprise of 7.9% for the last four quarters.
Petrobras’ bottom line beat the Zacks Consensus Estimate in three of the trailing four quarters, the average beat being 10.4%.
Denbury beat the Zacks Consensus Estimate for earnings in each of the prior four quarters, the average positive surprise being 162.9%.
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