We are upbeat about W&T Offshore, Inc.’s (WTI - Free Report) prospects and believe that it is a promising pick at the moment.
The company currently carries a Zacks Rank #2 (Buy) and a VGM Score of A. Our research shows that stocks with a VGM Score of A or B when combined with a Zacks Rank #1 (Strong Buy) or 2 offer the best opportunities for investors.
Let’s take a look at the other factors that make this upstream energy player an attractive bet.
W&T Offshore has a strong presence across the resources located off the coast of Gulf of Mexico. In the state and federal waters, the company owns stakes in 48 oil and natural gas fields, spreading across roughly 650,000 gross acres.
In the deepwater, the company has interest in 210,000 gross acres, while in the Gulf of Mexico Shelf, it covers 440,000 gross acres. Investors should know that after the prolific Permian basin, Gulf of Mexico contributes to the nation’s total production, per the company’s presentation.
The upstream firm reported 21.7 million barrel of oil equivalent (MMBoe) of 1P reserves in the deepwater Gulf of Mexico. In the Gulf of Mexico shelf, the company estimated its 1P reserves at 56.3 MMBoe. The proved reserves will likely back W&T Offshore’s production.
Notably, the company’s operations are getting efficient as reflected by almost flat production despite the massive fall in capital spending over the past few years. The company also has solid cost control measures. Since fourth-quarter 2014, W&T Offshore’s lease operating expenses have declined by more than 50%.
Importantly, the breakeven oil price for deepwater drilling has dramatically decreased to $30 a barrel, Royal Dutch Shell plc (RDS.A - Free Report) told Financial Times. This reflects that offshore projects are still profitable despite crude price tumbled to its lowest settlement of the year.
Following these developments, W&T Offshore has rallied 85.5% in the past year, outpacing the collective decline of 16.1% of the stocks belonging to the industry. The company also has a strong earnings surprise history and has managed to beat the Zacks Consensus Estimate in the prior four quarters.
Other Stocks to Consider
Other prospective players in the energy space are TC PipeLines, LP (TCP - Free Report) , Enterprise Products Partners L.P. (EPD - Free Report) and Energen Corporation . All the stocks sport a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
TC PipeLines beat the Zacks Consensus Estimate in three of the last four quarters, the average positive earnings surprise being 15.6%.
Enterprise Products surpassed the Zacks Consensus Estimate in the last four quarters, the average positive earnings surprise being 9.3%.
Energen has average positive earnings surprise of 18.6% for the prior four quarters.
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