It has been about a month since the last earnings report for W&T Offshore (WTI - Free Report) . Shares have lost about 21% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is W&T due for a breakout? 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 drivers.
W&T Offshore Beats Earnings & Revenue Estimates in Q3
W&T Offshore reported adjusted third-quarter 2018 earnings — excluding onetime items — of 30 cents per share, beating the Zacks Consensus Estimate of 24 cents and improving from the year-ago 4 cents.
Revenues increased to $153.5 million in the quarter from $110.3 million a year ago. The top line also surpassed the Zacks Consensus Estimate of $147 million.
Commencement of projects and surge in oil and natural gas liquids (NGLs) price realizations primarily attributed to the strong third-quarter results.
Production Falls, Prices Rise
The production of oil and natural gas was recorded at 3,359 thousand barrels of oil equivalent (MBoe) (60.6% liquids), almost remains flat with the year-ago level. Success in drilling businesses along with commencement of projects drove production levels.
W&T Offshore’s production for oil and NGLs was 2,036 thousand barrels (MBbls), up almost 2% from the prior-year quarter, but natural gas output came in at 7,939 million cubic feet (MMcf), down 2.3%.
The average realized crude oil price during the third quarter was $69.57 a barrel, representing an increase of 52% from the year-ago $45.92. The average realized price of NGL jumped 43.6% to $31.70 per barrel from $22.07 in third-quarter 2017. However, the average realized natural gas price during the September quarter of 2018 was $2.85 per thousand cubic feet (Mcf), down 4% from the year-ago quarter.
Balance Sheet & Capital Spending
As of Sep 30, 2018, the company had approximately $339.1 million in cash and cash equivalents. The company had long-term debt of $983.9 million — including the current maturities of debt.
For the oil and natural gas resources, W&T Offshore spent $27.4 million capital, on an accrual basis, through the September quarter of 2018.
The company expects production for fourth-quarter 2018 between 3.1 million barrels of oil equivalent (MMBoe) and 3.5 MMBoe. For 2018, W&T Offshore expects production in the range of 13.2-13.6 MMBoe.
Through 2018, the offshore oil and gas explorer expects lease operating expenses between $143 million and $158 million.
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 -10.39% due to these changes.
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.
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 #2 (Buy). We expect an above average return from the stock in the next few months.