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W&T Offshore (WTI) Q3 Earnings Beat on Higher Production

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W&T Offshore, Inc. (WTI - Free Report) reported third-quarter 2019 adjusted earnings (excluding one-time items) of 13 cents per share, beating the Zacks Consensus Estimate of 1 cent but declining from the year-ago figure of 30 cents.

Meanwhile, quarterly revenues decreased to $132.2 million from $153.5 million a year ago. Moreover, the top line missed the Zacks Consensus Estimate of $134 million.

The better-than-expected earnings were supported by higher production volumes, partially offset by a decline in average realized prices and rise in lease operating expenses.

W&T Offshore, Inc. Price, Consensus and EPS Surprise

W&T Offshore, Inc. Price, Consensus and EPS Surprise

W&T Offshore, Inc. price-consensus-eps-surprise-chart | W&T Offshore, Inc. Quote

Overall Production Rises

Total oil equivalent production averaged 41,149 barrels of oil equivalent per day (Boe/d), which rose 13% from 36,508 Boe/d in the year-ago quarter. Oil production was recorded at 1.7 million barrels of oil (MMBbls), flat year over year. Natural gas liquids output totaled 283 MBbls, lower than 318 MBbls a year ago. Natural gas production of 10,606 million cubic feet (MMcf) in the reported quarter was higher than 7,939 MMcf in the year-earlier period. Of the total production in the quarter, 53% comprised liquids.

The rise in production was supported by the company’s Mobile Bay acquisition from Exxon Mobil Corporation (XOM - Free Report) , which added 74 million BOE of net proved reserves to its portfolio. Moreover, W&T Offshore brought online its Gladden Deep first exploration well, which achieved an initial output rate of around 4,600 gross Boe/d.

Realized Prices Decline

The average realized price for oil during the third quarter was $59.24 a barrel, lower than the year-ago level of $69.57. The average realized price of NGL softened to $15.45 from $31.70 per barrel in the prior year. The average realized price of natural gas during the September quarter was $2.23 per thousand cubic feet, down from $2.85 in the comparable period last year. Average realized price for oil equivalent output declined to $34.56 per barrel from $45.32 a year ago.

Operating Expenses

Lease operating expenses increased to $12.46 per Boe in the third quarter from $11.14 a year ago.

Capital Spending & Balance Sheet

W&T Offshore spent $188.1 million capital through the September quarter on oil and gas resources.

As of Sep 30, 2019, the company had approximately $41.7 million in cash and cash equivalents. It also had $137.8 million remaining under its revolving bank credit facility. The company had $719 million in long-term debt.

Guidance

W&T Offshore expects production for fourth-quarter 2019 within 49,300-54,500 Boe/d. For the full year, its production view has been marginally lowered to 39,800-41,100 Boe/d.

This offshore oil and gas explorer expects lease operating expenses through 2019 between $187 million and $193 million. For the fourth quarter, the metric is expected in the range of $57-$62 million.

Full-year 2019 capital expenditures, excluding acquisitions, are expected in the range of $130-$150 million.

Zacks Rank and Stocks to Consider

Currently, Jagged Peak has a Zacks Rank #4 (Sell). Some better-ranked players in the energy space are Lonestar Resources US Inc. (LONE - Free Report) and Contango Oil & Gas Company (MCF - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Lonestar’s 2020 earnings per share are expected to rise 77% year over year.

Contango Oil & Gas’ bottom line for the current year is expected to rise around 87% year over year.

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