W&T Offshore (WTI) Q4 Earnings Beat Estimates, Reserves Grow

W&T Offshore, Inc. (NYSE:WTI) reported fourth-quarter 2019 adjusted earnings (excluding one-time items) of 17 cents per share, beating the Zacks Consensus Estimate of a cent but declining from the year-ago 24 cents.

Meanwhile, quarterly revenues increased to $152 million from $143 million a year ago. Moreover, the top line beat the Zacks Consensus Estimate of $151 million.

The better-than-expected results were supported by higher oil equivalent production volumes and lower lease operating expenses, partially offset by a decline in average realized prices of commodities. Along with the quarterly results announcement, the offshore producer announced plans of buying the remaining 25% working interest in the Magnolia field by early 2020.

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 52,773 barrels of oil equivalent per day (Boe/d), up 51% from 35,000 Boe/d in the year-ago quarter. Oil production was recorded at 1.8 million barrels (MMBbls), up 6.1% year over year. Natural gas liquids output totaled 415 MBbls, higher than 322 MBbls a year ago. Natural gas production of 15,966 million cubic feet (MMcf) in the reported quarter was considerably higher than 7,343 MMcf in the year-earlier period. Of the total production in the quarter, 45.2% comprised liquids.

The rise in production was supported by the company’s Mobile Bay area assets acquisition from Exxon Mobil Corporation (NYSE:XOM).

Realized Prices Decline

The average realized price for oil during the fourth quarter was $56.84 a barrel, lower than the year-ago level of $62.94. The average realized price of NGL dropped to $16.64 from $26.84 per barrel in the prior year. The average realized price of natural gas during the December quarter was $2.58 per thousand cubic feet, down from $3.83 per thousand cubic feet in the comparable period last year. Average realized price for oil equivalent output declined to $30.75 per barrel from $44.15 a year ago.

Operating Expenses

Lease operating expenses contracted to $10.98 per Boe in the fourth quarter from $13.48 a year ago.

Capital Spending & Balance Sheet

W&T Offshore spent $32.2 million capital through the December quarter on oil and gas resources.

As of Dec 31, 2019, the company had approximately $32.4 million in cash and cash equivalents. It also had $139.2 million remaining under its revolving bank credit facility. The company had $719.5 million in long-term debt.

Proved Reserves Grow

As of Dec 31, 2019, the company reported proved reserves at 157.4 MMBoE, up 87% from 2019-end reserves of 84 MMBoE.

Guidance

W&T Offshore expects production for first-quarter 2020 within 49,600-54,800 Boe/d. For the full year, its production view is pegged at 47,100-52,100 Boe/d, compared with last year’s 40,600 Boe/d.

Full-year 2020 capital expenditures, excluding acquisitions, are projected in the range of $50-$100 million, lower than last year’s $125.7 million.

Zacks Rank & Stocks to Consider

W&T Offshore currently carries a Zacks Rank #3 (Hold). Meanwhile, a few-better ranked players in the energy sector are Precision Drilling Corporation (NYSE:PDS) , Antero Resources Corporation (NYSE:AR) and Hess Corporation (NYSE:HES) . While Hess carries a Zacks Rank #2 (Buy), Precision Drilling and Antero sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Precision Drilling beat the Zacks Consensus Estimate for earnings in the last four reported quarters.

Antero is likely to see earnings growth of more than 270% in 2020.

Hess’ bottom line for 2020 is expected to climb 93.7% year over year.

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