It has been about a month since the last earnings report for W&T Offshore (WTI). Shares have added about 3.1% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is W&T due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
W&T Offshore Q1 Earnings & Revenue Miss Estimates
WTI reported a first-quarter 2023 adjusted loss (excluding one-time items) of 2 cents per share, missing the Zacks Consensus Estimate of earnings of 16 cents. The bottom line deteriorated from the year-ago quarter’s earnings of 21 cents per share.
Total quarterly revenues of $132 million missed the Zacks Consensus Estimate of $151 million. The top line also decreased from $191 million in the prior-year quarter.
The underperformance was owing to lower oil equivalent production and prices.
The total production averaged 32.5 thousand barrels of oil equivalent per day (MBoe/d), down from the year-ago quarter’s 37.8 MBoe/d.
Oil production was 1,350 thousand barrels (MBbls), up from the year-ago level of 1,304 MBbls. Natural gas liquids’ output totaled 294 MBbls, lower than 349 MBbls a year ago. Natural gas production of 7,677 million cubic feet (MMcf) in the reported quarter was lower than 10,471 MMcf in the year-earlier period.
Realized Commodity Prices
The average realized price for oil in the first quarter was $71.85 a barrel, lower than the year-ago level of $94.10. The average realized price of NGL declined to $26.51 from $39.60 per barrel in the prior year. The average realized price of natural gas in the March quarter was $3.23 per thousand cubic feet, down from $4.91 in the last year’s comparable period. The average realized price for oil-equivalent output decreased to $44.32 per barrel from $55.29.
Lease operating expenses rose to $22.29 per Boe in the first quarter from $12.78 a year ago. Also, general and administrative expenses increased to $6.81 per Boe from $4.05.
Net cash from operations in the first quarter was $23.4 million, which declined from $27.5 million in the year-ago period.
Free cash flow in the reported quarter decreased to $12.4 million from $46.9 million in the year-ago quarter.
Capital Spending & Balance Sheet
W&T Offshore spent $7.4 million in capital through the March quarter on oil and gas resources and equipment.
As of Mar 31, 2023, the company’s cash and cash equivalents were $177.4 million. Its net long-term debt in the quarter was $372.5 million. The current portion of the long-term debt is $30.8 million.
For the second quarter of this year, W&T Offshore projects production in the band of 3,177 to 3,557 MBoe. For 2023, WTI expects production of 13,510 to 14,955 MBoe.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended downward during the past month.
The consensus estimate has shifted -48.72% due to these changes.
Currently, W&T has a poor Growth Score of F, a grade with the same score on the momentum front. However, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. 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 these revisions indicates a downward shift. It's no surprise W&T has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.
Performance of an Industry Player
W&T belongs to the Zacks Oil and Gas - Exploration and Production - United States industry. Another stock from the same industry, Antero Resources (AR), has gained 5.7% over the past month. More than a month has passed since the company reported results for the quarter ended March 2023.
Antero Resources reported revenues of $1.41 billion in the last reported quarter, representing a year-over-year change of +79%. EPS of $0.51 for the same period compares with $1.15 a year ago.
Antero Resources is expected to post break-even earnings per share for the current quarter, representing a year-over-year change of -100%. Over the last 30 days, the Zacks Consensus Estimate has changed -118.3%.
Antero Resources has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of C.
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