W&T Offshore Q2 Earnings Lag Estimates on Lower Production

W&T Offshore, Inc. WTI reported a second-quarter 2024 loss of 5 cents per share (excluding one item), wider than the Zacks Consensus Estimate of a loss of 3 cents. However, the bottom line improved from the year-ago quarter's reported loss of 8 cents.

Total quarterly revenues of $142.8 million missed the Zacks Consensus Estimate of $152 million. However, the top line increased from $126 million reported in the prior-year quarter.

The weaker-than-expected quarterly earnings were due to low oil-equivalent production and rising operating expenses. This was partially offset by higher average realized prices for oil-equivalent production.

Production Statistics

Production for the quarter averaged 34.9 thousand barrels of oil equivalent per day (MBoe/d), down from 37 MBoe/d in the corresponding period of 2023. The reported metric was lower than our estimate of 37 Mboe/d. The production was negatively impacted by the company's primary Mobile Bay processing plant getting shut down by the third-party operator to perform a turnaround. The decrease was partially offset by increased production from wells acquired in January 2024 and September 2023.

Oil production totaled 1,382 thousand barrels (MBbls), up from 1,254 MBbls in the year-ago quarter. The figure missed our estimate of 1,387 MBbls.

Natural gas liquids' output totaled 334 MBbls, which decreased from 443 MBbls a year ago but surpassed our estimate of 312 MBbls.

Natural gas production of 8,769 million cubic feet (MMcf) was lower than 10,023 MMcf in the prior-year quarter. The figure missed our estimate of 10,017 MMcf.

Realized Commodity Prices

The average realized price for oil in the second quarter was $80.29 per barrel, higher than the year-ago level of $71.76. Our estimate for the same was pegged at $81.46.

The average realized price of NGL increased to $24.43 per barrel from $23.44 in the second quarter of 2023. Our estimate for the same was pinned at $20.69 per barrel.

The average realized price of natural gas in the June-end quarter was $2.50 per thousand cubic feet, up from $2.34 in the corresponding period of 2023 and above our estimate of $2.33.

The average realized price for oil-equivalent output increased to $44.40 per barrel from $36.76 a year ago. The figure also beat our estimate of $42.38.

Operating Expenses

Lease operating expenses increased to $23.29 per Boe from $19.60 in the year-ago period. The reported figure was lower than our estimate of $25.98.

Also, general and administrative expenses increased to $6.72 per Boe from $5.16 a year ago. The figure was higher than our estimate of $5.44.

Cash Flow

Net cash from operations totaled $37.4 million, up from $26.2 million in the year-ago quarter.

The free cash flow increased to $18.7 million from $9.7 million in the year-earlier quarter.

Capital Spending & Balance Sheet

For the reported quarter, W&T Offshore spent $8.8 million on oil and gas resources and equipment.

As of Jun 30, 2024, the company's cash and cash equivalents amounted to $123.4 million and net long-term debt totaled $376.9 million. The current portion of the long-term debt is $14.9 million.

Guidance

For the third quarter of 2024, W&T Offshore expects production to be in the band of 2,842-3,208 Mboe. For 2024, its production is anticipated to be in the 11,900-13,267 Mboe range.

Zacks Rank & Stocks to Consider

Currently, WTI carries a Zacks Rank #3 (Hold).

Investors interested in the energy sector may look at some better-ranked stocks like Sunoco LP SUN, SM Energy Company and Baker Hughes Company BKR. While Sunoco and SM Energy currently sport a Zacks Rank #1 (Strong Buy) each, Baker Hughes carries a Zacks Rank #2 (Buy).

Sunoco is a leading wholesale motor fuel distributor in the United States, boasting a vast distribution network spanning 40 states. With long-term contracts servicing more than 10,000 convenience stores, it distributes over 10 fuel brands, ensuring a stable revenue stream. SUN currently has a Value Score of A.

The Zacks Consensus Estimate for 2024 and 2025 earnings per unit is pegged at $7.29 and $7.26, respectively. The partnership has witnessed upward earnings estimate revisions for 2025 in the past 30 days.

SM Energy is set to expand its oil-centered operations in the coming years, with an increasing focus on crude oil, especially in the Permian Basin and Eagle Ford regions. The company's attractive oil and gas investments should create long-term value for shareholders.

The Zacks Consensus Estimate for SM's 2024 EPS is pegged at $7.09. The company has a Zacks Style Score of A for Value. It has witnessed upward earnings estimate revisions for 2024 in the past 30 days.

Baker Hughes, a leading player in the oilfield service sector, is known for its advanced technologies and equipment catering to the needs of upstream companies. The company expects substantial growth from LNG contracts globally due to the strong demand outlook.

The Zacks Consensus Estimate for BKR's 2024 EPS is pegged at $2.20. The company has a Zacks Style Score of A for Value. It has witnessed upward earnings estimate revisions for 2024 in the past seven days.

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