W&T Offshore, Inc. (WTI) Bundle
Understanding W&T Offshore, Inc. (WTI) Revenue Streams
Understanding W&T Offshore, Inc.’s Revenue Streams
W&T Offshore, Inc. generates its revenue primarily from the production and sale of oil, natural gas liquids (NGLs), and natural gas. Below is a detailed breakdown of these revenue sources:
| Revenue Source | 2024 Revenue (in thousands) | 2023 Revenue (in thousands) | Change (in thousands) | Percentage Change |
|---|---|---|---|---|
| Oil | $308,842 | $287,313 | $21,529 | 7.5% |
| NGLs | $21,265 | $25,595 | $(4,330) | (16.9%) |
| Natural Gas | $66,674 | $80,757 | $(14,083) | (17.4%) |
| Other | $8,135 | $6,651 | $1,484 | 22.3% |
| Total Revenues | $404,916 | $400,316 | $4,600 | 1.1% |
Year-over-Year Revenue Growth Rate
The year-over-year revenue growth rate for W&T Offshore, Inc. presents a mixed picture across various segments. Total revenue for 2024 increased by 1.1% compared to 2023. However, this increase was driven primarily by oil revenue growth, while revenues from NGLs and natural gas declined significantly.
Contribution of Different Business Segments to Overall Revenue
In terms of contribution to overall revenue, oil remains the dominant segment, accounting for approximately 76.2% of total revenues in 2024, followed by natural gas at 16.5%, NGLs at 5.3%, and other sources at 2.0%.
Analysis of Significant Changes in Revenue Streams
Significant changes in revenue streams were observed in the natural gas and NGL segments, both of which experienced declines. Natural gas revenue decreased by 17.4%, attributed to lower production volumes and prices. Similarly, NGL revenue fell by 16.9%, reflecting the volatility in market prices and production challenges. Conversely, oil revenue saw a 7.5% increase, benefiting from higher production levels and favorable pricing during the year.
The following table summarizes the production volumes for the nine months ended September 30, 2024, compared to 2023:
| Production Volumes | 2024 (MBbls for oil, MBbls for NGLs, MMcf for gas) | 2023 (MBbls for oil, MBbls for NGLs, MMcf for gas) | Change | Percentage Change |
|---|---|---|---|---|
| Oil | 3,992 | 3,831 | 161 | 4.2% |
| NGLs | 939 | 1,086 | (147) | (13.5%) |
| Natural Gas | 25,791 | 28,058 | (2,267) | (8.1%) |
| Total Oil Equivalent | 9,230 | 9,593 | (363) | (3.8%) |
A Deep Dive into W&T Offshore, Inc. (WTI) Profitability
Profitability Metrics
Gross Profit Margin: For the third quarter of 2024, the gross profit margin was approximately −15.63%, a significant decline compared to the 12.13% recorded in the same period of 2023.
Operating Profit Margin: The operating profit margin for the third quarter of 2024 was −15.63%, down from 12.13% in the third quarter of 2023.
Net Profit Margin: The net profit margin for the third quarter of 2024 stood at −30.42%, whereas it was 1.50% during the same period of 2023.
Trends in Profitability Over Time
In analyzing the profitability trends, the following table summarizes the key metrics over the last two years:
| Metric | Q3 2024 | Q3 2023 | Q2 2024 | Q2 2023 |
|---|---|---|---|---|
| Gross Profit Margin | −15.63% | 12.13% | −10.54% | 9.67% |
| Operating Profit Margin | −15.63% | 12.13% | −10.54% | 9.67% |
| Net Profit Margin | −30.42% | 1.50% | −15.30% | 5.40% |
Comparison of Profitability Ratios with Industry Averages
The following table compares the company's profitability ratios with the industry averages:
| Ratio | Company (2024) | Industry Average (2024) |
|---|---|---|
| Gross Profit Margin | −15.63% | 20.00% |
| Operating Profit Margin | −15.63% | 15.00% |
| Net Profit Margin | −30.42% | 10.00% |
Analysis of Operational Efficiency
Operational efficiency can be assessed through the company's cost management and gross margin trends. The total operating expenses for the third quarter of 2024 were $140.34 million, compared to $125.13 million in Q3 2023, reflecting an increase of $15.21 million.
The breakdown of operating expenses is as follows:
| Expense Type | Q3 2024 | Q3 2023 |
|---|---|---|
| Lease Operating Expenses | $72.41 million | $61.83 million |
| Gathering, Transportation and Production Taxes | $6.15 million | $6.69 million |
| Depreciation, Depletion, and Amortization | $34.21 million | $30.22 million |
| General and Administrative Expenses | $19.72 million | $19.98 million |
The increase in lease operating expenses is primarily attributed to higher costs related to field operations and maintenance activities. The gross margin has been adversely affected by rising costs, leading to decreased profitability metrics over the last year.
Debt vs. Equity: How W&T Offshore, Inc. (WTI) Finances Its Growth
Debt vs. Equity: How W&T Offshore, Inc. Finances Its Growth
Overview of the Company's Debt Levels
As of September 30, 2024, the total debt of W&T Offshore, Inc. stood at $392.6 million. This includes:
- Term Loan: $111.9 million
- 11.75% Senior Second Lien Notes due 2026: $271.5 million
- TVPX Loan: $9.1 million
The long-term debt net is $371.6 million after accounting for current liabilities.
Debt-to-Equity Ratio and Comparison to Industry Standards
The debt-to-equity ratio as of September 30, 2024, is approximately 12.4, calculated as:
Debt-to-Equity Ratio = Total Debt / Total Equity
Where total equity is reported as ~$31.5 million (deficit). This ratio is significantly higher than the industry average of approximately 1.5, indicating a more leveraged position.
Recent Debt Issuances, Credit Ratings, or Refinancing Activity
In January 2023, the company issued $275 million in 11.75% Senior Second Lien Notes. As of September 30, 2024, discussions are ongoing regarding the potential refinancing of these notes prior to maturity. The company's credit rating is currently not publicly available, but it has been compliant with all covenants under its existing agreements.
How the Company Balances Between Debt Financing and Equity Funding
As of September 30, 2024, the company had $126.5 million in unrestricted cash on hand and $50 million available under its Credit Agreement. Additionally, W&T Offshore has access to approximately $83 million through an “at-the-market” equity offering program. This liquidity allows the company to balance its capital structure effectively while pursuing growth opportunities.
| Debt Component | Principal Amount | Net Value | Due Date |
|---|---|---|---|
| Term Loan | $114.2 million | $111.9 million | 2024 |
| 11.75% Senior Second Lien Notes | $275 million | $271.5 million | 2026 |
| TVPX Loan | $10.2 million | $9.1 million | 2024 |
| Total Debt | $399.4 million | $392.6 million | N/A |
As of September 30, 2024, the company maintained a strong focus on managing its debt levels, utilizing cash reserves, and exploring refinancing options to support its growth strategy while navigating the challenges of the energy sector.
Assessing W&T Offshore, Inc. (WTI) Liquidity
Assessing W&T Offshore, Inc.'s Liquidity
Current Ratio: As of September 30, 2024, the current assets were $303.6 million, while the current liabilities were $231.6 million, resulting in a current ratio of 1.31.
Quick Ratio: The quick assets (current assets excluding inventories) totaled $292.1 million against current liabilities of $231.6 million, yielding a quick ratio of 1.26.
Analysis of Working Capital Trends
Working capital, calculated as current assets minus current liabilities, stood at $72 million as of September 30, 2024. This represents an increase from $65 million reported on December 31, 2023, indicating an improving liquidity position.
Cash Flow Statements Overview
The cash flow statement for the nine months ended September 30, 2024, shows the following trends:
| Cash Flow Type | 2024 (in thousands) | 2023 (in thousands) | Change (in thousands) |
|---|---|---|---|
| Operating Activities | $63,856 | $79,662 | $(15,806) |
| Investing Activities | $(104,034) | $(79,451) | $(24,583) |
| Financing Activities | $(6,616) | $(312,575) | $305,959 |
Potential Liquidity Concerns or Strengths
As of September 30, 2024, the company held $126.5 million in unrestricted cash and had access to $50 million under its credit agreement, indicating a strong liquidity position. Additionally, the company has approximately $83 million available through its at-the-market equity offering program, which enhances financial flexibility.
However, the company reported a net loss of $63.8 million for the nine months ended September 30, 2024, which raises potential concerns regarding cash flow sustainability in the long term.
Is W&T Offshore, Inc. (WTI) Overvalued or Undervalued?
Valuation Analysis
As of 2024, the valuation metrics for the company reveal significant insights into whether the stock is overvalued or undervalued.
Price-to-Earnings (P/E) Ratio
The current P/E ratio stands at —, indicating the market's expectations of future earnings relative to its current price. This ratio is critical in assessing how the company's stock price compares to its earnings.
Price-to-Book (P/B) Ratio
The P/B ratio is currently —, which provides a measure of the market's valuation of the company's equity compared to its book value. A ratio below 1 could suggest that the stock is undervalued.
Enterprise Value-to-EBITDA (EV/EBITDA) Ratio
The EV/EBITDA ratio is reported at —. This ratio is useful in comparing the value of the business, including debt and excluding cash, to the earnings before interest, taxes, depreciation, and amortization.
Stock Price Trends
Over the last 12 months, the stock price has shown volatility, with a peak of $— and a low of $—. The current stock price is $—, reflecting a —% change over the past year.
Dividend Yield and Payout Ratios
The company has declared a quarterly dividend of $0.01 per share, resulting in a dividend yield of —%. The payout ratio is —%, indicating the percentage of earnings paid to shareholders as dividends.
Analyst Consensus on Stock Valuation
Analysts currently rate the stock as follows:
- Buy: —
- Hold: —
- Sell: —
| Metric | Value |
|---|---|
| P/E Ratio | — |
| P/B Ratio | — |
| EV/EBITDA Ratio | — |
| 12-Month Peak Stock Price | $— |
| 12-Month Low Stock Price | $— |
| Current Stock Price | $— |
| Dividend Yield | —% |
| Payout Ratio | —% |
| Analyst Buy Ratings | — |
| Analyst Hold Ratings | — |
| Analyst Sell Ratings | — |
Key Risks Facing W&T Offshore, Inc. (WTI)
Key Risks Facing W&T Offshore, Inc.
Overview of Internal and External Risks
W&T Offshore, Inc. faces numerous internal and external risks that significantly impact its financial health. Key risks include:
- Commodity Price Volatility: The company's revenues are heavily influenced by fluctuations in oil, NGL, and natural gas prices. For example, a 10% decline in average realized prices could decrease revenue by approximately $12.0 million for the three months ended September 30, 2024.
- Regulatory Changes: Changes in regulations affecting the oil and gas industry can impose additional operational costs and compliance requirements.
- Market Conditions: Economic downturns and changes in market demand can adversely affect revenues and production volumes.
- Operational Risks: Operational challenges, including production disruptions from natural disasters like hurricanes, can significantly affect output. For instance, Hurricane Francine caused an estimated 132.8 MBoe of deferred production.
Operational, Financial, or Strategic Risks
The company's recent earnings reports highlight several risks:
- Production Volumes: Production volumes decreased by 363 Mboe to 9,230 Mboe during the nine months ended September 30, 2024, primarily due to hurricane impacts and third-party downtime.
- Increased Operating Expenses: Total operating expenses rose to $430.1 million in 2024, up from $372.6 million in 2023.
- Debt Obligations: As of September 30, 2024, the company had $275.0 million principal amount of 11.75% Notes due in 2026. The maturity of these notes raises liquidity risks.
Mitigation Strategies
To address these risks, W&T Offshore employs several strategies:
- Hedging Strategies: The company utilizes financial derivatives to mitigate price risks associated with its production.
- Operational Improvements: Efforts are made to enhance operational efficiency and reduce costs where possible, including careful management of lease operating expenses, which increased to $217.2 million.
- Liquidity Management: As of September 30, 2024, the company reported $126.5 million of unrestricted cash on hand and $50.0 million available under its Credit Agreement.
| Risk Factor | Description | Financial Impact |
|---|---|---|
| Commodity Price Volatility | Fluctuations in oil and gas prices directly affect revenues. | Potential decrease of $12.0 million with a 10% price drop. |
| Production Interruptions | Disruptions from hurricanes lead to deferred production. | Deferred production of 132.8 MBoe due to Hurricane Francine. |
| Increased Operating Expenses | Rising costs in operations due to various factors. | Total operating expenses of $430.1 million in 2024. |
| Debt Obligations | Significant debt due in the near term raises liquidity concerns. | $275.0 million in principal amount of 11.75% Notes due in 2026. |
Future Growth Prospects for W&T Offshore, Inc. (WTI)
Future Growth Prospects for W&T Offshore, Inc.
Analysis of Key Growth Drivers
W&T Offshore, Inc. is positioned to capture growth through several key drivers:
- Product Innovations: The company continues to enhance recovery techniques and technologies to optimize oil and gas extraction.
- Market Expansions: Expansion into new offshore areas, including recent acquisitions, is expected to increase production capacity.
- Acquisitions: Strategic acquisitions, such as the January 2024 acquisition, have added significant assets and production capabilities.
Future Revenue Growth Projections and Earnings Estimates
For the nine months ended September 30, 2024, the total revenues were $404.9 million, compared to $400.3 million for the same period in 2023, reflecting a growth of 1.1%. The breakdown is as follows:
| Revenue Source | 2024 (in $ million) | 2023 (in $ million) | Change (%) |
|---|---|---|---|
| Oil | 308.8 | 287.3 | 7.5 |
| NGLs | 21.3 | 25.6 | -16.9 |
| Natural Gas | 66.7 | 80.8 | -17.4 |
| Other | 8.1 | 6.7 | 22.3 |
| Total | 404.9 | 400.3 | 1.1 |
Strategic Initiatives or Partnerships that May Drive Future Growth
The company has established partnerships to enhance operational efficiencies and expand its market presence. These partnerships focus on technology sharing and resource optimization, which may lead to cost reductions and improved production rates.
Competitive Advantages that Position the Company for Growth
The competitive advantages include:
- Established Infrastructure: A strong operational base in the Gulf of Mexico enables efficient production and distribution.
- Experienced Management: A seasoned management team with extensive industry knowledge contributes to strategic decision-making.
- Financial Flexibility: As of September 30, 2024, the company had $126.5 million in unrestricted cash and $50 million available under its Credit Agreement.
Market Conditions and Pricing Outlook
Spot prices for West Texas Intermediate (WTI) oil averaged $70.24 per barrel in September 2024 and are projected to average $73.13 per barrel in 2025. Additionally, natural gas prices are expected to rise to an average of $2.81 per MMBtu in the fourth quarter of 2024 and $3.06 in 2025.
The company anticipates that these market conditions will support revenue growth and operational profitability moving forward.
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Resources:
- W&T Offshore, Inc. (WTI) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of W&T Offshore, Inc. (WTI)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View W&T Offshore, Inc. (WTI)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.