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W&T Offshore Stock Rises 35% So Far in September: What’s Up?

PART:
1 2 3 4 5 6 7 8 9 10
Part 5
W&T Offshore Stock Rises 35% So Far in September: What’s Up? PART 5 OF 10

How W&T Offshore’s Lease Operating Expenses Are Trending

W&T Offshore’s lease operating expenses

For 2Q17, W&T Offshore (WTI) reported LOE (lease operating expenses) of $8.04 per boe (barrel of oil equivalent), which is much lower than its 2Q17 LOE guidance range of $10.98–$13.51 per boe.

How W&amp;T Offshore’s Lease Operating Expenses Are Trending

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Sequentially, WTI’s 2Q17 LOE is ~23.0% lower than its 1Q17 LOE of $10.45 per boe. Even on a year-over-year basis, WTI’s 2Q17 LOE fell ~14.0% from $9.39 per boe in 2Q16. According to its 2Q17 earnings press release, W&T Offshore attributed its lower LOE to “lower costs from service providers along with optimization efforts to reduce our lease operating costs and lower insurance premiums.”

WTI’s peers Stone Energy (SGY) and Diamondback Energy (FANG) reported LOEs of $8.88 per boe and $4.14 per boe, respectively, in 2Q17. Diamondback Energy’s LOE is on the much lower side compared to many other oil and gas producers in the United States, mainly because all its operations are located in the low-cost Permian Basin. To know more about upstream companies operating in the Permian Basin, refer to Market Realist’s series Is the Permian Still the Hottest Basin in Oil and Gas?

W&T Offshore’s lease operating expenses guidance

For 3Q17, W&T Offshore expects LOE in the range of $39.0 million–$43.0 million. As we saw in the previous part of this series, for 3Q17, WTI expects total production volumes of 3.3 MMboe (million barrels of oil equivalent) to 3.7 MMboe. That means that on a per boe basis, WTI’s 3Q17 LOE will be in the range of $10.54–$13.03 per boe. That represents a mid-point increase of ~20.0% compared to 3Q16 LOE of $9.82 per boe. Even on a sequential basis, WTI’s forecast 3Q17 LOE is ~47.0% higher than 2Q17.

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