W&T Offshore Reported Negative Cash Flows in 2Q17
W&T Offshore’s operating cash flow
For 2Q17, W&T Offshore (WTI) reported a negative operating cash flow of -$16.0 million, which is much lower than Wall Street analysts’ positive expectation for ~$42.0 million in cash flows for the quarter. However, on a year-over-year basis, its 2Q17 operating cash flow was ~61.0% higher than -$41.0 million in 2Q16. Its higher cash flows can be attributed to its higher operating revenues in 2Q17. To know more about WTI’s revenues, refer to Part 3 of this series.
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W&T Offshore’s operating cash flows have been fluctuating a lot over the last two years. During that period, its cash flows marked a high of ~$105.0 million in 2Q15 and a low of -$41.0 million in 2Q16. Declining production coupled with lower crude oil (USO) and natural gas (UNG) prices in 2Q16 caused WTI’s cash flows to fall to their lowest level in the last two years. However, from 3Q16 to 1Q17, it reported an increasing trend in cash flows due to rising energy prices. In 2Q17, its operating cash flows reported a steep fall compared to its 1Q17 cash flows of ~$81.0 million. Asset retirement obligations and court deposits related to the Apache matter affected its cash flows negatively in 2Q17.
WTI’s capex and free cash flow
In 2Q17, W&T Offshore spent ~$21.0 million in capital expenditures, meaning its free cash flow was negative at -$37.0 million, or -$0.27 per share.
In the first half of 2017, WTI’s total capital expenditures were ~$44.0 million, which is ~159.0% higher than capital expenditures of ~$17.0 million in the first half of 2016. For 2017, the company expects total capital expenditures of ~$125.0 million, which is ~155.0% higher than ~$49.0 million in 2016.