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W&T Offshore Is Third in Terms of Total Returns

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Sep. 27 2018, Published 10:24 a.m. ET

W&T Offshore’s one-year returns

W&T Offshore (WTI), an exploration and production company involved in offshore drilling, has seen a strong rally since the beginning of September. The company has risen 31.2% in September. W&T Offshore’s strong rally could be attributed to the gains in crude oil prices and the recent announcement about divesting a few of its non-core assets. Overall, the company has gained ~170% in the past year.

The company’s strong one-year return could be attributed to its strong YoY earnings growth in recent quarters due to higher average realized prices. W&T Offshore’s average realized crude oil price was $67.1 per barrel in the second quarter—compared to $44.5 per barrel in the second quarter of 2017, which represents a YoY increase of 50.6%.

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What lies ahead?

Analysts expect W&T Offshore to post a CFFO (cash flow from operation) of $245.7 million in 2018—compared to $159.4 million in 2017. Analysts’ forecast represents a 54.2% YoY CFFO growth. For fiscal 2019, analysts expect a 3.3% YoY decline in the CFFO. W&T Offshore was trading at a price-to-CFFO of 3.5x as of September 25—below the industry median of 5.3x.

Analysts’ recommendations

Among the analysts surveyed by Reuters, 33.3% rate W&T Offshore as a “buy,” 33.3% rate it as a “hold,” and 33.3% rate it as a “sell.” KLR Group downgraded W&T Offshore to “sell” from “hold.” Currently, W&T Offshore is trading above the high range ($8.75) of analysts’ target price.

Next, we’ll discuss Whiting Petroleum’s (WLL) one-year returns.

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