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W&T OFFSHORE INC (WTI)·Q2 2025 Earnings Summary

Executive Summary

  • Revenue was $122.4M, down 6% QoQ and 14% YoY as higher volumes were more than offset by lower realized prices; production rose 10% QoQ to 33.5 MBoe/d within guidance .
  • Adjusted EBITDA increased 9% QoQ to $35.2M while Adjusted EPS improved to $(0.08); GAAP diluted EPS was $(0.14) .
  • Versus S&P Global consensus, EPS beat (Primary EPS actual $(0.08) vs $(0.17)) while revenue missed ($122.4M vs $128.96M); lower prices drove the miss despite volume growth. Management guided Q3 production to 33.1–36.6 MBoe/d and reiterated full-year ranges .
  • Balance sheet/liquidity strengthened: unrestricted cash $120.7M, Net Debt $229.4M (down ~$14.7M QoQ); surety settlements and a court recommendation against preliminary injunctions reduce collateral uncertainty, a potential stock catalyst .

What Went Well and What Went Wrong

What Went Well

  • Production ramp from Cox-acquired fields and workovers drove 10% QoQ volume increase to 33.5 MBoe/d; nine low-cost workovers exceeded expectations, five in Mobile Bay .
  • Adjusted EBITDA rose 9% QoQ to $35.2M and operating cash flow was $28.0M; Free Cash Flow was $3.6M despite higher LOE .
  • Derivative strategy contributed a $12.0M net gain (including $9.5M realized and $4.3M monetization of gas puts) and added costless oil collars (2,000 bbl/d, $63/$77.25) for H2 2025; management emphasized readiness for accretive acquisitions: “We have over $120 million in cash... prepared to take advantage of potential acquisitions.” .

What Went Wrong

  • Realized prices declined (Boe $39.16 vs $46.50 in Q1), offsetting volume gains and reducing revenue QoQ; oil price fell to $63.55/bbl from $71.31/bbl .
  • LOE rose to $76.9M (+8% QoQ), driven by base operating, insurance, and workover expenses; LOE per Boe remained elevated at $25.20 .
  • “Other expense” included a $13.9M increase in contingent accruals for non-ARO P&A obligations, pressuring GAAP results despite derivative gains .

Financial Results

P&L Summary (quarterly)

MetricQ4 2024Q1 2025Q2 2025
Revenue ($USD Millions)$120.345 $129.867 $122.367
GAAP Diluted EPS ($)$(0.16) $(0.21) $(0.14)
Adjusted EPS ($)$(0.18) $(0.13) $(0.08)
Adjusted EBITDA ($USD Millions)$31.614 $32.218 $35.240

Margins (S&P Global)

MetricQ4 2024Q1 2025Q2 2025
EBITDA Margin %24.41%*25.44%*18.20%*
EBIT Margin %-14.12%*-6.35%*-10.50%*
Net Income Margin %-19.41%*-23.54%*-17.07%*

Values retrieved from S&P Global.

Commodity Mix and Revenue Detail

MetricQ4 2024Q1 2025Q2 2025
Oil Revenue ($MM)$86.778 $87.716 $80.014
NGL Revenue ($MM)$6.713 $4.772 $4.715
Natural Gas Revenue ($MM)$24.203 $35.109 $34.802
Other Revenue ($MM)$2.651 $2.270 $2.836

Operating KPIs

KPIQ4 2024Q1 2025Q2 2025
Production (MBoe/d)32.1 30.5 33.5
Total MBoe2,953 2,744 3,052
Realized Price ($/Boe)$39.86 $46.50 $39.16
LOE ($MM)$64.259 $71.012 $76.924
LOE ($/Boe)$21.76 $25.88 $25.20
G&A ($MM)$20.799 $20.157 $17.670
G&A ($/Boe)$7.04 $7.35 $5.79
Derivatives Net (Gain)/Loss ($MM)$2.113 $2.757 $(12.047)

Results vs Wall Street Consensus (S&P Global)

MetricQ2 2025 ActualQ2 2025 Consensus# of Estimates
Revenue ($USD Millions)$122.367 $128.963*2*
Primary EPS ($)$(0.08)*$(0.17)*2*

Values retrieved from S&P Global.
Result: Revenue miss; EPS beat.

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Total equivalents (MBoe)Q3 20252,977–3,295 3,043–3,368 Raised
Avg daily equivalents (MBoe/d)Q3 202532.7–36.2 33.1–36.6 Raised
LOE ($MM)Q3 202571.3–78.9 71.5–79.3 Slightly raised
Gathering, transport & prod taxes ($MM)Q3 20256.6–7.4 6.7–7.5 Slightly raised
G&A – cash ($MM)Q3 202514.5–16.1 15.6–17.4 Raised
DD&A ($/Boe)FY 202513.40–14.90 13.40–14.90 Maintained
Avg daily equivalents (MBoe/d)FY 202532.8–36.3 32.8–36.3 Maintained
LOE ($MM)FY 2025280.0–310.0 280.0–310.0 Maintained
Dividend per shareQ3 2025$0.01 (Q2 paid) $0.01 declared for Q3 Maintained

Earnings Call Themes & Trends

TopicQ4 2024 (Q-2)Q1 2025 (Q-1)Q2 2025 (Current)Trend
Cox acquisition fields rampExpected WD 73 and MP 108/98 to return in Q2’25 Placed online end-Mar/early-Apr; ramp in Q2 Ramping; supports Q3 guide lift Improving
Cost discipline / LOEQ4 LOE below guidance low-end Q1 LOE below low-end Q2 LOE higher on base, insurance, workovers Mixed
Hedging strategyAdded 50k MMBtu/d costless collars for Mar–Dec’25 Added 70k MMBtu/d collars Apr–Dec’25 Added 2k bbl/d oil collars H2’25 Active risk management
Surety/regulatoryDescribed surety pressures; pro forma de-lever Admin orders to “Unleash American Energy”; DOI stance on supplemental assurance Settlement with major sureties; court recommends denying prelim injunctions De-risking
M&A postureAccretive acquisitions highlighted Balance sheet ready for opportunities Prepared for accretive deals; integration capability emphasized Ongoing

Management Commentary

  • “We are delivering strong results including production growth of 10% and Adjusted EBITDA growth of 9% quarter-over-quarter, all while growing our cash position to over $120 million and reducing our net debt by about $15 million.” — Tracy W. Krohn .
  • “We have brought online the remaining two fields from the Cox acquisition… expect [them] will continue to ramp up production into the second half of 2025, as you can see from our third quarter and full year guidance.” — Tracy W. Krohn .
  • On strategy: “We will remain focused on accretive low risk acquisitions of producing properties rather than high risk drilling in the current uncertain commodity price environment.” — Tracy W. Krohn .
  • On surety/regulatory: favorable settlement and court recommendation “alleviates some of the uncertainty that has unnecessarily and artificially suppressed our stock price” — Tracy W. Krohn .

Q&A Highlights

  • Policy outlook: Management expects further royalty reductions and rollback of “idle iron” policies; believes administration actions will support Gulf production .
  • Production trajectory: Workovers and recompletions plus a Cox field ramp underpin stronger H2 production per COO William Williford .
  • Surety impact: Krohn characterized prior collateral demands as collusive and expects resolution to positively affect M&A and liquidity; collateral requests ~“$250,000,000” historically pressured the company .
  • Reserves revisions: Positive 1.8 MMBoe mid-year revisions tied to better performance from Cox assets and optimization at Mobile Bay .

Estimates Context

  • Q2 2025 vs consensus (S&P Global): Revenue $122.367M actual vs $128.963M consensus* → miss; Primary EPS $(0.08) actual vs $(0.17) consensus* → beat. Lower commodity prices per Boe ($39.16 vs $46.50 in Q1) drove the revenue shortfall, while derivative gains and lower G&A supported the EPS beat .
  • Outlook for estimates: Raised Q3 production guidance and continued ramp from Cox fields may prompt upward revisions to volume assumptions; cost ranges for Q3 (LOE, G&A) were nudged higher, which may offset margin expectations .
    Values retrieved from S&P Global.

Key Takeaways for Investors

  • Volume growth is real and continuing: production +10% QoQ to 33.5 MBoe/d, with Q3 guide raised; monitor ramp from WD 73 and MP 108/98 for H2 execution .
  • Pricing headwinds are the swing factor: realized Boe price fell ~16% QoQ, overwhelming volume gains and driving the revenue miss versus consensus .
  • Non-GAAP dynamics matter: $12.0M derivative gain and reduced G&A aided Adjusted EPS/EBITDA; conversely, $13.9M non-ARO P&A accrual inflated “Other expense” and pressured GAAP EPS .
  • Balance sheet and legal overhang improving: liquidity $170.7M (incl. $50M revolver), Net Debt down to $229.4M; surety settlement and court recommendation reduce collateral uncertainty—a potential re-rating catalyst .
  • Risk management in place: added H2 oil collars (2,000 bbl/d at $63/$77.25) and earlier gas collars; helps smooth cash flow amid price volatility .
  • Watch costs: Q3 LOE and cash G&A ranges nudged higher; per-unit LOE remains elevated, making price and mix critical to margins .
  • Near-term trading lens: EPS beat vs consensus and improved guidance are positives; revenue miss and higher LOE temper the story. Focus on commodity tape, Q3 production delivery, and ongoing surety/legal developments as catalysts .
Notes:
* Values retrieved from S&P Global.