Earnings call transcript: W&T Offshore Q2 2025 earnings beat expectations

W&T Offshore Inc. reported its Q2 2025 earnings, surpassing analysts’ expectations with an earnings per share (EPS) of -$0.08, compared to the forecasted -$0.15. This represents a surprise of 46.67%. However, the company missed revenue expectations, reporting $122.37 million against a forecast of $133.35 million, resulting in an 8.23% shortfall. Following the announcement, W&T Offshore’s stock fell 1.45% to $1.71 in premarket trading.

Key Takeaways

• W&T Offshore’s EPS outperformed by 46.67%, despite a revenue miss.
• Stock price declined by 1.45% in premarket trading.
• Q2 2025 Adjusted EBITDA grew by 9% to $35 million.
• Production increased by 10% to 33,500 barrels of oil equivalent per day.
• Liquidity stood at $171 million as of June 30, 2025.

Company Performance

W&T Offshore demonstrated resilience in Q2 2025, with notable growth in adjusted EBITDA and production levels. The company’s strategic focus on operational efficiency and production enhancements contributed to its robust performance, despite a challenging market environment. The Gulf of Mexico remains a critical area for W&T Offshore, accounting for a significant portion of its production.

Financial Highlights

• Revenue: $122.37 million, down from the forecast of $133.35 million.
• Earnings per share: -$0.08, beating the forecast of -$0.15.
• Adjusted EBITDA: $35 million, a 9% increase.
• Net debt reduced to under $230 million.

Earnings vs. Forecast

W&T Offshore reported an EPS of -$0.08, significantly beating the forecasted -$0.15 by 46.67%. Despite this positive surprise in earnings, the company missed its revenue forecast by 8.23%, reporting $122.37 million against an expected $133.35 million. This mixed result reflects the company’s ability to manage costs effectively while facing revenue pressures.

Market Reaction

The stock price of W&T Offshore decreased by 1.45% to $1.71 in premarket trading, following the earnings announcement. This decline reflects investor concerns over the revenue miss, despite the positive EPS surprise. The stock remains within its 52-week range, with a high of $2.84 and a low of $1.09, indicating moderate volatility.

Outlook & Guidance

Looking ahead, W&T Offshore projects Q3 2025 production to reach approximately 35,000 barrels of oil equivalent per day. The company remains focused on low-risk acquisitions and anticipates continued regulatory support. Future guidance suggests modest EPS improvements, with projections of -$0.1 for Q3 2025 and potential positive earnings in early 2026.

Executive Commentary

CEO Tracy Krohn stated, "We’ve delivered strong operational and financial results," highlighting the company’s focus on operational excellence. Krohn emphasized the sustainable nature of W&T Offshore’s Gulf of Mexico assets, which are expected to continue generating cash flow.

Risks and Challenges

• Revenue pressures due to market conditions and pricing volatility.
• Regulatory changes affecting Gulf of Mexico operations.
• Potential increases in operating expenses impacting margins.
• Competitive pressures from other Gulf of Mexico producers.
• Macroeconomic factors influencing oil and gas demand.

Q&A

During the earnings call, analysts inquired about potential policy support for Gulf of Mexico production and the company’s strategy for navigating surety and bonding challenges. Executives addressed these concerns, emphasizing ongoing optimization efforts for recently acquired properties. For comprehensive analysis of W&T Offshore and over 1,400 other US stocks, access the detailed Pro Research Report available exclusively on InvestingPro, featuring expert insights and actionable intelligence for informed investment decisions.

Full transcript - W&T Offshore Inc (WTI) Q2 2025:

Conference Operator: Ladies and gentlemen, thank you for standing by. Welcome to the W and T Offshore Second Quarter twenty twenty five Conference Call. During today’s call, all parties will be in listen only mode. Following the company’s prepared comments, the call will be opened for questions and answers. During the question and answer session, we ask that you limit your questions to one and a follow-up.

You can always rejoin the queue. This conference call is being recorded and a replay will be available on the company’s website following the call. I would now like to turn the conference over to Al Petrie, Investor Relations Coordinator.

Tracy Krohn, Chairman and CEO, W and T Offshore: Thank you, Ghislain. And on behalf of the management team, I would like to welcome all of you to today’s conference call to review W and T Offshore’s second quarter twenty twenty five financial and operational results. Before we begin, I would like to remind you that our comments may include forward looking statements. It should be noted that a variety of factors could cause W and T’s actual results to differ materially from the anticipated results or expectations expressed in these forward looking statements. Today’s call may also contain certain non GAAP financial measures.

Please refer to the earnings release that we issued yesterday for disclosures on forward looking statements and reconciliations of non GAAP measures. With that, I’d like to turn the call over to Tracy Krohn, our Chairman and CEO. Thanks, Al. Good morning, everyone, and welcome to our second quarter conference call for 2025. With me today are William Wilford, our Executive Vice President and Chief Operating Officer Sameer Parasnas, our Executive Vice President and Chief Financial Officer and Trey Hartmann, our Vice President and Chief Accounting Officer.

They’re all available to answer questions later during the call. So before we discuss the second quarter results, I would like to say how proud I am of all the people who’ve helped make W and T a success since we founded the company in 1983. We’ve been an active operator in the Gulf Of America and a staunch advocate for the offshore industry for over forty years. Yesterday, I was honored to celebrate twentieth anniversary of W and T going public by ringing the closing bell at the New York Stock Exchange. We’re conducting today’s earnings call from the New York Stock Exchange where I have several media interviews scheduled that will give us a chance to discuss the company.

As you will hear throughout the call today, we’re continuing to enhance shareholder value through operational excellence and maximizing production across our impressive portfolio of assets. Across the 2025, we’ve delivered strong operational and financial results. Quite simply, we’re executing on our proven and successful strategy that’s committed to profitability, operational execution, returning value to our stockholders and ensuring the safety of our employees and contractors. Our ability to deliver production and EBITDA growth, while seamlessly integrating accretive producing property acquisitions has helped W and T grow during our forty year history. Some of our second quarter highlights include, we increased production by 10% quarter over quarter to 33,500 barrels oil equivalent per day, that’s within our guidance range.

Also performed nine low cost, low risk workovers that exceeded expectations and positively impacted production and revenue for the quarter. I’d like to point out that five of the workovers were performed in Mobile Bay, helping to increase production at this low decline long life asset, which is also our net our largest natural gas field and the largest natural gas field in the Gulf Of America. Total lease operating expenses were $77,000,000 again within guidance. We grew adjusted EBITDA by 9% to $35,000,000 compared to the 2025. We’ve also grown our unrestricted cash to over 120,000,000 while lowering our net debt by about $15,000,000 to under $230,000,000 Our 2025 midyear reserve report generated by Netherland Sewell and Associates showed net positive revisions of 1,800,000 barrels of oil equivalent, which continues to demonstrate the strength of our asset base and our ability to maximize value from our fields.

None of this included any drilling activity. We accomplished all of this while also returning value to our shareholders through our quarterly dividend. We paid seven quarterly cash dividends since initiating the dividend policy in late twenty twenty three and announced the third quarter twenty twenty five payment that will occur later this month. Additionally, in the first quarter of this year, we had several transactions that strengthened and simplified our balance sheet adding material cash to the bottom line and improving our credit ratings from S and P and Moody’s. So in January, we successfully closed $350,000,000 offering of new second yield second lien notes that increased our interest rate by 100 basis points excuse me, decreased our interest rate by 100 basis points and together with other transactions reduced our total debt by $39,000,000 We also entered into a new credit agreement for a $50,000,000 revolving credit facility, which matures in July 2028, that’s undrawn and replaces the previous $50,000,000 credit facility provided by Calculus Lending.

We also sold a non core interest at Garden Banks, which included about 200 barrels of oil equivalent per day for $12,000,000 and we received $58,000,000 in cash for an insurance settlement related to the Mobile Bay 70 Eight-one well. All of these actions have allowed us to enhance liquidity and improve our financial flexibility. Lastly, in the 2025, we’ve opportunistically taken advantage of commodity price volatility to increase our hedge position. So we added costless collars for both oil and natural gas, including 2,000 barrels per day of oil for July through December 2025 with a floor price of $63 per barrel and a seeding price of $77.02 $5 per barrel. For natural gas, we have costless collars of or 70,000,000 cubic feet per day from July to December 2025.

This has helped lock in a very favorable price range for a portion of our oil and natural gas for the remainder of 2025. So our ability to execute our strategy has delivered very positive results thus far in 2025, including an improved balance sheet, enhanced liquidity, growing production and EBITDA, all of which has positioned us for success in the 2025 and beyond. At year end 2024, the company had total debt of $393,000,000 and net debt of $284,000,000 At the end of the 2025, our total debt and net debt were significantly reduced to $350,000,000 and $229,000,000 respectively. Our liquidity at 06/30/2025 increased to $171,000,000 So CapEx in the 2025 was $10,000,000 and asset retirement settlement costs totaled $12,000,000 For the 2025, our CapEx has totaled $19,000,000 and asset retirement costs were $16,000,000 We continue to expect our full year capital expenditures to be between $34,000,000 and $42,000,000 This does not include potential acquisition opportunities. We will remain focused on accretive low risk acquisitions of producing properties rather than high risk drilling in the current uncertain commodity price environment.

These acquisitions must meet our stringent criteria of generating free cash flow, providing a solid base of proved reserves with upside potential and offer the ability for our experienced team to reduce costs. Over the years, we’ve consistently created significant value on methodically integrating producing property acquisitions. The assets we acquired last year added meaningful reserves at an attractive price and we are now seeing additional production from two fields that were previously shut in. The West Delta 73 and Main Pass 100 And Eightninety 8 fields were placed into production towards the March and into early April. The fields began ramping up production over the course of the 2025.

We expect production to continue to increase in the second half of this year from these fields. That will be seen in our third quarter guidance as well. There was a temporary shut in of production in Mobile Bay during the second quarter due to a pipeline issue that was resolved by June 30 that reduced second quarter production by about 1,000 barrels of oil equivalent per day. So yesterday, we provided our detailed guidance for third quarter twenty twenty five and reiterated our full year guidance. In the 2025 with new fields continuing to ramp up coupled with the strong workover and recompletion program performance, we are predicting the midpoint of Q3 twenty twenty five production to be around 35,000 barrels of oil equivalent per day.

This is an increase of almost 5% compared to the 2025. This is quite remarkable considering we currently do not have any drilling operations. Thus we’re spending minimal capital and our LOE costs are remaining flat. So the third quarter guidance for our cash operating costs, which includes LOE, gathering, transportation and production taxes and cash G and A costs is in line with the 2025. With absolute costs remaining flat and production expected to increase, we believe that on a per BOE basis, we will see decreases.

We also believe that there are more opportunities to reduce our operating costs and find synergies to drive costs lower in the long term. We’re always working hard to reduce costs without impacting safety or deferring asset integrity work. So I’d now like to talk to you about our mid year twenty twenty five reserve report. In our release yesterday, we reported SEC proved reserves of 123,000,000 barrels oil equivalent, which was slightly lower than the 127,000,000 barrels equivalent at year end 2024. This reduction was primarily driven by production of 5,800,000 barrels of oil equivalent in the 2025 which was partially offset by 1,800,000 barrels of net positive revisions.

We’re pleased with another report that has positive revisions despite drilling no new wells and spending minimal capital in 2025. This highlights the strength of our prolific asset base and our operational capabilities to economically extract reserves of long life assets. We operate about 94% of our midyear proved reserves, which gives us maximum flexibility in controlling our operations during periods of volatile commodity prices. So approximately 44% of midyear twenty twenty five second proved reserves were liquids with 34% crude oil and 10% NGLs, we had 56% natural gas. With the continued strengthening of natural gas pricing and the recent European LNG deals, we believe having a strong natural gas position located in close proximity to LNG facilities will position WT very well in the future.

We have long enjoyed a premium over Henry Hub pricing and see that continuing in the future with the increased demand in our operating region. The pre tax PV-ten of the midyear twenty twenty five proved reserves using SEC pricing was flat at $1,200,000,000 compared with year end 2024. Mid year twenty twenty five proved reserves in PV-ten were based on average SEC twelve month crude oil and natural gas prices of $71.2 per barrel and $2.86 per MMBtu, while year end twenty twenty four prices were $76.32 per barrel of oil and $2.13 per MMBtu of natural gas. We believe we’ve built a sustainable group of high performing Gulf Of America assets that will continue to provide meaningful cash flow to our shareholders for many years. So before closing, I’d like to address surety and regulatory updates.

In June 2025, we were pleased with the settlement agreement that we reached with two of our largest surety providers, which called for the dismissal of a previously filed lawsuit. This outcome is very positive for W and T overall as we will not acquiesce to unjustified collateral demands made by the applicable surety and we’ve locked in our historical premium rates through the 2026. We believe the entry into this settlement agreement vindicates our resolve to stand up to our surety providers unjustified demands on independent oil and gas operators such as W and T. So additionally, at the June 2025, U. S.

Magistrate Judge Dina Palermo recommended denying two other surety companies motions for preliminary injunction through which they were collectively asked for asking for full cash collateralization of over $100,000,000 We couldn’t be more pleased with the court’s decision to prevent unnecessary and unjustified collateral demands by surety providers. For the past forty plus years, W and T has met its plugging and abandonment obligations, paid its negotiated premiums and operated responsibly in the Gulf Of America. In fact, we’ve done more plug and abandonment work than anybody in the Gulf Of Mexico. We demand fairness and transparency for all oil and natural gas producers in the Gulf Of America and we’ll continue to pursue the pending litigation against our other surety providers that have decided not to deal fairly with W and T and other independent oil and gas producers. We have done well over $1,000,000,000 of decommissioning work in Gulf America, again more than any other operators down on its own nickel and we’ve done so safely and reliably.

These are very positive results for W and T and should alleviate some of the uncertainty that has negatively impacted our stock price despite some positive operational and financial results in 2025. So as we’ve mentioned during our last call in early twenty twenty five pursuant to directors from the Trump administration, the Department of Interior indicated it will not seek supplemental financial assurance in the Gulf Of America except in the case of sole liability properties and certain non sole liability properties that do not have a financially strong co owner or predecessor entitled. Since his inauguration, President Trump has issued a number of executive orders aimed at streamlining regulations and reducing the regulatory burden on oil and natural gas companies, increasing federal oil and natural gas leasing, including in the Gulf Of Mexico and expediting U. S. Natural gas excuse me, natural resource development.

We’re very pleased with these actions. We expect these will positively impact W T and the offshore energy industry. So in closing, I’d like to again thank our team at W and T for twenty years as an NYSE listed company. As the largest shareholder, I believe we are well positioned to continue to grow and add value in the 2025. We generated solid EBITDA and raised our cash position to over $120,000,000 This allows us to continue to evaluate growth opportunities both organically and inorganically.

We have a long track record of successfully integrating assets into our portfolio and we continue to believe that the Gulf Of America is a world class basin that supports value creation. We will maintain our focus on operational excellence and maximizing the cash flow potential of our asset base. So with that operator, we can now open the lines for questions.

Conference Operator: Thank you. We’ll now begin the question and answer session. Our first question is from Nate Pendleton with Teckley Capital. Please go ahead.

Nate Pendleton, Analyst, Teckley Capital: Good morning. For my first question, I wanted to start on policy. With the administration looking for ways to support the industry further, can you share your thoughts on what actions the administration may be looking at in order to incentivize production in the Gulf Of America?

Tracy Krohn, Chairman and CEO, W and T Offshore: Thanks, Nate. Good morning. Yes, there’s a lot of things that Department of Interior is looking at there. They’ve already weighed in with regard to lower royalties and I expect and I hope that they will weigh in on further reductions on those royalties. There’s the so called idle iron act, which is kind of nonsensical to me and our company.

Why do you need to prematurely abandon these wells when none of the rest of the wells on the platform had been abandoned? This was a policy brought on by the Obama administration to create havoc and essentially make it cost more deliberately. And the idea was of course to get rid of oil and gas companies in the Gulf Of America. We’ve looked at some other things that we discussed with them. I think it’s important to recognize that this administration has taken a very strong position in the fact that, yes, we want to maximize and utilize our abilities to conserve the natural resource in the Gulf Of America.

President Trump and DOI have made that pledge that they’re going to do it. We’re already seeing some of the regulations getting rolled back. There will hopefully be another decision with regard to surety here put solidly into writing and we’re looking forward to that. Of course, you’re aware that we’re showing surety providers. Those are just a few.

We’re very hopeful that this administration gets back to idea that oil and gas from this very important basin, by the way, the second largest producing basin and the largest by area in The United States.

Nate Pendleton, Analyst, Teckley Capital: Thanks, Tracy. That’s really encouraging. Shifting over to your operations, implied 4Q production guidance seems very strong at the midpoint. In your prepared remarks, you talked about the increase you expected in Q3. Can you share maybe what’s driving that further production ramp that you’re expecting at the back half of the year?

Tracy Krohn, Chairman and CEO, W and T Offshore: Yes, I’m going to turn that over to our Chief Operating Officer, William Wilford. He’s got responsibility for that, Vincent.

William Wilford, Executive Vice President and Chief Operating Officer, W and T Offshore: Yes. Good morning, Nate. As Tracy mentioned in the call this morning, we have a lot of low cost workovers that we’re continually doing in the third quarter as well as a couple of recompletions to add to that production. So we also plan on ramping up one of the Cox fields we acquired last year as well to see significant production through the last part of the year.

Nate Pendleton, Analyst, Teckley Capital: Got it. Thanks for taking my questions.

Tracy Krohn, Chairman and CEO, W and T Offshore: Thanks, Nate. You’re welcome.

Conference Operator: Next question is from Jeff Robertson with Water Tower Research. Please go ahead.

Jeff Robertson, Analyst, Water Tower Research: Thank you. Good morning. Tracy, does resolution of some of these surety and bonding issues for W and T have an impact on how you approach acquisitions? And then secondly, do they have an impact on anywhere on the balance sheet with respect to liquidity?

Tracy Krohn, Chairman and CEO, W and T Offshore: No, absolutely. Jeff, I mean, the sureties were in collusion with one another to artificially suppress the company by virtue of demanding full collateral. It’s kind of like your car insurance. If you have a car, your agent calls you up and says, gee, Jeff, you have a $50,000 insurance policy on your car. Would you please send me $15,000 In fact, I demand that you send me $50,000 so we can cash collateralize your account.

And by the way, I’m going to increase your premiums as a result. That was the alternative that was given to us except it a lot better, a lot bigger nominal dollars. For us, it was around $250,000,000 of collateral demands. And we had to sign this indemnity agreement with these companies. They all read virtually identically that you had to provide cash demand within a very, very short period of time, maybe ten days to two weeks, and that if you didn’t do so that you were in violation of their policy.

Well, several of them got together and they all called it at about the same time for $250,000,000 which by the way just happened to be the market cap of the company at the time. I thought that was pretty unfair. Obviously, were all doing it at the same time, seemed collusional to me. So we sued them. And as a result, it threw the surety market into quite a bit of disarray.

The idea the very idea that you need surety is kind of preposterous to us. The government, in spite of all the bankruptcies that have taken place in the Gulf Of Mexico, the government has never ever called a bond, even though they demand it. They demand that surety, but they’ve never called it. Well, the reason that they’ve never called it is because the lease form itself calls for joint and several liability. That means that anybody who was ever on the that ever held a record title interest is jointly and severally liable up to 100% of the obligations.

So the government never had that situation. They would just go back to the predecessor of Idol and demand that they take care of those obligations. We’ve had to do that ourselves. Others have had to do that. It’s always been the case.

That is what the lease form says. So the government’s idea that, gee, we need more surety is obviously preposterous because they’ve never called one single damn surety demand, not once. So it’s got to be a farce. It was put in by the Obama administration, further exasperated by the Biden administration. It was wholly designed to put oil and gas companies out of business.

Jeff Robertson, Analyst, Water Tower Research: Tracy, do you think that resolving those issues will have an impact on M and A activity in The Gulf?

Tracy Krohn, Chairman and CEO, W and T Offshore: Oh, you bet. Yes. People will have to figure out a different way to do that assurance for other companies that will be part of the sales price. People aren’t going companies aren’t going to stop selling properties. They use those proceeds to put into different projects that will, in fact create more value for them.

We will take those properties are the ones that we get and make them more valuable, because we’ll lightning focus on that. So yes, the surety part of it will definitely undergo a great deal of change. But I think it’s for the better. The obligation, the joint several obligations are never going to go away, even though there’s been a lot of talk about that, that needs to be the case. Reality is that the government has no obligation to do that.

And it’s highly unlikely that they would ever change that. Why should they? There’s no reason to change it. But it will have an effect on companies like W and T and others. And we’ll just have to figure out different ways to do things.

Jeff Robertson, Analyst, Water Tower Research: Excuse me. A question on your reserves of the $1,800,000 Boe of positive revisions. Can you provide some color as to which properties contributed there? And was any of that related to performance on the Cox acquisitions versus how those properties had originally been booked?

William Wilford, Executive Vice President and Chief Operating Officer, W and T Offshore: Yes. Go ahead, Blake. Yes. Thanks, Tracy. Yes, it was some of the additional increase in the reserves was based on better performance of some of the Cox assets as well as some of our own assets.

We did some optimization projects to further increase and increase the life of our Mobile Bay asset as well. So they added significant value as far as from a reserve standpoint.

Tracy Krohn, Chairman and CEO, W and T Offshore: Yes, Jeff, I’ll add to that a little bit. I mean, we’re still working some of these properties and finding different things that we can do with not only with the facilities themselves. Young Mr. Cox left them in terrible shape when we acquired them. Weren’t doing maintenance.

They weren’t maintaining properties in what we would have considered to be a safe manner. So we’ve had to spend a bit more money to bring them up to our standards. And I think that’s certainly affected some of the cash flow near term. But long term, I have a lot of high expectations of these properties and we’re getting there. Production at West Delta 73 and Main Pass one way they’re all coming up as we speak.

Jeff Robertson, Analyst, Water Tower Research: Thanks, Tracy.

Tracy Krohn, Chairman and CEO, W and T Offshore: Thank you, sir.

Conference Operator: As there are no more further questions, this concludes the question and answer session. I’d like to turn the conference back over to Tracy Krohn, Chairman and CEO for any closing remarks.

Tracy Krohn, Chairman and CEO, W and T Offshore: Thanks, operator. Again, celebrated twenty years as an NYSE listed company yesterday. I’m expecting another twenty years. I would certainly like to be around for that. So with that, just all of our shareholders watch what happens next.

It’s going to be fun. It’s going be exciting and it’s going to be profitable. Thanks so much.

Conference Operator: This concludes today’s conference call. You may disconnect your lines. Thank you for participating and have a pleasant day.

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