Estimate Update
We are updating our 2Q24 estimates to reflect actual oil and natural gas prices. Our reference oil price averaged $80.66 during 2Q24, and our reference natural gas price averaged $2.33/MMBtu. For 2Q24, we estimate total revenue of $139.1 million based on estimated average production of ~35.0 MBOE/d, including ~14.1 MB/d of oil. Oil accounts for 41% of our production estimate and 76% of our revenue estimate. Our 2Q24 adjusted EBITDA estimate is $36.2 million, compared to $49.4 million in 1Q24 and $38.8 million in 2Q23. The Q/Q decrease is primarily driven by higher estimated lease operating expenses reflecting costs associated with integrating the Cox assets acquired in January 2024. Those assets were purchased through a bankruptcy proceeding and necessitated some non-recurring costs to bring the facilities up to W&T’s standards. Lease operating expenses could remain elevated in 3Q24 before decreasing in 4Q24. W&T’s 2Q24 production estimate is 32.7 – 37.3 MBOE/d and the FY24 production estimate is 33.9 – 39.9 MBOE/d. The 36.9 MBOE/d midpoint of FY24 production guidance compares to a FY23 average of ~34.9 MBOE/d. Management’s latest (May 10, 2025) guidance outlook is summarized in Figure 1. Our FY24 adjusted EBITDA estimate is $176.6 million, a Y/Y decrease from $183.2 million in FY23 (Figures 2 - 4). Higher estimated lease operating expenses offset higher estimated production and revenue contributing to the adjusted EBITDA decrease. Our FY25 estimates are based on the expectation that the remediation work on the Cox assets during FY24 could add production volumes and help moderate lease operating expenses contributing to higher Y/Y adjusted EBITDA. Our FY25 adjusted EBITDA estimate is $221.5 million assuming NYMEX reference prices of $80.00/bbl for oil and $3.00/MMBtu for natural gas. Net debt totaled $305.1 million as of March 31, 2024. The principal amount of debt outstanding was $399.9 million, including $275 million of 11.75% Senior Second Lien Notes due 2026 and $114.2 million outstanding on a 7.0% non-recourse Term Loan. W&T had an undrawn $50-million RBL borrowing base, which combined with cash provided total liquidity of $140.4 million at the end of 1Q24. W&T has closed two acquisitions over the past 12 months totaling ~$100 million. Acquisitions reflect management’s preference to invest in accretive assets that immediately add cash flow. The company is working towards the formation of a drilling joint venture that could be part of the capital program beginning in 2025. The joint venture would consist of a package of development and exploration wells. The Holy Grail well, a proved undeveloped location in the Magnolia Field, is expected to be a part of the joint venture.
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