W&T Offshore Inc.WTI

Morningstar Rating

Stock Research and Analysis

by Jennifer O'Connor

W&T Offshore acquires and exploits offshore oil and gas properties in the Gulf of Mexico. High reinvestment risk is characteristic of the region and is posing an increasingly larger threat to W&T.

Offshore wells typically cost more than onshore Read more

Bulls Say

Higher cash flows as a result of strong oil prices should allow the firm to pay down debt.

Major oil companies and larger independents could continue selling their Gulf of Mexico properties providing W&T with acquire-and-exploit opportunities, assuming sufficient access to capital.

Key oil-weighted projects that came on stream in the back half of 2009 increased W&T's leverage to oil prices.

Bears Say

Persistently weak natural gas prices will likely result in a reserve write-down, potentially triggering a negative borrowing base redetermination.

As industrywide activity picks up, service costs will likely move in tandem.

As a result of the perennial threat of hurricanes in the Gulf, soaring insurance premiums could force W&T to self-insure in the near future, adding additional uncertainty to the firm's performance.

Gulf of Mexico wells have steep decline rates. W&T must scramble to find and develop new resources in order to keep production levels steady. Read more

Strategy

W&T plans to continue focusing on acquiring and exploiting resources in the Gulf of Mexico. The firm is on the hunt for an acquisition, and larger energy companies' announcements to sell their Gulf Read more

Management

Chairman and CEO Tracy Krohn founded W&T Offshore on a shoestring in 1983 and has since turned it into a multimillion-dollar company. He controlled 51% of the shares as of April 17, 2009. Because W&T is a controlled company, it isn't required Read more

Profile

W&T Offshore acquires, explores for, develops, and produces natural gas and oil in the Gulf of Mexico, with most of its reserves located on the conventional shelf. The Read more

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