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W&T Offshore Spuds ST 320 A-2 Well in Ewing Bank 910 Field

Zacks Equity Research
Updated
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W&T Offshore, Inc. WTI has spud exploration well — ST 320 A-2 — from the South Timbalier 311 platform. The platform is part of the Ewing Bank 910 field in the deepwater Gulf of Mexico.  

The company intends to drill a second exploration well — ST 320 A-3 —on completion of the ST 320 A-2. Total depth was reached by the exploratory well ST 320 A-2 and is now being prepared for completion. The company recorded about 163 feet of net hydrocarbon, which surpasses pre-drill estimates.  W&T Offshore anticipates the well to be brought online via existing infrastructure by the end of 2018.

ST 320 A-3 well is expected to be a low-risk exploration prospect in the Ewing Bank 910 field. Stratigraphic information from high-quality thick Miocene sand that was infiltrated up-hole in the ST 320 A-2 well has lowered the apprehended risk on the ST 320 A-3 oil prospect.

In 2018, a drilling joint venture (“JV”) program was established by W&T and private investors. The wells mentioned above are part of this program. W&T Offshore’s working interest in these wells was 36%, before inclusion in the JV Drilling Program. Consequent to the JV Drilling Program and other promoted working interests at the ST 320 A-2 well, the company is expected to contribute 4.8% of the total capital expenditures and obtain 10.8% of net revenues less expenses until certain thresholds are met. By that time, the company’s effective interest in the well will rise to 13.8%.

Also, W&T Offshore announced that it has inked a definitive purchase and sale agreement to divest ownership in overriding royalty interests in the Permian Basin. The transaction is valued at $56.8 million. On meeting customary closing conditions and adjustments, the transaction is anticipated to close on or before Oct 1, 2018.

The company is exiting from low-profit generating operations and broadening international asset base. W&T Offshore plans to divest non-core and non-operated onshore asset to boost strong cash position. The company continues to deliver outstanding drilling results in the Gulf of Mexico as well as in the JV Drilling Program. The outcome of the ST 320 A-2 well reflects on the company’s efficiency as well as high-quality prospect inventory.

Price Performance

In the past year, W&T Offshore’s shares have surged 178.8% compared with the industry’s 11.3% increase.



 

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Zacks Rank & Other Stocks to Consider

W&T Offshore currently sports a Zacks Rank #1 (Strong Buy).

A few other top-ranked players in the same sector are Petroleo Brasileiro S.A. PBR or Petrobras SA, Shell Midstream Partners, L.P SHLX and CNX Resources Corporation CNX. All these stocks flaunt a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Petrobras is the largest integrated energy firm in Brazil and one of the major players in Latin America. It pulled off an average positive earnings surprise of 10.4% in the last four quarters.

Shell Midstream Partners is involved in owning, operating, developing and acquiring pipelines and other midstream assets. The partnership delivered an average positive earnings surprise of 7.9% in the trailing four quarters.

CNX Resources is an independent oil and gas exploration and production company. The company delivered a positive earnings surprise of 250.0% in the preceding quarter.

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