The deal and its benefits to the energy firm are
addressed in a ROTH Capital Partners report.
In a June 27 research note, ROTH Capital Partners analyst John White
reported that W&T Offshore Inc.'s (WTI:NYSE) proposed acquisition
of assets from ExxonMobil for $200 million is "very positive."
Those assets include oil and gas producing properties in the eastern Gulf
of Mexico that generated $70 million in operating cash flow in 2018 along
with related onshore processing facilities.
White highlighted that in terms of benefits of the deal to W&T
Offshore, the acquisition will nearly double its Proven reserves from
84,000,000 barrels of oil equivalent (84 MMboe) to 158 MMboe. It will boost
its pro forma production by about 59%, to 53,149 barrels of oil equivalent
(boe). Also, the properties to be acquired will offset W&T Offshore's
Fairway field in offshore Alabama.
Because W&T Offshore's management team has successfully executed this
acquisition strategy several times in the past, White noted, it likely will
"be able to lower operating costs, add synergies and increase production
and reserves" with this transaction.
The analyst also pointed out that the acquisition metrics are "very
favorable," at $2.70 per boe or $0.45 per thousand cubic feet equivalent
(Mcfe) on Proven reserves and $10,100 flowing boe per day or $1,684 flowing
Mcfe per day. "The median figure of our coverage on flowing boe per day
is $35,000," he indicated.
W&T Offshore will fund the acquisition with cash on hand, $86.1
million, plus the bank revolver, up to $229 million available, both figures
accurate as of March 31, 2019, White wrote.
ROTH has a Buy rating and a $9.50 per share target price on W&T
Offshore. The company's current share price is around $4.96.
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Disclosures from ROTH Capital Partners, W&T Offshore Inc., Flash
Note, June 27, 2019
Regulation Analyst Certification ("Reg AC"): The research
analyst primarily responsible for the content of this report certifies the
following under Reg AC: I hereby certify that all views expressed in this
report accurately reflect my personal views about the subject company or
companies and its or their securities. I also certify that no part of my
compensation was, is or will be, directly or indirectly, related to the
specific recommendations or views expressed in this report.
ROTH makes a market in shares of W&T Offshore, Inc. and Callon
Petroleum Company and as such, buys and sells from customers on a principal
basis.
Shares of W&T Offshore, Inc. may be subject to the Securities and
Exchange Commission's Penny Stock Rules, which may set forth sales practice
requirements for certain low-priced securities.
ROTH Capital Partners, LLC expects to receive or intends to seek
compensation for investment banking or other business relationships with the
covered companies mentioned in this report in the next three months.