W&T Offshore Q2 Earnings Call Highlights

W&T Offshore reported solid second-quarter results, including $12.6 million in net income, more than $54 million in adjusted EBITDA and $31 million in free cash flow. Cash rose above $150 million, while net debt fell to $200 million and leverage stood at 1.2 times adjusted EBITDA. Production averaged 34,700 barrels of oil equivalent per day, with realized prices up 11% sequentially to $50.23 per barrel of oil equivalent. W&T expects third-quarter production to exceed 35,000 barrels per day and maintained its full-year production and cost outlook. The company continues to prioritize acquisitions of profitable producing assets and could favor dividends over share repurchases, depending on acquisition and drilling needs. W&T is also pursuing surety litigation that management says could involve claims worth hundreds of millions of dollars, though outcomes remain uncertain. W&T Offshore reported second-quarter 2026 net income of $12.6 million, or $0.08 per share, alongside adjusted EBITDA of more than $54 million. The adjusted EBITDA result was in line with the first quarter, bringing the first-half total to nearly $110 million. The offshore producer generated $31 million of free cash flow during the second quarter, a 50% increase from the first quarter, and more than $52 million for the first half of 2026. The cash generation increased the company’s cash balance to more than $150 million and reduced net debt to $200 million. At quarter-end, W&T reported total debt of $351 million, liquidity of $194 million and net debt-to-adjusted EBITDA of 1.2 times on a trailing 12-month basis. Assuming margins remain at current levels through the second half, the leverage ratio could fall below 1.0 times by year-end. Second-quarter production averaged 34,700 barrels of oil equivalent per day at the midpoint of the company’s guidance range, up 3% from the same period in 2025. The result was achieved without new drilling or acquisitions, citing well optimization work, low-decline Gulf of America fields and the company’s existing infrastructure. W&T’s strategy emphasizes workovers, recompletions and facility upgrades rather than higher-risk new drilling. The company seeks to use operational cash flow for lower-risk projects and acquisitions of producing properties that can be integrated into its infrastructure. Realized prices reached $50.23 per barrel of oil equivalent during the second quarter, up 11% from the first quarter and approximately 40% from year-end 2025. Higher commodity prices can improve the economic viability and life of oil fields while increasing reserve valuations. For the third quarter, W&T forecast production above 35,000 barrels of oil equivalent per day at the midpoint of its guidance. The company reiterated its full-year production and cost outlook. Lease operating expense, or LOE, totaled $72 million in the second quarter, below the low end of guidance. The lower expense was partly due to the timing of facility and workover projects, as well as cost-saving initiatives implemented in late 2025 that began to materialize in the first half of 2026. Gathering, transportation and production taxes also came in below the low end of the company’s guidance range. Second-quarter capital expenditures were $10.4 million, while asset retirement obligation settlement costs totaled $3.4 million. W&T maintained full-year 2026 capital guidance of $20 million to $25 million, excluding possible a.