W&T Offshore, Inc.

W&T Offshore reported Q2 2026 net income of $12.6 million, or $0.08 per share, and adjusted EBITDA of over $54 million. Free cash flow was $31 million, up 50% sequentially, and first-half 2026 adjusted EBITDA was almost $110 million with more than $52 million in free cash flow. Production was 34,700 boe/d at the midpoint of guidance, up 3% from the same period in 2025, and realized prices were $50.23 per barrel of oil equivalent, up 11% from Q1 and about 40% from year-end 2025. LOE was $72 million, below guidance; capex was $10.4 million; asset retirement settlement costs were $3.4 million. Cash on hand was over $150 million, net debt was $200 million, total debt was $351 million, liquidity was $194 million, and net debt-to-adjusted EBITDA was 1.2x. For Q3 2026, management expects midpoint production above 35,000 boe/d, LOE of $73 million to $81 million, transportation and production taxes of $8.8 million to $9.7 million, and cash G&A of $17.2 million to $19 million. Full-year 2026 capital guidance remains $20 million to $25 million, excluding acquisitions, and ARO guidance remains $34 million to $42 million.

Tracy Krohn framed the quarter as another proof point that W&T’s low-capital, production-optimization strategy is working, emphasizing strong cash generation, disciplined spending and a stronger second-half balance sheet. He stressed that the company prefers low-risk workovers, recompletions and facility work over new drilling, and said the Gulf of America remains a high-quality basin where the company can keep adding value through operations and acquisitions. His tone was upbeat and confident, repeatedly highlighting that the company is undervalued relative to PDP/PV-10 and that the stock price does not reflect the asset base.

Management highlighted that Q2 operating costs came in favorably versus guidance, with LOE at $72 million below the low end and transportation/production taxes also below the range. Capex was $10.4 million in the quarter and ARO settlement costs were $3.4 million, while full-year capex guidance stays at $20 million to $25 million and ARO guidance at $34 million to $42 million. The CFO-specific financial message centered on rising liquidity and leverage improvement: cash exceeded $150 million, net debt fell to $200 million, and net debt-to-EBITDA was 1.2x, with management suggesting it could trend below 1x by year-end if margin levels hold.

Analysts focused on the surety litigation, acquisition appetite, production optimization inventory, ARO, and hedging. Krohn said the surety damages estimate could be in the hundreds of millions, said he expects the case to play out within the next 2 years, and suggested any recovery would likely favor dividends more than buybacks, though capital allocation would depend on acquisitions and drilling. On M&A, he said price matters more than asset type, noted the bid-ask spread has not changed much, and said the company currently prefers acquisitions over drilling; on hedges, he said there are no current plans to add more for 2027. On reserves and ARO, he argued actual production has historically exceeded 1P estimates by a wide margin and said the company typically spends about $35 million to $45 million a year on decommissioning.