W&T Offshore NYSE: WTI reported third-quarter production above its guidance range and said it strengthened its balance sheet as it generated free cash flow, reduced net debt and built cash for potential acquisitions.
Chairman and CEO Tracy Krohn said production totaled 38,200 barrels of oil equivalent per day in the third quarter, exceeding the high end of the company’s guidance by 4%. The result came without new drilling or acquisitions, according to Krohn, and reflected production gains from workovers and recompletions, reduced downtime and the delayed turnaround at its Mobile Bay operations.
The company reported a GAAP net loss of $13.6 million, or $0.09 per share, for the quarter. Krohn said the loss included nearly $16 million of hedging losses. Adjusted EBITDA exceeded $51 million, while free cash flow was $33 million. For the first nine months of 2026, W&T generated $164 million in adjusted EBITDA and $89 million in free cash flow, he said.
Workovers lift production as capital budget rises
W&T spent slightly more than $3 million during the quarter on seven workover projects and one recompletion, which collectively added more than 2,000 BOE per day of production uplift. Krohn said the company favors lower-risk workovers, recompletions and facility work over new drilling, arguing that those projects can sustain output while requiring less capital.
Capital expenditures in the third quarter were $3 million, while asset retirement obligation settlement costs totaled $6 million. With commodity prices remaining supportive, W&T raised its full-year 2026 capital-spending guidance to between $35 million and $38 million. Krohn said the accelerated spending is expected to support production during the first half of 2027.
The company maintained its 2026 asset retirement obligation guidance of $34 million to $42 million.
During the question-and-answer session, Krohn said the company has no drilling planned for 2027 at this point. Instead, he said W&T would prefer to preserve capital for potential acquisitions, while continuing to use recompletions and workovers to increase or maintain production.
Executive Vice President and Chief Operating Officer William Williford said most of the recent production uplift projects were workovers rather than capital-intensive recompletions. He said the company has further optimization opportunities available for 2027, as well as an inventory of potential recompletion projects. Most planned recompletion opportunities are weighted toward oil, which could increase W&T’s oil mix over time, he added.
Cash balance grows and debt declines
W&T ended the third quarter with more than $190 million of cash, total debt of $352 million and net debt of $160 million. Krohn said net debt fell 20% from the previous quarter, and trailing 12-month net debt to adjusted EBITDA declined to 0.9 times from 1.6 times a year earlier. Liquidity increased to $235 million.
During the quarter, the company issued 3.6 million common shares through its at-the-market program, raising $15 million in net proceeds. Krohn said the funds were intended to further support liquidity and near-term strategic growth objectives.
On Oct. 1, W&T converted its credit facility to a reserve-based lending structure. Krohn said the new structure could allow commitments to expand from $50 million to $100 million, eliminates restrictive cash-flow and repayment requirements, and increases annual shareholder distribution capacity. He said there were no changes to pricing, financial covenants or amendment fees.
Krohn told analysts that the company’s larger cash position would be directed first toward acquisitions. He said W&T continues to review potential transactions and sees both larger and smaller Gulf of America assets as possible opportunities. The company believes its long operating history and experience managing mature properties can create value from acquired producing assets, he said.
Fourth-quarter outlook includes Mobile Bay shutdown
W&T expects fourth-quarter production to be affected by a planned one-week shutdown at Mobile Bay for equipment repairs, as well as recent Hurricane Isaias-related downtime. The combined impact is expected to reduce production by about 2,600 BOE per day, resulting in fourth-quarter production guidance centered around 33,700 BOE per day.
The company forecast fourth-quarter lease operating expense of $65 million to $72 million, below the third-quarter level of $77 million. Transportation and production taxes are expected to range from $8.4 million to $9.3 million, while cash general and administrative expense, excluding surety litigation costs, is expected to be between $16.9 million and $18.6 million.
Krohn said no significant equipment damage resulted from the hurricane, describing the impact primarily as shut-in production and the time required to restart wells and pipelines.
Third-quarter realized prices were $46.13 per BOE, down 8% from the second quarter but about 20% above the prior-year period, according to Krohn. He said prices improved in October and could remain stronger during the final two months of the year.
Surety litigation discovery continues
W&T said it has made progress in its surety litigation through discovery agreements and a court order requiring defendants to review and produce communications relevant to the company’s claims. Depositions of surety and broker defendants are expected over the coming months.
Krohn said W&T believes documents and deposition testimony could help its experts quantify damages, though he cautioned that the outcome remains uncertain. If the company prevails, damages related to antitrust claims could be subject to automatic trebling and recovery of reasonable attorney’s fees under applicable statutes, he said.
Executive Vice President, General Counsel and Corporate Secretary George Hittner said litigation costs are expected to increase in 2027. He said W&T does not anticipate a major increase in those costs during the remainder of 2026 as it reviews recently received discovery materials and prepares for depositions.
About W&T Offshore (NYSE:WTI)
W&T Offshore, Inc is an independent oil and natural gas exploration and production company focused on the U.S. Gulf of Mexico. The company explores for, develops, and produces crude oil, natural gas, and natural gas liquids from offshore properties.
W&T Offshore's operations have included assets in the federal and state waters of the Gulf of Mexico, spanning shelf and deepwater areas. Its activities include acquiring exploration and production interests, drilling and completing wells, and managing offshore production and related infrastructure.
Founded in 1983 by Tracy W.
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