W&T Offshore NYSE: WTI reported first-quarter 2026 results that management said met or exceeded guidance across several operational and financial measures, helped by steady production, higher realized pricing and lower operating costs.
Chairman and CEO Tracy Krohn told investors the Gulf of Mexico producer “started 2026 on a positive note,” with production of 36,200 barrels of oil equivalent per day, near the high end of guidance and flat with the fourth quarter of 2025 despite adverse weather early in the year.
The company reported realized prices of $45.08 per barrel of oil equivalent, up 26% from the fourth quarter. Krohn said the company’s realized oil price in March was $88.61 per barrel. Lease operating expense declined 11% to $66 million, which management said was below the midpoint of guidance and reflected cost-saving initiatives that began in the fourth quarter of 2025.
Adjusted EBITDA totaled $55 million, which Krohn said was the company’s highest quarterly figure since the third quarter of 2023. W&T also generated $21 million in free cash flow, which management described as a significant improvement from the prior quarter.
Balance Sheet and Capital Spending
W&T ended the first quarter with total debt of $351 million, net debt of $220 million and liquidity of $175 million. Krohn said the company’s balance sheet and liquidity position support its ability to evaluate growth opportunities while continuing to generate operating cash flow.
Capital expenditures in the quarter were $7 million, while asset retirement settlement costs totaled $17 million. The company maintained its full-year capital expenditure outlook of $20 million to $25 million, excluding potential acquisitions, and kept its asset retirement obligation budget at $34 million to $42 million.
Krohn emphasized that W&T’s operating model differs from some peers because the company spends relatively less on capital projects and more on lower-risk workovers, recompletions and facility optimization. He said management views that approach as an economic way to reinvest operating cash flow into the business while preserving flexibility for acquisitions.
Second-Quarter Outlook Includes Mobile Bay Turnaround
The company reiterated its full-year production and cost guidance, while noting that second-quarter production is expected to decline sequentially due primarily to a planned third-party Mobile Bay natural gas processing facility turnaround.
W&T expects second-quarter production at the midpoint of guidance to be about 34,300 barrels of oil equivalent per day, down about 5% from the first quarter. Krohn said the turnaround will affect natural gas liquids volumes and temporarily lift lease operating expense.
Second-quarter lease operating expense is expected to range from $71 million to $79 million, compared with $66 million in the first quarter. Management attributed the increase to the Mobile Bay turnaround as well as planned workover and facility maintenance activity that is expected to support production in the second half of the year.
Krohn said operating costs can be seasonal, with more work performed during warmer months when offshore weather conditions are generally more favorable. Transportation and production taxes are expected to range from $7 million to $8 million in the second quarter, down from $9 million in the first quarter, with management citing benefits from a new pipeline installed for the West Delta 73 field. Cash general and administrative costs are expected to remain comparable to first-quarter levels.
Management Highlights Acquisition Strategy
During the call, Krohn reiterated W&T’s long-running strategy of acquiring producing properties in the Gulf of Mexico and integrating them into the company’s infrastructure. He said the company looks for assets with existing cash flow, meaningful reserves and an affordable price, along with opportunities to increase production through workovers, recompletions or facility upgrades.
In response to a question from Derrick Whitfield of Texas Capital about the M&A environment, Krohn said there has been a “dearth of significant transactions” in the Gulf in recent years but suggested activity could begin to improve. He said W&T has been in data rooms “almost continuously over the years” and intends to pursue opportunities that fit its financial criteria.
“That criteria usually starts with cash flow,” Krohn said, adding that management also evaluates the reserve base and near-term actions that could improve cash flow.
Krohn also told analysts that the company expects to remain active with workovers and recompletions, particularly as weather improves in late spring and summer. He said W&T has a “good inventory” of projects and has begun moving equipment in the Gulf to support that work.
Reserve Conversion and Low-Capital Model
Analysts also asked about W&T’s reserve base and the company’s ability to convert probable reserves into proved producing reserves over time. Krohn said a portion of the company’s 2P reserves ultimately shows up first as cash flow and later as booked reserves without requiring additional capital spending.
He said that dynamic has contributed to W&T’s historically low decline rates and supports production with a relatively low reinvestment rate. Krohn said the company still has drilling inventory, including exploration opportunities and proved reserve opportunities, but management currently prefers to preserve liquidity and pursue acquisitions when assets can be acquired at attractive economics.
“It’s not because we don’t have inventory,” Krohn said. “It’s because management, including myself, believes that opportunities to do additional acquisitions are good.”
Regulatory and Legal Updates
Krohn also addressed proposed regulatory changes from the Department of the Interior that would roll back portions of a 2024 rule related to supplemental financial assurance requirements. He said the prior rule would have required companies to set aside about $6.9 billion in supplemental financial assurance, with about $6 billion applying to small businesses that make up much of the Gulf operator base.
According to Krohn, the proposed revisions would better align financial assurance requirements with actual decommissioning risk and reduce industry-wide bonding costs by at least $500 million annually. He said the revisions were published in the Federal Register with a 60-day public comment period expected to end May 15.
On litigation involving sureties, Krohn said a district court rejected the sureties’ attempt to require W&T to immediately pay collateral demands. He said the sureties are appealing and that W&T will continue to defend its position. Krohn also said the court granted W&T’s request to file an amended lawsuit that includes antitrust and other claims against the sureties.
In closing, Krohn said W&T remains focused on operational execution, cash flow generation and evaluating acquisition opportunities in the Gulf of Mexico, where the company has operated for more than 40 years.
About W&T Offshore NYSE: WTI
W&T Offshore, Inc is an independent oil and gas exploration and production company focused primarily on offshore operations in the Gulf of Mexico. The company acquires, develops and produces crude oil and natural gas reserves, operating a portfolio of producing properties that encompasses both shallow-water and deepwater assets. W&T Offshore leverages its technical expertise and asset management capabilities to optimize field development and production efficiency across its portfolio.
Founded in 1983 and headquartered in Covington, Louisiana, W&T Offshore has built a track record of disciplined growth through strategic acquisitions and targeted exploration activities.
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