W&T Offshore (NYSE: WTI) reported Q2 2026 revenue of $162.6 million, up 33% from $122.4 million a year earlier, while diluted EPS improved to $0.08 from a loss of $0.14 per share. Production rose 3% to 34.7 MBoe/d, but higher realized oil prices and lower year-over-year lease operating expenses were the more important drivers of the improvement in earnings and free cash flow.
Core Earnings Data
Revenue advanced much faster than production as the realized price per Boe, before derivative settlements, increased 28% year over year. Total operating expenses rose only about 4%, allowing W&T to move from an operating loss to an operating profit.
GAAP net income exceeded adjusted net income primarily because the adjusted calculation removed an $11.8 million unrealized commodity derivative gain, together with related tax effects and other selected items.
| Metric | Q2 2026 | Q2 2025 | Year-over-Year Change |
|---|---|---|---|
| Revenue | $162.6 million | $122.4 million | +33% |
| Operating income / margin | $22.6 million / about 13.9% | -$12.9 million / about -10.5% | Turned positive |
| Net income | $12.6 million | -$20.9 million | Turned profitable |
| Diluted EPS | $0.08 | -$0.14 | Turned positive |
| Adjusted net income / diluted EPS | $3.5 million / $0.02 | -$11.8 million / -$0.08 | Turned positive |
| Adjusted EBITDA | $54.4 million | $35.2 million | +54% |
| Operating cash flow | $33.3 million | $28.0 million | About +19% |
| Free cash flow | $31.4 million | $3.6 million | +776% |
Adjusted net income, adjusted EBITDA, and free cash flow are company-defined non-GAAP measures.
Production and Revenue Mix
Oil pricing was the main revenue driver. Oil revenue rose about 51% to $120.5 million even though oil sales volumes declined 4%, as the average realized oil price increased 56% to $99.30 per barrel.
Results were more mixed across the other products. NGL revenue increased about 28% to $6.0 million, with a 34% increase in volume more than offsetting a 5% decrease in realized price. Natural gas revenue fell about 8% to $32.1 million because a 12% decline in realized pricing outweighed 4% volume growth.
Total production reached 3.16 million Boe, equivalent to 34.7 MBoe/d and the midpoint of management’s guidance. W&T completed three workovers and one recompletion that positively affected production during the quarter. Liquids represented 49% of output.
Profitability, Cash Flow, and the Balance Sheet
Lease operating expenses declined 7% year over year to $71.6 million, while the cost per Boe fell 10% to $22.67. The expense was below the low end of guidance, although part of that benefit was timing-related: approximately $3 million of facility and workover projects was deferred to the third quarter.
GAAP general and administrative expense increased 56% to $27.5 million, mainly because higher mark-to-market share-based compensation raised noncash expense. Excluding share-based compensation, adjusted G&A was $16.4 million, up 11% year over year but down 5% from the first quarter.
Free cash flow increased to $31.4 million, a much larger percentage gain than the increase in GAAP operating cash flow. The difference reflects W&T’s non-GAAP reconciliation, including working-capital and derivative-related adjustments. Capital expenditures were nearly unchanged year over year at $10.4 million.
Unrestricted cash increased 15% sequentially to $150.7 million, while net debt declined 9% to $200.9 million. Total debt remained at $351.6 million, and net debt equaled 1.2 times trailing-12-month adjusted EBITDA. Available liquidity was $194.1 million, including $43.4 million of revolving credit availability.
The balance sheet still included a $196.2 million shareholders’ deficit, a $24.4 million current asset retirement obligation, and a $548.8 million long-term asset retirement obligation. W&T also declared a $0.01-per-share third-quarter dividend, payable August 26, 2026, to shareholders of record on August 19.
Production and Expense Guidance
Management expects third-quarter production to be slightly higher than in Q2, but it also expects lease operating expenses to rise. In addition to the approximately $3 million of projects deferred from Q2, about $2 million of workover projects has been moved forward from the fourth quarter.
W&T expects full-year capital expenditures and plugging and abandonment spending to finish toward the upper end of their respective ranges because certain projects are being accelerated in the current commodity-price environment.
| Metric | Period | Latest Guidance |
|---|---|---|
| Average daily production | Q3 2026 | 33.3–36.8 MBoe/d |
| Average daily production | FY 2026 | 33.5–37.2 MBoe/d |
| Lease operating expense | Q3 2026 | $73.0–$81.0 million |
| Lease operating expense | FY 2026 | $264.7–$294.7 million |
| Adjusted G&A expense | Q3 2026 | $17.2–$19.0 million |
| Adjusted G&A expense | FY 2026 | $63.2–$70.2 million |
| Capital expenditures | FY 2026 | $19.5–$24.5 million |
| Plugging and abandonment | FY 2026 | $34.0–$42.4 million |
Recent Insider Transactions
The supplied six-month insider summary shows 1,696,168 shares purchased across 16 transactions and 306,000 shares sold across eight transactions, producing net purchases of 1,390,168 shares. That represented 2.6% of the reported 54.32 million shares held by insiders.
The most recent detailed records supplied were eight sales between July 14 and July 16, 2026. Two additional records lacking transaction direction and value were omitted.
| Insider | Role | Transaction | Reported Value | Date |
|---|---|---|---|---|
| Daniel O. Conwill IV | Director | Sale at $3.41 per share | $204,600 | July 16, 2026 |
| Nancy T. Chang | Director | Sale at $3.31 per share | $198,600 | July 15, 2026 |
| Virginia Boulet | Director | Sale at $3.54 per share | $212,400 | July 14, 2026 |
| William J. Williford | Chief Operating Officer | Sale at $3.56 per share | $106,800 | July 14, 2026 |
| Sameer Parasnis | Chief Financial Officer | Sale at $3.56 per share | $106,800 | July 14, 2026 |
| Bart P. Hartman III | Officer | Sale at $3.54 per share | $21,240 | July 14, 2026 |
| George J. Hittner | General Counsel | Sale at $3.53 per share | $105,900 | July 14, 2026 |
| Huan Gamblin | Chief Technology Officer | Sale at $3.55 per share | $106,500 | July 14, 2026 |
The transaction data alone does not establish the insiders’ reasons for buying or selling.
Risks Investors Need to Watch
- Commodity-price sensitivity: The quarter’s revenue improvement was driven largely by a 56% increase in realized oil pricing, while natural gas pricing declined. A reversal in oil prices could pressure revenue and cash generation even if production remains stable.
- Higher third-quarter costs: Some of the Q2 lease operating expense benefit resulted from project timing. Deferred and accelerated work are expected to push Q3 lease operating expense to $73 million–$81 million.
- Decommissioning obligations: W&T expects full-year plugging and abandonment spending of $34 million–$42.4 million and indicated that spending could be near the upper end. The company also carries substantial current and long-term asset retirement obligations.
- Debt and interest costs: Net debt improved, but W&T still had $351.6 million of total debt and recorded $9.2 million of quarterly net interest expense.
- Litigation uncertainty: Management believes potential claims against sureties could reach hundreds of millions of dollars and could be trebled under certain circumstances, but only if W&T prevails. Both the outcome and the damages estimate remain uncertain.
Summary
W&T Offshore’s second-quarter improvement was driven more by oil pricing and cost control than by production growth. Higher revenue, lower year-over-year lease operating expense, and improved cash generation allowed the company to add cash and reduce net debt, although higher Q3 operating costs are already expected as deferred and accelerated projects move into the period. Production execution, commodity pricing, and the pace of capital and decommissioning spending are the principal items to monitor next.
Find out more
Comments