|Shares Out. (in M):||141||P/E||0||0|
|Market Cap (in $M):||640||P/FCF||0||0|
|Net Debt (in $M):||553||EBIT||0||0|
Company: W&T Offshore, Inc.
Security: WTI 9 ¾ 11/01/23 Corp at 96 (10.9% YTM)
Founded in 1983, W&T (WTI or the company) is an independent offshore conventional oil company, with a focus in the Gulf of Mexico. The company has 2x 2019 E leverage, is free cash flow positive down to $35/bbl of oil and has a CEO who owns 32.7% of the $655MM market cap.
Investment Thesis / Trade Summary
WTI is an offshore oil company in the Gulf of Mexico (GOM) with a CEO who owns 1/3rd of the market cap. The company’s strategy is conventional drilling, conservative balance sheet, and grow by acquisitions of assets that are either in bankruptcy or small and unwanted by the major oil companies. Leverage will be 2.0x by 2019, a slight increase from 1.5x in 2019 but WTI is free cash flow positive at $35/oil and has an equity cushion larger than it’s debt load with a high motivate owner/manager/investor.
Buy at 96 (10.9% YTM) and collect a 9 ¾ coupon. WTI is an off the run company with no sell side coverage. Net debt of $583MM is cushioned by $655MM market cap on this free cash flow positive E&P company, where the CEO owns nearly 1/3rd of the company’s stock.
Valuation & Structure