Wednesday, March 19, 2014

This Beaten-Down Offshore E&P Company Has 30%+ Upside Potential

This article was originally published by Seeking Alpha as part of Seeking Alpha PRO and is available on a time-limited basis.

By Sarafraz A. Khan, Research assistant: Gohar Yousuf

W&T Offshore is poised to deliver higher levels of liquids production. Its acreage in West Texas offers a big opportunity for long term growth. The company is also going strong on the offshore front. Its shares could continue going higher to $19. 

W&T Offshore (WTI) is a 30-year old independent oil and natural gas producer with more than 26 years of experience of operating offshore oil and gas properties. The company was founded, and is currently headed, by the business mogul and racing enthusiast Tracy Krohn. The company has offshore operations at the Gulf of Mexico, which is the backbone of the business, and onshore operations at the Permian Basin, mainly in West Texas. The company has grown on the back of exploration and development as well as acquisitions. The company's acreage is primarily offshore property and more than half of its reserves are liquids.

However, the company's growth ambitions received a setback when in late-November, it announced that it could get blocked from getting federal contracts as a result of pollution issues in 2009. Moreover, its recent quarterly results released last week also came in well below expectations, which further exacerbated the situation. As a result, since November 27, the company's shares have plunged 26% and closed at $14.43 on March 11.

The markets seem to have overreacted and this could be a buying opportunity for investors. Analysts at Capital One believe that the regulator's notice related to federal government's contracts is not as bad as it sounds. On Tuesday, The KLR Group gave a price target of $20 on the stock, which implies an upside of 38.60% from the current price levels. So should you buy into the dip? To find this out, we will have to dig much deeper ….. read full article at Seeking Alpha.