Investment Thesis
W&T Offshore exhibits severe financial distress with negative stockholders' equity of -$221.8M, indicating liabilities exceed assets. The company is unprofitable with a -15% net margin, negative free cash flow of -$14.2M, and critically insufficient interest coverage of 0.3x. Combined with below-threshold liquidity (current ratio 0.99x) and declining revenue, the company faces imminent solvency risks without significant operational or financial restructuring.
Strengths
- Positive operating cash flow of $2.6M demonstrates some operational cash generation capability
- Operating margin of 9.8% indicates business operations generate acceptable returns before financing costs
- Cash position of $130.9M provides near-term liquidity buffer for operations
Risks
- Negative stockholders' equity of -$221.8M signals insolvency and violation of debt covenants, creating bankruptcy risk
- Interest coverage ratio of 0.3x indicates operating income cannot cover debt obligations; company dependent on asset liquidation
- Negative free cash flow of -$14.2M with depleting cash reserves means company is burning cash; at current burn rate has <9 months runway before insolvency
- Current ratio of 0.99x indicates working capital deficit and near-term liquidity crisis
- Net loss of -$22.5M and declining revenue suggest operational deterioration with no growth trajectory
Key Metrics to Watch
- Cash balance and monthly cash burn rate to assess solvency timeline
- Interest coverage ratio trajectory and debt covenant compliance status
- Operating cash flow sustainability and whether it can cover capital expenditures
- Revenue trends and operating margin maintenance in volatile commodity environment
- Debt restructuring announcements or covenant waiver negotiations
Financial Metrics
Revenue
150.0M
Net Income
-22.5M
EPS (Diluted)
$-0.15
Free Cash Flow
-14.2M
Total Assets
959.2M
Cash
130.9M
Profitability Ratios
Gross Margin
N/A
Operating Margin
9.8%
Net Margin
-15.0%
ROE
N/A
ROA
-2.3%
FCF Margin
-9.5%
Balance Sheet & Liquidity
Current Ratio
0.99x
Quick Ratio
0.99x
Debt/Equity
N/A
Debt/Assets
0.0%
Interest Coverage
0.33x
Long-term Debt
351.2M
Disclaimer: This analysis is generated by AI based on publicly available SEC EDGAR filings.
It does not include stock price data and should not be considered financial advice.
All fundamental data is sourced from SEC public domain filings.
Always conduct your own research before making investment decisions.
Data Source: SEC EDGAR |
Analysis Date: 2026-05-08T08:48:46.152815 |
Data as of: 2026-03-31 |
Powered by Claude AI