W&T Offshore shares fall on scale back of wells

Shares of the Houston-based company fell $6.60, or 15.5 percent, to $36 in morning trading.

The company announced Tuesday that it would scale back its 2008 drilling program from 50 wells to between 30 and 35 wells for a variety of reasons including equipment delays and revisions to outside operators' drilling programs.

"A majority of the wells removed from the 2008 program will be moved into the 2009 program." Tracy W. Krohn, W&T Offshore's chairman and chief executive, said in a statement.

W&T Offshore on Tuesday reported net income of $134.6 million, or $1.77 per share, attributing the near tripling from the second quarter of 2007 to higher realized prices for its products.

When excluding a $10.2 million unrealized derivative loss, which amounts to $6.7 million after-tax or 9 cents per share, the company earned $141.3 million, or $1.86 per share.

Analysts surveyed by Thomson Financial, on average, expected earnings of $1.84 per share on revenue.

Jefferies & Co. analyst Gary Nuschler Jr., who rates the stock "Buy" with a price target of $55, said W&T Offshore maintains a large inventory of probable and possible reserves and a robust inventory of wildcat prospects.

"In our view, this makes WTI a better company by increasing its growth prospects and enhancing the 'big hit' potential of its exploration program," Nuschler said in a client note.

Nuschler said W&T Offshore's cash flow per share in the second quarter fell below expectations, but the miss was due entirely to higher current taxes. He said production volumes fell 2 percent below forecasts, but they were offset by better-than-expected operating expenses.