FANG - W&T Offshore: Value Play Vs. Debt Trap
- W&T Offshore's asset values suggest that the shares are underpriced and may be worth $6-$7.
- Further, management owns 35% of the common stock, providing for a strong alignment of incentives.
- However, leverage and debt maturities are not favorable; it is a close call whether the company can repay its notes due in 2023.
- The sizable discount at which the 2023 notes trade shows that the bond market also perceives refinancing risk.
- W&T Offshore makes sense as a speculative play, but its valuation is low for a reason.
For further details see:
W&T Offshore: Value Play Vs. Debt Trap