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Research from Water Tower Research

Water Tower Research is a leading equity research firm that provides research on micro, small and mid cap companies.

Water Tower Research was founded by Wall Street veterans after witnessing a fundamental shift in the investment research industry with the result being a declining knowledge base among investors, a lack of awareness and a shrinking pool of fundamental research being conducted on companies across the small-cap and micro-cap spectrum. The same issues are now increasingly occurring in the mid-cap space. This sea change within the investment community is impacting not only the companies themselves but also current shareholders and potential investors. With significantly less active sell-side sponsorship by Wall Street, a substantial information gap has developed between companies and various constituents in the financial community. The net result is fewer channels for insight and information to flow between companies and investors.

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<ul><li>Global oil supplies have experienced massive disruptions in 2026. </li><li>A major news agency published a report last week stating that nearly half the world’s oil is supplied by countries affected by conflicts this year, including the ongoing Iran war and the expansion into other Middle East countries (which has resulted in the largest oil supply crisis on record), the Russia-Ukraine war, conflicts in Libya, and US restrictions on Venezuelan oil exports at ?the start of the year. </li><li>Reuters calculated that countries affected by those conflicts together produced ~45 million barrels of oil per day based on 2025 output, representing more than 43% of the global oil supply (Figure 1).</li></ul>

Global oil supplies have experienced massive disruptions in 2026. A major news agency published a report last week stating that nearly half the world’s oil is supplied by countries affected by conflicts this year, including the ongoing Iran war and the expansion into other Middle East countries (which has resulted in the largest oil supply crisis on record), the Russia-Ukraine war, conflicts in Libya, and US restrictions on Venezuelan oil exports at ?the start of the year. Reuters calculated that countries affected by those conflicts together produced ~45 million barrels of oil per day based on 2025 output, representing more than 43% of the global oil supply (Figure 1).

Global Energy Security Remains Stressed as Renewed Fighting Pushes Prices Higher

Equity Bottom-Up

<div><ul><li>W&amp;T has historically relied on acquisitions of producing properties in the Gulf of America (GOA), which add current cash flow and exploitation/development opportunities to add future value. </li><li>Management has established a track record, with case studies, of increasing the value of acquired assets through both drilling and expense management.</li><li>W&amp;T’s last asset acquisition closed in January 2024; the $77-million purchase of six producing fields from the bankruptcy proceeding of Cox Oil &amp; Gas on the GOA shelf. </li></ul></div>

W&amp;T has historically relied on acquisitions of producing properties in the Gulf of America (GOA), which add current cash flow and exploitation/development opportunities to add future value. Management has established a track record, with case studies, of increasing the value of acquired assets through both drilling and expense management.W&amp;T’s last asset acquisition closed in January 2024; the $77-million purchase of six producing fields from the bankruptcy proceeding of Cox Oil &amp; Gas on the GOA shelf. 

<ul><li>Successful low-risk workovers completed during 2Q25, coupled with the production restart at the West Delta 73 and Main Pass 108/98 fields are expected to drive production through year-end.</li><li>W&amp;T executed nine workovers during 2Q25 that performed better than expected.</li><li>The midpoint of 3Q25 total production guidance is 34.9 MBoe/d, which would equate to 3.9% Q/Q growth and 12.3% Y/Y growth.</li></ul>

Successful low-risk workovers completed during 2Q25, coupled with the production restart at the West Delta 73 and Main Pass 108/98 fields are expected to drive production through year-end.W&amp;T executed nine workovers during 2Q25 that performed better than expected.The midpoint of 3Q25 total production guidance is 34.9 MBoe/d, which would equate to 3.9% Q/Q growth and 12.3% Y/Y growth.

WTI: 2H25 Production Growth Supported by Asset Performance and Exploitation Activity

<ul><li>Replenishing oil reserves likely to set higher near-term oil price floor. </li><li>Regardless of when the latest Iran war military escalation hopefully ends in another ceasefire and resumption of peace negotiations, we expect crude oil demand to refill global oil inventories and strategic petroleum reserves will provide upward pressure on oil prices, resulting in a higher floor price than would otherwise be expected. </li><li>As Figure 1 highlights, the additional crude oil demand associated with replenishing global stockpiles could exceed 500 thousand barrels per day and continue at least throughout 2027. </li></ul>

Replenishing oil reserves likely to set higher near-term oil price floor. Regardless of when the latest Iran war military escalation hopefully ends in another ceasefire and resumption of peace negotiations, we expect crude oil demand to refill global oil inventories and strategic petroleum reserves will provide upward pressure on oil prices, resulting in a higher floor price than would otherwise be expected. As Figure 1 highlights, the additional crude oil demand associated with replenishing global stockpiles could exceed 500 thousand barrels per day and continue at least throughout 2027. 

Energy Roundup : Restocking Global Oil Storage Should Pressure Oil Prices...

Cross Asset Strategy

<ul><li>That’s a lot of volatility – continued Strait of Hormuz shutdown sends shockwaves through energy complex only to see prices substantially decline less than 24 hours later. </li><li>As the Iran war continued into week two with the Israeli military striking several Iranian fuel sites, oil prices began trading this week with the one of the largest one-day price moves on record.</li><li> After climbing ~30% last week to just under $93/bbl, Brent oil spot prices spiked as high as $117/bbl (+26%) when trading opened Sunday evening.</li></ul>

That’s a lot of volatility – continued Strait of Hormuz shutdown sends shockwaves through energy complex only to see prices substantially decline less than 24 hours later. As the Iran war continued into week two with the Israeli military striking several Iranian fuel sites, oil prices began trading this week with the one of the largest one-day price moves on record. After climbing ~30% last week to just under $93/bbl, Brent oil spot prices spiked as high as $117/bbl (+26%) when trading opened Sunday evening.

Energy Roundup : Oil Prices Swing Wildly...

United States

W&T Offshore, Inc. is an independent oil and natural gas company focused primarily on the Gulf of Mexico area in the United States.

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W&T Offshore (WTI US)

Global Energy Security Remains Stressed as Renewed Fighting Pushes Prices Higher

A major news agency published a report last week stating that nearly half the world’s oil is supplied by countries affected by conflicts this...

Water Tower Research

WTI: Estimate Update - 25 February 2026

W&T has historically relied on acquisitions of producing properties in the Gulf of America (GOA), which add current cash flow and exploitation...

Water Tower Research

WTI: 2H25 Production Growth Supported by Asset Performance and Exploitation Activity

Successful low-risk workovers completed during 2Q25, coupled with the production restart at the West Delta 73 and Main Pass 108/98 fields are...

Water Tower Research

Energy Roundup : Restocking Global Oil Storage Should Pressure Oil Prices...

Regardless of when the latest Iran war military escalation hopefully ends in another ceasefire and resumption of peace negotiations, we expect...

Water Tower Research

Energy Roundup : Oil Prices Swing Wildly...

That’s a lot of volatility – continued Strait of Hormuz shutdown sends shockwaves through energy complex only to see prices substantially decline...

Water Tower Research

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