W&T Offshore, Inc. (NYSE:WTI) recently closed an exchange proposal for its 2019 notes, leading in a $408.2 million decline in long-term debt and expected yearly interest savings of almost $50 million to $60 million.

The highlights

In the past two years, W&T Offshore has lessened its lease operating costs and G&A expenses by 48% and 40%, correspondingly. Even with low oil prices, the company has excellent coverage of more than 2x. This week’s bond assessment focuses on an independent gas and oil producer functioning in the deepwater areas of the Gulf of Mexico. W&T has done a remarkable job of reducing operating costs and debt, while maintaining production stable.

The company’s 2019 bonds, couponed at 8.50% are presently selling at the deep discounted rate of close to 47, with yield indications more than 45%. For investors prepared to analyze the posted numbers, there are gems to be identified. WTI has shown extremely strong adjusted EBITDA margins previously between 45% and 67%. The bonds are presently a part of top-performing hedge fund, named as Distressed Debt 1 LP, and the experts think they show an overlooked opportunity for shareholders looking to increase cash flow and comprehensive portfolio returns.

In response to the low gas and oil price environment, many gas and oil exploration and production firms have looked to curb operational expenses as much as possible. W&T Offshore has recorded a fantastic job of minimizing its ongoing expenses in the past few years as gas and oil prices decreased and continue to trade at historically low levels.

For the quarter closed September 30, 2016, the firm’s Lease Operating Expenses declined 23.2% over the comparable period in 2015. Following the diligent cost cutting efforts, lease operating expenses have been reduced considerably since 2014.

Additionally, W&T’s G&A have also been declining. In the third quarter, it posted 23.2% decline in G&A expenses as compared to the same quarter in 2015.