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Whiting Petroleum Stock Continues to Face Challenges in 2017

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Whiting Petroleum Stock Continues to Face Challenges in 2017 PART 1 OF 4

Whiting Petroleum Stock: Oil Prices and 2Q17 Earnings

Whiting Petroleum stock

Whiting Petroleum (WLL) has come under pressure this year as crude oil prices started to fall. Since the beginning of 2017, Whiting Petroleum has fallen ~62%.

While crude oil prices have been showing signs of recovery recently, Whiting Petroleum stock hasn’t shown a similar recovery.

Whiting Petroleum Stock: Oil Prices and 2Q17 Earnings

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Crude oil prices (USO) have fallen 6% since the beginning of the year, while natural gas prices (UNG) have fallen 15%. The Energy Select Sector SPDR ETF (XLE) has fallen ~14.7 since the beginning of the year.

Oil prices seemed to have fallen slightly compared to Whiting Petroleum stock. However, the recovery in crude oil prices is fairly recent. Crude oil prices hit the lowest levels this year at $42.53 per barrel in late June 2017, which was an ~20% fall compared to the prices at the beginning of the year.

As you can see in the above graph, Whiting Petroleum stock and the energy sector (XLE) have both given lower returns compared to the SPDR S&P 500 ETF (SPY), or the broader market, which has returned ~9.8% year-to-date.

What’s holding Whiting Petroleum stock back?

Whiting Petroleum’s disappointing 2Q17 earnings likely brought about the weakness in its stock. The company reported 2Q17 revenue of $311 million—compared to analysts’ estimate of ~$369 million in 2Q17. Whiting Petroleum posted adjusted earnings per share of -$0.18—compared to Wall Street analysts’ estimate of -$0.17.

At the operational level, Whiting Petroleum’s 2Q17 production levels were lower on a year-over-year and sequential basis.

Likely prompted by lower energy prices, Whiting Petroleum revised its capital expenditure for 2017 from $1.1 billion to $950 million. The earlier capex figure was almost double its figure in 2016.

Whiting Petroleum’s long-term debt at the end of 2Q17 was $3.3 billion—compared to its market cap of $1.7 billion, which could also be keeping investors at bay.

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