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How Much Is Crude Driving Whiting Petroleum?

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How Much Is Crude Driving Whiting Petroleum? PART 1 OF 4

Does Whiting Stock Have More Room to Rise?

Whiting Petroleum’s stock

Whiting Petroleum (WLL) stock has held onto its upward movement from last week (ended September 22, 2017), when it rose ~4.1%. But on a YoY (year-over-year) basis, WLL stock has fallen ~60%.

The recent positive movements in WLL stock can be attributed to the improvement in crude oil prices (UCO) (DBO). Last week, crude oil prices rose 1.5%.

Does Whiting Stock Have More Room to Rise?

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On September 25, 2017, crude oil prices closed at $52.08, after trading at a high of $52.2. Crude oil prices have stayed above $50 per barrel for four consecutive days.

The increase in crude oil prices could be explained by the decision by OPEC (Organization of the Petroleum Exporting Countries) and non-OPEC producers to wait until January 2018 to decide on extending their production cut deal to beyond March 2018. This latest meeting was held on September 22, 2017, in Vienna, Austria. (For more, check out Market Realist’s “US Crude Oil Futures and the S&P 500 Rose Last Week.”)

What’s driving WLL stock?

In the wake of weak oil prices, WLL had already revised its capital expenditure for 2017. Its updated capital expenditure or capex forecast for 2017 is now $950 million, down from the previous forecast of $1.1 billion.

In August, Whiting sold its Fort Berthold assets in North Dakota in exchange for $500 million in cash and used the money to pay down the majority of its $550 million bank debt. On September 7, 2017, Whiting announced that it would carry out a reverse stock split of its common stock at any ratio ranging between one-for-two and one-for-six. After that, on September 7, the stock fell 6.5%, but since then, the stock has risen 19%.

As crude oil makes up a considerable amount of WLL’s total production, crude oil prices are a major driver of WLL’s performance. In 2Q17, crude oil made up ~67.0% of Whiting’s total production. But recent improvements in crude oil prices seem to have given the stock a new breath of life.

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