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Clocking Whiting's Recent Stock Performance: Key Drivers

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Clocking Whiting's Recent Stock Performance: Key Drivers PART 1 OF 4

Whiting Petroleum’s Stock: Will The Uptrend Sustain?

Whiting Petroleum’s stock

Whiting Petroleum (WLL) stock rose last week, tracking higher crude oil prices and climbing 19.2% during the week ended September 18, 2017. Crude oil prices (UCO) rose 3.8% during the same period, while natural gas prices rose 6.6%.

WLL’s stock has been tracking the movements of crude oil prices (UCO) (DBO) for most of this year.

Whiting Petroleum’s Stock: Will The Uptrend Sustain?

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However, the stock remains lower than its levels at the beginning of the year. So far in 2017, WLL stock has fallen 61%, while the Energy Select Sector SPDR ETF (XLE) has fallen 13.2%.

The energy sector has performed poorly compared with the S&P 500 SPDR ETF (SPY), which has risen ~11% since the start of the year.

What’s behind WLL’s stock movements?

Crude oil prices are a major driver for WLL’s performance, as oil makes up a considerable amount of WLL’s total production. In 2Q17, crude oil made up ~67.0% of WLL’s total production. But recent improvements in crude oil prices are likely to sustain WLL’s uptrend.

In response to weak oil prices, WLL had revised its capital expenditure for 2017 to $950 million, up from $1.1 billion, and the previous guidance had already been almost double its 2016 capex. In August, Whiting announced its decision to sell its Fort Berthold assets in North Dakota, in exchange for $500 million in cash, to pay down a major portion of its $550 million bank debt.

On September 7, 2017, WLL announced that it would reverse stock split its common stock at any ratio ranging between one-for-two and one-for-six, as determined by its board at the meeting in 4Q17.

Usually, the motivation behind a reverse stock split is to meet stock exchange requirements. For example, to remain listed on the New York Stock Exchange, a stock has to avoid trading below $1.00 for an extended period.

Following this news, Whiting Petroleum stock fell 6.5% on September 7. Investors will be watching Whiting Petroleum as markets take in the company’s recent steps against a backdrop of improving crude oil prices.

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