Digging Deeper into Whiting Petroleum’s Key Fundamentals

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Part 5
Digging Deeper into Whiting Petroleum’s Key Fundamentals PART 5 OF 8

What’s Whiting Petroleum’s Relative Valuation?

Whiting Petroleum’s relative valuation

Now that we have looked at Whiting Petroleum’s (WLL) EV-to-EBITDA (enterprise value to earnings before interest, tax, depreciation, and amortization) multiple compared to its historical values, we’ll look at the company’s valuation compared to its peers’ multiples.

What&#8217;s Whiting Petroleum’s Relative Valuation?

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Forward EV-to-EBITDA

Whiting Petroleum’s forward EV-to-EBITDA multiple of ~5.6x is mostly in line with its peer average of 5.9x. Its peer SM Energy (SM) is trading at a forward EV-to-EBITDA multiple of ~5.9x.

EP Energy (EPE) and Oasis Petroleum (OAS) are trading at higher multiples of ~7.34x  and ~6.01x, respectively. Carrizo Oil & Gas (CRZO) is trading at a lower multiple of 4.75x.

Return on equity

When its profitability is scaled by its shareholder equity, Whiting Petroleum offers negative returns. Its peers also offer negative returns. The calculation is the return on equity.

Whiting Petroleum’s return on equity stands at about -21%. The negative return on equity is due to the company’s negative net earnings or net loss. Among Whiting Petroleum’s peers, Carrizo Oil & Gas has the lowest return on equity at -52.5%.

Debt-to-assets ratio

As you can see in the above chart, Whiting Petroleum has a debt-to-assets ratio of ~35%. EP Energy’s debt-to-assets ratio is the highest among its peers. The debt-to-assets ratio is a way to measure a company’s leverage. A higher percentage indicates that a higher proportion of a company’s assets are financed through debt. So, the higher the ratio, the higher the financial risk.


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