Whiting Petroleum’s 2Q16 Earnings Disappoint

Whiting Petroleum (WLL) reported its 2Q16 earnings on July 27, 2016, after the markets closed. Whiting’s 2Q16 revenue was ~$359 million, against an estimate of $393 million. Revenue in 2Q15 was ~$677 million. In 1Q16 it was $324 million.

Whiting Petroleum’s (WLL) 2Q16 adjusted earnings per share (or EPS) was -$0.70, against Wall Street analysts’ consensus estimate of about -$0.45 EPS. Its 2Q15, EPS stood at $0.04. 1Q16 earnings came in at -$0.85 per share. As we can see in the above graph, Whiting’s earnings and revenues missed estimates.

Peers Oasis Petroleum (OAS), Newfield Exploration (NFX), and (CLR) haven’t announced their 2Q16 earnings yet. Analysts expect the EPS for these companies to come in at about -$0.15, $0.13, and -$0.17, respectively. Watch this space for earnings coverage on these companies.

In the previous quarter, WLL entered into a “wellbore participation agreement” in the Williston Basin with an unknown private player. Under the agreement, the private party will pay 65% of drilling and completion costs to earn a 50% working interest in 44 Williston Basin wells.

In 2Q16 Whiting signed another well-participation agreement, for 30 wells, with similar terms as the previous agreement. Following this, WLL plans to add a drilling rig in October. As a result of the new participation agreement, WLL has increased its 2016 capex by $50 million. In addition, WLL sold its North Ward Estes property in West Texas for $300 million and a “potential contingency payment of $100.”

Lastly, WLL exchanged $1.1 billion of debt into mandatory convertible debt. In its 2Q16 earnings release, the company stated that “these debt exchanges have effectively reduced Whiting’s debt by $810 million as of July 27, 2016 by conversion into stock.”