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Why Did Whiting’s Stock Fall after Its 2Q16 Earnings Release?

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Whiting’s stock performance

Following Whiting Petroleum’s (WLL) 2Q16 after-market earnings release on July 27, its stock fell by ~7%. WLL’s stock has declined significantly over the past year. YoY (year-over-year), WLL has fallen by ~61%. In this part of the series, we’ll analyze Whiting’s stock performance with respect to movements in the broader industry and the broader market.

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Peer comparison

Meanwhile, Cimarex Energy’s (XEC) and Continental Resources’ (CLR) stock prices increased by ~7% and 36% year-over-year, respectively. Anadarko Petroleum’s (APC) stock price fell by ~25% year-over-year.

As shown in the above graph, WLL’s performance has been driven mainly by the WTI (West Texas Intermediate) crude oil prices (OIL). Along with natural gas prices (UNG), they have also been driving the broader industry ETF, the Energy Select Sector SPDR ETF (XLE).

From July 14 to July 28, Whiting’s stock was outperforming the Energy Select Sector SPDR ETF (XLE). However, towards the end of the period, WLL’s stock plunged, as did crude oil prices, and ended up giving lower returns than XLE at the end of the period. WLL’s stock fell 21% during this period, while XLE fell by 3%. Both XLE and WLL’s stock underperformed the SPDR S&P 500 ETF (SPY), which increased 0.7% during this period.

WLL’s stock fell by ~7% on July 28, following its after-market 2Q16 earnings release on July 27. This was mostly because of the negative market reaction to its 2Q16 earnings. Crude oil prices also fell 2% on July 28, so the drop in WLL’s stock was also likely due to the drop in crude oil prices. Read the first part of this series to learn more about Whiting’s 2Q16 performance.

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