Whiting’s net debt-to-EBITDA
Whiting Petroleum’s net debt-to-adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) has steadily increased since 4Q14. In 2Q16, Whiting’s net-debt-to-adjusted-EBITDA multiple was ~6.6x.
As the graph below shows, Whiting’s net debt was steady at ~$5 billion between 1Q15 and 1Q16. It adjusted EBITDA, meanwhile, declined considerably during this period, which explains the increase in its net debt-to-adjusted EBITDA ratio.
In 2Q16 WLL’s net debt dropped on a sequential basis and on a Yoy (year-over-year) basis, but its 2Q16 trailing-12 month adjusted EBITDA dropped more significantly, pushing its net debt-to-EBITDA multiple higher.
Whiting’s 2Q16 net debt was ~$4.9 billion, as compared to $5.18 billion in 2Q15 and ~$5.22 billion in 1Q16. Its trailing-12-month adjusted EBITDA as of 2Q16 was ~$747 million, as compared to its 2Q15 trailing 12-month EBITDA of ~$1.6 billion and 1Q16 trailing 12-month EBITDA of ~$975 million.
After its Kodiak Oil and Gas acquisition in 2014, WLL took on a lot of debt—$5.2 billion as of December 31, 2015. Since then, the company has been working on improving its financial position. (Refer to Part 4 and Part 10 of this series for more on the company’s key objectives and efforts.)
Notably, CHK and WLL combined make up 1.1% of the iShares US Oil & Gas Exploration & Production ETF (IEO).
In the next part, we’ll look at Whiting’s free cash flow.