Why Whiting Petroleum Beat the Industry and Broader Market


Nov. 20 2020, Updated 3:33 p.m. ET

Whiting Petroleum’s stock

In the two weeks since December 30, 2016, Whiting Petroleum (WLL) has given a return of ~1.8%, outperforming the energy sector. The Energy Select Sector SPDR ETF (XLE) gave a return of -1.25% in the same period. The broader market S&P 500 ETF (SPY) gave a return of ~1.6%.

The spike in WLL’s stock during the first two weeks of 2017 was likely a result of its announcement on January 3, 2017, stating that it had closed its previously announced Bakken midstream asset sale. Soon after this announcement, WLL’s management announced that it plans to redeem its 6.5% senior subordinated notes due October 2018 from the proceeds of the Bakken Midstream asset sale. In Part 4, we’ll look at yet another reason for WLL’s stock increasing sharply.

The recent asset sale by WLL is another proof that the company is focusing on lowering its debt levels, a key focus for the company in 2016 and possibly in 2017 as well.

The stock stayed strong until January 5, 2017, after which it started sliding, mirroring crude oil prices (USO), as we can see in the chart above. Crude oil prices gave a return of -2.5% in the two weeks ended January 13, 2017.

Year-over-year, Whiting has given returns of ~114%, compared to the XLE’s ~37%. WLL’s superior performance is likely because of its focus on debt reductions, operational efficiencies, strong cash flows, and an improving oil price environment.

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