How Crude Oil Prices and 2Q17 Earnings Are Driving WLL Stock



Whiting Petroleum stock

Whiting Petroleum (WLL) stock has been under pressure for most of this year. WLL stock has fallen ~60% since the beginning of 2017.

As we can see in the graph below, WLL stock has underperformed the Energy Select Sector SPDR ETF (XLE), which has fallen 12.5% since the start of this year.

Weakness in WLL stock was likely brought about by crude oil prices (DBO), which have dropped 4.0% since the beginning of 2017. Natural gas prices (UGAZ) have fallen ~15.3% in the same period. The price of crude oil serves as a major driver for WLL’s performance, as oil makes up a considerable amount of WLL’s total production. In 2Q17, crude oil comprised ~67.0% of WLL’s total production.

While crude oil prices seemed to have decreased only marginally compared to WLL stock this year, the recovery in crude oil prices is fairly recent. Crude oil prices had hit their lowest levels of $42.53 per barrel in late June 2017, which was an ~20% decline compared to the beginning of the year.

Crude oil prices have remained below $50 per barrel since the end of May, before touching $50.18 per barrel on July 31—its first foray above $50 in two months.

To see more operational highlights about WLL’s 2Q17 performance, please read Whiting Petroleum Updates its 2017 Production Guidance.

As we can see in the chart above, WLL stock and the energy sector (XLE) have both underperformed the broader market. The SPDR S&P 500 ETF (SPY) has returned ~9.6% year-to-date.

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Whiting Petroleum’s 2Q17 earnings highlights

Whiting Petroleum’s stock movements could also have been pressured by its dismal 2Q17 earnings last week. Also, Whiting Petroleum’s total production volume in 2Q17 was ~112.7 Mboepd (thousand barrels of oil equivalent per day), which was lower than its 1Q17 production volume of 117.4 Mboepd.

While Whiting’s 2017 production guidance is 7.5% lower at the midpoint compared to its 2016 production levels, the company has forecast 14% production growth between 1Q17 and 4Q17.


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