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What’s Going on with Whiting Petroleum Stock

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Whiting Petroleum stock

Whiting Petroleum (WLL) continues to remain pressured, and the stock has remained on a downward trajectory. Since the beginning of this year, Whiting Petroleum stock has fallen ~65%.

On August 15, 2017, Whiting Petroleum announced its decision to sell its Fort Berthold assets in North Dakota in exchange for $500 million in cash. The company intends to use the proceeds to pay down a major portion of its $550 million bank debt. The closing date of the transaction is expected to be September 1, 2017.

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Weaker crude oil prices and WLL’s high debt likely incited this move. At the end of 2Q17, WLL’s long-term debt was $3.3 billion, and its market cap was $1.5 billion. While WLL stock failed to rise despite positive steps towards reducing its debt, there could be other factors suppressing WLL stock as well. Some factors may include its weak 2Q17 earnings and 2Q17 production levels, which were lower on a year-over-year and sequential basis.

Crude oil prices (USO) have fallen 7.3% since the start of 2017, while natural gas prices (UNG) have fallen 13%. The Energy Select Sector SPDR ETF (XLE) has fallen ~18% since the beginning of 2017.

As shown in the graph above, the decline in oil prices was marginal compared with that seen in Whiting Petroleum stock. Also, as the graph above notes, Whiting Petroleum stock and the energy sector (XLE) have underperformed the SPDR S&P 500 ETF (SPY), which has returned ~7.8% year-to-date. Due to lower energy prices, Whiting Petroleum revised its 2017 capital expenditure from $1.1 billion to $950 million. The previous capex figure was almost double its 2016 capex.

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