How Improving Crude Oil Prices Could Affect Whiting Petroleum Stock



Whiting Petroleum stock

Whiting Petroleum (WLL) stock has maintained the uptrend it started a few weeks ago. The stock has closed higher three weeks in a row.

In the week ended September 29, 2017, WLL stock rose 7%, but on a YTD (year-to-date) basis, WLL stock has fallen ~57%.

WLL has been tracking crude oil prices. In the week ended September 29, 2017, crude oil prices rose 1.9%. Notably, crude oil prices have closed above $50 per barrel every day since September 20, 2017.

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Key steps in the wake of weak crude

Weak crude oil prices had driven WLL to revise its capital expenditure for 2017 from $1.1 billion to $950 million. In August, Whiting sold its Fort Berthold assets in North Dakota in exchange for $500 million in cash and used the money to pay down the majority of its $550-million bank debt.

In September, Whiting announced its decision to implement a reverse stock split of its common stock. The ratio will likely range between one-for-two and one-for-six and will likely be decided in the next board meeting scheduled in 4Q17. After this news, on September 7, the stock fell 6.5%, but since then, the stock has risen 27.5%.

On the operational side, Whiting Petroleum dropped two rigs, one in the Williston Basin and one in the DJ Basin. It will now be running a four-rig program (all in the Williston Basin) through the end of 2017.

What next?

As crude oil makes up a major chunk of WLL’s total production, crude oil prices are a major driver of WLL’s performance. Crude had accounted for ~67.0% of Whiting’s total production in 2Q17, and so the improvement in crude oil prices on a sustained basis could lighten the weight on WLL stock.

Investors will likely be watching for further steps from WLL this year amid improving oil prices.


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