Whiting Petroleum (WLL) stock has fallen ~52% YTD (year-to-date). In this series, we’ll be looking at various factors that could have affected WLL’s stock fall this year—apart from the volatile energy price environment.
Crude oil prices
Three months into 2017, crude oil prices (USO) (DBO) fell below $50 per barrel and started showing weakness, and the subsequent rises over $50 per barrel weren’t sustained for a long duration for the majority of the year.
Since late September, however, crude oil prices have risen over $50 per barrel and have remained strong since then. Overall, crude prices have now risen 10% YTD. This increase explains the uptrend we’ve seen in WLL’s stock since September.
WLL stock hit its lowest point of $16 on September 8—a drop of 68% compared to its beginning-of-the-year levels. However, the stock has recovered from those lows and is currently trading ~52% higher than that low point in September.
Reverse stock split
But while crude oil prices have offered some support to WLL stock, WLL’s returns are lagging crude oil prices. One key factor that has been putting downward pressure on WLL stock recently was its recent announcement of a reverse stock split. On November 8, Whiting Petroleum finalized a one-for-four reverse stock split. Its stock fell ~6% following the announcement. The stock is now trading 13% lower than pre-announcement levels.
WLL’s management took this major step in the hopes that it “may improve marketability and facilitate its trading.”
In the subsequent parts of this series, we’ll assess the key reasons for the underlying weakness in WLL stock, starting with WLL’s earnings history.