Why Did Whiting Petroleum Stock Fall Last Week?



Whiting Petroleum stock

Whiting Petroleum (WLL) stock fell 2.3% in the week ending December 15, 2017. Since the beginning of the year, Whiting Petroleum stock has fallen ~55%.

As you can see in the above chart, Whiting Petroleum’s movements have been tracking the movements in crude oil (USO) (UCO) prices. In the week ending December 15, 2017, crude oil prices were mostly flat compared to the previous week ending December 8, 2017.

Last week, Whiting Petroleum’s fall was due to an announcement that it made on December 11, 2017. Whiting Petroleum announced that it expects impairment charges of $800 million–$900 million in 4Q17. The company also reduced its reserve estimates in the DJ Basin. The impairment charges are in connection with the partial write-down of its Redtail field assets in the DJ Basin. Whiting Petroleum’s management noted that the impairments were a result of its decision to focus its activities more in the Williston Basin in 2018. Management noted that the decision was based on the DJ Basin’s recent performance results compared to the Williston Basin. According to Whiting Petroleum, proved undeveloped reserves accounted for ~90% of the reserve reduction.

Following the announcement, Whiting Petroleum stock fell 7.5% the next day.

Whiting Petroleum has fared poorly compared to the broader energy ETF, the Energy Select Sector SPDR ETF (XLE). XLE has fallen ~10.0% since the beginning of the year. Whiting Petroleum and XLE have performed poorly compared to the broader market (SPY) (SPX-INDEX), which has risen ~18.0% since the beginning of the year.

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