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Why Whiting Petroleum Stock Rose Last Week

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Whiting Petroleum stock

Whiting Petroleum (WLL) stock rose 12.6% in the week ending December 22 from the previous week. Since the start of the year, however, the stock has fallen ~50.28%.

The rise in WLL’s stock came from the passing of the US tax reform bill on December 20. Like several US stocks, WLL rose the next day, rising 2.3%.

In contrast, in the previous week, WLL had fallen due to Whiting Petroleum’s announcement on December 11 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 resulted from 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 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.

Crude oil prices might have impacted WLL stock

A rise in crude oil prices also likely gave WLL’s stock a boost. In the week ending December 22, crude oil prices (UCO) increased ~1.9%. Crude oil prices have risen 11.6% since the beginning of the year. As you can see above, WLL stock has given lower returns compared to crude oil prices since the beginning of the year.

Whiting Petroleum has also fared poorly compared to the broader energy ETF, the Energy Select Sector SPDR ETF (XLE). XLE has fallen ~5.51% since the beginning of the year. Whiting Petroleum and XLE have performed poorly compared to the broader market (SPY)(SPX-INDEX), which has risen ~18.8% since the beginning of the year.

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