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Factors Driving Whiting Petroleum Stock in 2018


Nov. 20 2020, Updated 2:54 p.m. ET

Whiting Petroleum’s stock performance

Whiting Petroleum (WLL) stock has been rallying since the start of this year, rising ~79.0% YTD (year-to-date). Strong crude oil prices (UCO) have been supporting this rally. WLL’s crude oil production mix in the first quarter was 68.0%.

Oasis Petroleum (OAS) and Continental Resources (CLR) are two of WLL’s peers that also have the majority of their operations in the Bakken. Until recently, OAS had been a pure-play Bakken player. However, toward the end of 2017, OAS announced its decision to move into the Permian Basin. In the first quarter, OAS closed the Permian Basin acquisition from Forge Energy on February 14.

The acquisition added ~3.6 Mboepd (thousand barrels of oil equivalent per day) of production to Oasis Petroleum’s existing production. Around 56.0% of CLR’s first-quarter production came from the Bakken region.

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Other factors supporting WLL stock

Strong first-quarter earnings have also been supporting WLL stock. WLL’s first-quarter earnings improved significantly on both a YoY (year-over-year) and sequential basis. WLL’s revenues had also improved YoY in the first quarter as a result of higher production and better price realizations.

Average crude oil price realizations in the first quarter were $55.40 per barrel, compared to $44.12 per barrel in the first quarter of 2017 and $50.86 per barrel in the fourth quarter of 2017. Production rose 8.0% year-over-year in the first quarter.

Whiting Petroleum’s management has also been focusing on lowering its costs. WLL’s operating expenses in the first quarter were ~$417.0 million, compared to $449.0 million in the first quarter of 2017. The company’s management is projecting ~$200.0 million of free cash flow in 2018 at $55.00 NYMEX oil prices. Crude oil prices are currently trading at ~$65.00 per barrel.

Improved cash flows are expected to keep supporting WLL stock. These cash flows are aided by cost reduction plans, increasing crude oil prices, and improving Bakken price differentials.

Year-over-year performance

On a year-over-year basis, Whiting Petroleum (WLL) stock has risen ~109.0%, and crude oil prices have risen ~47.0% in the same period. The Energy Select Sector SPDR ETF (XLE) has increased ~13.4% year-over-year, and the S&P 500 SPDR ETF (SPY) has increased ~12.6% YoY.


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