Whiting Petroleum Corp. (WLL) Plummets on 22% Discount on Stock Offering

Shares of Denver, Colorado, based Whiting Petroleum Corp. (WLL) fell sharply on Tuesday, on a down day on Wall Street across the board. Whiting's stock fell $7.48 per share, down 19.48% to close at 30.91 per share, on trading volume of 58,107,805 shares. The company disclosed that it is pricing an upcoming stock offering at $30 per share, or 22% below the stock's closing price on Monday.

Founded in 1980, Whiting Petroleum Corp. is an oil and gas producing company, engaged in the acquisition, exploration and development of crude oil, natural gas and natural gas liquids.
It operates in the Permian Basin, the Rocky Mountains, Mid-Continent, the Gulf Coast and in Michigan. Whiting is the largest oil producer in North Dakota, and owns one of the largest oil producing tracks in the state's Bakken oil formation.

On Tuesday, the company announced that it would price its upcoming offering of 35 million shares of stock at $30 a share. This caused an immediate reaction by investors, as the price of Whiting's stock fell to just above the new stock offering price. The sale is expected to raise $1 billion, after deducting underwriter's discounts and commissions. The underwriter will have the option to purchase up to an additional 5.25 million shares of the company's common stock. The offering is expected to close on March 27.

According to Benzinga, Senior Managing Partner at Meridian Equity Partners, Jonathan Corpina, noted that the stock sale must be done "at a discount to attract buyers, otherwise they wouldn't be able to sell so much stock at once to a condensed group.

Whiting's stock had traded at over $90 per share as recently as September.

In a separate press release, Whiting also announced a private, unregistered offering of $1 billion aggregate principal amount of 1.25% convertible senior notes due in 2020. Included in that offering is the option of initial buyers to have a 30 day option to purchase up to an additional $250 million aggregate principal amount of convertible senior notes. The senior notes will be convertible at an initial conversion rate of 25.641 shares of stock per $1,000 principal amount of the convertible senior notes. This will result in an initial conversion price of about $39 per share.

The company had earlier announced that it had commenced a private unregistered offering of $750 million aggregate principal amount of senior notes due in 2023.

Whiting plans to use the proceeds of the stock offering and the senior notes to repay all or a portion of the amount outstanding under its credit agreement, with any unused funds allocated to general corporate purposes.

It had been reported earlier this month that Whiting was looking to sell itself in light of the sharp decline in oil prices since last summer. Tuesday's announcements make a sale less likely, as the stock and note offerings will increase the company's liquidity.

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Published on Mar 25, 2015
By Kevin Mercadante

Copyrighted 2016. Content published with author's permission.

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