Whiting Petroleum: Here Is an Opportunity

Whiting Petroleum (WLL) announced first quarter ended March 31, 2016 total revenue of $289.7 million, down 44 percent year-over-year from $519.8 million during the same period last year.

Whiting declared first quarter of 2016 adjusted net loss of $174.2 million or $0.85 of loss per diluted share compared to a net loss of $39.1 million or $0.23 of loss per diluted share in first quarter of 2015.

The key energy company reported continued year-over-year decline in both its top and bottom lines primarily due to the ongoing weaker global commodity demand and pricing environment coupled with the expanding exploration and drilling expenditures, eating into the company’s key margins.

Whiting delivered consolidated first quarter of 2016 production of 146,770 boe/d and comprising of 124,900 boe/d production at Bakken/Three Forks in Williston Basin, 11,840 boe/d production at Niobrara A, B, C & Codell/Ft Hays in Redtail and 8,900 boe/d of production at North Ward estes.
Further, the company has key acreage across two major plays viz. DJ Basin and Bakken thus, well-positioned to deliver attractive long-term company growth while offering attractive shareholder returns once the current economic slowdown comes to an end.

What’s working?  

The expansion program at Williston Basin has clubbed acreage availability in regions having 90-day consolidated production per well exceeding 50 Mboe. The Bakken Three Forks expansion plan is executed across 1,280-acre spacing components, 5,530 projected gross drilling areas by this quarter-end. The energy company targets on developing 900 Mboe EUR wells during 2016 with a key plan to finalize 44 gross wells over the period and estimate nearly 30 drilled incomplete wells as of year-end 2016.

Whiting has grouped 756,225 gross acres or 445,921 net acres in the key Williston Basin with about 99% of acreage across North Dakota booked for production at $6.8 million of horizontal completed well cost. Importantly, Whiting has 92% of expected Bakken/Three Forks drilling regions across key areas.

The excellent operational position of Whiting, better than several of its key competitors, is believed to drive sustainable long-term company growth while attracting new investors to continue to invest in this growth stock.

Whiting’s excellent operational execution and improved completions is driving superior company growth and tracking 900 Mboe type growth curve with improved completions at Williams County expanding the early 60-day typical rates in the range of more than 100% to 200%.

Strongly positioned  

The key upstream energy company is believed to be an industry-leading performer in Bakken region with just second to the top position in delivering early 60-day average rate in BOEPD for key wells completed during the period from May 2015 till April 2016. Moreover, there’s 56% reduction in drill times at Williston Basin since the start of 2012 and till date, highlighting the company’s operational excellence and advanced drilling techniques.

The attractive operations of Whiting at Bakken signifies its operational strength and industry-leading cost structure to support its growth operations amid continuing tough global operating environment.

The existing requirements for ND gas capturing is about 80% however, Whiting has illustrated an attractive 94% of gas capture rate at Williston Basin which is 14% superior to the actual requirements. Further, Whiting has achieved significant improvement in Redtail drill times with approximately 57% reduction since the start of fiscal year 2012 and depicting notable technological advancements being achieved by company.

Conclusion

Overall, the investors are advised to “Hold” their position in Whiting Petroleum Corp. considering the company’s significant long-term growth prospects but, currently weaker financial position with huge total debt of $5.33 billion against tinier total cash position of $1.06 million only which is restricting the company to continue with its daily operations profitably. The profit margin of -134.58% seems disappointing and indicate no profit but loss. The PEG ratio of 0.15 appears weak and indicate only satisfactory near-term company growth.
Published on Jul 7, 2016
By Vinay Singh

Copyrighted 2016. Content published with author's permission.

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