A month has gone by since the last earnings report for Whiting Petroleum (WLL - Free Report) . Shares have added about 9.3% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Whiting due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Whiting's Q2 Earnings and Revenues Jump Y/Y
Whiting Petroleum reported second-quarter adjusted net income per share of 62 cents, in line with the Zacks Consensus Estimate and turning around from the year-ago adjusted loss of 72 cents. The outperformance stems from strong Williston Basin production and higher oil realizations.
Total operating revenues of $526.4 million were above the Zacks Consensus Estimate of $501 million and was 69% above the second-quarter 2017 sales of $311.5 million.
Importantly, Whiting Petroleum’s discretionary cash flow exceeded capital expenditure by $107.2 million for the quarter. Over the past nine months, the company have generated $268.8 million of operating cash flow over and above capital spending. As costs continue to come down amid stronger oil pricing, the company is expected to generate significant amount of free cash flow over the next few years.
Production & Prices
Whiting Petroleum’s total oil and gas production increased 12% compared with last year’s corresponding period to 11.48 million oil-equivalent barrels (84% liquids). Results were also above the Zacks Consensus Estimate of 11.35 million oil-equivalent barrels. Roughly 82% of the company’s output came from the Williston Basin region.
The average realized crude oil price during the second quarter was $62.61 per barrel, representing an increase of 56% from the year-ago realization of $40.12, while the average realized natural gas liquids price was $15.26 per barrel, up 47% from the year-ago period. Meanwhile, Whiting Petroleum fetched $1.32 per thousand cubic feet (Mcf) for natural gas during the March quarter of 2018, down 21% year over year.
Balance Sheet & Capital Expenditure
As of Jun 30, 2018, the oil explorer had approximately $16.6 million in cash and cash equivalents. Whiting Petroleum carried long-term debt of $2.8 billion, representing a debt-to-capitalization ratio of 41.4%. In the reported quarter, the company spent $203.3 million on capital programs.
Whiting Petroleum expects third-quarter production in the range of 11.7–12.2 MMBOE and yearly output in the range of 47–47.7 MMBOE (up from the previous forecast of 46.5–47.2 MMBOE. For 2018, the company expects a capital budget of $750 million.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates. The consensus estimate has shifted -19.45% due to these changes.
Currently, Whiting has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Our style scores indicate that the stock is more suitable for growth investors than value investors.
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Whiting has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.