A month has gone by since the last earnings report for Whiting Petroleum (WLL - Free Report) . Shares have lost about 19.7% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Whiting due for a breakout? 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 drivers.
Whiting's Q3 Earnings and Revenues Jump Y/Y
Whiting Petroleum reported third-quarter adjusted net income per share of 92 cents, surpassing the Zacks Consensus Estimate of 58 cents. The outperformance stemmed from cost efficiency and higher liquids realizations.The bottom line also turned around from the year-ago adjusted loss of 56 cents. Further, total operating revenues came in at $566.7 million, topping the Zacks Consensus Estimate of $522 million. The top line also recorded year-over-year growth of 75%.
Importantly, Whiting’s discretionary cash flow of $297 million exceeded capital expenditure by $90 million in the quarter. In the quarter under review, the company generated $56 million of operating cash flow over and above its capital spending. Notably, total operating expenses of the company reduced 50.6% from the prior-year level to a total of $397.3 million in the quarter under review. As costs continue to decline amid stronger oil pricing, it is expected to generate a significant amount of free cash flow over the next few years.
Production & Prices
Whiting’s total oil and gas production increased 13% from the last year’s corresponding period to 11.84 million oil-equivalent barrels (comprising 83% liquids). Roughly 83% of the company’s output came from the Williston Basin region.
The average realized crude oil price during the third quarter was $56.82 per barrel, representing an increase of 36% from the year-ago realization of $41.69.The average realized natural gas liquids price was $22.22 per barrel, up 84% from the year-ago period. Meanwhile, Whiting fetched $2.88 per thousand cubic feet (Mcf) for natural gas during the third quarter of 2018, down 0.3% year over year.
Balance Sheet & Capital Expenditure
As of Sep 30, 2018, the oil explorer had approximately $14.2 million in cash and cash equivalents. Whiting had a long-term debt of $2,835 million, representing a debt-to-capitalization ratio of 41%. In the reported quarter, the company spent $207 million on capital programs.
Whiting expects fourth-quarter production in the range of 12.2-12.6 million barrels of oil equivalent (MMBOE) and yearly output within 47-47.4 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 -19.9% due to these changes.
Currently, Whiting has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with a D. However, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
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.