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Whiting (WLL) Down 18.3% Since Last Earnings Report: Can It Rebound?

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It has been about a month since the last earnings report for Whiting Petroleum (WLL - Free Report) . Shares have lost about 18.3% 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 the most recent earnings report in order to get a better handle on the important catalysts.

Whiting Misses Q1 Earnings & Sales Estimates

Whiting Petroleum reported first-quarter 2019 adjusted net loss per share of 16 cents versus the Zacks Consensus Estimate of earnings of 20 cents. Lower-than-expected oil, natural gas liquids (NGLs) and gas prices led to the underperformance. Precisely, the company’s realized NGLs price was $6.62 a barrel, significantly lagging the Zacks Consensus Estimate of 18.78. Realized prices of oil and gas also missed the consensus estimate by 1.6% and 28%, respectively.

Further, its bottom line compared unfavorably with the year-ago EPS of 92 cents a share owing to weaker year-over-year commodity price realizations.

Total operating revenues came in at $389.5 million, missing the Zacks Consensus Estimate of $420 million. The top line also recorded a decline of 24.4% from the year-ago level of $515.1 million.

On a further discouraging note, the company’s discretionary cash flow of $199.5 million was lower than the capital spending of $219 million, translating into a negative FCF of $19.5 million. Notably, total operating expenses of the company increased 4.4% from the prior-year level to a total of $435.5 million in the quarter under review.

Production & Prices

Whiting’s total oil and gas production recorded a nominal y/y increase of 1.2% to 11.58 million oil-equivalent barrels (comprising 82% liquids).

The average realized crude oil price during the first quarter was $47.71 per barrel, reflecting a decrease of 19% from the year-ago realization of $58.61. Moreover, the average realized natural gas liquids price was $6.62 per barrel, plummeting 72% from the year-ago period. Natural gas prices also declined 18% y/y to $1.36 per thousand cubic feet. 

Balance Sheet & Capital Expenditure

As of Mar 31, the oil explorer had approximately $1.7 million in cash and cash equivalents. Whiting had a long-term debt of $2,839.4 million, representing a debt-to-capitalization ratio of 40.3%. In the reported quarter, the company spent $219 million on capital program.

Guidance Intact

Whiting keeps its 2019 production and capital expenditure guidance unchanged. The firm expects 2019 production in the range of 46.7-47.7 million barrels of oil equivalent. It expects total output from the Williston Basin to grow 11% on a year-over-year basis. The company forecasts 2019 capital spending in the band of $800-$840 million, with 86% of the total outlay directed toward drilling and completion activities.

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 -20.61% due to these changes.

VGM Scores

At this time, Whiting has an average Growth Score of C, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of A on the value side, putting it in the top quintile 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.

Outlook

Estimates have been 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.


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