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Whiting (WLL) Loss Narrower Than Expected in Q4, Sales Top

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Whiting Petroleum Corporation WLL reported fourth-quarter 2019 adjusted net loss per share of 22 cents, narrower than the Zacks Consensus Estimate of a loss of 44 cents owing to better-than-expected oil production. Precisely, the company’s realized oil price was $48.67 a barrel, beating the Zacks Consensus Estimate of $47.44.

However, the bottom line per share was wider than the year-ago loss of 5 cents. Lower-than-expected commodity prices caused this underperformance.

Total operating revenues came in at $380.6 million, beating the Zacks Consensus Estimate of $376 million. However, the top line fell 19.6% from the year-ago level of $473.2 million. The company also suffered a spike in operating expenses, which escalated 87% from the prior-year level to $412.4 million.

On an encouraging note, the company’s discretionary cash flow of $188.7 million was higher than the capital spending of $103 million, translating to a positive free cash flow of $86 million.

Production & Prices

Whiting Petroleum’s total oil and gas production reported a nominal year-over-year decrease of 5.4% to 11.32 million oil-equivalent barrels (comprising 82% liquids) and also fell short of the Zacks Consensus Estimate of 11.34 million oil-equivalent barrels. In particular, oil volumes at 7.38 million barrels were down 9.6% from the level achieved in fourth-quarter 2018.

The average realized crude oil price during the fourth quarter was $48.67 per barrel, reflecting a marginal decline from the year-ago realization of $49.26. Moreover, the average realized natural gas liquids price was $8.79 per barrel, plummeting 60.4% from the year-ago period. Natural gas prices also tumbled 84.4% year over year to 41 cents per thousand cubic feet. 

Balance Sheet & Capital Expenditure

As of Dec 31, Whiting Petroleum had approximately $8.7 million in cash and cash equivalents. The oil explorer’s long-term debt of $2,799.8 million represented a debt-to-capitalization ratio of 26.8%. In the reported quarter, the company spent $103 million on its capital program.

Output Guidance

Whiting Petroleum announced its 2020 production outlook and projects it within 40.9-43.3 million barrels of oil equivalent, indicating a fall from the previous year’s reported production volume of 45.8 million barrels of oil equivalent. Following its weak production view, this Denver, CO-based company’s shares shed around 29% of value.

The firm expects 2020 capex in the band of $585-$620 million, suggesting a decrease from $778 million reported in the year-ago quarter. The firm plans to allocate 90% of its total capex to drilling and completion activity depending on the mid-point of its guided range.

Whiting Petroleum aims to operate three rigs and two-three completion crews all the year round and expects 122 gross wells to enter service in 2020.

Zacks Rank & Key Picks

Whiting Petroleum has a Zacks Rank #3 (Hold). Some better-ranked players in the energy space are Contango Oil & Gas Company MCF, Apache Corporation APA and Earthstone Energy, Inc. (ESTE - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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