Why Is Whiting (WLL) Down 53.3% Since Last Earnings Report?

A month has gone by since the last earnings report for Whiting Petroleum (WLL). Shares have lost about 53.3% 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 its most recent earnings report in order to get a better handle on the important catalysts.

Whiting Reports Narrower-Than-Expected Q4 Loss

Whiting Petroleum Corporation 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.

How Have Estimates Been Moving Since Then?

It turns out, estimates review have trended downward during the past month. The consensus estimate has shifted -483.33% due to these changes.

VGM Scores

Currently, Whiting has a subpar Growth Score of D, however its Momentum Score is doing a bit better with a C. However, the stock was allocated a grade of A on the value side, putting it in the top 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.

Outlook

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.