Will Crude Woes Mar Whiting Petroleum (WLL) Q1 Earnings? - Analyst Blog
Domestic oil and gas explorer Whiting Petroleum Corp. WLL is set to release its first-quarter 2015 results after the closing bell on Wednesday, Apr 29.
In the preceding three-month period, Denver, CO-based firm delivered a negative earnings surprise of 13.73%, dragged down by the challenging environment posed by the steep drop in oil prices throughout the quarter. This was partially offset by strong production increase.
Let’s see how things are shaping up for this announcement.
Factors to Consider This Quarter
Like any other energy player − primarily involved in exploration, development and production of crude oil − the fate of Whiting Petroleum’s business is directly correlated with crude prices. Let’s have a look at the crude pricing environment during the first quarter.
As it was, the commodity traded in the range of $45–$55 per barrel for the most of the January-March period, down from the $100-a-barrel mark back last June. We believe that the dismal crude pricing scenario will weigh on the company’s bottom line.
The losses on the price front could partially be offset by a cut in spending on the back of lower rig count.
Earnings Whispers
Our proven model does not conclusively show that Whiting Petroleum is likely to beat earnings this quarter. That is because a stock needs to have both a positive Earnings ESP (Expected Surprise Prediction) and a Zacks Rank of #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. Unfortunately, this is not the case here as elaborated below.
Zacks ESP: Earnings ESP which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is -10.00%. The Most Accurate estimate for Whiting Petroleum stands at a loss of 33 cents while the Zacks Consensus Estimate is pegged narrower at a loss of 30 cents.
Zacks Rank: Whiting Petroleum’s Zacks Rank #3 increases the predictive power of ESP. Nevertheless, we need to have a positive ESP to be confident of an earnings surprise.
We caution against stocks with Zacks Ranks #4 and 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions momentum.
Stocks to Consider
While earnings beat looks uncertain for Whiting Petroleum, here are some firms you may want to consider on the basis of our model, which shows that they have the right combination of elements to post an earnings beat this quarter:
Marathon Petroleum Corp. MPC has an Earnings ESP of +1.77% and a Zacks Rank #1 (Strong Buy). The company is slated to release earnings on Apr 30.
Suncor Energy Inc. SU has an Earnings ESP of +400.00% and a Zacks Rank #2. The company is slated to release earnings on Apr 29.
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WHITING PETROLM (WLL): Free Stock Analysis Report
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