It has been about a month since the last earnings report for Whiting Petroleum (WLL). Shares have added about 3.6% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Whiting due for a pullback? 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 drivers.
Whiting's Q4 Loss Narrows Y/Y, Revenues Fall
Whiting Petroleum reported fourth-quarter 2018 adjusted net loss per share of 5 cents versus the Zacks Consensus Estimate of earnings of 50 cents. Lower oil prices, especially in the month of December, can be primarily attributed to the underperformance. Nonetheless, the company’s loss narrowed from the year-ago figure of 17 cents a share.
Total operating revenues came in at $473.2 million, missing the Zacks Consensus Estimate of $500 million. The top line also recorded a marginal decline from the year-ago level of $474.4 million.
Importantly, Whiting’s discretionary cash flow of $253 million exceeded capital expenditure by $18.6 million in the quarter. Free cash flow (“FCF”) in full-year 2018 amounted to $280 million vis a vis negative FCF of $175.7 million recorded a year ago. Notably, total operating expenses of the company reduced 84% from the prior-year level to a total of $220.7 million in the quarter under review.
Production & Prices
Whiting’s total oil and gas production increased 2% from the last year’s corresponding period to 11.96 million oil-equivalent barrels (comprising 83.1% liquids).
The average realized crude oil price during the fourth quarter was $47.25 per barrel, reflecting a decrease of 7% from the year-ago realization of $50.86. The average realized natural gas liquids price was $22.21 per barrel, down 3% from the year-ago period. Meanwhile, Whiting fetched $2.63 per thousand cubic feet for natural gas during the fourth quarter of 2018, up 41% year over year.
Balance Sheet & Capital Expenditure
As of Dec 31, 2018, the oil explorer had approximately $13.6 million in cash and cash equivalents. Whiting had a long-term debt of $2,792.3 million, representing a debt-to-capitalization ratio of 39.5%. In the reported quarter, the company spent $234.4 million on capital programs. Full-year capex amounted to $832 million.
Capex & Output View
Whiting expects 2019 production in the range of 46.7-47.7 million barrels of oil equivalent. It expects oil output from the Williston Basin to grow 15% 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 -26.57% due to these changes.
At this time, Whiting has an average Growth Score of C, however its Momentum Score is doing a lot better with an A. Charting a somewhat similar path, 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 B. 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.
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