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Whiting (WLL) Posts Q4 Loss on Weak Oil Price Realizations

Zacks Equity Research
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Whiting Petroleum Corporation WLL 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.

Zacks Rank & Key Picks

Currently, Whiting has a Zacks Rank #3 (Hold).

Some better-ranked players in the energy space are Enbridge Inc. ENB, Archrock, Inc. AROC and NuStar Energy L.P. NS, each carrying a Zacks Rank #2 (Buy).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Enbridge’s earnings beat the Zacks Consensus Estimate in three of the last four quarters, with the average positive surprise being 31.8%.

The 2019 Zacks Consensus Estimate for Archrock is 63 cents, representing 31.3% earnings per unit growth over 2018. Next year’s average forecast is 78 cents, pointing to another 23.8% growth.

The 2019 Zacks Consensus Estimate for NuStar is pegged at $1.10, representing 64.2% earnings per unit growth over 2018. Next year’s average forecast is $1.32, pointing toward another 20.3% growth.

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