Why Investors Are Unhappy With Whiting Petroleum

The company also took a non-cash writedown of $870 million related to its acquisition of Kodiak Oil & Gas in December 2014 and another non-cash charge of about $1.7 billion for a field in Texas the company has chosen not to develop while prices remain low. On a GAAP basis Whiting posted a net loss of $9.14 per share in the third quarter.

Whiting increased production by 37% year-over-year on production of 14.77 million barrels of oil equivalent in the quarter. Some 99% of production came from oil and NGLs. A full 82% of Whiting’s third quarter production came from the Bakken play.

CEO James J. Volker gave the company’s outlook statement:

We continue to maintain a strong financial position. Year-to-date, we have sold approximately $400 million of assets and anticipate further non-core asset sales by year end. We ended the third quarter with nothing drawn on our $4.0 billion borrowing base. Our credit commitments from our banks under our borrowing base remain unchanged at $3.5 billion. This demonstrates the confidence our banking group has in the quality of our assets and in our strategic plan.

Consensus estimates call for a fourth-quarter loss of $0.22 per share on revenues of $548.01 million. For the full year analysts are expecting a net loss of $0.66 and $2.27 billion in revenues.

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For the fourth quarter, Whiting forecasts production at 13.9 to 14.3 million barrels of oil equivalent. Expenses are expected to total $37.55 to $ $39.65 per barrel and discounts to the NYMEX price for oil are expected to be in the range of $7 to $8. Gas discounts are expected to be $0.20 to $0.60 per thousand cubic feet.

Capital spending in the quarter totaled $403.4 million and for the first nine months of the year the total comes to $1.99 billion. Total capex in the fourth quarter is now estimated to fall below $300 million. Whiting’s goal for the 2016 fiscal year is to balance capex and cash flow at approximately $1 billion.

Whiting has chosen to put a lid on spending and sit on its cash until prices improve. It’s not popular with investors, but it could mean the company will be around to drill another day.

Shares traded down about 3.3% in the after-hours session, having closed at $17.06 in a 52-week range of $13.50 to $63.63. Thomson Reuters had a consensus analyst price target of around $28.76 before the report.