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Why Whiting Petroleum Stock Is Crashing Today

By Matthew DiLallo - Updated Aug 1, 2019 at 1:18PM

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The oil company gave investors an unpleasant surprise.

What happened

Shares of Whiting Petroleum (WLL) had cratered more than 37% by 12:00 p.m. EDT on Thursday. Fueling the oil driller's shellacking was its second-quarter report.

So what

Whiting Petroleum shocked investors by posting an unexpected loss during the second quarter. While analysts anticipated that the oil company would produce a profit of $0.25 per share, Whiting turned in a loss of $0.28 per share. Not only did a slump in oil prices during the quarter hurt profitability, but the company also experienced some infrastructure issues that affected its production.

An oil pump with a red moon in the background.

Image source: Getty Images.

Whiting produced 127,090 barrels of oil equivalent per day (BOE/D) during the quarter, which was only slightly above the 126,180 BOE/D it produced in the year-ago period. That's due in large part to infrastructure constraints, which reduced its production by 3,000 BOE/D during the quarter. The company expects these headwinds to persist through the rest of the year.

Because of these issues, the company is revising its full-year outlook. While Whiting still expects to spend between $800 million and $840 million, production will only be between 45 million and 46.5 million BOE. That's below its initial outlook that output would be in the range of 46.7 million and 47.7 million BOE. The main issue is that the company plans to slow its well completion pace so that it can build up an inventory of locations that it can finish when commodity prices improve. 

Whiting also announced a 33% staffing reduction to cut costs and better align its organization with its anticipated future activity level. Overall, this move will save the company about $50 million per year.

Now what

Whiting continues to battle a variety of headwinds. The company is working to better navigate these challenges by reducing its headcount and slowing its well completion pace. However, until the company proves that it can thrive at lower oil prices, investors will want to steer clear of this oil stock.

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