Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of Whiting Petroleum Corp (NYSE:WLL) dropped as much as 22% today after the company announced major stock and debt offerings.
So what: Whiting will offer 35 million shares of stock to investors for $30 per share with an overallotment option of another 5.25 million shares. It is also selling $1.0 billion in 1.25% convertible senior notes due in 2020 with another $250 million in potential overallotment. The notes will be convertible into shares of stock at a price of $39 per share.
Now what: All told, these offerings could raise $2.5 billion for Whiting, but they could also dilute shares by adding 72.3 million new shares to the market. That's a huge impact, because at the end of 2014 there were just 131.8 million shares outstanding on a diluted basis.
Such a large offering shows just what dire straits Whiting Petroleum and shale drillers in general are in today. I wouldn't buy the discount today because of the industry's weakness and the lower potential upside if the oil market does recover.
Travis Hoium has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.