Whiting Petroleum Case Analysis

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Whiting Petroleum (WLL)
Whiting Petroleum announced its third quarter 2015 results on Wednesday, 28th October. The company produced 14.8 million barrels of oil equivalent (MMBOE) at the average rate of 160,590 barrels of oil equivalent per day (BOE/d). The total production was 38 % greater than the third quarter production of last year. This production volume is without the 8,700 BOE/d of production capacity from the assets sold out in the second quarter of this year. Till now, the company has sold approximately $ 400 million of assets out of which $ 100 million came in the third quarter itself. On the other hand the newly completed designs in the Williston Basin are delivering 44 % production increases over second quarter 2015 on a per well basis. Also, the Johnson pad in the Cassandra area has tested an average rate per well of 5,224 BOEs per day.
The company CEO commented that the company has enough liquidity and a strong capital structure. The company has $ 38 million cash in hand and an undrawn credit facility of $ 3.5 billion on a borrowing base of $ 4 billion that remained unchanged after redetermination with its lenders. This shows the confidence that the company’s lender group has in the quality of its assets and in the strategic plans that the company is following. Further, the first major bond maturity
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Although it has not posted a very outstanding result for the previous quarter, it has got some strong points. It has reduced its operating costs and capex drastically. It has got some quality assets that are showing further improvements in efficiency and capacity. A big percentage of its production is hedged for the coming years as mentioned in the earnings presentation. And lastly, the confidence shown in the company by its lenders provides a positive signal to its equity investors as well. Hence Whiting is a decent bet in the current price environment and will get better as the prices

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