Why Whiting Petroleum (WLL) Stock Is Jumping This Morning

NEW YORK (TheStreet) -- Shares of Whiting Petroleum Corp. (WLL) are up 4.53% to $82.10 in pre-market trading on Monday after it announced over the weekend it agreed to acquire Kodiak Oil & Gas Corp. (KOG) for $6 billion in stock and debt to become the largest producer in North Dakota's Bakken shale oil formations.

Kodiak Oil & Gas shares are rising 2.81% to $14.63 ahead of the opening bell this morning.

Separately, Brean Capital raised its price target on Whiting Petroleum to $102 from $96 following its proposed deal, which is expected to be accretive across all metrics in 2015.

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TheStreet Ratings team rates WHITING PETROLEUM CORP as a Buy with a ratings score of A-. TheStreet Ratings Team has this to say about their recommendation:

"We rate WHITING PETROLEUM CORP (WLL) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its robust revenue growth, expanding profit margins, increase in net income, good cash flow from operations and solid stock price performance. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The revenue growth came in higher than the industry average of 3.2%. Since the same quarter one year prior, revenues rose by 18.9%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • The gross profit margin for WHITING PETROLEUM CORP is currently very high, coming in at 76.02%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 14.96% is above that of the industry average.
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Oil, Gas & Consumable Fuels industry. The net income increased by 26.4% when compared to the same quarter one year prior, rising from $86.26 million to $109.07 million.
  • Net operating cash flow has slightly increased to $323.90 million or 8.83% when compared to the same quarter last year. Despite an increase in cash flow, WHITING PETROLEUM CORP's average is still marginally south of the industry average growth rate of 17.51%.
  • Powered by its strong earnings growth of 26.38% and other important driving factors, this stock has surged by 64.59% over the past year, outperforming the rise in the S&P 500 Index during the same period. Looking ahead, the stock's sharp rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.
  • You can view the full analysis from the report here: WLL Ratings Report
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