NEW YORK (TheStreet) -- Shares of Whiting Petroleum Corp. (WLL) are up slightly up after Oppenheimer reiterated its "outperform" rating and $40 price target, while cutting its capital expenditure estimate.
"We are cutting our CAPEX and production estimates, which, along with updated oil prices, leads to lower EPS and cash flow estimates. However, we still see compelling valuation and maintain our rating and target," Oppenheimer said.
Whiting Petroleum intends to issue full guidance on the 4Q14 call in February. Analysts expect the company to cut its previous CAPEX outlook of $3.8 billion given current oil prices.
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Oppenheiner believes the company can maintain flat production with $2 billion, but will look to balance liquidity with modest growth and therefore now model CAPEX of $2.8 billion and pro forma production growth of just under 10%.
Additionally, they believe the Denver-based oil and gas company will likely have to repurchase $1.55 billion in Kodiak notes at 101% of par in early January, while funding its capital program in the current environment.
Separately, TheStreet Ratings team rates WHITING PETROLEUM CORP as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:
"We rate WHITING PETROLEUM CORP (WLL) a HOLD. The primary factors that have impacted our rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its revenue growth, reasonable valuation levels and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and weak operating cash flow."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The revenue growth came in higher than the industry average of 6.7%. Since the same quarter one year prior, revenues rose by 13.9%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- The debt-to-equity ratio is somewhat low, currently at 0.65, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Despite the fact that WLL's debt-to-equity ratio is low, the quick ratio, which is currently 0.58, displays a potential problem in covering short-term cash needs.
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed against the S&P 500 and did not exceed that of the Oil, Gas & Consumable Fuels industry. The net income has decreased by 22.6% when compared to the same quarter one year ago, dropping from $204.10 million to $157.98 million.
- The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. In comparison to the other companies in the Oil, Gas & Consumable Fuels industry and the overall market, WHITING PETROLEUM CORP's return on equity is significantly below that of the industry average and is below that of the S&P 500.
- You can view the full analysis from the report here: WLL Ratings Report