Whiting Petroleum Corporation’s (NYSE:WLL): Whiting Petroleum Corporation engages in the acquisition, exploration, development, and production of crude oil, natural gas liquids, and natural gas primarily in the Rocky Mountains region of the United States. The US$2.64B market-cap company announced a latest loss of -US$1.24B on 31 December 2017 for its most recent financial year result. As path to profitability is the topic on WLL’s investors mind, I’ve decided to gauge market sentiment. I’ve put together a brief outline of industry analyst expectations for WLL, its year of breakeven and its implied growth rate.
View our latest analysis for Whiting Petroleum According to the industry analysts covering WLL, breakeven is near. They expect the company to post a final loss in 2017, before turning a profit of US$168.47M in 2018. WLL is therefore projected to breakeven around a few months from now. In order to meet this breakeven date, I calculated the rate at which WLL must grow year-on-year. It turns out an average annual growth rate of 85.00% is expected, which signals high confidence from analysts. If this rate turns out to be too aggressive, WLL may become profitable much later than analysts predict.
Underlying developments driving WLL’s growth isn’t the focus of this broad overview, however, bear in mind that typically an oil and gas business has lumpy cash flows which are contingent on the natural resource and stage at which the company is operating. This means, large upcoming growth rates are not abnormal as the company is beginning to reap the benefits of earlier investments.
Before I wrap up, there’s one issue worth mentioning. WLL currently has a relatively high level of debt. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, which in WLL’s case is 95.01%. Note that a higher debt obligation increases the risk in investing in the loss-making company.
Next Steps:
There are too many aspects of WLL to cover in one brief article, but the key fundamentals for the company can all be found in one place – WLL’s company page on Simply Wall St. I’ve also put together a list of pertinent factors you should further examine:
- Valuation: What is WLL worth today? Has the future growth potential already been factored into the price? The intrinsic value infographic in our free research report helps visualize whether WLL is currently mispriced by the market.
- Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Whiting Petroleum’s board and the CEO’s back ground.
- Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.