Underappreciated Whiting Petroleum Gets An Upgrade From Stifel

Stifel’s Michael Scialla expressed optimism regarding Whiting Petroleum Corp’s WLL high quality Bakken shale assets, improved balance sheet and expectations of higher oil price.

Scialla upgraded the rating on the company from Hold to Buy, while raising the price target from $8 to $15.

Following the OPEC agreement regarding a cut in production for the first time in eight years, the analyst raised the Q4 2016 and 2017 NYMEX oil price forecast by 7 percent to $48 and by 10 percent to $55, respectively.

Underappreciated

Scialla mentioned that although the Bakken shale has been “out of favor” with investors, Whiting Petroleum’s returns have been in line with the peer group average.

“The company's production growth will likely lag our group over the next two years, as it must stem a decline and continue to improve its balance sheet,” the analyst stated.

While the stock is vulnerable to a decline in oil prices, in the event that the OPEC agreement fails, Scialla noted that the company was more heavily hedged than Stifel’s group average.

In addition, Whiting Petroleum’s production is one of the most heavily weighted to oil in Stifel’s coverage universe.

“WLL completed 48 Williston Basin wells over the past year with 5+ MMLbs of sand. Spanning 6 different counties, these wells are tracking the company's 900 MBoe type curve after 265 days,” the analyst added.