Whiting Petroleum (WLL)
Posted: Mon Apr 28, 2014 10:52 am
Comments below from Stifel this morning. They rate WLL a BUY with a price target of $80. - Dan
Tweaking Realized Oil Price Forecast Again
Last week, we raised our 1Q14 and 2Q14 realized oil price forecast for WLL to
$91.21/Bl and $88.00 from $85.80 and $84.29, respectively, based on improved
Bakken prices. The differential between Bakken crude priced at Clearbrook, MN
and NYMEX WTI averaged $3.86/Bl during 1Q14, down from $10.22/Bl in 4Q13,
which lead us to suspect that management's oil price differential guidance of $9/Bl
to $11/Bl could be too conservative.
Upon further review, however, we are lowering our 1Q14 and 2Q14 realized oil
price estimates 4% and 2% to $87.71 and $86.00. Despite improved Clearbrook
differentials, 40% of WLL's Bakken crude is now transported by rail with an
average deduct of $14/Bl while 30% is transported via pipeline to Clearbrook at an
average cost of $8/bbl (including tariffs) and 30% to Guernsey, WY at an average
cost of $8/Bl. The Bakken comprises roughly 73% of company-wide oil volumes.
This change lowers our 1Q14 EPS/CFPS estimates 12%/5% to $0.97/$3.68 from
$1.09/$3.87, slightly below 1Q14 consensus of $0.98/$3.74.
Tweaking Realized Oil Price Forecast Again
Last week, we raised our 1Q14 and 2Q14 realized oil price forecast for WLL to
$91.21/Bl and $88.00 from $85.80 and $84.29, respectively, based on improved
Bakken prices. The differential between Bakken crude priced at Clearbrook, MN
and NYMEX WTI averaged $3.86/Bl during 1Q14, down from $10.22/Bl in 4Q13,
which lead us to suspect that management's oil price differential guidance of $9/Bl
to $11/Bl could be too conservative.
Upon further review, however, we are lowering our 1Q14 and 2Q14 realized oil
price estimates 4% and 2% to $87.71 and $86.00. Despite improved Clearbrook
differentials, 40% of WLL's Bakken crude is now transported by rail with an
average deduct of $14/Bl while 30% is transported via pipeline to Clearbrook at an
average cost of $8/bbl (including tariffs) and 30% to Guernsey, WY at an average
cost of $8/Bl. The Bakken comprises roughly 73% of company-wide oil volumes.
This change lowers our 1Q14 EPS/CFPS estimates 12%/5% to $0.97/$3.68 from
$1.09/$3.87, slightly below 1Q14 consensus of $0.98/$3.74.