Whiting Petroleum (WLL) PT Raised to $17 at KLR Group
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KLR Group analyst Gail Nicholson reiterated a Buy rating and raised its price target on Whiting Petroleum (NYSE: WLL) to $17.00 (from $14.00) due to a 5%+ improvement in capital productivity and a ~2% increase in our '17 production forecast partly offset by a ~5% reduction in our '19 forward capex assumption.
The firm is increasing 4Q/16 production estimate ~2% to ~116.9 MBoepd (driven by better Williston well performance), which is at the high end of company guide (113-117.4 MBoepd) and equates to relatively flat production (normalizing for North Ward Estes divestiture) q/q.
Nicholson commented, "Whiting offers exposure to the Williston Basin and Niobrara at a significant discount vs. its oil-dominant peer group (90%+ upside vs. the group median of ~50%). The stock trades at ~5.6x '17 EV/EBITDA, well below the oil peer median of ~8.2x, although does have less growth ('16-'18 growth CAGR of ~1% vs. oil-dominant median of ~15%) and its '18 capital yield of ~110% (up from ~100% previously) is below the group median of ~125%. In our opinion the stock offers investors beta to a further commodity price recovery with potential incremental upside from the implementation of higher proppant loadings in the Williston and/or further acceleration of its drilling tempo. The potential monetization of its Williston processing plants could further enhance the company's liquidity position allowing Whiting to increase drilling activity (we estimate the monetization of the plants could yield $240-$300 million of potential proceeds)."
Shares of Whiting Petroleum closed at $8.82 yesterday.
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