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Whiting Offering Gives Shale Oil Stocks Wake-Up Call

BY ALAN R. ELLIOTT, INVESTOR'S BUSINESS DAILY
05:21 PM ET



Whiting Petroleum (NYSE:WLL) shares plunged nearly 20% Tuesday after the company announced a share offering priced 22% below Monday's closing level. The Denver-based oil producer said late Monday that it would offer 35 million common shares priced at 30. It will also issue $1.75 billion in debt. Proceeds will go to pay debt and support company operations. The news was a tough blow to investors holding shares already down 60% from an Aug. 29 high of 92.92.

From an industry standpoint, the offering means that Whiting has given up on reported efforts to sell the company. It's a startling statement from one of the leaders of the U.S. shale oil boom.

Whiting's $3.8 billion purchase of Kodiak Oil & Gas in December created the largest producer in the Montana/North Dakota Bakken shale formation. It also created a firm with what S&P Capital IQ estimated to be an $11 billion enterprise value, including debt.

Whiting dragged that hefty price tag onto the auction block early this year. The Wall Street Journal on March 6 cited unnamed sources saying that the company had brought in financial advisers to explore options.

In mid-March, Bloomberg reported that Whiting had drawn interest from Exxon Mobil (NYSE:XOM), Continental Resources (NYSE:CLR), Hess (NYSE:HES) and Norway's Statoil (NYSE:STO). Bloomberg said this week that the bids received were too low, which could suggest that the company has decided to wait until prospects improve.

It could also mean that the buyers have decided to wait, let the current oil price scenario play out and maybe get a more cost-effective shot at Whiting and others if and when backs get more firmly pressed to the wall.

Read More At Investor's Business Daily: http://news.investors.com/investing-ibd-industry-themes/032415-744916-whiting-oil-announces-share-offering.htm#ixzz3VLEVsBLN
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