Whiting Petroleum Corp. (WLL)

[Atlanta1]

Whiting Petroleum downgrade details -- to Sell at UBS; tgt lowered to $8 (8.36 -0.06)
UBS transfers, in addition to downgrading, WLL to Sell from Neutral and lowers their tgt to $8 from $12. While WLL offers material upside in an oil upcycle, it's outweighed by even greater downside risks if prices stay at or below current levels. Its recent decision to again outspend cash flow using a capex budget based on $55/Bbl deck puts WLL as one of the E&Ps most at risk of scaling back if prices remain weak. The material funding gaps at or below $50/Bbl combined with ~$1.5 billion of debt maturing in 2019-2020 is enough for us to sit on the sideline. Besides oil prices, firm remains unconvinced by its execution track record particularly in the Niobrara as well as its ability to stick to an already high capex budget (that's baking in minimal inflation). As such, they expect shares to continue to price at a discount to peers given leverage & execution concerns.