Energy Stocks to Sell: Whiting Petroleum (WLL)
Make no mistake, drilling activity in the Bakken shale is hot hot hot. The region is one of the main ways America is catching up to the likes of Russia and Saudi Arabia in terms of total energy production. That fact has caused a variety of energy stocks in the Bakken to trade at “rich” values compared to many of their peers.
Take Whiting Petroleum (WLL), for example.
The energy stock has long been touted as the next big buyout in the Bakken for some larger oil major. This fact has caused WLL shares to trade at a forward P/E higher than many of its Bakken sisters. Unfortunately, the buy-out hasn’t happened yet, and Whiting is currently expensive given its growth potential.
WLL currently trades for a forward P/E of 16. Meanwhile, rival Oasis Petroleum (OAS) can be bought for just 11 times forward earnings.
What’s more troubling is that WLL recently reported a 50-cent-per-share loss during the fourth quarter. That compares to a 69 per share profit in the year-ago period. The culprit? Rising exploration cots and interest expenses.
Adding in its loss and the fact that WLL stock has gained about 24% over the last six months, it may be time for investors to say goodbye and move into cheaper energy stocks in the Bakken.