Here’s Why Steve Cohen is Accumulating Whiting Petroleum Corp (NYSE:WLL)

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Billionaire Steve Cohen founded Point72 Asset Management in 2014. The hedge fund manages over $14.22 billion in assets as of the end of the third quarter, while the net worth of Mr. Cohen stands at $13 billion. In a recent Schedule 13G filing, Point72 Asset Management disclosed ownership of over 5.32 million shares of Whiting Petroleum Corp (NYSE:WLL). This position accounts for 1.9% of the company’s total float. The Denver, Colorado-based oil and gas company’s shares have gained over 30% in value since the start of the year. The company entered 2016 in bad shape due to plummeting oil prices and its weakening financial position. As a result, the company set its capex budget for 2016 at $500 million, an 80% decrease the prior year. But analysts think that things are about to improve for Whiting Petroleum, mainly due to the rallying oil prices and some crucial steps the company took to reverse its declines in this year.

How Whiting Petroleum Turned the Tables in 2016

Whiting Petroleum Corp’s (NYSE:WLL) debt was slashed by 34% to $3.7 billion due to several debt exchange steps. The company also sold many of its non-core assets, including those in Texas. The company also signed a deal to sell its Bakken midstream assets to Tesoro Logistics (NYSE:TLLP). This deal will be finalized in the first half of 2017, and Whiting will get $375 million in cash. The company generated a total of $151.31 million cash from its operating activities in the third quarter, as compared to the capital spending of $66 million.

OPEC’s recent decision to cut oil production by almost 1.8 million barrels per day from January 1, 2017 will create an oil deficit of 600,000 barrels per day, which should boost financial performance of Whiting Petroleum, as analysts are now predicting that inventory correction in the oil industry after end of oversupply will result in oil prices soaring to $60 per barrel.

Earlier this month, Stifel upgraded Whiting Petroleum to ‘Buy’ from Hold’ and upped its price target to $15 from $8. Wells Fargo downgraded Whiting Petroleum (NYSE:WLL) from Outperform to Market Perform.


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