Wells Fargo downgrades Whiting Petroleum, lowers price target to $11
Wells Fargo analyst Gordon Douthat downgraded Whiting Petroleum to Market Perform from Outperform and lowered his price target for the shares to $11 from $12. The company's free cash generation potential is highly sensitive to oil price levels, Douthat tells investors in a research note. At a strip pricing scenario, the analyst does not model meaningful free cash for Whiting generation through 2021, "thereby extending the timeline of its de-levering process in the absence of higher prices." Further, while recent negative revisions to guidance were largely characterized as midstream related, the trends suggest there might be an issue with productivity degradation which will likely act as another headwind to the de-levering process, says Douthat.