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Whiting Petroleum (WLL): What Will Q2 Earnings Unveil?

Domestic oil and gas explorer Whiting Petroleum Corp. WLL is set to release second-quarter 2017 results after the closing bell on Wednesday, Jul 26.

In the preceding three-month period, the Denver, CO-based company reported stronger-than-expected results on robust output and cost control.

Coming to earnings surprise history, Whiting Petroleum has a mixed record: its missed estimates in 2 of the last four quarters.

Let’s see how things are shaping up for this announcement.

Factors to Consider This Quarter

Oil prices have been on a freefall over the past few weeks, erasing all the gains associated with the OPEC-led output cut. The continued rise in domestic production thanks to soaring shale output have dragged down the commodity well below the psychologically-critical $50 threshold. This will hamper Whiting Petroleum’s earnings and cash flows

However, efficiencies on the production front might be able to mitigate some of the damage. The company expects to maintain a flat-to-rising production profile in the upcoming few quarters despite asset sales.

Moreover, Whiting Petroleum has been able to reduce costs that will provide some buffer amid the tumbling commodity prices.

Earnings Whispers

Our proven model does not conclusively show that Whiting Petroleum will beat estimates this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) to be able to beat consensus estimates. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

That is not the case here as you will see below.

Zacks ESP: Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is -5.26%. This is because the Most Accurate estimate stands at a loss of 20 cents, while the Zacks Consensus Estimate is pegged narrower, at a loss of 19 cents.

Zacks Rank: Whiting Petroleum’s Zacks Rank #4 (Sell) further decreases the predictive power of ESP, making us less confident of an earnings surprise call.

As it is, we caution against Sell-rated stocks (Zacks Ranks #4 and 5) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Share Performance: Shares have fallen 41.8% during the second quarter, as against the industry's loss of 16.9%. Over the last 12 months, Whiting Petroleum stock has lost 37.4%.

Stocks to Consider

While earnings beat looks uncertain for Whiting Petroleum, here are some energy firms you may want to consider on the basis of our model, which shows that they have the right combination of elements to post earnings beat this quarter:

TransCanada Corp. TRP has an Earnings ESP of +7.84% and a Zacks Rank #1. The energy infrastructure developer is expected to release earnings results on Jul 28. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Halliburton Co. HAL has an Earnings ESP of +10.53% and a Zacks Rank #3. The oilfield services provider is anticipated to release earnings on Jul 24.

EQT Corp. EQT has an Earnings ESP of +12.50% and a Zacks Rank #3. The oil and gas company is likely to release earnings on Jul 27.

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