Here's What Fueled Whiting Petroleum Corp.'s 11% Sell-Off in April

By Matthew DiLallo Markets Fool.com

What happened

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Shares of Whiting Petroleum (NYSE: WLL) tumbled in April, ending the month down by double digits despite monster first-quarter results.

So what

Whiting Petroleum beat the forecasts across the board last month. Production came in at the high end of the company's guidance range thanks to the impressive results from its Loomer pad in North Dakota, where initial production rates have the three-well pad on pace to deliver 50% more production than initial expectations. Meanwhile, costs came in below the company's guidance, thanks to a new comprehensive water handling system and well maintenance program. Those two factors helped Whiting Petroleum narrow its net loss, which came in better than the consensus estimate.

Image source: Getty Images.

While the company's stock got a bit of a bump thanks to those results, that wasn't nearly enough to overcome the impact from sinking crude prices during the month. Overall, the price of the U.S. oil benchmark WTI fell almost 8% from its peak in early April, ending the month below $50 per barrel due to concerns that crude supplies continue to rise in spite of OPEC's best efforts.

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That sub-$50 oil price is a problem for Whiting because its 2017 budget is based on $55 crude. It's worth noting, though, that Whiting wasn't the only Bakken-focused driller that used $55 crude to fuel its 2017 growth plan since rival Continental Resources (NYSE: CLR) also built its budget for cash flow neutrality at that oil price. However, with crude staying below that level all year, and recently falling into the mid-$40s, it's causing concern that Whiting and Continental Resources might not be able to achieve their bullish growth forecasts.

Now what

While Whiting Petroleum reported a much better-than-expected first quarter, the market has concerns whether the company can keep that up because of tumbling oil prices. If Whiting Petroleuminvests as much capitalas planned, it runs the risk of outspending cash flow to chase growth. That could cause it to dig itself back into a deep hole considering that it still has a lot of debt on the balance sheet. That weaker financial situationcould cause this stock to remain very volatile this year.

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Matt DiLallo has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.