Assessing the outlook for Whiting
The discussion started with an assessment of the prospects for the upstream producers in the Bakken and Williston fields. In light of recent consolidations, the specialist remarked that these were inevitable. “There were just way too many small and mid-sized companies, so there weren’t really a lot of economies of scale. When oil is USD 140 a barrel, anyone can throw a hole in the ground and be fairly successful.”
Post-bankruptcy, Whiting has worked on improving its operations. “It seems like they’ve been pretty strategic and pretty smart… Right now the market is definitely rewarding people who have restrictions on their capital and try to live within cash flows and try to grow at a reasonable rate and get out of debt.” They also noted that Whiting should be out of debt by the end of this year.
Moving on to the topic of headwinds for the oil and gas industry, the former director explained that many banks and lending institutions do not want to be associated with this sector. “Capital is drying up a little bit in oil and gas, and some of those dollars are seeking green alternatives.”
However, they do not envisage demand drying up, with growing middle classes in India and China. In addition, “to build the infrastructure for the renewables, to smelt the steel, to mine the copper, to get the lithium, all the stuff that you need to build a renewable infrastructure takes a large amount of fossil fuels to get there.”
To access all the human insights from Third Bridge Forum’s Whiting Petroleum – financials overview & post-bankruptcy outlook Interview, click here to view the full transcript.
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