Whiting Petroleum: Bakken Acreage Keys Upgrades

| About: Whiting Petroleum (WLL)

I have not posted anything on the Whiting Petroleum (NYSE:WLL), an undervalued E&P producer with assets in the Bakken and other promising regions, in awhile. However, the stock is starting to pick up on some positives, and it feels like it is ready to make its next leg up.

Recent positives for WLL:

  • JPMorgan upgraded the shares Monday to "Overweight" from "Neutral." It also walked up its price target to $65 a share from $62.50 a share. Analyst Joseph Allman also noted "Our model could be conservative if the company has success testing the higher-density pilot programs in the Williston Basin."
  • BMO Capital also upgraded the shares to "Outperform" from "Market Perform" in February. It also raised its price target to $60 from $50.
  • Consensus earnings for FY2013 have moved up nicely over the last two months.
  • During its last quarterly earnings report, Whiting beat on both on the top and the bottom lines on higher production.

Whiting Petroleum Corporation is an independent energy concern producing oil and gas primarily in the Permian Basin, Rocky Mountains, Mid-Continent, Gulf Coast, and Michigan regions of the United States.

4 additional reasons WLL still has upside from $48 a share:

  1. 80% of the company's current production is oil, of which over 70% comes from the Bakken, the most important new energy region in over a generation.
  2. One possible catalyst could be dropping the company's hundreds of miles of pipelines and gas processing plants into a MLP (Master Limited Partnership) structure. The company also has grown earnings and revenues at better than an 18% CAGR over the past five years, and the stock sells for just over 11x projected 2014's earnings.
  3. Analysts expect the company to grow revenues at a 14% CAGR over the next two years, and the stock sports a five year projected PEG of exactly 1.
  4. The 33 analysts that cover the shares have a $60 price target on WLL. The stock also sells for less than 5x operating cash flow.

Disclosure: I am long WLL. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.