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TheStreet Open House

Whiting Petroleum Corporation Drilling Operations: One Well Drilling, One Well Being Completed And One Well Producing In The Sanish Field Of Mountrail County, North Dakota. (Photo: Business Wire)

Whiting Petroleum Corporation’s (NYSE: WLL) production in the second quarter of 2012 totaled 7.34 million barrels of oil equivalent (MMBOE), of which 86% were crude oil/natural gas liquids (NGLs). This second quarter 2012 production total equates to a daily average production rate of 80,700 barrels of oil equivalent (BOE), representing a 26% increase over the second quarter 2011 average daily rate of 64,120 BOE per day. During the second quarter, Whiting replaced the approximate 4,500 BOE per day of production that was conveyed from Whiting Petroleum Corporation to Whiting USA Trust II effective March 28, 2012, through new drilling. Production would have increased 33% without the Trust II conveyance.

Whiting Petroleum Corporation drilling operations: One well drilling, one well being completed and o ...

Whiting Petroleum Corporation drilling operations: One well drilling, one well being completed and one well producing in the Sanish Field of Mountrail County, North Dakota. (Photo: Business Wire)

Based on continued good results across our properties, we are increasing our 2012 production growth guidance to 20% - 23% from 17% - 22% and revising upward our capital budget to $1.9 billion from $1.8 billion.

James J. Volker, Whiting’s Chairman and CEO, commented, “Our objectives for 2012 remain intact:

  • We continue to execute on our active drilling program and have increased our guidance for the third time this year to a range of 20% to 23% production growth;
  • Our plan to drill 257 gross (160 net) wells throughout our prospect areas remains unchanged. By high-grading our drilling rig fleet and using pad drilling and sliding sleeve completions, we believe we can efficiently reach our 2012 drilling goals;
  • At current oil prices, our discretionary cash flow, recent WHZ Trust unit sale and Belfield Plant sale will substantially fund our 2012 capital budget of $1.9 billion;
  • We continue to experience success in emerging development areas such as Big Tex and build solid acreage positions in new exploration areas at attractive prices and attractive net revenue interests.
  • We continue to monitor oil prices and have flexibility in our rig contracts. Of our 29 contracted rigs 13 have contracts that can be terminated without penalty by December 31, 2012 and another seven have contracts that can be terminated without penalty by December 31, 2013. Currently our plans call for the release of three rigs. One in Sanish in early September, one in Hidden Bench in late August and one in Pronghorn in late August. These are generally less efficient rigs when compared to others we have under contract. Due to the efficiency of the rigs we will retain under contract, we anticipate no reduction in the number of wells we intend to drill in 2012.

Mr. Volker continued, “We added more than 10,500 net acres to our Williston Basin acreage position in the second quarter and now hold over 712,000 net acres in the Basin. With further drilling in our new development areas and our established core properties, we expect a strong second half in 2012.”

Operating and Financial Results

The following table summarizes the second quarter operating and financial results for 2012 and 2011:

 

Three Months Ended June 30,

     

2012

     

2011

     

Change

Production (MBOE/d) 80.70 64.12 26 %
Discretionary Cash Flow-MM$ (1) 310.5 313.3 (1) %
Realized Price ($/BOE) 66.13 78.45 (16) %
Total Revenues-MM$ 502.2 481.2 4 %

Net Income Available to CommonShareholders-MM$

150.6 202.9 (26) %
Per Basic Share $1.28 $1.73 (26) %
Per Diluted Share $1.27 $1.71 (26) %

Adjusted Net Income Available to CommonShareholders-MM$ (2)

86.8 120.3 (28) %
Per Basic Share $0.74 $1.02 (27) %
Per Diluted Share       $0.73       $1.02       (28) %
 

(1) A reconciliation of discretionary cash flow to net cash provided by operating activities is included later in this news release.

(2) A reconciliation of adjusted net income available to common shareholders to net income available to common shareholders is included later in this news release.

Historically, Whiting included the price of NGLs in its oil differentials and its guidance. In the second quarter, NGLs represented 11.2% of the Company’s total liquids production and reduced our overall liquids price by $4.76 per barrel. Our true crude oil differential was $13.59 per barrel.

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