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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)

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.

Other Financial and Operating Results

The following table summarizes the Company’s net production and commodity price realizations for the quarters ended June 30, 2012 and 2011:

      Three Months      
Ended June 30,

Production

2012       2011 Change
Oil (MMBbls) 5.58 4.31 29 %
NGLs (MMBOE) 0.70 0.48 46 %
Natural gas (Bcf) 6.38 6.29 1 %
Total equivalent (MMBOE) 7.34 5.84 26 %
 

Average Sales Price

Oil (per Bbl):
Price received $ 79.92 $ 96.88 (18 %)
Effect of crude oil hedging (1)   (1.35 )   (3.78 )
Realized price $ 78.57   $ 93.10   (16 %)
NYMEX oil (per Bbl) $ 93.51   $ 102.55   (9 %)
 
 
NGLs (per BOE):
Realized price $ 37.45   $ 53.22   (30 %)
 
Natural gas (per Mcf):
Price received $ 3.25 $ 4.94 (34 %)
Effect of natural gas hedging (1)   0.06     0.03  
Realized price $ 3.31   $ 4.97   (33 %)
NYMEX natural gas (per Mcf) $ 2.21   $ 4.32   (49 %)
 
(1)     Whiting realized pre-tax cash settlement losses of $7.5 million on its crude oil hedges and gains of $0.4 million on its natural gas hedges during the second quarter of 2012. A summary of Whiting’s outstanding hedges is included later in this news release.
 

Second Quarter and First Half 2012 Costs and Margins

A summary of production, cash revenues and cash costs on a per BOE basis is as follows:

      Per BOE, Except Production
Three Months       Six Months
Ended June 30, Ended June 30,
2012       2011 2012       2011
Production (MMBOE) 7.34 5.84 14.69 11.78
 
Sales price, net of hedging $ 66.13 $ 78.45 $ 70.15 $ 74.36
Lease operating expense 12.19 12.65 12.54 12.34
Production tax 5.55 5.87 5.81 5.60
General & administrative 3.43 3.58 4.06 3.34
Exploration 1.84 2.12 1.58 2.29
Cash interest expense 2.12 2.26 2.16 2.17
Cash income tax expense   0.15   0.27   0.17   0.31
$ 40.85 $ 51.70 $ 43.83 $ 48.31
 

2012 Capital Budget

We increased our 2012 capital budget to $1,900 million from $1,800 million. Our revised 2012 capital budget is currently allocated among our major development areas as indicated in the table below:

       

2012 CAPEX (MM)

     

Gross Wells

     

Net Wells

      % of Total
Northern Rockies $ 851 218 124 45%
EOR 223 NA (1) NA (1) 12%
Permian 97 19 19 5%
Central Rockies 85 20 17 4%
Non-Operated 160 -- -- 8%
Land 163 -- -- 9%
Exploration Expense (2) 56 -- -- 3%
Facilities 215 -- -- 11%
Well Work, Misc. Costs, Other   50       --       --       3%
Total Budget $ 1,900 (3)       257       160       100%
 
(1)     These multi-year CO 2 projects involve many re-entries, workovers and conversions. Therefore, they are budgeted on a project basis not a well basis.
(2) Comprised primarily of exploration salaries, seismic activities and delay rentals.
(3) The change in our 2012 capital budget consisted of increases of $50MM in well recompletions and capitalized workovers, $46MM in our EOR projects (primarily Residual Oil Zone capex), $27MM in non-operated drilling and a reduction of $23MM to our facilities budget due to the Belfield plant sale.
 

Second Quarter and First Half 2012 Drilling and Expenditures Summary

The table below summarizes Whiting’s operated and non-operated drilling activity and capital expenditures for the three and six months ended June 30, 2012:

      Gross/Net Wells Completed      
            Total New       % Success CAPEX
Producing Non-Producing Drilling Rate (in MM)
Q2 12 91 / 44.1 0 / 0 91 / 44.1 100% / 100%

$456.0

6M 12 175 / 79.9 0 / 0 175 / 79.9 100% / 100% $ 984.0
 

Outlook for Third Quarter and Full-Year 2012

The following table provides guidance for the third quarter and full-year 2012 based on current forecasts, including Whiting’s full-year 2012 capital budget of $1,900 million.

     

Guidance

Third Quarter       Full-Year

2012

2012

Production (MMBOE) 7.40 - 7.80 29.70 - 30.50
Lease operating expense per BOE $ 11.90 - $ 12.30 $ 12.20 - $ 12.50
General and admin. expense per BOE $ 3.30 - $ 3.60 $ 3.60 - $ 3.90
Interest expense per BOE $ 2.30 - $ 2.50 $ 2.30 - $ 2.60
Depr., depletion and amort. per BOE $ 22.10 - $ 22.70 $ 21.90 - $ 22.30
Prod. taxes (% of production revenue) 8.3% - 8.5% 8.2% - 8.4%
Oil price differentials to NYMEX per Bbl (1) ($ 9.00) - ($ 10.00) ($ 10.50) - ($ 11.50)
Gas price premium to NYMEX per Mcf (2) $ 0.60 - $ 0.90 $ 0.60 - $ 0.90
 

(1)

    Does not include the effect of NGLs.
(2) Includes the effect of Whiting’s fixed-price gas contracts. Please refer to fixed-price gas contracts later in this news release.
 

Oil Hedges

The following summarizes Whiting’s crude oil hedges as of July 16, 2012:

                Weighted Average         As a Percentage of
Hedge Contracted Volume NYMEX Price Collar Range June 2012
Period (Bbls per Month) (per Bbl) Oil Production
 
2012
Q3 1,163,440 $68.93 - $106.81 (1) 54.9%
Q4 1,163,157 $68.93 - $106.81 (1) 54.8%
 
2013
Q1 294,560 $48.17 - $90.71 13.9%
Q2 294,550 $48.17 - $90.71 13.9%
Q3 294,450 $48.16 - $90.70 13.9%
Oct 294,340 $48.15 - $90.69 13.9%
Nov 194,340 $47.96 - $85.90 9.2%
Dec 4,340 $80.00 - $122.50 0.2%
 
2014
Q1 4,250 $80.00 - $122.50 0.2%
Q2 4,150 $80.00 - $122.50 0.2%
Q3 4,060 $80.00 - $122.50 0.2%
Q4 3,970 $80.00 - $122.50 0.2%
 

(1) In July, Whiting added two new oil hedges as follows:

Hedge         Contracted Volume         NYMEX Floor         NYMEX Ceiling
Period (Bbls per Month) (per Bbl) (per Bbl)
 
July – Dec. 2012 75,000 $80.00 $96.45
July – Dec. 2012 100,000 $80.00 $96.70
 

These new hedges are included in the calculation of the Weighted Average Collar Range shown above.

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