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Whiting Petroleum Corporation Announces Third Quarter 2012 Financial And Operating Results

Operated Drilling and Workover Rig Count

As of September 30, 2012, 23 operated drilling rigs and 76 operated workover rigs were active on our properties.

The breakdown of our operated rigs as of September 30, 2012 was as follows:

 

Region

 

Drilling

 

Workover

 

Northern Rockies

20 27
Permian Basin 1 7
Central Rockies 1 3
EOR Projects:
Postle 1 4
North Ward Estes -   35
Totals 23   76
 

Other Financial and Operating Results

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

   
Three Months
Ended September 30,

Production

2012   2011 Change
Oil (MMBbls) 5.86 4.80 22 %
NGLs (MMBOE) 0.69 0.57 21 %
Natural gas (Bcf) 6.32 6.81 (7 %)
Total equivalent (MMBOE) 7.60 6.50 17 %
 

Average Sales Price

Oil (per Bbl):
Price received $ 81.66 $ 83.79 (3 %)
Effect of crude oil hedging (1)   (0.80 )   (0.39 )
Realized price $ 80.86   $ 83.40   (3 %)
NYMEX oil (per Bbl) $ 92.19   $ 89.91   3 %
 
NGLs (per BOE):
Realized price $ 30.77   $ 56.88   (46 %)
 
Natural gas (per Mcf):
Price received $ 3.39 $ 5.00 (32 %)
Effect of natural gas hedging (1)   0.05     0.02  
Realized price $ 3.44   $ 5.02   (31 %)
NYMEX natural gas (per Mcf) $ 2.81   $ 4.20   (33 %)

(1)

  Whiting realized pre-tax cash settlement losses of $4.7 million on its crude oil hedges and gains of $0.3 million on its natural gas hedges during the third quarter of 2012. A summary of Whiting’s outstanding hedges is included later in this news release.
 

Third Quarter and First Nine Months 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   Nine Months
Ended September 30, Ended September 30,
2012   2011 2012   2011
Production (MMBOE) 7.60 6.50 22.29 18.28
 
Sales price, net of hedging $ 67.99 $ 71.80 $ 69.41 $ 73.45
Lease operating expense 12.35 11.94 12.48 12.20
Production tax 5.73 5.31 5.78 5.49
General & administrative 3.29 3.56 3.80 3.42
Exploration 1.36 1.45 1.51 1.99
Cash interest expense 2.15 2.16 2.16 2.16
Cash income tax expense (benefit)  

(0.24

)

 

0.15

 

0.03

 

0.25

$ 43.35   $ 47.23 $ 43.65 $ 47.94
 

Third Quarter and First Nine Months 2012 Drilling and Expenditures Summary

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

   
Gross/Net Wells Completed
    Total New   % Success CAPEX
Producing Non-Producing Drilling Rate (in MM)
Q3 12 93 / 45.3 1 / 0.8 94 / 46.1 98.9% / 98.3% $ 553.4
9M 12 268 / 125.2 1 / 0.8 269 / 126.0 99.6% / 99.4% $ 1,537.4
 

Outlook for Fourth Quarter and Full-Year 2012

The following table provides guidance for the fourth quarter and full-year 2012 based on current forecasts, including Whiting’s full-year 2012 capital budget of $1,900.0 million.

 

Guidance

Fourth Quarter   Full-Year

2012

2012

Production (MMBOE) 7.60 - 8.00 29.90 - 30.30
Lease operating expense per BOE $ 12.20 - $ 12.50 $ 12.30 - $ 12.60
General and admin. expense per BOE $ 3.40 - $ 3.60 $ 3.60 - $ 3.80
Interest expense per BOE $ 2.40 - $ 2.60 $ 2.40 - $ 2.60
Depr., depletion and amort. per BOE $ 23.50 - $ 24.50 $ 22.50 - $ 23.00
Prod. taxes (% of production revenue) 8.4% - 8.6% 8.2% - 8.4%
Oil price differentials to NYMEX per Bbl (1) ($ 8.50) - ($ 9.50) ($ 11.10) - ($ 11.70)
Gas price premium to NYMEX per Mcf (2) $ 0.40 - $ 0.70 $ 0.60 - $ 0.80
(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 October 1, 2012:

       
Weighted Average As a Percentage of
Derivative Hedge Contracted Volume NYMEX Price Collar Range September 2012
Instrument Period (Bbls per Month) (per Bbl) Oil Production
 
Collars 2012
Q4 1,163,157 $68.93 - $106.81 59.3%
 
Three-way Collars (1) 2013
Q1 910,000 $70.00 - $85.00 - $114.80 46.4%
Q2 910,000 $70.00 - $85.00 - $114.80 46.4%
Q3 910,000 $70.00 - $85.00 - $114.80 46.4%
Q4 910,000 $70.00 - $85.00 - $114.80 46.4%
 
Collars 2013
Q1 294,560 $48.17 - $90.71 15.0%
Q2 294,550 $48.17 - $90.71 15.0%
Q3 294,450 $48.16 - $90.70 15.0%
Oct 294,340 $48.15 - $90.69 15.0%
Nov 194,340 $47.96 - $85.90 9.9%
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)   A three-way collar is a combination of options: a sold call, a purchased put and a sold put. The sold call establishes a maximum price (ceiling) we will receive for the volumes under contract. The purchased put establishes a minimum price (floor) of $85.00 for the above hedges, unless the market price falls below the sold put of $70.00 (sub-floor), at which point the minimum price would be NYMEX plus the $15.00 difference between the purchased put and the sold put strike price in the hedges above.
 

The following summarizes Whiting Petroleum Corporation’s natural gas hedges as of October 1, 2012:

       
Weighted Average As a Percentage of
Derivative Hedge Contracted Volume NYMEX Price Collar Range September 2012
Instrument Period (Mcf per Month) (per Mcf) Gas Production
 
Collars 2012
Q4 30,640 $7.00 - $13.40 1.5%
 

Whiting also has the following fixed-price natural gas contracts in place as of October 1, 2012:

 
    Weighted Average   As a Percentage of
Hedge Contracted Volume Contracted Price September 2012
Period (MMBtu per Month) (per MMBtu) Gas Production
 
2012
Q4 398,667 $5.46 19.3%
 
2013
Q1 360,000 $5.47 17.4%
Q2 364,000 $5.47 17.6%
Q3 368,000 $5.47 17.8%
Q4 368,000 $5.47 17.8%
 
2014
Q1 330,000 $5.49 16.0%
Q2 333,667 $5.49 16.1%
Q3 337,333 $5.49 16.3%
Q4 337,333 $5.49 16.3%
 

Selected Operating and Financial Statistics

   

Three Months Ended September 30,

Nine Months Ended September 30,

2012   2011 2012   2011
Selected operating statistics
Production
Oil, MBbl 5,861 4,803 17,020 13,394
NGLs, MBOE 687 565 2,055 1,534
Natural gas, MMcf 6,318 6,807 19,305 20,096
Oil equivalents, MBOE 7,601 6,502 22,292 18,277
Average Prices
Oil per Bbl (excludes hedging) $ 81.66 $ 83.79 $ 83.99 $ 88.52
NGL per BOE $ 30.77 $ 56.88 $ 38.06 $ 53.75
Natural gas per Mcf (excludes hedging) $ 3.39 $ 5.00 $ 3.36 $ 4.98
Per BOE Data
Sales price (including hedging) $ 67.99 $ 71.80 $ 69.41 $ 73.45
Lease operating $ 12.35 $ 11.94 $ 12.48 $ 12.20
Production taxes $ 5.73 $ 5.31 $ 5.78 $ 5.49
Depreciation, depletion and amortization $ 23.63 $ 18.90 $ 22.26 $ 18.65
General and administrative (1) $ 3.29 $ 3.56 $ 3.80 $ 3.42
Selected Financial Data
(In thousands, except per share data)
Total revenues and other income $ 530,482 $ 487,557 $ 1,596,363 $ 1,400,985
Total costs and expenses $ 397,253 $ 155,183 $ 1,064,409 $ 718,869
Net income available to common shareholders $ 82,865 $ 205,966 $ 331,678 $ 427,990
Earnings per common share, basic $ 0.70 $ 1.75 $ 2.82 $ 3.65
Earnings per common share, diluted $ 0.70 $ 1.74 $ 2.79 $ 3.62
 
Average shares outstanding, basic 117,631 117,381 117,590 117,333
Average shares outstanding, diluted 118,924 118,539 118,968 118,572
Net cash provided by operating activities $ 382,760 $ 275,536 $ 1,017,945 $ 863,754
Net cash used in investing activities $ (543,223 ) $ (420,267 ) $ (1,221,158 ) $ (1,266,880 )
Net cash provided by financing activities $ 179,731 $ 139,730 $ 213,477 $ 390,262
 
(1)   For the nine months ended September 30, 2012, the price includes the effect of a one-time charge under our Production Participation Plan related to the Whiting USA Trust II of $0.39 per BOE.

Conference Call

The Company’s management will host a conference call with investors, analysts and other interested parties on Thursday, October 25, 2012 at 11:00 a.m. EST (10:00 a.m. CST, 9:00 a.m. MST) to discuss Whiting’s third quarter 2012 financial and operating results. Please call (866) 356-3377 (U.S./Canada) or (617) 597-5392 (International) to be connected to the call and enter the pass code 56379441. Access to a live Internet broadcast will be available at http://www.whiting.com by clicking on the “Investor Relations” box on the menu and then on the link titled “Webcasts.” Slides for the conference call will be available on this website beginning at 11:00 a.m. (EST) on October 25, 2012.

A telephonic replay will be available beginning approximately two hours after the call on Thursday, October 25, 2012 and continuing through Thursday, November 1, 2012. You may access this replay at (888) 286-8010 (U.S./Canada) or (617) 801-6888 (International) and entering the pass code 89198470. You may also access a web archive at http://www.whiting.com beginning approximately one hour after the conference call.

About Whiting Petroleum Corporation

Whiting Petroleum Corporation, a Delaware corporation, is an independent oil and gas company that explores for, develops, acquires and produces crude oil, natural gas and natural gas liquids primarily in the Rocky Mountain, Permian Basin, Mid-Continent, Michigan and Gulf Coast regions of the United States. The Company’s largest projects are in the Bakken and Three Forks plays in North Dakota and its Enhanced Oil Recovery fields in Oklahoma and Texas. The Company trades publicly under the symbol WLL on the New York Stock Exchange. For further information, please visit http://www.whiting.com.

Forward-Looking Statements

This news release contains statements that we believe to be “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. All statements other than historical facts, including, without limitation, statements regarding our future financial position, business strategy, projected revenues, earnings, costs, capital expenditures and debt levels, and plans and objectives of management for future operations, are forward-looking statements. When used in this news release, words such as we “expect,” “intend,” “plan,” “estimate,” “anticipate,” “believe” or “should” or the negative thereof or variations thereon or similar terminology are generally intended to identify forward-looking statements. Such forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those expressed in, or implied by, such statements.

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