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Whiting Petroleum Corporation Announces Third Quarter 2012 Financial And Operating Results

These risks and uncertainties include, but are not limited to: declines in oil, NGL or natural gas prices; our level of success in exploration, development and production activities; adverse weather conditions that may negatively impact development or production activities; the timing of our exploration and development expenditures; our ability to obtain sufficient quantities of CO 2 necessary to carry put our enhanced oil recovery projects; inaccuracies of our reserve estimates or our assumptions underlying them; revisions to reserve estimates as a result of changes in commodity prices; risks related to our level of indebtedness and periodic redeterminations of the borrowing base under our credit agreement; our ability to generate sufficient cash flows from operations to meet the internally funded portion of our capital expenditures budget; our ability to obtain external capital to finance exploration and development operations and acquisitions; federal and state initiatives relating to the regulation of hydraulic fracturing; the potential impact of federal debt reduction initiatives and tax reform legislation being considered by the U.S. Federal government that could have a negative effect on the oil and gas industry; impacts of the global recession and tight credit markets; our ability to identify and complete acquisitions and to successfully integrate acquired businesses; unforeseen underperformance of or liabilities associated with acquired properties; our ability to successfully complete potential asset dispositions; the impacts of hedging on our results of operations; failure of our properties to yield oil or gas in commercially viable quantities; uninsured or underinsured losses resulting from our oil and gas operations; our inability to access oil and gas markets due to market conditions or operational impediments; the impact and costs of compliance with laws and regulations governing our oil and gas operations; our ability to replace our oil and natural gas reserves; any loss of our senior management or technical personnel; competition in the oil and gas industry in the regions in which we operate; risks arising out of our hedging transactions; and other risks described under the caption “Risk Factors” in our Annual Report on Form 10-K for the period ended December 31, 2011. We assume no obligation, and disclaim any duty, to update the forward-looking statements in this news release.

SELECTED FINANCIAL DATA

For further information and discussion on the selected financial data below, please refer to Whiting Petroleum Corporation’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2012, to be filed with the Securities and Exchange Commission.

 

WHITING PETROLEUM CORPORATION CONSOLIDATED BALANCE SHEETS (Unaudited) (In thousands)

   

September 30, 2012

December 31, 2011

 
ASSETS
 
Current assets:
Cash and cash equivalents $ 26,075 $ 15,811
Accounts receivable trade, net 345,352 262,515
Prepaid expenses and other 21,075 20,377
Total current assets 392,502 298,703

Property and equipment:

Oil and gas properties, successful efforts method:
Proved properties 8,317,199 7,221,550
Unproved properties 366,255 354,774
Other property and equipment 152,786 150,933
Total property and equipment 8,836,240 7,727,257
Less accumulated depreciation, depletion and amortization (2,416,815) (2,088,517)
Total property and equipment, net 6,419,425 5,638,740

Debt issuance costs

27,945 33,306

Other long-term assets

89,578 74,860

TOTAL ASSETS

$ 6,929,450 $ 6,045,609
 

WHITING PETROLEUM CORPORATION CONSOLIDATED BALANCE SHEETS (Unaudited) (In thousands, except share and per share data)

   

September 30, 2012

December 31, 2011

LIABILITIES AND EQUITY
 
Current liabilities:
Accounts payable trade $ 141,326 $ 56,673
Accrued capital expenditures 112,137 142,827
Accrued liabilities and other 175,104 157,214
Revenues and royalties payable 137,162 103,894
Taxes payable 42,380 31,195
Derivative liabilities 33,499 73,647
Deferred income taxes   10,967     1,584
Total current liabilities 652,575 567,034
Long-term debt 1,600,000 1,380,000
Deferred income taxes 1,012,286 823,643
Derivative liabilities 7,931 47,763
Production Participation Plan liability 86,858 80,659
Asset retirement obligations 57,183 61,984
Deferred gain on sale 117,946 29,619
Other long-term liabilities   27,577     25,776
Total liabilities   3,562,356     3,016,478
Commitments and contingencies
Equity:
Preferred stock, $0.001 par value, 5,000,000 shares authorized; 6.25% convertible perpetual preferred stock, 172,391 issued and outstanding as of September 30, 2012 and December 31, 2011, aggregate liquidation preference of $17,239,100 at September 30, 2012 - -
Common stock, $0.001 par value, 300,000,000 shares authorized; 118,584,188 issued and 117,631,451 outstanding as of September 30, 2012, 118,105,279 issued and 117,380,884 outstanding as of December 31, 2011 119 118
Additional paid-in capital 1,562,025 1,554,223
Accumulated other comprehensive income (loss) (1,202 ) 240
Retained earnings   1,797,954     1,466,276
Total Whiting shareholders’ equity 3,358,896 3,020,857
Noncontrolling interest   8,198     8,274
Total equity   3,367,094     3,029,131

TOTAL LIABILITIES AND EQUITY

$ 6,929,450   $ 6,045,609
 

WHITING PETROLEUM CORPORATION CONSOLIDATED STATEMENTS OF INCOME (Unaudited) (In thousands, except per share data)

   

Three Months Ended September 30,

Nine Months Ended September 30,

2012   2011 2012   2011
REVENUES AND OTHER INCOME:
Oil and natural gas sales $ 521,195 $ 468,573 $ 1,572,648 $ 1,368,121
Gain on hedging activities 398 1,871 2,285 7,326
Amortization of deferred gain on sale 8,636 3,518 21,281 10,455
Gain (loss) on sale of properties 99 13,505 (263 ) 14,732
Interest income and other   154     90     412     351  
Total revenues and other income   530,482     487,557     1,596,363     1,400,985  
COSTS AND EXPENSES:
Lease operating 93,859 77,630 278,153 222,937
Production taxes 43,519 34,510 128,893 100,412
Depreciation, depletion and amortization 179,587 122,890 496,296 340,868
Exploration and impairment 23,882 18,918 79,362 61,326
General and administrative 25,034 23,144 84,611 62,470
Interest expense 18,734 16,130 55,095 45,867

Change in Production Participation Plan  liability

6,217 853 6,199 3,060
Commodity derivative (gain) loss, net   6,421     (138,892 )   (64,200 )   (118,071 )
Total costs and expenses   397,253     155,183     1,064,409     718,869  
INCOME BEFORE INCOME TAXES 133,229 332,374 531,954 682,116
INCOME TAX EXPENSE (BENEFIT):
Current (1,859 ) 975 676 4,590
Deferred   51,975     125,164     198,868     248,728  
Total income tax expense   50,116     126,139     199,544     253,318  
NET INCOME 83,113 206,235 332,410 428,798
Net loss attributable to noncontrolling interest   21     -     76     -  
NET INCOME AVAILABLE TO SHAREHOLDERS 83,134 206,235 332,486 428,798
Preferred stock dividends   (269 )   (269 )   (808 )   (808 )
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  
Diluted $ 0.70   $ 1.74   $ 2.79   $ 3.62  
WEIGHTED AVERAGE SHARES OUTSTANDING:
Basic   117,631     117,381     117,590     117,333  
Diluted   118,924     118,539     118,968     118,572  
 

WHITING PETROLEUM CORPORATION Reconciliation of Net Income Available to Common Shareholders to Adjusted Net Income Available to Common Shareholders (In thousands, except for per share data)

   
Three Months Ended Nine Months Ended
September 30, September 30,
2012   2011 2012   2011
Net Income Available to Common Shareholders $ 82,865 $ 205,966 $ 331,678 $ 427,990
 
Adjustments Net of Tax:
Amortization of Deferred Gain on Sale (5,387 ) (2,183 ) (13,298 ) (6,572 )
(Gain) Loss on Sale of Properties (62 ) (8,379 ) 164 (9,261 )
Impairment Expense 8,449 5,881 28,601 15,666
One-time Charge Under Production Participation Plan Related to Trust II Offering - - 5,924 -
Unrealized Derivative (Gains) Losses   1,002     (88,406 )   (57,341 )   (94,953 )
Adjusted Net Income (1) $ 86,867   $ 112,879   $ 295,728   $ 332,870  
 
Adjusted Net Income Available to Common Shareholders per Share, Basic $ 0.74   $ 0.96   $ 2.51   $ 2.84  
Adjusted Net Income Available to Common Shareholders per Share, Diluted $ 0.73   $ 0.95   $ 2.49   $ 2.81  
(1)   Adjusted Net Income Available to Common Shareholders is a non-GAAP financial measure. Management believes it provides useful information to investors for analysis of Whiting’s fundamental business on a recurring basis. In addition, management believes that Adjusted Net Income Available to Common Shareholders is widely used by professional research analysts and others in valuation, comparison and investment recommendations of companies in the oil and gas exploration and production industry, and many investors use the published research of industry research analysts in making investment decisions. Adjusted Net Income Available for Common Shareholders should not be considered in isolation or as a substitute for net income, income from operations, net cash provided by operating activities or other income, cash flow or liquidity measures under US GAAP and may not be comparable to other similarly titled measures of other companies.
 

WHITING PETROLEUM CORPORATION Reconciliation of Net Cash Provided by Operating Activities to Discretionary Cash Flow (In thousands)

   
Three Months Ended Nine Months Ended
September 30, September 30,
2012   2011 2012   2011

Net cash provided by operating activities

$ 382,760 $ 275,536 $ 1,017,945 $ 863,754
Exploration 10,338 9,440 33,592 36,406
Exploratory dry hole costs (1,885 ) (417 ) (2,140 ) (4,714 )
Changes in working capital (47,590 ) 32,246 (42,805 ) 19,258
Preferred stock dividends paid   (269 )   (269 )   (808 )   (808 )
Discretionary cash flow (1) $ 343,354   $ 316,536   $ 1,005,784   $ 913,896  
(1)   Discretionary cash flow is computed as net income plus exploration and impairment costs, depreciation, depletion and amortization, deferred income taxes, non-cash interest costs, non-cash compensation plan charges, non-cash losses on mark-to-market derivatives and other non-current items less the gain on sale of properties, amortization of deferred gain on sale, non-cash gains on mark-to-market derivatives, and preferred stock dividends paid. The non-GAAP measure of discretionary cash flow is presented because management believes it provides useful information to investors for analysis of the Company’s ability to internally fund acquisitions, exploration and development. Discretionary cash flow should not be considered in isolation or as a substitute for net income, income from operations, net cash provided by operating activities or other income, cash flow or liquidity measures under GAAP and may not be comparable to other similarly titled measures of other companies.




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