Whiting Petroleum Corporation Announces Third Quarter 2013 Financial And Operating Results

Whiting Petroleum Corporation’s (NYSE: WLL) production in the third quarter of 2013 totaled 8.533 million barrels of oil equivalent (MMBOE), of which 87% was crude oil/natural gas liquids (NGLs). Despite the sale of our Postle field assets, which accounted for approximately 7,560 barrels of oil equivalent per day (BOE/d) of production in the second quarter, third quarter 2013 production came to 92,750 BOE/d compared to 93,380 BOE/d in the second quarter of 2013. Third quarter production was up 12% over the third quarter 2012 average of 82,615 BOE/d and up 23% excluding the production associated with the Postle field assets, which were sold on July 15, 2013.

Success in several areas contributed to strong third quarter production. We have applied the modified completion design that we employed at our Missouri Breaks prospect to other areas in the Williston Basin, including Hidden Bench, Lewis & Clark and Pronghorn, with encouraging results. At our Western Williston area, production increased 46% over the second quarter of 2013, driven by strong drill bit results. At our Redtail prospect in the DJ Basin, our new completion design continues to generate very strong and consistent results. We also continued to see increased production at our North Ward Estes EOR project where several phases of the CO 2 flood are continuing to respond.

We recently entered into an agreement to sell 32,183 net acres and approximately 200 net BOE/d in our Big Tex prospect area in the Delaware Basin to a private buyer for total consideration of $150.1 million subject to closing and post-closing adjustments. Of the total net acres, 30,822 net acres are located in Pecos County, Texas and 1,361 net acres are located in Reeves County, Texas. The sale is subject to normal purchase price adjustments and is expected to close by October 31, 2013.

James J. Volker, Whiting’s Chairman and CEO, commented, “This is an exciting time for Whiting and our shareholders. During the third quarter, we added 17,282 net acres to our Hidden Bench and Missouri Breaks prospect areas and 32,419 net acres to our Redtail Niobrara prospect. Our new completion design using cemented liners and plug and perf technology is working throughout the Williston Basin. Initial results from our higher density drilling program at our Pronghorn prospect are very encouraging, and we expect results from our Sanish field and Hidden Bench prospect higher density drilling programs in the fourth quarter. We expect to add a third rig at our Redtail Niobrara prospect on November 4, 2013 and are in development mode with an estimated 3,394 future gross well locations.”

Mr. Volker added, “In the third quarter, we replaced nearly all of the production from the Postle assets sale, which generated $816.5 million in net sale proceeds. We recently issued $2.3 billion of senior notes, $1.1 billion of senior notes bearing an interest rate of 5.000% and maturing in 2019 and $1.2 billion of senior notes that bear an interest rate of 5.750% and mature in 2021. We used the net proceeds from the Postle assets sale and bond issuance to strengthen our financial position and put us in a position for sustained growth. The sale of a portion of our Big Tex assets for $150.1 million will further increase our liquidity to accelerate development of our high rate of return Williston Basin Bakken and DJ Basin Niobrara assets. In addition, the transaction will bring a new operator to the Big Tex area whose drilling we expect will help de-risk our remaining 41,173 net acres at Big Tex, which is composed of 30,846 net acres in Pecos County, Texas, 6,207 net acres in Reeves County, Texas and 4,120 net acres in Ward County, Texas.”

Operating and Financial Results

The following tables summarize the third quarter and first nine months operating and financial results for 2013 and 2012:

Three Months Ended September 30,
      2013     2012     Change
Production (MBOE/d) (1) 92.75 82.62 +12 %
Discretionary Cash Flow-MM$ (2) 450.5 343.4 +31 %
Realized Price ($/BOE) 81.21 67.99 +19 %
Total Revenues-MM$ 831.0 530.5 +57 %

Net Income Available to CommonShareholders-MM$ (3)
204.1 82.9 +146 %
Per Basic Share $1.72 $0.70 +146 %
Per Diluted Share $1.71 $0.70 +144 %

Adjusted Net Income Available to CommonShareholders-MM$ (4)
153.2 90.7 +69 %
Per Basic Share $1.29 $0.77 +68 %
Per Diluted Share $1.28 $0.77 +66 %
(1)   Production attributable to the Postle field, which was sold on July 15, 2013, was 113.1 MBOE for the three months ended September 30, 2013 (7.5 MBOE/d over 15 days) and 751.0 MBOE or 8.2 MBOE/d over 92 days for the three months ended September 30, 2012.
(2) A reconciliation of discretionary cash flow to net cash provided by operating activities is included later in this news release.
(3) For the three months ended September 30, 2013, net income available to common shareholders included $11.4 million of pre-tax, non-cash derivative losses or $0.06 per basic share and diluted share after tax. For the three months ended September 30, 2012, net income available to common shareholders included $1.6 million of pre-tax, non-cash hedging losses or $0.01 per basic and diluted share after tax.
(4) A reconciliation of adjusted net income available to common shareholders to net income available to common shareholders is included later in this news release.
 
 

Nine Months Ended September 30,
    2013     2012     Change
Production (MBOE/d) (1) 91.77 81.36 +13 %
Discretionary Cash Flow-MM$ (2) 1,292.5 1,005.8 +29 %
Realized Price ($/BOE) 77.34 69.41 +11 %
Total Revenues-MM$ 2,107.9 1,596.4 +32 %

Net Income Available to CommonShareholders-MM$ (3)
424.8 331.7 +28 %
Per Basic Share $3.60 $2.82 +28 %
Per Diluted Share $3.56 $2.79 +28 %

Adjusted Net Income Available to CommonShareholders-MM$ (4)
386.2 299.6 +29 %
Per Basic Share $3.27 $2.55 +28 %
Per Diluted Share $3.24 $2.53 +28 %
(1)   Production attributable to the Postle field, which was sold on July 15, 2013, was 1,492.3 MBOE for the nine months ended September 30, 2013 (7.6 MBOE/d over 196 days) and 2,248.6 MBOE or 8.2 MBOE/d over 274 days for the nine months ended September 30, 2012.
(2) A reconciliation of discretionary cash flow to net cash provided by operating activities is included later in this news release.
(3) For the nine months ended September 30, 2013, there was no significant impact to net income available to common shareholders related to non-cash derivative gains or losses. For the nine months ended September 30, 2012, net income available to common shareholders included $91.8 million of pre-tax, non-cash derivative gains or $0.49 per basic share and $0.48 per diluted share after tax.
(4) A reconciliation of adjusted net income available to common shareholders to net income available to common shareholders is included later in this news release.
 

Operations Update

Core Development Areas

Bakken and Three Forks Development

Western Williston Basin

The Western Williston Basin includes our Hidden Bench, Tarpon, Missouri Breaks and Cassandra prospects. During the third quarter, we acquired 39,310 gross (17,282 net) acres located in and around our acreage in the Missouri Breaks and Hidden Bench prospects. The properties include 13 operated 1,280-acre Bakken/Three Forks drilling spacing units with an average working interest of 58% and net revenue interest of 48%. 92% of the acreage is held by production. The acquisition brought our total acreage in the Western Williston Basin to 205,581 gross (120,309 net) acres. Production from the Western Williston Basin averaged 13,710 BOE/d in the third quarter of 2013, which represented a 46% increase over the 9,385 BOE/d average rate in the second quarter of 2013. The acquisition contributed approximately 25,000 BOE to our third quarter volumes after the September 20, 2013 closing date.

Missouri Breaks Prospect. We hold 99,584 gross (62,635 net) acres in the Missouri Breaks prospect, located in Richland County, Montana and McKenzie County, North Dakota. We have implemented a new completion design in our Missouri Breaks area that utilizes cemented liners and higher sand volumes. The new frac design appears to significantly improve production rates. On August 24, 2013, we completed the Sundheim 21-27-1H flowing at an initial rate of 1,136 BOE/d using a cemented liner and our first slick water frac. Cumulative production from this well during its first 30 days of production totaled 16.7 MBOE, which was approximately 75% better than the offset well that was completed by another operator using different technology.

The last eight wells at Missouri Breaks that were completed using cemented liners and plug and perf technology had average first 30-day cumulative production of 14.4 MBOE, approximately 60% better than the previous 31 area wells completed using uncemented liners and sliding sleeves.

Hidden Bench Prospect. We hold 66,805 gross (37,459 net) acres in the Hidden Bench prospect, located in McKenzie County, North Dakota. We have also implemented a new completion design in our Hidden Bench area that utilizes cemented liners and higher sand volumes that has generated positive results. We recently completed the Eide 41-13-2H flowing at an initial rate of 3,795 BOE/d using a cemented liner and a plug and perf completion. An offset well, the Eide 41-13HR, was completed flowing 2,715 BOE/d. This well was completed using an uncemented liner and sliding sleeve technology. Both wells were completed on October 1, 2013.

Southern Williston Basin

The Southern Williston Basin spans our Pronghorn and Lewis & Clark prospects, which encompass a total of 395,490 gross (263,784 net) acres. Production from the Southern Williston averaged 14,160 BOE/d, up 6% over the 13,325 BOE/d rate in the second quarter of 2013 and up 16% year-over-year. We completed our first two higher density wells at Pronghorn with favorable results. The Privratsky 24-22PH HD was completed in the Pronghorn Sand on September 21, 2013 flowing 1,482 BOE/d. The Privratsky 14-22PH HD was completed in the Pronghorn Sand on September 18, 2013 flowing 1,254 BOE/d. Both wells were completed using cemented liners and plug and perf technology. We are testing the potential to drill six or seven wells per drilling spacing unit versus our prior plan for three wells per spacing unit.

Also at Pronghorn, we recently completed a three-well pad to test our new completion technique. The Obrigewitch 21-29PH was completed on September 12, 2013 using a cemented liner and plug and perf technology flowing 2,432 BOE/d from the Pronghorn Sand, approximately a 50% increase over two offsetting wells completed on the same pad using older technology.

At Lewis & Clark, we completed the Kjelstrup Federal 11-19-1PH on August 27, 2013 using a cemented liner and plug and perf technology flowing 1,348 BOE/d from the Pronghorn Sand, approximately 50% better than the offset well completed using an uncemented liner and sliding sleeve method.

Sanish Field Area

Whiting’s net production from the Sanish field area averaged 36,840 BOE/d in the third quarter of 2013. In this area, Whiting is participating in downspacing wells with the Parshall field operator. We have initiated our own higher density pilot project in the Sanish field and expect results in the fourth quarter of 2013. If successful, this could add 191 gross well locations.

Denver Basin: Redtail Niobrara Area

During the third quarter, we acquired 48,131 gross (32,419 net) acres at our Redtail Niobrara prospect, located in the Denver Julesberg Basin in Weld County, Colorado. The acquisition brought our total acreage at Redtail to 168,644 gross (119,978 net) acres. Our Redtail acreage currently produces from the Niobrara “B” zone and is also prospective in the Niobrara “A” and “C” zones as well as the Codell formation.

During the quarter, we completed two wells that bracket our Phase 1 acreage, which has 899 potential gross drilling locations, on the eastern and western sides. The Horsetail 18-0713H averaged 452 BOE/d over the first 30 days of production and the Wildhorse 04-0424H averaged 492 BOE/d over the first 60 days of production.

We expect to add a third rig to our Redtail drilling program on November 4, 2013. We currently plan to add a fourth rig in January 2014 and a fifth rig in June 2014. Our drilling has shifted to pad drilling. As of October 15, 2013, we had three wells flowing back and 10 wells waiting on completion. Our development plan for the Redtail prospect is to drill eight wells per spacing unit to the Niobrara “B” zone and eight wells in each spacing unit to the Niobrara “A” zone. We estimate that we have more than 3,300 gross locations and 1,650 net locations at our Redtail prospect on this development pattern.

Enhanced Oil Recovery - North Ward Estes Field

Net production from our North Ward Estes field averaged 9,610 BOE/d in the third quarter of 2013, a 4% increase over the 9,275 BOE/d in the second quarter of 2013. Whiting is injecting approximately 365 MMcf of CO 2 per day into the field, of which about 67% is recycled gas.

Operated Drilling Rig Count

As of October 15, 2013, 23 operated drilling rigs were active on our properties. The breakdown of our operated rigs as of October 15, 2013 was as follows:
           

Region
     

Northern Rockies
18
Permian Basin 2
Central Rockies 2
Other 1
Total 23
 

Other Financial and Operating Results

The following table summarizes the Company’s net production and commodity price realizations for the quarters ended September 30, 2013 and 2012:
    Three Months Ended    
September 30,

Production
2013     2012   Change
Oil (MMBbl) 6.74 5.86 15 %
NGLs (MMBbl) 0.67 0.69 (3 %)
Natural gas (Bcf) 6.79 6.32 7 %
Total equivalent (MMBOE) 8.53 7.60 12 %
 

Average Sales Price
Oil (per Bbl):
Price received $ 97.69 $ 81.66 20 %
Effect of crude oil hedging   (2.01 )(1)   (0.80 )
Realized price $ 95.68   $ 80.86   18 %
NYMEX oil (per Bbl) $ 105.82   $ 92.19   15 %
 
NGLs (per Bbl):
Realized price $ 35.78   $ 30.77   16 %
 
Natural gas (per Mcf):
Price received $ 3.64 $ 3.39 7 %
Effect of natural gas hedging   -     0.05  
Realized price $ 3.64   $ 3.44   6 %
NYMEX natural gas (per Mcf) $ 3.58   $ 2.81   27 %
(1)   Whiting realized pre-tax cash settlement losses of $13.6 million on its crude oil hedges during the third quarter of 2013. A summary of Whiting’s outstanding hedges is included later in this news release.
 

Third Quarter and First Nine Months 2013 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 Ended     Nine Months Ended
September 30, September 30,
2013     2012   2013     2012
Production (MMBOE) 8.53 7.60 25.05 22.29
 
Sales price, net of hedging $ 81.21 $ 67.99 $ 77.34 $ 69.41
Lease operating expense 12.79 12.35 12.54 12.48
Production tax 7.17 5.73 6.64 5.78
General & administrative 5.90 3.29 4.33 3.80
Exploration 3.33 1.36 2.86 1.51
Cash interest expense 2.59 2.15 2.47 2.16
Cash income tax expense (benefit)   0.85   (0.24 )   0.20   0.03
$ 48.58 $ 43.35   $ 48.30 $ 43.65
 

Third Quarter and First Nine Months 2013 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, 2013:
    Gross/Net Wells Completed    
        Total New     % Success CAPEX
Producing Non-Producing Drilling Rate (in MM)
Q3 13 120 / 57.2 3 / 2.9 123 / 60.1 98% / 95%

$ 696.6

(1)
9M 13 314 / 157.9 6 / 5.8 320 / 163.7 98% / 96% $ 1,929.0

(1) Includes $68 million for land and $45 million for facilities.

Outlook for Fourth Quarter and Full-Year 2013

The following table provides guidance for the fourth quarter and full-year 2013 based on current forecasts, including Whiting’s full-year 2013 capital budget of $2,500.0 million.
   

Guidance
Fourth Quarter         Full-Year

2013

2013
Production (MMBOE) 8.80 - 9.20 33.90 - 34.30
Lease operating expense per BOE(1) $ 12.50 - $ 13.00 $ 12.40 - $ 12.80
General and admin. expense per BOE(2) $ 3.40 - $ 3.80 $ 4.00 - $ 4.20
Interest expense per BOE $ 4.70 - $ 4.90 $ 3.20 - $ 3.40
Depr., depletion and amort. per BOE $ 25.25 - $ 26.25 $ 25.50 - $ 26.00
Prod. taxes (% of production revenue) 8.6% - 8.8% 8.5% - 8.6%
Oil price differentials to NYMEX per Bbl(3) ($ 8.50) - ($ 9.50) ($ 6.80) - ($ 7.40)
Gas price premium to NYMEX per Mcf(4) $ 0.00 - $ 0.20 $ 0.15 - $ 0.35
(1)   The increase in LOE reflects the payout of our oil gathering system at Robinson Lake and should be offset by a commensurate increase in our realized oil price.
(2) Full-year guidance includes a $21.7 million charge under the Whiting Production Participation Plan related to the Postle sale.
(3) Does not include the effect of NGLs.
(4) Includes the effect of Whiting’s fixed-price gas contracts. Please refer to fixed-price gas contracts later in this news release.
 

Hedges and Fixed Price Natural Gas Contracts

The following summarizes Whiting’s crude oil hedges as of October 1, 2013:
                  Weighted Average       As a Percentage of
Derivative Hedge Contracted Volume NYMEX Price September 2013
Instrument Period (Bbls per Month) (per Bbl) Oil Production
 
Three-way Collars(1) 2013
Q4 1,040,000 $ 71.25 - $ 85.63 - $ 113.95 47.5%
 
2014
Q1 1,200,000 $ 71.00 - $ 85.00 - $ 103.56 54.9%
Q2 1,200,000 $ 71.00 - $ 85.00 - $ 103.56 54.9%
Q3 1,200,000 $ 71.00 - $ 85.00 - $ 103.56 54.9%
Q4 1,200,000 $ 71.00 - $ 85.00 - $ 103.56 54.9%
 
Collars 2013
Oct 294,340 $ 48.15 - $ 90.69 13.5%
Nov 194,340 $ 47.96 - $ 85.90 8.9%
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), unless the market price falls below the sold put (sub-floor), at which point the minimum price would be NYMEX plus the difference between the purchased put and the sold put strike price.
 

Whiting also has the following fixed-price natural gas contracts in place as of October 1, 2013:
        Weighted Average     As a Percentage of
Hedge Contracted Volume Contracted Price September 2013
Period (MMBtu per Month) (per MMBtu) Gas Production
 
2013
Q4 368,000 $5.47 16.3%
 
2014
Q1 330,000 $5.49 14.6%
Q2 333,667 $5.49 14.8%
Q3 337,333 $5.49 14.9%
Q4 337,333 $5.49 14.9%
 
       

Selected Operating and Financial Statistics
 
Three Months Ended

September 30,
Nine Months Ended

September 30,
  2013         2012     2013         2012  
Selected operating statistics
Production
Oil, MBbl 6,736 5,861 19,686 17,020
NGLs, MBbl 666 687 2,070 2,055
Natural gas, MMcf 6,789 6,318 19,777 19,305
Oil equivalents, MBOE 8,533 7,601 25,053 22,292
Average Prices
Oil per Bbl (excludes hedging) $ 97.69 $ 81.66 $ 91.74 $ 83.99
NGLs per Bbl $ 35.78 $ 30.77 $ 38.78 $ 38.06
Natural gas per Mcf (excludes hedging) $ 3.64 $ 3.39 $ 3.90 $ 3.36
Per BOE Data
Sales price (including hedging) $ 81.21 $ 67.99 $ 77.34 $ 69.41
Lease operating $ 12.79 $ 12.35 $ 12.54 $ 12.48
Production taxes $ 7.17 $ 5.73 $ 6.64 $ 5.78
Depreciation, depletion and amortization $ 25.73 $ 23.63 $ 25.71 $ 22.26
General and administrative

$

5.90

(1)
$ 3.29 $

4.33

(1)
$

3.80

(2)
Selected Financial Data
(In thousands, except per share data)
Total revenues and other income $ 830,985 $ 530,482 $ 2,107,925 $ 1,596,363
Total costs and expenses $ 525,698 $ 397,253 $ 1,456,903 $ 1,064,409
Net income available to common shareholders $ 204,101 $ 82,865 $ 424,782 $ 331,678
Earnings per common share, basic $ 1.72 $ 0.70 $ 3.60 $ 2.82
Earnings per common share, diluted $ 1.71 $ 0.70 $ 3.56 $ 2.79
 
Average shares outstanding, basic 118,654 117,631 118,127 117,590
Average shares outstanding, diluted 119,507 118,924 119,511 118,968
Net cash provided by operating activities $ 513,896 $ 382,760 $ 1,254,127 $ 1,017,945
Net cash used in investing activities $ (138,674 ) $ (543,223 ) $ (1,341,755 ) $ (1,221,158 )
Net cash provided by financing activities $ 627,045 $ 179,731 $ 1,068,407 $ 213,477
(1)   For the three and nine months ended September 30, 2013, the cost includes the effect of a charge under our Production Participation Plan related to the sale of the Postle Properties of $2.54 per BOE and $0.87 per BOE, respectively.
(2) For the nine months ended September 30, 2012, the cost includes the effect of a charge under our Production Participation Plan related to the Whiting USA Trust II divestiture of $0.39 per BOE.
 

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, 2013, to be filed with the Securities and Exchange Commission.
       

WHITING PETROLEUM CORPORATION

CONSOLIDATED BALANCE SHEETS (Unaudited)

(In thousands)
 

September 30,2013

December 31,2012
ASSETS
 
Current assets:
Cash and cash equivalents $ 1,025,579 $ 44,800
Accounts receivable trade, net 361,512 318,265
Prepaid expenses and other   13,723     21,347  
Total current assets   1,400,814     384,412  

Property and equipment:
Oil and gas properties, successful efforts method:
Proved properties 9,880,963 8,849,515
Unproved properties 415,748 362,483
Other property and equipment   176,516     141,738  
Total property and equipment 10,473,227 9,353,736
Less accumulated depreciation, depletion and amortization   (2,907,055 )   (2,590,203 )
Total property and equipment, net 7,566,172 6,763,533

Debt issuance costs
51,830 28,748

Other long-term assets
  108,157     95,726  

TOTAL ASSETS
$ 9,126,973   $ 7,272,419  
 
       

WHITING PETROLEUM CORPORATION

CONSOLIDATED BALANCE SHEETS (Unaudited)

(In thousands, except share and per share data)
 

September 30,2013

December 31,2012
LIABILITIES AND EQUITY
 
Current liabilities:
Current portion of long-term debt $ 250,000 $ -
Accounts payable trade 92,092 131,370
Accrued capital expenditures 158,813 110,663
Accrued liabilities and other 200,262 180,622
Revenues and royalties payable 195,377 149,692
Taxes payable 61,735 33,283
Derivative liabilities 20,164 21,955
Deferred income taxes   9,993     9,394  
Total current liabilities 988,436 636,979
Long-term debt 2,653,991 1,800,000
Deferred income taxes 1,284,178 1,063,681
Derivative liabilities 499 1,678
Production Participation Plan liability 95,815 94,483
Asset retirement obligations 99,059 86,179
Deferred gain on sale 88,238 110,395
Other long-term liabilities   26,697     25,852  
Total liabilities   5,236,913     3,819,247  
Commitments and contingencies
Equity:

Preferred stock, $0.001 par value, 5,000,000 authorized,  6.25% convertible perpetual preferred stock, no shares  authorized, issued or outstanding as of September 30,  2013 and 172,391 shares issued and outstanding as of  December 31, 2012
- -

Common stock, $0.001 par value, 300,000,000 shares  authorized; 120,106,602 issued and 118,654,184  outstanding as of September 30, 2013, 118,582,477  issued and 117,631,451 outstanding as of December 31, 2012
120 119
Additional paid-in capital 1,578,033 1,566,717
Accumulated other comprehensive loss (406 ) (1,236 )
Retained earnings   2,304,170     1,879,388  
Total Whiting shareholders’ equity 3,881,917 3,444,988
Noncontrolling interest   8,143     8,184  
Total equity   3,890,060     3,453,172  

TOTAL LIABILITIES AND EQUITY
$ 9,126,973   $ 7,272,419  
 
       

WHITING PETROLEUM CORPORATION

CONSOLIDATED STATEMENTS OF INCOME (Unaudited)

(In thousands, except per share data)
 
Three Months Ended

September 30,
Nine Months Ended

September 30,
2013     2012 2013     2012
REVENUES AND OTHER INCOME:
Oil, NGL and natural gas sales $ 706,543 $ 521,195 $ 1,963,525 $ 1,572,648
Gain (loss) on hedging activities (665 ) 398 (1,313 ) 2,285
Amortization of deferred gain on sale 7,750 8,636 23,680 21,281
Gain (loss) on sale of properties 116,274 99 119,706 (263 )
Interest income and other   1,083     154     2,327     412  
Total revenues and other income   830,985     530,482     2,107,925     1,596,363  
COSTS AND EXPENSES:
Lease operating 109,106 93,859 314,064 278,153
Production taxes 61,143 43,519 166,228 128,893
Depreciation, depletion and amortization 219,530 179,587 644,135 496,296
Exploration and impairment 47,092 23,882 127,765 79,362
General and administrative 50,368 25,034 108,466 84,611
Interest expense 24,988 18,734 69,579 55,095
Change in Production Participation Plan liability (10,798 ) 6,217 1,332 6,199
Commodity derivative (gain) loss, net   24,269     6,421     25,334     (64,200 )
Total costs and expenses   525,698     397,253     1,456,903     1,064,409  
INCOME BEFORE INCOME TAXES 305,287 133,229 651,022 531,954
INCOME TAX EXPENSE (BENEFIT):
Current 7,220 (1,859 ) 5,131 676
Deferred   93,976     51,975     220,612     198,868  
Total income tax expense   101,196     50,116     225,743     199,544  
NET INCOME 204,091 83,113 425,279 332,410
Net loss attributable to noncontrolling interest   10     21     41     76  
NET INCOME AVAILABLE TO SHAREHOLDERS 204,101 83,134 425,320 332,486
Preferred stock dividends   -     (269 )   (538 )   (808 )
NET INCOME AVAILABLE TO COMMON SHAREHOLDERS $ 204,101   $ 82,865   $ 424,782   $ 331,678  
EARNINGS PER COMMON SHARE:
Basic $ 1.72   $ 0.70   $ 3.60   $ 2.82  
Diluted $ 1.71   $ 0.70   $ 3.56   $ 2.79  
WEIGHTED AVERAGE SHARES OUTSTANDING:
Basic   118,654     117,631     118,127     117,590  
Diluted   119,507     118,924     119,511     118,968  
 
       

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,
2013     2012 2013     2012

Net Income Available to Common  Shareholders
$ 204,101 $ 82,865 $ 424,782 $ 331,678
 
Adjustments Net of Tax:
Amortization of Deferred Gain on Sale (4,882 ) (5,387 ) (14,918 ) (13,298 )
(Gain) Loss on Sale of Properties (73,252 ) (62 ) (75,415 ) 164
Impairment Expense 11,760 8,449 35,362 28,601

Charge Under Production Participation PlanRelated to Sale of Postle Properties
15,078 - 15,078 -

Charge Under Production Participation PlanRelated to Trust II Offering
- - - 5,924

Change in Production Participation PlanLiability
(6,803 ) 3,878 839 3,873

Total measure of derivative (gain) lossreported under U.S. GAAP
15,709 3,944 16,788 (40,866 )

Total net cash settlements paid oncommodity derivatives during the period
  (8,556 )   (2,942 )   (16,321 )   (16,475 )
Adjusted Net Income (1) $ 153,155   $ 90,745   $ 386,195   $ 299,601  
 

Adjusted Net Income Available to Common  Shareholders per Share, Basic
$ 1.29   $ 0.77   $ 3.27   $ 2.55  

Adjusted Net Income Available to Common  Shareholders per Share, Diluted
$ 1.28   $ 0.77   $ 3.24   $ 2.53  
(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 U.S. 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,
2013     2012 2013     2012
Net cash provided by operating activities $ 513,896 $ 382,760 $ 1,254,127 $ 1,017,945
Exploration 28,426 10,338 71,635 33,592
Exploratory dry hole costs (9,522 ) (1,885 ) (21,150 ) (2,140 )
Changes in working capital (82,282 ) (47,590 ) (11,614 ) (42,805 )
Preferred stock dividends paid   -     (269 )   (538 )   (808 )
Discretionary cash flow (1) $ 450,518   $ 343,354   $ 1,292,460   $ 1,005,784  
(1)   Discretionary cash flow is a non-GAAP measure. 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 U.S. GAAP and may not be comparable to other similarly titled measures of other companies.
 

Conference Call

The Company’s management will host a conference call with investors, analysts and other interested parties on Thursday, October 24, 2013 at 11:00 a.m. EDT (10:00 a.m. CDT, 9:00 a.m. MDT) to discuss Whiting’s third quarter 2013 financial and operating results. Please call (866) 515-2914 (U.S./Canada) or (617) 399-5128 (International) to be connected to the call and enter the pass code 55172667. 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. (EDT) on October 24, 2013.

A telephonic replay will be available beginning approximately two hours after the call on Thursday, October 24, 2013 and continuing through Thursday, October 31, 2013. You may access this replay at (888) 286-8010 (U.S./Canada) or (617) 801-6888 (International) and entering the pass code 90153869. 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, Michigan, Gulf Coast and Mid-Continent 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 field in 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 section 21E of the Securities Exchange Act of 1934. 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.

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 out 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; 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 and the risks related thereto; 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 final prospectus supplement dated September 9, 2013. We assume no obligation, and disclaim any duty, to update the forward-looking statements in this news release.

Copyright Business Wire 2010

More from Press Releases

NFL Pushes for Regulation Following Supreme Court's Sports Gambling Ruling

NFL Pushes for Regulation Following Supreme Court's Sports Gambling Ruling

21st Century Fox Scoops Up Local News Stations

21st Century Fox Scoops Up Local News Stations

Walmart CEO: 'We Are Transforming Globally' With Flipkart

Walmart CEO: 'We Are Transforming Globally' With Flipkart

Three-Part FREE Webinar Series

Three-Part FREE Webinar Series

March 24 Full-Day Course Offering: Professional Approach to Trading SPX

March 24 Full-Day Course Offering: Professional Approach to Trading SPX