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Whiting Petroleum Corporation Announces Second Quarter 2017 Financial and Operating Results

DENVER--(BUSINESS WIRE)--Whiting’s (NYSE: WLL) production in the second quarter 2017 totaled 10.3 million barrels of oil equivalent (MMBOE), comprised of 83% crude oil/natural gas liquids (NGLs). Second quarter 2017 production averaged 112,660 barrels of oil equivalent per day (BOE/d). 10 out of 22 wells completed during the quarter commenced production in June. The production benefit of these wells is expected to be experienced mainly during the second half of 2017. Whiting’s depreciation, depletion and amortization (DD&A) rate of $21.46 per BOE came in below the low end of guidance for $22.25 – $23.25 per BOE. This reflects the impact of strong reserve bookings in the Williston Basin area where the Company recorded a 59 MMBOE increase in proved reserves from upward performance revisions, extensions and discoveries. All other metrics were within guidance.

James J. Volker, Whiting’s Chairman, President and CEO, commented, “One of our priorities is to maintain a strong balance sheet while delivering high returns and sustainable growth to investors. We plan to reduce capital spending to $950 million while achieving 14% production growth from first quarter to fourth quarter 2017. This is a testament to the high quality of our asset base, which is also evident in the strong 23% growth in proved reserves from year-end 2016 levels. A large component of this growth was driven by the effect of enhanced completions in the Williston Basin.”

Mr. Volker continued, “We continue to bring on enhanced completion wells in the Williston Basin with production profiles in the 1-1.5 MMBOE type curve range. These wells deliver strong rates of return, even at a $40 NYMEX oil price. In summary, the steps we took to strengthen our balance sheet and improve well productivity through enhanced completions empowers us to deliver strong growth at current commodity prices.”

Operating and Financial Results

The following table summarizes the operating and financial results for the second quarter of 2017 and 2016, including non-cash charges recorded during those periods:

Three Months Ended
June 30,
2017 2016
Production (MBOE/d) (1) 112.66 134.24
Net cash provided by operating activities-MM $ 111.0 $ 161.0
Discretionary cash flow-MM (2) $ 139.3 $ 151.6
Realized price ($/BOE) $ 30.83 $ 30.39
Total operating revenues-MM $ 311.5 $ 337.0
Net loss attributable to common shareholders-MM (3) $ (66.0 ) $ (301.0 )
Per basic share $ (0.18 ) $ (1.33 )
Per diluted share $ (0.18 ) $ (1.33 )
Adjusted net loss attributable to common shareholders-MM (4) $ (65.3 ) $ (158.7 )
Per basic share $ (0.18 ) $ (0.70 )
Per diluted share $ (0.18 ) $ (0.70 )
(1) Second quarter 2016 includes 8,920 BOE/d from properties that have since been divested.
(2) A reconciliation of net cash provided by operating activities to discretionary cash flow is included later in this news release.
(3) Net loss attributable to common shareholders includes $16 million of pre-tax, non-cash derivative gains and $31 million of pre-tax, non-cash derivative losses for the three months ended June 30, 2017 and 2016, respectively.
(4) A reconciliation of net loss attributable to common shareholders to adjusted net loss attributable to common shareholders is included later in this news release.

The following table summarizes the first six months operating and financial results for 2017 and 2016, including non-cash charges recorded during those periods:

Six Months Ended
June 30,
2017 2016
Production (MBOE/d) (1) 115.00 140.51
Net cash provided by operating activities-MM $ 191.1 $ 206.9
Discretionary cash flow-MM (2) $ 321.9 $ 253.9
Realized price ($/BOE) $ 33.10 $ 28.00
Total operating revenues-MM $ 682.8 $ 626.7
Net loss attributable to common shareholders-MM (3) $ (152.9 ) $ (472.8 )
Per basic share $ (0.42 ) $ (2.20 )
Per diluted share $ (0.42 ) $ (2.20 )
Adjusted net loss attributable to common shareholders-MM (4) $ (119.5 ) $ (333.0 )
Per basic share $ (0.33 ) $ (1.55 )
Per diluted share $ (0.33 ) $ (1.55 )
(1) The six months ended June 30, 2016 includes 9,070 BOE/d from properties that have since been divested.
(2) A reconciliation of net cash provided by operating activities to discretionary cash flow is included later in this news release.
(3) Net loss attributable to common shareholders includes $22 million and $91 million of pre-tax, non-cash derivative losses for the six months ended June 30, 2017 and 2016, respectively.
(4) A reconciliation of net loss attributable to common shareholders to adjusted net loss attributable to common shareholders is included later in this news release.

Adjusting Capital Budget to $950 Million; Project 14% Production Growth Q1 to Q4 2017

Whiting is revising its capital budget and production guidance. The Company’s new capital budget of $950 million allocates $518 million to the Williston Basin area, $332 million to the DJ Basin area, $62 million to non-operated activity and $38 million to exploration, facilities and land. Whiting plans to drop two rigs, one in the Williston Basin and one in the DJ Basin, and run a four-rig program (all Williston Basin) through year-end.

The Company plans to put 82 wells on production in the Redtail area in the third and fourth quarters and anticipates an inventory of 38 DUC (drilled uncompleted) wells at year-end. In the Williston Basin, Whiting plans to put 54 wells on production in the third and fourth quarters and anticipates an inventory of 55 DUC wells at year-end. The Company’s new production guidance forecasts full-year average production of 43.6 - 44.3 MMBOE (119,450 - 121,370 BOE/d). At the midpoint of guidance, Whiting projects third quarter average volumes of approximately 118.0 MBOE/d and fourth quarter volumes of approximately 133.5 MBOE/d. The fourth quarter rate represents a 14% production increase relative to first quarter levels.

Proved Reserves Grew 23% to 755 MMBOE from Year-End Levels

As of June 30, 2017, Whiting’s proved reserves are estimated at 755 MMBOE, a 23% increase from year-end 2016 levels of 616 MMBOE. The mid-year reserve estimate was audited by the Company’s third-party reservoir engineering firm Cawley, Gillespie & Associates.

Whiting Receives $35 Million for North Ward Estes Oil Price Contingent Payment Agreement

In July 2016, Whiting completed the sale of its interest in the North Ward Estes field and associated assets located in Ward and Winkler Counties, Texas. In addition to the $300 million cash purchase price, the buyer agreed to pay Whiting $100,000 for every one cent ($0.01) that the average of the NYMEX WTI crude oil futures contract price for the period of August 2018 through July 2021 is above $50.00/Bbl on June 28, 2018. On July 19, 2017, the buyer made a $35 million cash payment to Whiting to settle this contingent feature. The contract settlement amount would have been $4.2 million based on the NYMEX forward strip pricing for crude oil as of July 19, 2017.

Operations Update

Whiting controls 743,667 gross (449,857 net) acres in the Williston Basin and 159,994 gross (134,771 net) acres at its Redtail Niobrara/Codell play in the DJ Basin. In the second quarter 2017, total net production for the Company averaged 112,660 BOE/d. The Bakken/Three Forks play in the Williston Basin averaged 105,475 BOE/d. The Redtail Niobrara/Codell play in the DJ Basin averaged 6,610 BOE/d.

New Williston Basin Enhanced Completions in Williams County Tracking above 1.0 MMBOE Type Curve. In June 2017, Whiting completed its three-well Evitt 14-12 pad and its three-well Evitt 34-12 pad in Williams County, North Dakota. The wells are located in the southeastern portion of Whiting’s Williams County acreage. The Evitt 14-12 pad was completed with an average of 9.3 million pounds of sand per well and averaged 37 stages. The Evitt 34-12 pad was completed with an average of 10.1 million pounds of sand per well and averaged 42 stages. On average, the two pads are tracking above a 1.0 MMBOE type curve. In April, Whiting completed two enhanced completion wells on its Northern 31-30 pad, which is located approximately 15 miles northwest of the Evitt pads. The two wells were completed with an average of 11.6 million pounds of sand per well and 43 stages and are tracking above a 1.0 MMBOE type curve. Whiting estimates it has approximately 1,650 gross future drilling locations in Williams County.

69 Enhanced Completion Wells Drilled Across Williston Basin Since January 2016 Exceeding 1.0 MMBOE Type Curve. Since January...


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