New wells on pace to exceed 1 MMBOE
Whiting Petroleum (ticker: WLL) announced second quarter earnings today, showing a net loss of $66 million, or $(0.18) per share. Whiting produced 112.7 MBOEPD in Q2, 83% of which was liquids.
Whiting reports that it completed 22 wells during the quarter, but 10 of these wells began production in June. This means the production benefit of these wells will primarily be seen in Q3 and Q4 2017, and they have only partially impacted Q2 results.
New wells using 7+ million pounds sand are exceeding WLL’s 1 MMBOE type curve
Enhanced completion processes have paid off for Whiting. The company reports that it has drilled a total of 69 enhanced completion wells since the beginning of 2016. Each well uses at least seven million pounds of sand per well, with higher numbers of stages and new diverter techniques. On average, these wells are exceeding the company’s 1 MMBOE type curve.
Source: WLL Investor Presentation
Williston
Based on planned capital expenditures, Whiting production should grow by 14% from Q1 2017 to Q4 2017. This will be accomplished using a four-rig program, all in the Williston Basin. Whiting looks to put 54 Bakken wells on production in the second half of Q2, with a further 55 wells awaiting completion at the end of the year.
Niobrara DUCs
In the company’s Niobrara acreage, Whiting is completing its DUC inventory. A total of 82 Niobrara wells will begin production in Q3 and Q4, with 38 DUCs remaining at year-end, the company said.
Whiting Chairman, President and CEO James Volker commented on this quarter’s results, saying, “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. 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.”
Q&A from WLL Q2 conference call
There will be more A than M, thanks to availability of pools of new capital: Volker
Q: You had some nice reserve growth. Can you say what kind of EURs your reserve auditor has given you for the 2017 Bakken wells?
James J. Volker: Yeah. They’re the same 1 million to 1.5 million BOEs per well. And really, they were largely responsible for that 60-million barrel increase.
Q: I know you’ve mentioned that it was too early to talk production numbers on the new pads on the Niobrara wells. I guess we’ve seen some of your competitors do some larger fracs there and with mid and long laterals in the DJ, it looks like their wells are taking a long time to reach production or peak production. Can you say what kind of timeframe you’re expecting to see peak production of those wells?
Rick A. Ross: I think we would be similar in Redtail. Generally, it’s 60 to 90 days to reach peak production. But again, I think as we watch performance, we may be able to make a call earlier than that if performance holds up.
Q: Jim, you’ve been in this business kind of a long time, can you maybe take step back and speak for the broader industry, do you see the potential from any greater consolidation over the next 12 to 18 months. Kind of leave it open ended that like that.
James J. Volker: Well, I certainly can’t speak for anybody else. I don’t know their plans and all I can say is that, there has been a positive influence out there, and it’s been the arrival of capital from the nontraditional sources. I’m talking about people who essentially put together large pools of capital to buy operated and non-operated properties and spawn new companies.
I think that is essentially filling in for some of the M&A activity – the traditional M&A activity that we’ve seen in the past in that companies – operators do have the ability to sell assets or – rather than being acquired, I guess, in whole.
So I look at it as a very healthy situation right now in that there’s all sorts of solutions to the questions that you are poking at there which is how to maintain a good strong balance sheet and how to have good growth and does that mean that there’s going to be, by necessity, some M&A activity? I’m going to say ‘yes’. There’s going to be some more M&A activity, but I think a part of it will be more A than M because of this availability in new capital. I hope that’s clear.
