Current WLL Stock Info

Whiting expects its production to flatten out over Q3 and Q4

Whiting Petroleum (ticker: WLL) reported its second quarter results today, with production averaging 134.2 MBOEPD for the quarter, down 21% from the same quarter last year. During the company’s conference call, management said it expects production to even out through the end of the year, and plans to wait for stable $50 oil prices before it begins ramping up its drilling.

“As we begin to see the benefit of these new completions,” Whiting CEO Jim Volker said, referring the company’s participation agreement well completions, “we expect to see Q3 and Q4 production flatten to approximately 115,000 BOEs a day after adjustment, meaning reduction, for the North Ward Estes sale, while spending only about $100 million per quarter in the third and fourth quarter of 2016.

The company continues to focus on capital efficiencies as production flattens. Q2 capex reached $79.4 million, 70% less than the first quarter, while discretionary cash flow exceeded capex by $72.2 million.

The company also continues to strengthen its balance sheet as well. Whiting exchanged $1.6 billion of notes for new convertible notes, effectively decreasing debt by $810 million, according to the company’s presentation. Including the $300 million sale of the company’s North Ward Estes properties, Whiting reported $1.8 billion of liquidity as of its Q2 report.

Whiting hopes to position itself for a recovery in oil prices by selling its higher LOE per BOE—more expensive—operations, and focusing on the Niobrara and Williston Basins. The company’s Williston Basin assets in particular continue to perform well, with Whiting reporting wells tracking at 900 MBOE EURs after 200 days. The company plans on completing 16 more wells in the Williston in the second half of the year.

 Whiting Petroleum Williston Well performance

“As we begin to see the benefit of new completions, as we’ve said, we expect to see Q3 and Q4 production flatten. And after you adjust for the North Ward Estes sale and then begin to rise, assuming our production projections are accurate as we complete those wells and bring them on in the first half and basically see the best of those results in the second half of 2017,” said Volker.

“So, all we really want to do is watch that oil price. If it stays up there, let’s say, for a quarter or two with $50 or better, well, yes, we’ll be back at it. And in my opinion, by the time we get to the end of 2017, again, kind of growing at our historic double-digit rates.

“I would say that we, for our capital, tend to think pretty much that you want to be doing 3:1 or better on your money, and in my opinion, once we get a little bit above $50 a barrel [with] our new reduced drilling and completion costs both in the Bakken and in the Niobrara, we’re doing that 3:1 with our own capital,” Volker added. “I would say below $60, you’ll probably see us trying to do some of these JVs because we have such a large acreage position. Above that, maybe not so much.”

WLL Acreage

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