Market Overview

Whiting Petroleum Corporation Announces First Quarter 2018 Financial and Operating Results

Share:
  • Q1 2018 Average Production of 127,050 BOE/d above Midpoint of
    Guidance
  • Q1 2018 Diluted Earnings per Share of $0.16 and Adjusted Earnings
    per Share of $0.92
  • Q1 2018 Net Cash Provided by Operating Activities Exceeded Capital
    Expenditures by $46 Million and Discretionary Cash Flow Exceeded
    Capital Expenditures by $103 Million
  • Q1 2018 DD&A per BOE Significantly below Low End of Guidance
  • Oil Differentials per Bbl and Natural Gas Differentials per Mcf
    below Low End of Guidance

Whiting's (NYSE:WLL) production in the first quarter 2018
totaled 11.4 million barrels of oil equivalent (MMBOE), comprised of 84%
crude oil/natural gas liquids (NGLs). First quarter 2018 production
averaged 127,050 barrels of oil equivalent per day (BOE/d) and came in
above the midpoint of guidance. Capex for the first quarter 2018 was
$187 million. First quarter 2018 net cash provided by operating
activities of $233 million exceeded capital expenditures by $46 million
and first quarter 2018 discretionary cash flow of $290 million exceeded
capital expenditures by $103 million. Whiting's depreciation, depletion
and amortization (DD&A) of $16.43 per BOE, oil differentials of $4.31
per barrel (Bbl) and natural gas differentials of $1.48 per thousand
cubic feet (Mcf) all came in below the low end of guidance. Guidance at
the midpoint for such metrics called for $17.50 per BOE, $4.50 per Bbl
and $1.50 per Mcf, respectively.

During the first quarter 2018 and subsequent to the quarter, the Company
added to its hedges and is now 71% hedged for 2018 and 15% hedged for
2019 as a percentage of March 2018 production with a mix of swaps and
collars as detailed later in the press release.

Operating and Financial Results

The following table summarizes the operating and financial results for
the first quarter of 2018 and 2017, including non-cash charges recorded
during those periods:

        Three Months Ended
March 31,
2018     2017
Production (MBOE/d) (1) 127.05 117.36
Net cash provided by operating activities-MM $ 232.9 $ 80.1
Discretionary cash flow-MM (2) $ 290.5 $ 182.6
Realized price ($/BOE) $ 42.87 $ 35.29
Total operating revenues-MM $ 515.1 $ 371.3
Net income (loss) attributable to common shareholders-MM (3) $ 15.0 $ (87.0 )
Per basic share (4) $ 0.17 $ (0.96 )
Per diluted share (4) $ 0.16 $ (0.96 )
 
Adjusted net income (loss) attributable to common shareholders-MM (5) $ 83.7 $ (54.2 )
Per basic share (4) $ 0.92 $ (0.60 )
Per diluted share (4) $ 0.92 $ (0.60 )

(1)

  First quarter 2017 includes 8,220 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 income (loss) attributable to common shareholders includes $28
million and $38 million of pre-tax, non-cash derivative losses for
the three months ended March 31, 2018 and 2017, respectively.

(4)

All per share amounts have been retroactively adjusted for the 2017
period to reflect the Company's one-for-four reverse stock split in
November 2017.

(5)

A reconciliation of net income (loss) attributable to common
shareholders to adjusted net income (loss) attributable to common
shareholders is included later in this news release.
 

Bradley J. Holly, Whiting's President and CEO, commented, "I am pleased
we delivered another solid quarter here at Whiting. The team did a great
job managing through a heavy winter, allowing us to meet our first
quarter goals. For the second quarter in a row, Whiting generated
discretionary cash flow that significantly exceeded its capital
expenditures. As we move through the second quarter into the summer
months, we plan to increase our pace of operations in the Bakken in
order to accelerate our growth profile. We remain on target with our
$750 million capex budget as the focus shifts from Redtail drilled
uncompleted wells to Bakken development in the second half of the year.
As you can see in our operational results, our Company remains a leader
in implementing optimized completions to unlock the full value of its
Bakken assets."

Operations Update

In the first quarter 2018, total net production for the Company averaged
127,050 BOE/d. The Bakken/Three Forks play in the Williston Basin
averaged 103,115 BOE/d. The Redtail Niobrara/Codell play in the DJ Basin
averaged 23,300 BOE/d.

Whiting Successfully Tests Optimized Completion in Southern Hidden
Bench Area
. Subsequent to the quarter, the Company completed a
noteworthy single-well pad in its southern Hidden Bench area of McKenzie
County, North Dakota. The Mallow 34-8H targeted the Bakken formation and
tested at a 24-hour IP rate of 4,837 BOE/d. The well used Whiting's new
optimized completion philosophy and was fracture-stimulated in 40 stages
with 8.7 million pounds of proppant. This well significantly
outperformed the test rates on an offsetting three-well pad that was
completed in 2013. The offsetting Smokey 2-17-5 pad had an average
24-hour IP rate of 2,647 BOE/d. These wells were completed in the Middle
Bakken and Three Forks formations with an average of 30 stages and
3.8 million pounds of proppant.

Third-Party Gas Processing Outage Impacts Outlook. On
April 19, 2018, a third-party gas plant operator informed Whiting it
plans to conduct unscheduled gas plant maintenance for the majority of
the month of May. The plant processes nearly all of the natural gas
produced at Whiting's Sanish field. The Company does not anticipate the
plant outage will have an impact on oil sales. The impact on production
is a reduction of 150,000 BOE of gas and NGL sales. The impact on
discretionary cash flow is a reduction of approximately $2 million.
Whiting has reduced its second quarter 2018 outlook to reflect the
impact of this unscheduled maintenance. The Company's full-year
production guidance remains unchanged.

First Quarter 2018 Capital Expenditures and
Activity Summary

During the first quarter 2018, Whiting's capital expenditures totaled
$187 million. This includes $6 million for non-operated drilling and
completion, $3 million for land and $1 million for facilities. Whiting
drilled 24 wells in its Williston Basin area and no wells in its Redtail
area during the quarter. The Company put 19 wells on production in the
Williston Basin and 6 wells on production at Redtail during the quarter.

Other Financial and Operating Results

The following table summarizes the Company's net production and
commodity price realizations for the quarters ended March 31, 2018 and
2017:

    Three Months Ended    
March 31,
2018     2017 Change

Production

Oil (MMBbl) 7.74 7.30 6 %
NGLs (MMBbl) 1.82 1.62 12 %
Natural gas (Bcf) 11.27 9.87 14 %
Total equivalent (MMBOE) (1) 11.43 10.56 8 %
 

Average sales price

Oil (per Bbl):
Price received $ 58.61 $ 43.92 33 %
Effect of crude oil hedging (2)   (3.21 )   0.20
Realized price (3) $ 55.40   $ 44.12 26 %
Weighted average NYMEX price (per Bbl) (4) $ 62.92   $ 51.87 21 %
 
NGLs (per Bbl):
Realized price $ 23.57   $ 17.69 33 %
 
Natural gas (per Mcf):
Realized price $ 1.65   $ 2.25 (27 %)
Weighted average NYMEX price (per MMBtu) (4) $ 3.13   $ 3.06 2 %

(1)

  First quarter 2017 includes 8,220 BOE/d from properties that have
since been divested.

(2)

Whiting paid $25 million and received $1 million in pre-tax cash
settlements on its crude oil hedges during the first quarter of 2018
and 2017, respectively. A summary of Whiting's outstanding hedges is
included later in this news release.

(3)

Whiting's realized price was reduced by $1.09 per Bbl and $2.21 per
Bbl in the first quarter of 2018 and 2017, respectively, due to the
Redtail fixed fee differential deficiency payment. The remaining
contract ends in April 2020.

(4)

Average NYMEX prices weighted for monthly production volumes.
 

First Quarter 2018 and 2017 Costs and Margins

A summary of production and cash revenues and cash costs on a per BOE
basis is as follows:

        Three Months Ended
March 31,
2018     2017
(per BOE, except production)
Production (MMBOE) 11.43 10.56
 
Sales price, net of hedging $ 42.87 $ 35.29
Lease operating expense 8.10 8.56
Production tax 3.31 3.03
Cash general & administrative 2.35 2.34
Exploration 0.41 0.58
Cash interest expense 3.94 3.83
Cash income tax benefit   -   (0.18 )
$ 24.76 $ 17.13  
 

Outlook for Second Quarter and Full-Year 2018

The following table provides guidance for the second quarter and
full-year 2018 based on current forecasts, including Whiting's full-year
2018 capital budget of $750 million:

    Guidance
Second Quarter     Full Year
2018 2018
Production (MMBOE) 11.0 - 11.5 46.5 - 47.2
Lease operating expense per BOE $ 7.90 - $ 8.50 $ 7.90 - $ 8.30
General and administrative expense per BOE $ 2.70 - $ 3.00 $ 2.60 - $ 2.90
Interest expense per BOE $ 4.00 - $ 4.40 $ 4.00 - $ 4.40
Depreciation, depletion and amortization per BOE $16.00 - $17.00 $16.00 - $17.00
Production taxes (% of sales revenue) 7.7% - 8.3% 7.8% - 8.2%
Oil price differentials to NYMEX per Bbl (1) ($4.50) - ($5.50) ($4.50) - ($5.50)
Gas price differential to NYMEX per Mcf ($1.50) - ($2.00) ($1.50) - ($2.00)
 

(1) Does not include the effects of NGLs.

 

Commodity Derivative Contracts

Whiting is 71% hedged for 2018 as a percentage of March 2018 production.

The following summarizes Whiting's crude oil hedges as of April 24, 2018:

            Weighted Average     As a Percentage of
Derivative Hedge Contracted Crude NYMEX Price March 2018
Instrument Period (Bbls per Month) (per Bbl) Oil Production
 
Three-way collars (1) 2018 Sub-Floor/Floor/Ceiling
Q2 1,450,000 $37.07 - $47.07 - $57.30 55.8%
Q3 1,450,000 $37.07 - $47.07 - $57.30 55.8%
Q4 1,450,000 $37.07 - $47.07 - $57.30 55.8%
 
Swaps 2018 Fixed Price
Q2 400,000 $61.74 15.4%
Q3 400,000 $61.74 15.4%
Q4 400,000 $61.74 15.4%
 
Collars 2019 Floor/Ceiling
Q1 400,000 $50.00 - $68.44 15.4%
Q2 400,000 $50.00 - $68.44 15.4%

(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.
 

Selected Operating and Financial Statistics

    Three Months Ended
March 31,
2018     2017
Selected operating statistics:
Production
Oil, MBbl 7,740 7,297
NGLs, MBbl 1,816 1,619
Natural gas, MMcf 11,273 9,872
Oil equivalents, MBOE (1) 11,435 10,562
Average prices
Oil per Bbl (excludes hedging) $ 58.61 $ 43.92
NGLs per Bbl $ 23.57 $ 17.69
Natural gas per Mcf $ 1.65 $ 2.25
Per BOE data
Sales price (including hedging) $ 42.87 $ 35.29
Lease operating $ 8.10 $ 8.56
Production taxes $ 3.31 $ 3.03
Depreciation, depletion and amortization $ 16.43 $ 22.76
General and administrative $ 2.75 $ 2.90
Selected financial data:

(In thousands, except per share data)

Total operating revenues $ 515,083 $ 371,317
Total operating expenses $ 416,892 $ 448,823
Total other expense, net $ (83,179 ) $ (48,941 )
Net income (loss) attributable to common shareholders $ 15,012 $ (86,957 )
 
Income (loss) per common share, basic (2) $ 0.17 $ (0.96 )
Income (loss) per common share, diluted (2) $

0.16

$ (0.96 )
Weighted average shares outstanding, basic (2)

90,892

90,652
Weighted average shares outstanding, diluted (2)

91,310

90,652
 
Net cash provided by operating activities $ 232,867 $ 80,070
Net cash provided by (used in) investing activities $ (177,447 ) $ 243,140
Net cash used in financing activities $ (904,284 ) $ (380,006 )

(1)

  First quarter 2017 includes 8,220 BOE/d from properties that have
since been divested.

(2)

All share and per share amounts have been retroactively adjusted for
the 2017 period to reflect the Company's one-for-four reverse stock
split in November 2017.
 

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 March 31, 2018 to be filed with the
Securities and Exchange Commission.

WHITING PETROLEUM CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited)
(in thousands)
 
        March 31,     December 31,
2018 2017
ASSETS
Current assets:
Cash and cash equivalents $ 30,515 $ 879,379
Accounts receivable trade, net 270,304 284,214
Prepaid expenses and other   27,710     26,035  
Total current assets   328,529     1,189,628  
Property and equipment:
Oil and gas properties, successful efforts method 11,473,492 11,293,650
Other property and equipment   134,790     134,524  
Total property and equipment 11,608,282 11,428,174
Less accumulated depreciation, depletion and amortization   (4,429,947 )   (4,244,735 )
Total property and equipment, net   7,178,335     7,183,439  
Other long-term assets   25,844     29,967  
TOTAL ASSETS $ 7,532,708   $ 8,403,034  
 
LIABILITIES AND EQUITY
Current liabilities:
Current portion of long-term debt $ - $ 958,713
Accounts payable trade 86,222 32,761
Revenues and royalties payable 161,704 171,028
Accrued capital expenditures 76,456 69,744
Accrued interest 38,595 40,971
Accrued liabilities and other 76,033 118,815
Taxes payable 29,954 28,771
Derivative liabilities   99,020     132,525  
Total current liabilities 567,984 1,553,328
Long-term debt 2,861,428 2,764,716
Asset retirement obligations 131,678 129,206
Other long-term liabilities   36,005     36,642  
Total liabilities   3,597,095     4,483,892  
Commitments and contingencies
Equity:
Common stock, $0.001 par value, 225,000,000 shares authorized;
92,326,188 issued and 90,927,193 outstanding as of March 31, 2018
and 92,094,837 issued and 90,698,889 outstanding as of December 31,
2017
92 92
Additional paid-in capital 6,406,949 6,405,490
Accumulated deficit   (2,471,428 )   (2,486,440 )
Total equity   3,935,613     3,919,142  
TOTAL LIABILITIES AND EQUITY $ 7,532,708   $ 8,403,034  
 
WHITING PETROLEUM CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)
(in thousands, except per share data)
 
        Three Months Ended
March 31,
2018     2017
OPERATING REVENUES
Oil, NGL and natural gas sales $ 515,083 $ 371,317
 
OPERATING EXPENSES
Lease operating expenses 92,572 90,393
Production taxes 37,838 32,056
Depreciation, depletion and amortization 187,919 240,407
Exploration and impairment 14,747 20,841
General and administrative 31,480 30,617
Derivative loss, net 52,664 36,577
Loss on sale of properties 2,576 1,274
Amortization of deferred gain on sale   (2,904 )   (3,342 )
Total operating expenses   416,892     448,823  
 
INCOME (LOSS) FROM OPERATIONS 98,191 (77,506 )
 
OTHER INCOME (EXPENSE)
Interest expense (52,899 ) (48,011 )
Loss on extinguishment of debt (31,160 ) (1,540 )
Interest income and other   880     610  
Total other expense   (83,179 )   (48,941 )
 
INCOME (LOSS) BEFORE INCOME TAXES 15,012 (126,447 )
 
INCOME TAX BENEFIT
Current - (1,890 )
Deferred   -     (37,586 )
Total income tax expense (benefit)   -     (39,476 )
 
NET INCOME (LOSS) 15,012 (86,971 )
Net loss attributable to noncontrolling interests   -     14  
 
NET INCOME (LOSS) ATTRIBUTABLE TO COMMON SHAREHOLDERS $ 15,012   $ (86,957 )
 
INCOME (LOSS) PER COMMON SHARE (1)
Basic $ 0.17   $ (0.96 )
Diluted $ 0.16   $ (0.96 )
 
WEIGHTED AVERAGE SHARES OUTSTANDING (1)
Basic   90,892     90,652  
Diluted   91,310     90,652  

(1)

  All share and per share amounts have been retroactively adjusted for
the 2017 period to reflect the Company's one-for-four reverse stock
split in November 2017.
 
WHITING PETROLEUM CORPORATION
Reconciliation of Net Income (Loss) Attributable to Common
Shareholders to
Adjusted Net Income (Loss) Attributable to Common Shareholders
(in thousands, except per share data)
 
        Three Months Ended
March 31,
2018     2017
Net income (loss) attributable to common shareholders $ 15,012 $ (86,957 )
Adjustments:
Amortization of deferred gain on sale (2,904 ) (3,342 )
Loss on sale of properties 2,576 1,274
Impairment expense 10,050 14,703
Loss on extinguishment of debt 31,160 1,540
Total measure of derivative loss reported under U.S. GAAP 52,664 36,577
Total net cash settlements received (paid) on commodity derivatives
during the period
(24,837 ) 1,470
Tax impact of adjustments above   -     (19,478 )
Adjusted net income (loss) attributable to common shareholders (1) $ 83,721   $ (54,213 )
 
Adjusted net income (loss) attributable to common shareholders per
share, basic (2)
$ 0.92   $ (0.60 )
Adjusted net income (loss) attributable to common shareholders per
share, diluted (2)
$ 0.92   $ (0.60 )

(1)

  Adjusted Net Income (Loss) Attributable 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 (Loss) Attributable 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 (Loss)
Attributable 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.

(2)

All per share amounts have been retroactively adjusted for the 2017
period to reflect the Company's one-for-four reverse stock split in
November 2017.
 
WHITING PETROLEUM CORPORATION
Reconciliation of Net Cash Provided by Operating Activities to
Discretionary Cash Flow
(in thousands)
           
Three Months Ended
March 31,
2018 2017
Net cash provided by operating activities $ 232,867 $ 80,070
Operating cash outflow for settlement of commodity derivative
contract
61,036 -
Exploration 4,697 6,138
Changes in working capital   (8,131 )   96,381
Discretionary cash flow (1) $ 290,469   $ 182,589

(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 Tuesday, May 1, 2018 at 11:00
a.m. ET (10:00 a.m. CT, 9:00 a.m. MT) to discuss Whiting's first quarter
2018 financial and operating results. Participants are encouraged to
pre-register for the conference call by clicking on the following link: http://dpregister.com/10118769.
Callers who pre-register will be given a unique telephone number and PIN
to gain immediate access on the day of the call.

Those without internet access or unable to pre-register may join the
live call by dialing: (877) 328-5506 (U.S.), (866) 450-4696 (Canada) or
(412) 317-5422 (International) to be connected to the call. Presentation
slides will be available at http://www.whiting.com
by clicking on the "Investor Relations" box on the menu and then on the
link titled "Presentations & Events."

A telephonic replay will be available beginning one to two hours after
the call on Tuesday, May 1, 2018 and continuing through Tuesday, May 8,
2018. You may access this replay at (877) 344-7529 (U.S.), 855-669-9658
(Canada) or (412) 317-0088 (International) and enter the pass code
10118769. You may also access a web archive at http://www.whiting.com
beginning one to two hours after the conference call.

About Whiting Petroleum Corporation

Whiting Petroleum Corporation, a Delaware corporation, is an independent
oil and gas company that develops, produces, acquires and explores for
crude oil, natural gas and natural gas liquids primarily in the Rocky
Mountains region of the United States. The Company's largest projects
are in the Bakken and Three Forks plays in North Dakota and Montana and
the Niobrara play in northeast Colorado. 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 Section 27A of the
Securities Act of 1933 and 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 or extended periods of low oil, NGL or natural gas prices; our level
of success in exploration, development and production activities; risks
related to our level of indebtedness, ability to comply with debt
covenants and periodic redeterminations of the borrowing base under our
credit agreement; impacts to financial statements as a result of
impairment write-downs; our ability to successfully complete asset
dispositions and the risks related thereto, including the potential
disposition of our Redtail Field assets; revisions to reserve estimates
as a result of changes in commodity prices, regulation and other
factors; adverse weather conditions that may negatively impact
development or production activities; the timing of our exploration and
development expenditures; inaccuracies of our reserve estimates or our
assumptions underlying them; risks relating to any unforeseen
liabilities of ours; 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; federal and state initiatives
relating to the regulation of hydraulic fracturing and air emissions;
unforeseen underperformance of or liabilities associated with acquired
properties; the impacts of hedging on our results of operations; failure
of our properties to yield oil or gas in commercially viable quantities;
availability of, and risks associated with, transport of oil and gas;
our ability to drill producing wells on undeveloped acreage prior to its
lease expiration; shortages of or delays in obtaining qualified
personnel or equipment, including drilling rigs and completion services;
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; the potential impact of changes in laws, including tax
reform, that could have a negative effect on the oil and gas industry;
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; cyber security attacks or failures of our telecommunication
systems; and other risks described under the caption "Risk Factors" in
our Annual Report on Form 10-K for the period ended December 31, 2017.
We assume no obligation, and disclaim any duty, to update the
forward-looking statements in this news release.

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