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Form 8-K WHITING PETROLEUM CORP For: Oct 28

October 28, 2015 4:17 PM EDT


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_______________________

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
_______________________

       
 
Date of Report
   
 
(Date of earliest
   
 
event reported):
October 28, 2015
 


                         Whiting Petroleum Corporation                         
(Exact name of Registrant as specified in its charter)

         
 
Delaware
           001-31899           
20-0098515
 
 
(State or other
jurisdiction of
incorporation)
(Commission File
Number)
(IRS Employer
Identification No.)
 

            1700 Broadway, Suite 2300, Denver, Colorado 80290-2300           
(Address of principal executive offices, including ZIP code)

                              (303) 837-1661                              
(Registrant’s telephone number, including area code)
_______________________

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the Registrant under any of the following provisions:
 
   
£
Written communications pursuant to Rule 425 under the Securities Act (17 C.F.R. §230.425)
£
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 C.F.R. §240.14a-12)
£
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 C.F.R. §240.14d-2(b))
£
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 C.F.R. §240.13e-4(c))

 
 

 

Item 2.02.                      Results of Operations and Financial Condition.
 
On October 28, 2015, Whiting Petroleum Corporation issued a press release announcing its financial and operating results for the third quarter ended September 30, 2015 and providing certain guidance for the fourth quarter of 2015 and full-year 2015.  A copy of such press release is furnished as Exhibit 99 and is incorporated by reference herein.
 
Item 9.01.                      Financial Statements and Exhibits.

 
(a)
Financial Statements of Businesses Acquired.  Not applicable.
 
 
(b)
Pro Forma Financial Information.  Not applicable.
 
 
(c)
Shell Company Transactions.  Not applicable.
 
 
(d)
Exhibits:
 
 
(99)
Press Release of Whiting Petroleum Corporation, dated October 28, 2015.
 
 
2

 

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
       
     
WHITING PETROLEUM CORPORATION
       
       
Date: October 28, 2015
 
By:   
/s/ James J. Volker
     
James J. Volker
     
Chairman, President and Chief Executive Officer

 
3

 

WHITING PETROLEUM CORPORATION
FORM 8-K
EXHIBIT INDEX
 
     
Exhibit
Number
 
Description
(99)
 
Press Release of Whiting Petroleum Corporation, dated October 28, 2015.
 
4



 

 
Company Contact: Eric K. Hagen
October 28, 2015
Title: Vice President, Investor Relations
For immediate release
Phone: 303.837.1661
 
 
 
Whiting Petroleum Corporation Announces Third Quarter 2015 Financial and Operating Results

· Q3 2015 Production Averaged 160,590 BOE/d after 8,700 BOE/d of Q2 2015 Property Sales

· Q3 2015 Discretionary Cash Flow Totals $280 Million

· Enhanced Completions Contribute to 44% Quarter-over-Quarter Productivity Increases in Williston Basin

· Enhanced Completion Pad at Cassandra Prospect Tests at Average Rate of 5,224 BOE/d per Well

· Announces $400 Million of Total Asset Sales Year-to-Date

· Credit Commitments Unchanged at $3.5 Billion, Zero Drawn at September 30, 2015

DENVER – October 28, 2015 – Whiting’s (NYSE: WLL) production in the third quarter 2015 totaled 14.8 million barrels of oil equivalent (MMBOE), 89% crude oil/natural gas liquids (NGLs).  Third quarter 2015 production averaged 160,590 barrels of oil equivalent per day (BOE/d) after 8,700 BOE/d of Q2 2015 property sales.  This represents a 38% increase over the third quarter 2014.

James J. Volker, Whiting’s Chairman, President and CEO, commented, “Our third quarter results demonstrate we remain on track to balance capital spending and cash flow in 2016 at approximately $1.0 billion while maintaining our longer term growth profile.  Total capital expenditures decreased 46% from the second quarter while production adjusted for asset sales was relatively flat.  We spent $266 million in our core Williston Basin Bakken/Three Forks and DJ Basin plays in the third quarter, largely before we dropped three rigs to reach our fourth quarter eight rig program.  Non-operated spending and facilities spending during the quarter were $58 million and $32 million, respectively.  As they decline during the fourth quarter, we anticipate total capex under $300 million.

 
 

 
 
In addition, we expect production in the fourth quarter to benefit from the continuing transition to high volume, enhanced completions as evidenced by the outstanding results at our P Johnson pad, which tested an average rate per well of 5,224 BOE/d.  The pad incorporated 7.0 million pounds of sand per completion versus our typical 5.0 million pound completion.”

Mr. Volker continued, “We continue to maintain a strong financial position.  Year-to-date, we have sold approximately $400 million of assets and anticipate further non-core asset sales by year end. We ended the third quarter with nothing drawn on our $4.0 billion borrowing base.  Our credit commitments from our banks under our borrowing base remain unchanged at $3.5 billion.  This demonstrates the confidence our banking group has in the quality of our assets and in our strategic plan.  Our strong liquidity position and focus on enhancing returns through cost control and technology improvements provides us the financial flexibility to continue realizing the value of our premier asset base in the current pricing environment.”

Operating and Financial Results
 
The following table summarizes the operating and financial results for the third quarter of 2015 and 2014, including non-cash charges recorded during the quarter ended September 30, 2015:
 
   
Three Months Ended
 
   
September 30,
 
   
2015
   
2014
 
Production (MBOE/d)
    160.59       116.67  
Discretionary cash flow-MM (1)
  $ 279.9     $ 538.2  
Realized price ($/BOE)
  $ 37.86     $ 74.88  
Total revenues-MM
  $ 508.0     $ 813.1  
Net income (loss) available to common shareholders-MM (2)(3)(4)
  $ (1,865.1 )   $ 158.0  
Per basic share
  $ (9.14 )   $ 1.33  
Per diluted share
  $ (9.14 )   $ 1.32  
Adjusted net income (loss) available to common shareholders-MM (5)
  $ (35.4 )   $ 148.7  
Per basic share
  $ (0.17 )   $ 1.25  
Per diluted share
  $ (0.17 )   $ 1.24  

(1)
A reconciliation of net cash provided by operating activities to discretionary cash flow is included later in this news release.
(2)
For the three months ended September 30, 2015, net loss available to common shareholders included $153 million of pre-tax, non-cash derivative gains or $0.47 per basic and diluted share after tax. For the three months ended September 30, 2014, net income available to common shareholders included $25 million of pre-tax, non-cash derivative gains or $0.13 per basic and diluted share after tax.
(3)
For the three months ended September 30, 2015, this amount includes $1.7 billion in non-cash pre-tax impairment charges for the partial write-down of our North Ward Estes field in Texas and other non-core proved and unproved oil, gas and CO2 properties that are not currently being developed due to depressed oil and gas prices.  The Company did not recognize any impairment write-downs with respect to its proved oil and gas or CO2 properties during the 2014 period presented.
(4)
During the three months ended September 30, 2015, goodwill related to the acquisition of Kodiak Oil and Gas Corp. in December 2014 (the “Kodiak Acquisition”) with a carrying amount of $870 million was written down to a fair value of zero, resulting in a non-cash impairment charge of $870 million, which resulted from lower commodity prices.  The Company did not recognize any goodwill impairment write-downs during the 2014 period presented.
(5)
A reconciliation of net income (loss) available to common shareholders to adjusted net income (loss) available to common shareholders is included later in this news release.
 
 
2

 
 
The following table summarizes the first nine months operating and financial results for 2015 and 2014, including non-cash charges recorded during the nine months ended September 30, 2015:
 
   
Nine Months Ended
 
   
September 30,
 
   
2015
   
2014
 
Production (MBOE/d)
    165.90       108.89  
Discretionary cash flow-MM (1)
  $ 909.8     $ 1,576.4  
Realized price ($/BOE)
  $ 40.22     $ 78.88  
Total revenues-MM
  $ 1,627.3     $ 2,389.0  
Net income (loss) available to common shareholders-MM (2)(3)(4)
  $ (2,120.5 )   $ 418.5  
Per basic share
  $ (11.01 )   $ 3.52  
Per diluted share
  $ (11.01 )   $ 3.48  
Adjusted net income (loss) available to common shareholders-MM (5)
  $ (65.4 )   $ 442.7  
Per basic share
  $ (0.34 )   $ 3.72  
Per diluted share
  $ (0.34 )   $ 3.69  

(1)
A reconciliation of net cash provided by operating activities to discretionary cash flow is included later in this news release.
(2)
For the nine months ended September 30, 2015, net loss available to common shareholders included $32 million of pre-tax, non-cash derivative losses or $0.10 per basic and diluted share after tax. For the nine months ended September 30, 2014, net income available to common shareholders included $20 million of pre-tax, non-cash derivative losses or $0.10 per basic and diluted share after tax.
(3)
For the nine months ended September 30, 2015, this amount includes $1.7 billion in non-cash pre-tax impairment charges for the partial write-down of our North Ward Estes field in Texas and other non-core proved and unproved oil, gas and CO2 properties that are not currently being developed due to depressed oil and gas prices.  The Company did not recognize any impairment write-downs with respect to its proved oil and gas or CO2 properties during the 2014 period presented.
(4)
During the nine months ended September 30, 2015, goodwill related to the Kodiak Acquisition with a carrying amount of $870 million was written down to a fair value of zero, resulting in a non-cash impairment charge of $870 million, which resulted from lower commodity prices.  The Company did not recognize any goodwill impairment write-downs during the 2014 period presented.
(5)
A reconciliation of net income (loss) available to common shareholders to adjusted net income (loss) available to common shareholders is included later in this news release.

No Change to $3.5 Billion of Credit Commitments

In October, the lenders under Whiting’s revolving credit agreement completed their semi-annual redetermination of the borrowing base.  Under their current price deck, lenders set a $4.0 billion borrowing base. There was no change to the $3.5 billion in aggregate commitments.  There were no changes to the interest rates, fees or repayment terms of the credit line, which matures in December 2019.  Whiting and its lenders also agreed to extend the 2.5 to 1.0 senior secured debt to EBITDAX covenant and institute a 2.25 to 1.0 EBITDAX to consolidated cash interest charges covenant.  Both remain in effect through March 31, 2018.  Whiting is well within both these covenants.  No funds were drawn on the credit facility as of September 30, 2015.

$400 Million of Total Asset Sales Year-to-Date

Year-to-date, Whiting has completed a total of approximately $400 million of non-core asset sales with estimated remaining 2015 production of 11.6 MBOE/d.  This includes a package of older, conventional, operated and non-operated properties located in the Rockies, Permian and Gulf Coast areas, which was sold to private buyers for $52 million subsequent to the end of the quarter.  The effective date for the sale is October 1, 2015 and the closing date is scheduled to occur on November 12, 2015.  Estimated remaining 2015 production is 2,500 BOE/d.
 
 
3

 
 
Operations Update

Core Development Areas

Williston Basin Development

We hold 1,067,587 gross (667,668 net) acres in the Williston Basin of North Dakota and Montana.  In the third quarter 2015, production from the Bakken/Three Forks averaged 130,895 BOE/d.  The Bakken/Three Forks represented 82% of Whiting’s total third quarter production.

Enhanced Completions Contribute to 44% Quarter-over-Quarter Productivity Increases in Williston Basin.  We continue to test larger volume completions across our acreage in the Williston Basin.  In the third quarter, we completed 34 operated wells with average sand volumes of 5.2 million pounds that produced for 30 or more days.  This compares to 54 operated wells with average sand volumes of 3.5 million pounds in the second quarter.  Wells completed during the third quarter achieved an average 30-day rate of 1,102 BOE/d, which was 44% better than the second quarter wells. The average estimated completed well cost for the third quarter was $6.6 million down from approximately $8.0 million in 2014.

Enhanced Completion Pad at Cassandra Prospect Tests at Average Rate of 5,224 BOE/d per Well.  Between August 31, 2015 and September 7, 2015, Whiting completed a two well pad at its Cassandra Prospect in Williams County, North Dakota. The P Johnson 153-98-1-6-7-16HA tested at a 24-hour initial production rate of 5,062 BOE/d from the Middle Bakken formation.  The P Johnson 153-98-1-6-7-16H tested at a 24-hour initial production rate of 5,386 BOE/d from the Middle Bakken formation. These are the highest test rates recorded by Whiting at its Cassandra Prospect.  Both wells were completed with a hybrid-style completion, 7.0 million pounds of sand per well and have an estimated completed well cost of approximately $6.9 million also down from approximately $8.0 million in 2014.

Denver Julesburg Basin Development

We hold a total of 147,472 gross (118,436 net) acres in our Redtail field, located in the Denver Julesburg Basin in Weld County, Colorado.  Whiting has established production in four zones, the Niobrara “A”, “B” and “C” zones and the Codell/Fort Hays formations.  Net production from the Redtail field averaged 16,575 BOE/d in the third quarter 2015. The next significant round of completions at Redtail is scheduled for the first quarter 2016.

Construction at phase two of our Redtail gas plant was completed during the third quarter.  This expands plant inlet capacity to 50 MMcf/d from 20 MMcf/d. The expanded gas plant will allow for planned development of the field in an environmentally responsible manner as we profitably capture the gas and NGLs produced at the field.
 
 
4

 
 
Other Financial and Operating Results
 
The following table summarizes the Company's net production and commodity price realizations for the quarters ended September 30, 2015 and 2014:
 
   
Three Months Ended
       
   
September 30,
       
   
2015
   
2014
   
Change
 
Production
                 
Oil (MMBbl)
    11.70       8.54     37%  
NGLs (MMBbl)
    1.49       0.91     64%  
Natural gas (Bcf)
    9.53       7.72     23%  
Total equivalent (MMBOE)
    14.77       10.73     38%  
                       
Average sales price
                     
Oil (per Bbl):
                     
Price received
  $ 39.45     $ 86.78     (55%)  
Effect of crude oil hedging (1)
    4.72       (0.16 )      
Realized price
  $ 44.17     $ 86.62     (49%)  
Weighted average NYMEX price (per Bbl) (2)
  $ 46.52     $ 97.16     (52%)  
NGLs (per Bbl):
                     
Realized price
  $ 10.55     $ 36.01     (71%)  
Natural gas (per Mcf):
                     
Realized price
  $ 2.83     $ 4.08     (31%)  
Weighted average NYMEX price (per Mcf) (2)
  $ 2.74     $ 4.07     (33%)  

(1)
Whiting received $55 million and paid $1 million in pre-tax cash settlements on its crude oil hedges during the third quarter of 2015 and 2014, respectively.  A summary of Whiting’s outstanding hedges is included later in this news release.
(2)
Average NYMEX prices weighted for monthly production volumes.
 
Third Quarter and First Nine Months 2015 Costs and Margins
 
A summary of production, cash revenues and cash costs on a per BOE basis is as follows:
 
Three Months Ended
 
Nine Months Ended
 
 
September 30,
 
September 30,
 
 
2015
 
2014
 
2015
 
2014
 
 
(per BOE, except production)
 
Production (MMBOE)
    14.77       10.73       45.29       29.73  
 
                               
Sales price, net of hedging
  $ 37.86     $ 74.88     $ 40.22     $ 78.88  
Lease operating expense
    8.50       11.56       9.61       12.02  
Production tax
    3.00       6.44       3.21       6.66  
Cash general & administrative
    2.54       2.89       2.50       2.96  
Exploration
    1.43       1.12       2.38       1.67  
Cash interest expense
    4.83       3.51       4.75       3.75  
Cash income tax expense (benefit)
    (0.03 )     (0.06 )     (0.01 )     0.26  
    $ 17.59     $ 49.42     $ 17.78     $ 51.56  
 
 
5

 
 
Third Quarter and First Nine Months 2015 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, 2015.
 
   
Gross/Net Wells Completed
     
   
Producing
 
Non-Producing
 
Total New Drilling
 
% Success Rate
 
CAPEX (in MM)
 
Q3 15   110 / 47.59   0 / 0   110 / 47.59   100% / 100%   $    403.4 (1)  
9M 15   486 / 234.2   1 / 0.9   487 / 235.1   99.8% / 99.6%   $ 1,989.9 (2)  

(1)
Includes $58 million for non-operated drilling and completion, $5 million for land, $32 million for facilities and $11 million in drilling rig early termination fees.
(2)
Includes $269 million for non-operated drilling and completion, $26 million for land, $124 million for facilities and $76 million in drilling rig early termination fees.

Outlook for Fourth Quarter and Full-Year 2015
 
The following table provides guidance for the fourth quarter and full-year 2015 based on current forecasts.
 
 
Guidance
 
Fourth Quarter
 
Full-Year
 
2015
 
2015
Production (MMBOE)(1)                                                                          
13.9   -   14.3
 
59.2   -   59.6
Lease operating expense per BOE                                                                          
$    8.00   -   $    8.50
 
$    9.10   -   $    9.50
General and administrative expense per BOE
$    2.90   -   $    3.10
 
$    2.90   -   $    3.10
Interest expense per BOE                                                                          
$    5.90   -   $    6.30
 
$    5.40   -   $    5.80
Depreciation, depletion and amortization per BOE
$  20.75   -   $  21.75
 
$  20.30   -   $  20.90
Production taxes (% of sales revenue)                                                                          
8.6%   -   8.8%
 
8.6%   -   8.8%
Oil price differentials to NYMEX per Bbl (2)                                                                           
($   7.00)  -  ($   8.00)
 
($   7.50)  -  ($   8.50)
Gas price differential to NYMEX per Mcf                                                                          
($   0.60)  -  ($   0.20)
 
($   0.60)  -  ($   0.20)
 
(1)
Does not include the impact of 2,500 BOE/d sold subsequent to end of the third quarter.
(2)
Does not include the effect of NGLs.
 
 
6

 
 
Commodity Derivative Contracts
 
Whiting is 52% hedged for October – December 2015 and 45% hedged for 2016 as a percentage of September 2015 production.
 
The following summarizes Whiting’s crude oil hedges as of October 1, 2015:
           
Weighted Average
 
As a Percentage of
Derivative
 
Hedge
 
Contracted Crude
 
NYMEX Price
 
September 2015
Instrument
 
Period
 
(Bbls per Month)
 
(per Bbl)
 
Oil Production
Three-way collars (1)
 
2015
           
   
Q4
 
1,450,000
 
$44.48 - $54.83 - $70.54
 
39.3%
   
2016
           
   
Q1
 
1,400,000
 
$43.75 - $53.75 - $74.40
 
37.9%
   
Q2
 
1,400,000
 
$43.75 - $53.75 - $74.40
 
37.9%
   
Q3
 
1,400,000
 
$43.75 - $53.75 - $74.40
 
37.9%
   
Q4
 
1,400,000
 
$43.75 - $53.75 - $74.40
 
37.9%
Collars
 
2015
           
   
Q4
 
209,200
 
$ 51.06 - $ 57.37
 
5.7%
   
2016
           
   
Q1
 
250,000
 
$51.00 - $63.48
 
6.8%
   
Q2
 
250,000
 
$51.00 - $63.48
 
6.8%
   
Q3
 
250,000
 
$51.00 - $63.48
 
6.8%
   
Q4
 
250,000
 
$51.00 - $63.48
 
6.8%
   
2017
           
   
Q1
 
250,000
 
$53.00 - $70.44
 
6.8%
   
Q2
 
250,000
 
$53.00 - $70.44
 
6.8%
   
Q3
 
250,000
 
$53.00 - $70.44
 
6.8%
   
Q4
 
250,000
 
$53.00 - $70.44
 
6.8%
Swaps
 
2015
           
   
Q4
 
251,230
 
$76.25
 
6.8%
 
(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.

 
7

 

Selected Operating and Financial Statistics
 
   
Three Months Ended
   
Nine Months Ended
 
   
September 30,
   
September 30,
 
   
2015
   
2014
   
2015
   
2014
 
Selected operating statistics:
                       
Production
                       
Oil, MBbl
    11,699       8,537       36,305       23,787  
NGLs, MBbl
    1,487       911       3,899       2,346  
Natural gas, MMcf
    9,529       7,717       30,517       21,570  
Oil equivalents, MBOE
    14,774       10,734       45,290       29,728  
Average Prices
                               
Oil per Bbl (excludes hedging)
  $ 39.45     $ 86.78     $ 42.63     $ 89.51  
NGLs per Bbl
  $ 10.55     $ 36.01     $ 13.38     $ 41.80  
Natural gas per Mcf
  $ 2.83     $ 4.08     $ 2.44     $ 5.78  
Per BOE data
                               
Sales price (including hedging)
  $ 37.86     $ 74.88     $ 40.22     $ 78.88  
Lease operating
  $ 8.50     $ 11.56     $ 9.61     $ 12.02  
Production taxes
  $ 3.00     $ 6.44     $ 3.21     $ 6.66  
Depreciation, depletion and amortization
  $ 21.40     $ 26.61     $ 20.36     $ 26.56  
General and administrative
  $ 3.03     $ 3.45     $ 2.95     $ 3.53  
Selected financial data:
     (In thousands, except per share data)
                               
Total revenues and other income
  $ 508,041     $ 813,131     $ 1,627,282     $ 2,389,002  
Total costs and expenses
  $ 2,968,006     $ 561,683     $ 4,473,866     $ 1,700,799  
Net income (loss) available to common shareholders
  $ (1,865,108 )   $ 157,975     $ (2,120,493 )   $ 418,488  
Earnings (loss) per common share, basic
  $ (9.14 )   $ 1.33     $ (11.01 )   $ 3.52  
Earnings (loss) per common share, diluted
  $ (9.14 )   $ 1.32     $ (11.01 )   $ 3.48  
Weighted average shares outstanding, basic
    204,143       119,024       192,549       118,972  
Weighted average shares outstanding, diluted
    204,143       120,066       192,549       120,109  
 
Net cash provided by operating activities
  $ 373,120     $ 457,640     $ 901,256     $ 1,349,306  
Net cash used in investing activities
  $ (395,418 )   $ (757,727 )   $ (1,840,315 )   $ (2,079,849 )
Net cash provided (used in) financing activities
  $ (125 )   $ 101,057     $ 898,690     $ 59,136  
 
 
8

 
 
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, 2015, to be filed with the Securities and Exchange Commission.

WHITING PETROLEUM CORPORATION
CONSOLIDATED BALANCE SHEETS (unaudited)
(in thousands)

   
September 30,
   
December 31,
 
   
2015
   
2014
 
ASSETS
           
Current assets:
           
Cash and cash equivalents
  $ 37,731     $ 78,100  
Accounts receivable trade, net
    354,488       543,172  
Derivative assets
    125,988       135,577  
Prepaid expenses and other
    39,967       86,150  
Total current assets
    558,174       842,999  
Property and equipment:
               
Oil and gas properties, successful efforts method
    13,795,901       14,949,702  
Other property and equipment
    164,278       276,582  
Total property and equipment
    13,960,179       15,226,284  
Less accumulated depreciation, depletion and amortization
    (3,013,548 )     (3,083,572 )
Total property and equipment, net
    10,946,631       12,142,712  
Goodwill
    -       875,676  
Debt issuance costs
    76,244       53,274  
Other long-term assets
    91,111       104,843  
TOTAL ASSETS
  $ 11,672,160     $ 14,019,504  
 
 
9

 

WHITING PETROLEUM CORPORATION
CONSOLIDATED BALANCE SHEETS (unaudited)
(in thousands, except share and per share data)

   
September 30,
   
December 31,
 
   
2015
   
2014
 
LIABILITIES AND EQUITY
           
Current liabilities:
           
Accounts payable trade
  $ 124,805     $ 62,664  
Accrued capital expenditures
    125,893       429,970  
Revenues and royalties payable
    178,208       254,018  
Production Participation Plan liability
    -       113,391  
Accrued liabilities and other
    142,316       169,193  
Taxes payable
    63,390       63,822  
Accrued interest
    73,925       67,913  
Deferred income taxes
    55,398       47,545  
Total current liabilities
    763,935       1,208,516  
Long-term debt
    5,254,646       5,628,782  
Deferred income taxes
    586,578       1,230,630  
Asset retirement obligations
    137,051       167,741  
Deferred gain on sale
    52,133       60,305  
Other long-term liabilities
    27,799       20,486  
Total liabilities
    6,822,142       8,316,460  
Commitments and contingencies
               
Equity:
               
Common stock, $0.001 par value, 300,000,000 shares authorized; 206,455,594 issued and 204,142,725 outstanding as of September 30, 2015 and 168,346,020 issued and 166,889,152 outstanding as of December 31, 2014
    206       168  
Additional paid-in capital
    4,652,571       3,385,094  
Retained earnings
    189,219       2,309,712  
Total Whiting shareholders' equity
    4,841,996       5,694,974  
Noncontrolling interest
    8,022       8,070  
Total equity
    4,850,018       5,703,044  
TOTAL LIABILITIES AND EQUITY
  $ 11,672,160     $ 14,019,504  
 
 
10

 
 
WHITING PETROLEUM CORPORATION
CONSOLIDATED STATEMENTS OF INCOME (unaudited)
(in thousands, except per share data)
 
   
Three Months Ended
   
Nine Months Ended
 
   
September 30,
   
September 30,
 
   
2015
   
2014
   
2015
   
2014
 
REVENUES AND OTHER INCOME:
                       
Oil, NGL and natural gas sales
  $ 504,155     $ 805,054     $ 1,674,530     $ 2,352,064  
Gain (loss) on sale of properties
    (359 )     (50 )     (61,937 )     12,305  
Amortization of deferred gain on sale
    3,666       7,689       13,240       22,906  
Interest income and other
    579       438       1,449       1,727  
Total revenues and other income
    508,041       813,131       1,627,282       2,389,002  
 
COSTS AND EXPENSES:
                               
Lease operating expenses
    125,575       124,075       435,315       357,222  
Production taxes
    44,303       69,106       145,410       197,993  
Depreciation, depletion and amortization
    316,147       285,658       922,077       789,432  
Exploration and impairment
    1,690,679       29,925       1,829,160       103,544  
Goodwill impairment
    869,713       -       869,713       -  
General and administrative
    44,821       37,070       133,788       104,959  
Interest expense
    84,551       39,632       247,984       120,821  
Loss on early extinguishment of debt
    -       -       5,634       -  
Commodity derivative (gain) loss, net
    (207,783 )     (23,783 )     (115,215 )     26,828  
Total costs and expenses
    2,968,006       561,683       4,473,866       1,700,799  
 
INCOME (LOSS) BEFORE INCOME TAXES
    (2,459,965 )     251,448       (2,846,584 )     688,203  
 
INCOME TAX EXPENSE (BENEFIT):
                               
Current
    (422 )     (660 )     (357 )     7,695  
Deferred
    (594,425 )     94,147       (725,686 )     262,070  
Total income tax expense (benefit)
    (594,847 )     93,487       (726,043 )     269,765  
 
NET INCOME (LOSS)
    (1,865,118 )     157,961       (2,120,541 )     418,438  
Net loss attributable to noncontrolling interests
    10       14       48       50  
 
NET INCOME (LOSS) AVAILABLE TO COMMON SHAREHOLDERS
  $ (1,865,108 )   $ 157,975     $ (2,120,493 )   $ 418,488  
 
EARNINGS (LOSS) PER COMMON SHARE
                               
Basic
  $ (9.14 )   $ 1.33     $ (11.01 )   $ 3.52  
Diluted
  $ (9.14 )   $ 1.32     $ (11.01 )   $ 3.48  
 
WEIGHTED AVERAGE SHARES OUTSTANDING:
                               
Basic
    204,143       119,024       192,549       118,972  
Diluted
    204,143       120,066       192,549       120,109  

 
11

 
 
WHITING PETROLEUM CORPORATION
Reconciliation of Net Income (Loss) Available to Common Shareholders to
Adjusted Net Income (Loss) Available to Common Shareholders
(in thousands, except per share data)
 
   
Three Months Ended
   
Nine Months Ended
 
   
September 30,
   
September 30,
 
   
2015
   
2014
   
2015
   
2014
 
Net income (loss) available to common shareholders
  $ (1,865,108 )   $ 157,975     $ (2,120,493 )   $ 418,488  
 
Adjustments net of tax:
                               
Amortization of deferred gain on sale
    (2,308 )     (4,848 )     (8,335 )     (14,443 )
(Gain) loss on sale of properties
    226       32       38,989       (7,758 )
Impairment expense
    1,051,017       11,311       1,083,472       34,030  
Goodwill impairment (non-taxable)
    869,713       -       869,713       -  
Penalties for early termination of drilling rig contracts
    7,076       -       47,720       -  
Early extinguishment of debt
    -       -       3,546       -  
Total measure of derivative (gain) loss reported under U.S. GAAP
    (130,799 )     (14,995 )     (72,528 )     16,915  
Total net cash settlements received (paid) on commodity derivatives during the period
    34,760       (820 )     92,565       (4,519 )
Adjusted net income (loss) (1)
  $ (35,423 )   $ 148,655     $ (65,351 )   $ 442,713  
                                 
Adjusted net income (loss) available to common shareholders per share, basic
  $ (0.17 )   $ 1.25     $ (0.34 )   $ 3.72  
Adjusted net income (loss) available to common shareholders per share, diluted
  $ (0.17 )   $ 1.24     $ (0.34 )   $ 3.69  

(1)
Adjusted Net Income (Loss) 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 (Loss) 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 (Loss) 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.
 
 
12

 
 
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,
 
 
2015
 
2014
 
2015
 
2014
 
Net cash provided by operating activities
  $ 373,120     $ 457,640     $ 901,256     $ 1,349,306  
Exploration
    21,072       11,984       108,000       49,572  
Exploratory dry hole costs
    (68 )     (350 )     (867 )     (3,972 )
Changes in working capital
    (114,248 )     68,959       (98,574 )     181,475  
Discretionary cash flow (1)
  $ 279,876     $ 538,233     $ 909,815     $ 1,576,381  

(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 29, 2015 at 11:00 a.m. EDT (10:00 a.m. CDT, 9:00 a.m. MDT) to discuss Whiting’s third quarter 2015 financial and operating results. Participants are encouraged to pre-register for the conference call by clicking on the following link: http://dpregister.com/10072857. 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 Thursday, October 29, 2015 and continuing through Thursday, November 5, 2015.  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 10072857.  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 explores for, develops, acquires and produces crude oil, natural gas and natural gas liquids primarily in the Rocky Mountain and Permian Basin regions of the United States.  The Company’s largest projects are in the Bakken and Three Forks plays in North Dakota, the Niobrara play in northeast Colorado 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 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.

 
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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; risks related to our level of indebtedness 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; 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 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 obtain sufficient quantities of CO2 necessary to carry out our EOR projects; our ability to identify and complete acquisitions and to successfully integrate acquired businesses; 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; 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 Quarterly Report on Form 10-Q for the quarter ended June 30, 2015 and Annual Report on Form 10-K for the year ended December 31, 2014.  We assume no obligation, and disclaim any duty, to update the forward-looking statements in this news release.
 
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