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Whiting Petroleum set to thrive despite low prices

Denver-based Whiting Petroleum Corp. was and continues to be structured around making money at current oil price levels, says James J. Volker, the company’s president and Chief Executive Officer.

During the company’s fourth quarter and 2015 investor’s guidance call he emphasized that Whiting will not be delaying well completions and will not depend on the curve of oil prices to make its operations more economical. Volker said, “We are relying on ourselves to make money in the current oil price environment. We are set to prosper at current oil prices.”

According to a report by The Bakken Magazine, the company is currently operating 16 drilling rigs in the Williston Basin. By the middle of this year, the company anticipates it will operate 13. For the upcoming year Whiting expects to spend roughly $2 billion with costs focused mainly on the operations that have the highest rate-of-return.

In a recent press release, Volker stated that “2014 was a strong year for Whiting. We set records in production, proved reserves and discretionary cash flow. In the wake of our acquisition of Kodiak Oil & Gas, we became the largest Bakken/Three Forks producer in the Williston Basin.” In regards to the upcoming year, he added, “We have taken prudent measures in 2015 to reduce our capital budget while maintaining our financial flexibility. Our 2015 capital budget of $2 billion reflects a disciplined approach to maintaining our financial strength while preserving our long-term growth plans.”

During 2014, the company’s 30-, 60- and 90-day initial production rates increased by over 30 percent. This increase of initial production rates, along with well costs that have dropped from $8.5 million to $7 million, leaves the company confident that 2015 will be another positive year. As reported by The Bakken Magazine, Volker thinks that more efficient operations and the utilization of new completion technologies will help the company overcome the impact of the currently low market prices.

By utilizing cemented well liners and a slickwater fracking method, the company has been able to increase fracture stimulation points and therefore increase well productivity. Slickwater fracking uses water that contains fewer chemicals and additives than other fracking fluids, creating more complex fracture networks in a well. Senior Vice President of Exploration and Production Mark Williams stated that although the method may not be appropriate for every portion of the Bakken formation, it seems to work extremely well in the basin’s core. Although it adds to the completion costs, the increase in production has made using the method worthwhile.

Despite the current crude oil prices, the goal for Whiting in the upcoming year is to see three-to-one returns on investments and payback on well costs within one year. By next year’s end, Volker stated that almost half of the company’s anticipated production will be hedged with ‘three-way collars’ based on the low price of $55 per barrel and ceiling prices between $60 and $70 per barrel. With the reduced rig count expected in mid-year, the company expects production will remain steady but without substantial growth. Looking toward the future, Volker commented that the company’s plans for 2016 are expected to be similar to this year’s goals. He said, “I really believe we could have a lower budget and still see more growth in 2016.”

11 comments

  1. Whiting petroleum is seeking a buyout…

  2. Companies looking to be bought out are never good companies to be working for while it going down!

  3. Smart company this way they keep rigs and experienced hands.they won’t have to deal with worms when it picks up again.

  4. They dug themselves a huge hole. Oil dropped along with the Kodak buyout. Wonder if stat or Exxon will buy them.

  5. Wall Street journal, think it was 3 days ago said they were looking for a buyer..looking..

  6. I’m on a w whiting flowback right now ..there good people to work for

  7. Jimmy John Bergeron told you what you heard was BS

  8. Yeah. Charlie must just be a gossip queen. Wish the would sell so we could charge them travel time

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