Whiting Petroleum, North Dakota’s largest oil producer, announced it will freeze all new fracking and well completions as of April 1 and will cut its budget by 80 percent this year.
Whiting’s announcement marks the single largest cutback made by a major U.S. shale producer to date. In North Dakota, a state already facing a billion dollar budget shortfall and far-reaching spending cuts, the change will likely “reverberate in the economy of North Dakota,“ reports Reuters.
“We are focused on returns and balance sheet strength,” said Whiting President and CEO James J. Volker in a statement. The company is projecting a total capital budget of $500 million in 2016.
“We believe this conservative strategy should help us to maintain our liquidity and leave us well positioned to capitalize on a rebound in oil prices,” Volker added.
Of the company’s $500 million budget for 2016, the majority will be spent on idling Whiting drilling and fracking operations. After June, the company plans to emphasize maintenance and spend only $160 million.
The stock market was quick to react to Whiting’s announcement. After posting a wider than expected fourth quarter net loss of $98.7 million (43 cents per share), and following the dramatic budget projection, shares of Whiting Petroleum Corp. (WLL) jumped 7.7 percent to $4 per share in after-hours trading before sliding back down to $3.72 per share.
In other Whiting Petroleum news, the company announced a quarter-over-quarter productivity increase throughout the Williston Basin during the fourth quarter. While continuing to test larger sand volume, or enhanced completions, Whiting achieved an average 30-day rate of 1,339 barrels of oil equivalent per day, 22 percent greater than the previous quarter.
In the fourth quarter, Whiting completed 21 operating wells that produced for 30 days or more with sand volumes of around 6.7 pounds, compared to the 41 operated wells with sand volumes of 5.2 million pounds in the third quarter.