Whiting Petroleum Corp. (NYSE: WLL) reported that production in 3Q 2013 totaled 8.533 million barrels of oil equivalent (MMBOE), of which 87% was crude oil/NGLs.
Despite the sale of its Postle field assets, which accounted for 7,560 barrels of oil equivalent per day (BOE/d) of production in 2Q, 3Q 2013 production came to 92,750 BOE/d compared to 93,380 BOE/d in 2Q 2013. Third quarter production was up 12% over 3Q 2012 average of 82,615 BOE/d and up 23% excluding the production associated with the Postle field assets, which Whiting sold on July 1.
Success in several areas contributed to strong third quarter production. Whiting has applied the modified completion design that Whiting employed at its Missouri Breaks prospect to other areas in the Williston Basin, including Hidden Bench, Lewis & Clark and Pronghorn, with encouraging results. At the Western Williston area, production increased 46% over 2Q 2013, driven by strong drill bit results. At the Redtail prospect in the DJ Basin, the new completion design continues to generate very strong and consistent results. Whiting also continued to see increased production at the North Ward Estes EOR project where several phases of the CO2 flood are continuing to respond.
Whiting recently entered into an agreement to sell 32,183 net acres and approximately 200 net BOE/d in the Big Tex prospect area in the Delaware Basin to a private buyer for total consideration of $150.1 million subject to closing and post-closing adjustments. Of the total net acres, 30,822 net acres are located in Pecos County, Texas and 1,361 net acres are located in Reeves County, Texas. The sale is subject to normal purchase price adjustments and is expected to close by Oct. 31.
“This is an exciting time for Whiting and our shareholders. During the third quarter, we added 17,282 net acres to our Hidden Bench and Missouri Breaks prospect areas and 32,419 net acres to our Redtail Niobrara prospect. Our new completion design using cemented liners and plug and perf technology is working throughout the Williston Basin. Initial results from our higher density drilling program at our Pronghorn prospect are very encouraging, and we expect results from our Sanish field and Hidden Bench prospect higher density drilling programs in the fourth quarter. We expect to add a third rig at our Redtail Niobrara prospect on Nov. 4, 2013 and are in development mode with an estimated 3,394 future gross well locations,” James J. Volker, Whiting’s chairman and CEO, said in the release.
“In the third quarter, we replaced nearly all of the production from the Postle assets sale, which generated $816.5 million in net sale proceeds. We recently issued $2.3 billion of senior notes, $1.1 billion of senior notes bearing an interest rate of 5.000% and maturing in 2019 and $1.2 billion of senior notes that bear an interest rate of 5.750% and mature in 2021. We used the net proceeds from the Postle assets sale and bond issuance to strengthen our financial position and put us in a position for sustained growth. The sale of a portion of our Big Tex assets for $150.1 million will further increase our liquidity to accelerate development of our high rate of return Williston Basin Bakken and DJ Basin Niobrara assets. In addition, the transaction will bring a new operator to the Big Tex area whose drilling we expect will help de-risk our remaining 41,173 net acres at Big Tex, which is composed of 30,846 net acres in Pecos County, Texas, 6,207 net acres in Reeves County, Texas and 4,120 net acres in Ward County, Texas,” Volker said.
Core Development Areas
Bakken and Three Forks Development
Western Williston Basin
The Western Williston Basin includes the Hidden Bench, Tarpon, Missouri Breaks and Cassandra prospects. During the third quarter, Whiting acquired 39,310 gross (17,282 net) acres located in and around the acreage in the Missouri Breaks and Hidden Bench prospects. The properties include 13 operated 1,280-acre Bakken/Three Forks drilling spacing units with an average working interest of 58% and net revenue interest of 48%. 92% of the acreage is held by production. The acquisition brought the total acreage in the Western Williston Basin to 205,581 gross (120,309 net) acres. Production from the Western Williston Basin averaged 13,710 BOE/d in 3Q 2013, which represented a 46% increase over the 9,385 BOE/d average rate in 2Q 2013. The acquisition contributed approximately 25,000 BOE to the third quarter volumes after the Sept. 20 closing date.
Missouri Breaks Prospect. Whiting hold 99,584 gross (62,635 net) acres in the Missouri Breaks prospect, located in Richland County, Mont. and McKenzie County, N.D. Whiting has implemented a new completion design in the Missouri Breaks area that utilizes cemented liners and higher sand volumes. The new frac design appears to significantly improve production rates. On Aug. 24, Whiting completed the Sundheim 21-27-1H flowing at an initial rate of 1,136 BOE/d using a cemented liner and the first slick water frac. Cumulative production from this Well during its first 30 days of production totaled 16.7 MBOE, which was 75% better than the offset Well that was completed by another operator using different technology.
The last eight Wells at Missouri Breaks that were completed using cemented liners and plug and perf technology had average first 30-day cumulative production of 14.4 MBOE, 60% better than the previous 31 area Wells completed using uncemented liners and sliding sleeves.
Hidden Bench Prospect. Whiting hold 66,805 gross (37,459 net) acres in the Hidden Bench prospect, located in McKenzie County, N.D. Whiting have also implemented a new completion design in the Hidden Bench area that utilizes cemented liners and higher sand volumes that has generated positive results. Whiting recently completed the Eide 41-13-2H flowing at an initial rate of 3,795 BOE/d using a cemented liner and a plug and perf completion. An offset Well, the Eide 41-13HR, was completed flowing 2,715 BOE/d. This Well was completed using an uncemented liner and sliding sleeve technology. Both wells were completed on Oct. 1.
Southern Williston Basin
The Southern Williston Basin spans the Pronghorn and Lewis & Clark prospects, which encompass a total of 395,490 gross (263,784 net) acres. Production from the Southern Williston averaged 14,160 BOE/d, up 6% over the 13,325 BOE/d rate in 2Q 2013 and up 16% year-over-year. Whiting completed the first two higher density wells at Pronghorn with favorable results. The Privratsky 24-22PH HD was completed in the Pronghorn Sand on Sept. 1 flowing 1,482 BOE/d. The Privratsky 14-22PH HD was completed in the Pronghorn Sand on Sept. 18 flowing 1,254 BOE/d. Both Wells were completed using cemented liners and plug and perf technology. Whiting is testing the potential to drill six or seven wells per drilling spacing unit versus the prior plan for three wells per spacing unit.
Also at Pronghorn, Whiting recently completed a three-well pad to test the new completion technique. The Obrigewitch 21-29PH was completed on Sept. 12 using a cemented liner and plug and perf technology flowing 2,432 BOE/d from the Pronghorn Sand, a 50% increase over two offsetting wells completed on the same pad using older technology.
At Lewis & Clark, Whiting completed the Kjelstrup Federal 11-19-1PH on Aug. 27 using a cemented liner and plug and perf technology flowing 1,348 BOE/d from the Pronghorn Sand, 50% better than the offset well completed using an uncemented liner and sliding sleeve method.
Sanish Field Area
Whiting’s net production from the Sanish field area averaged 36,840 BOE/d in 3Q 2013. In this area, Whiting is participating in downspacing wells with the Parshall field operator. Whiting has initiated the own higher density pilot project in the Sanish field and expect results in 4Q 2013. If successful, this could add 191 gross well locations.
Denver Basin: Redtail Niobrara Area
During the third quarter, Whiting acquired 48,131 gross (32,419 net) acres at the Redtail Niobrara prospect, located in the Denver Julesberg Basin in Whitingld County, Colo. The acquisition brought the total acreage at Redtail to 168,644 gross (119,978 net) acres. The Redtail acreage currently produces from the Niobrara “B” zone and is also prospective in the Niobrara “A” and “C” zones as well as the Codell formation.
During the quarter, Whiting completed two wells that bracket the phase one acreage, which has 899 potential gross drilling locations, on the eastern and Western sides. The Horsetail 18-0713H averaged 452 BOE/d over the first 30 days of production and the Wildhorse 04-0424H averaged 492 BOE/d over the first 60 days of production.
Whiting expect to add a third rig to the Redtail drilling program on November 4, 2013. Whiting currently plan to add a ftheth rig in January 2014 and a fifth rig in June 2014. The drilling has shifted to pad drilling. As of Oct. 15, Whiting had three wells flowing back and 10 wells waiting on completion. The development plan for the Redtail prospect is to drill eight wells per spacing unit to the Niobrara “B” zone and eight wells in each spacing unit to the Niobrara “A” zone. Whiting estimate that it has more than 3,300 gross locations and 1,650 net locations at the Redtail prospect on this development pattern.
Enhanced Oil Recovery - North Ward Estes Field
Net production from the North Ward Estes field averaged 9,610 BOE/d in 3Q 2013, a 4% increase over the 9,275 BOE/d in 2Q 2013. Whiting is injecting 365 MMcf of CO2 per day into the field, of which about 67% is recycled gas.
Operated Drilling Rig Count
As of Oct. 15, 23 operated drilling rigs were active on Whiting's properties.
Breakdown Of Rigs
Source: Whiting Petroleum Corp.
Whiting Petroleum Corp. is an independent energy company engaged in the acquisition, exploration, exploitation, development, and production of crude oil, NGLs, and natural gas in the U.S. The company is based in Denver.