Denver-based Whiting Petroleum Corp. (NYSE: WLL) reports it has farmed out a 50% working interest in the western portion of its Sanish Field in Mountrail County, North Dakota, and sold a 50% interest in a gas plant and gathering system to privately held Kaiser-Francis Oil Co., Tulsa, Oklahoma, for $107.3 million.

Kaiser-Francis paid $6.4 million for acreage costs, $65.8 million for 65% of Whiting's cost in the 18 wells currently drilled or drilling, and $35.1 million for a 50% interest in Whiting's Robinson Lake gas plant and oil and gas gathering system.

The agreement covers 25 1,280-acre units and one 640-acre unit. Kaiser-Francis has agreed to pay 65% of Whiting's net working interest completed well cost to receive 50% of Whiting's working interest and net revenue interest in the first and second wells planned for each of the units. Whiting will remain operator.

There are 18 drilled or drilling wells on the 26 units covered by the agreement and 12 more wells are planned in 2009, which would result in the buyer participating on 30 wells in Sanish Field in 2009 and 21 wells thereafter. Whiting expects to have four rigs running in Sanish Field through 2009.

Whiting used the proceeds to repay debt. Following the transaction, Whiting expects its borrowing base to remain at $1.1 billion.

James J. Volker, Whiting president and CEO, says, “We are pleased to have this strong partner in these 26 Sanish units, which we expect to continue to develop at the pace of our previously announced 2009 plans. We are also pleased that this agreement will permit our planned 2009 capital expenditures to approximately come in line with our expected 2009 discretionary cash flow.”

Whiting currently owns an interest in 93 total units in Sanish Field. The 26 units covered by the agreement represent 28% of these total units. On units not covered by the agreement, Whiting currently owns interests in 30 producing wells on 27 Whiting-operated units and 20 producing wells on 20 nonoperated units where 27 infill wells are planned under current spacing. Whiting also retains 18 operated and two nonoperated units where 38 wells could be drilled.

As a result of the cost sharing arrangement under the transaction, Whiting's finding cost of all producing wells drilled under the agreement will improve by 30%, the company reports.

Analysts with Pritchard Capital Partners says Whiting “has been knocking it out of the park in the Sanish Field,” with average IP rates on 32 operated wells in 2008 and 2009 a “very impressive” 2,254 barrels of oil equivalent per day. Finding and developing (F&D) costs are less than $8 per barrel, and IRRs at $70 Nymex for a 850,000 BOE EUR well are better than 100%, the analyst’s report.