Whiting Sees Lower Costs, Raises Production Guidance

Charlie Passut –  April 28, 2017- Natural Gas Intelligence Shale Daily “We don’t have any plans for further JVs in the Williston Basin,” Volker said. But he added that in the Niobrara Shale, “there are several parties who’ve contacted us and are interested in doing drilling out there because they realized we’ve got 5,000 drilling locations. We are talking to some of them. They like the economics, even with oil in the $40-50 range.”

Whiting Petroleum Corp. said the addition of new pipeline infrastructure in the Williston Basin in the first quarter helped drop oil differentials below the low end of its guidance, while its operations team helped lower its lease operating expenses (LOE) during the downturn in oil prices.

The Denver-based producer, one of the largest oil producers in North Dakota’s Bakken Shale, also reported production above the high end of its guidance for the quarter, and raised its production forecast for the remainder of the year.

On Wednesday, Whiting reported depreciation, depletion and amortization costs of $22.76/boe in 1Q2017, well below its initial guidance of $24-25/boe. An average sales price of $43.92/bbl for the quarter came in $7.95/bbl below the weighted average Nymex price of $51.87/bbl — beating the expected oil differential range of $9-10/bbl. Meanwhile, LOEs of $8.56/boe were at the low end of the company’s guidance of $8.50-9.50/boe.

The company boosted its production guidance to 10.2-10.8 million boe for 2Q2017, and to 45.2-46.2 million boe for the full year (up from 45-46 million boe). Capital expenditures for the year remain unchanged at $1.1 billion.

“We’re increasing our full year production guidance and lowering our cost per boe guidance across the board,” CFO Mike Stevens said during a conference call to discuss 1Q2017 on Thursday. “The improvements we have made in our cost structure and well productivity, along with our hedge positions, will allow us to operate effectively and efficiently in the $40-50 oil price environment.”

Whiting reported that its Loomer 44-33-3 well pad had an average initial production rate of 3,509 boe/d. The three-well pad, located in McKenzie County, ND, was completed last February with an average of 8.9 million pounds of sand per well. CEO James Volker said that after 50 days of production, the Loomer pad was tracking along a 1.5 million boe type curve.

“Our activity is designed to take us forward even at a $40 oil price environment,” Volker said. “We certainly wouldn’t consider cutting back until the trend got below $45. And I see everything that we’re doing in 2017 — and for that matter, what we planned in 2018 — already as being very economic, even at $40 or $45 oil.”

Whiting is currently running a five-rig drilling program in the Williston Basin, and one rig for its Redtail development program, which targets the A, B and C intervals of the Niobrara Shale and the Codell/Fort Hays formations, in the Denver-Julesburg Basin in Colorado.

Continue reading story at Natural Gas Intelligence Shale Daily

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