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Whiting Petroleum Sets Up For 2012
Whiting Petroleum (NYSE:WLL) plans to spend $1.6 billion to explore and develop its oil and gas properties in 2012, and leverage that spending to generate double digit production growth for the year. The company is active mostly in the Bakken and Three Forks formations in North Dakota. (To know more about oil and gas, read Oil And Gas Industry Primer.)
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2012 Capital Budget
Whiting Petroleum Corporation has budgeted $1.6 billion in capital spending in 2012, with $1.24 billion or 77% allocated for exploration and development activity. The balance of the funds will be used for additional leasehold purchases and infrastructure needed to process and transport production.
Whiting Petroleum Corporation expects that this level of spending will lead to production ranging from 28 million barrels of oil equivalent (BOE) per day to 29.5 million BOE per day in 2012. This would represent growth from 13 to 19% over the 2011 production of 24.8 million BOE.
Bakken
Whiting Petroleum Corporation plans to spend $851 million or just over 53% of its 2012 capital budget in the Northern Rockies. These funds will be used to drill 218 gross wells during the year, with most targeting the Bakken and Three Forks formations.
In 2011, Whiting Petroleum Corporation spent approximately $1.7 billion in capital, with $825.5 million directed towards the Northern Rockies.
2011 Summary
Whiting Petroleum Corporation reported 345.2 million BOE of proved reserves at the end of 2011, a 13.2% increase from the 304.9 million BOE reported a year earlier. The 40.3 million BOE increase in proved reserves means that the company replaced 164% of its 2011 production of 24.8 million BOE.
Whiting Petroleum Corporation might have produced more oil in 2011 if not for problems related to a delay in obtaining rigs needed to service wells in the Sanish field area. The company reported 66 shut-in wells in this area at the beginning of November 2011.
Whiting originally expected to reduce this backlog to 20 at the end of 2011, but due to the delay, the company reported 44 shut-in wells as of Dec. 31, 2011. The company estimates that an additional ten wells will be placed into production by the end of January 2012.
Bakken
The development of the Bakken has invigorated the oil and gas industry in North Dakota and led to a sharp rise in production from this state. In November 2011, production from North Dakota reached 510,000 barrels per day, up from 357,000 barrels per day in November 2010. Information on other major operators in the Bakken and Three Forks as well as other properties, are below:
Continental Resources (NYSE:CLR) has 901,000 net acres under lease and is operating 22 rigs in this play.
EOG Resources (NYSE:EOG) has 600,000 net acres under lease and plans to drill 84 gross wells into the Bakken in 2012.
Hess Corporation (NYSE:HES) has budgeted to spend $2.5 billion in 2012 for production and development expenditures in the Bakken and other unconventional plays in its portfolio. The company will operate 16 rigs here during the year.
The Bottom Line
Whiting Petroleum Corporation estimates that the company will grow production by a mid-teen percentage rate in 2012, and will enable this growth through the deployment of more than $850 million in drilling capital into the Northern Rockies. (For additional reading, check out A Guide To Investing In Oil Markets.)
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At the time of writing, Eric Fox did not own shares in any of the companies mentioned in this article.
Investopedia Markets: Explore the best one-stop source for financial news, quotes and insights.
2012 Capital Budget
Whiting Petroleum Corporation has budgeted $1.6 billion in capital spending in 2012, with $1.24 billion or 77% allocated for exploration and development activity. The balance of the funds will be used for additional leasehold purchases and infrastructure needed to process and transport production.
Whiting Petroleum Corporation expects that this level of spending will lead to production ranging from 28 million barrels of oil equivalent (BOE) per day to 29.5 million BOE per day in 2012. This would represent growth from 13 to 19% over the 2011 production of 24.8 million BOE.
Bakken
Whiting Petroleum Corporation plans to spend $851 million or just over 53% of its 2012 capital budget in the Northern Rockies. These funds will be used to drill 218 gross wells during the year, with most targeting the Bakken and Three Forks formations.
In 2011, Whiting Petroleum Corporation spent approximately $1.7 billion in capital, with $825.5 million directed towards the Northern Rockies.
2011 Summary
Whiting Petroleum Corporation reported 345.2 million BOE of proved reserves at the end of 2011, a 13.2% increase from the 304.9 million BOE reported a year earlier. The 40.3 million BOE increase in proved reserves means that the company replaced 164% of its 2011 production of 24.8 million BOE.
Whiting Petroleum Corporation might have produced more oil in 2011 if not for problems related to a delay in obtaining rigs needed to service wells in the Sanish field area. The company reported 66 shut-in wells in this area at the beginning of November 2011.
Bakken
The development of the Bakken has invigorated the oil and gas industry in North Dakota and led to a sharp rise in production from this state. In November 2011, production from North Dakota reached 510,000 barrels per day, up from 357,000 barrels per day in November 2010. Information on other major operators in the Bakken and Three Forks as well as other properties, are below:
Continental Resources (NYSE:CLR) has 901,000 net acres under lease and is operating 22 rigs in this play.
EOG Resources (NYSE:EOG) has 600,000 net acres under lease and plans to drill 84 gross wells into the Bakken in 2012.
Hess Corporation (NYSE:HES) has budgeted to spend $2.5 billion in 2012 for production and development expenditures in the Bakken and other unconventional plays in its portfolio. The company will operate 16 rigs here during the year.
The Bottom Line
Whiting Petroleum Corporation estimates that the company will grow production by a mid-teen percentage rate in 2012, and will enable this growth through the deployment of more than $850 million in drilling capital into the Northern Rockies. (For additional reading, check out A Guide To Investing In Oil Markets.)
Use the Investopedia Stock Simulator to trade the stocks mentioned in this stock analysis, risk free!
At the time of writing, Eric Fox did not own shares in any of the companies mentioned in this article.
by
Eric Fox
Eric J. Fox, CFA, is a freelance financial writer and has previous experience working in the asset management industry as an equity analyst and portfolio manager on the buy side. His favorite area to write on is the energy sector and he keeps current on the industry by reading Haynesville Shale, Permian Oil and Gas and various other blogs.
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