Denver Oct 30, 2015 (Thomson StreetEvents) -- Edited Transcript of Whiting Petroleum Corp earnings conference call or presentation Thursday, October 29, 2015 at 3:00:00pm GMT TEXT version of Transcript ================================================================================ Corporate Participants ================================================================================ * Eric Hagen Whiting Petroleum Corporation - VP of IR * Jim Volker Whiting Petroleum Corporation - President & CEO * Michael Stevens Whiting Petroleum Corporation - CFO * Rick Ross Whiting Petroleum Corporation - SVP of Operations * Mark Williams Whiting Petroleum Corporation - SVP of Exploration and Development ================================================================================ Conference Call Participants ================================================================================ * Scott Hanold RBC Capital Markets - Analyst * Neal Weasey SunTrust Robinson Humphrey - Analyst * Jeffrey Campbell Tuohy Brothers - Analyst * David Deckelbaum KeyBanc Capital Markets - Analyst * Ryan Oatman Cowen and Company - Analyst * Brian Corales Howard Weil - Analyst * David Cameron Wells Fargo Securities - Analyst * Tim Rezvan Sterne, Agee & Leach, Inc. - Analyst * Jason Smith BofA Merrill Lynch - Analyst * Tarek Ahmed JPMorgan - Analyst * Mike Kelly Seaport Global - Analyst * Paul Grigel Macquarie Research Equities - Analyst * John Nelson Goldman Sachs - Analyst * Michael Scialla Stifel Nicolaus - Analyst * Kevin Andrus GMT Capital - Analyst ================================================================================ Presentation -------------------------------------------------------------------------------- Operator [1] -------------------------------------------------------------------------------- Welcome, everyone, to the Whiting Petroleum Corporation's third quarter 2015 financial and operating results conference call. (Operator Instructions) I will now turn the call over to Eric Hagen, the Company's Vice President of Investor Relations. -------------------------------------------------------------------------------- Eric Hagen, Whiting Petroleum Corporation - VP of IR [2] -------------------------------------------------------------------------------- Thank you, Keith. Good morning and welcome to Whiting Petroleum Corporation's third-quarter 2015 earnings conference call. On the call for Whiting this morning is the Whiting Management team. During this call, we will review our results for the third quarter of 2015 and then discuss the outlook for the remainder of the year. This conference call is being recorded and will also be available on our website at www.whiting.com. To access the presentation slides, please click on the Investor Relations box on the menu and then click on the Presentations and Events link. Please note, that our remarks and the answers to questions include forward-looking statements that are subject to risks that could cause actual results to differ materially from those in the forward-looking statements. Additional information concerning these risks is set forth on slide 1, in our earnings release. Reconciliations of non-GAAP measures we refer to and the GAAP measures can be found in our earnings release and at the end of our webcast slides. Please take note that our form 10-Q for the three months ended September 30, 2015, is expected to be filed later today. With that, I will turn the call over to Jim Volker. -------------------------------------------------------------------------------- Jim Volker, Whiting Petroleum Corporation - President & CEO [3] -------------------------------------------------------------------------------- Thanks, Eric. Hello, everyone, and thanks for joining us. We're going to get to your questions as soon as possible so we will be brief with our comments. Production at Whiting averaged 160,600 BOEs a day, that is net after 8,700 BOEs a day at property sales. Our new completion designs in the Williston Basin are delivering 44% production increases over second quarter 2015, on a per well basis. We reported outstanding results at our Johnson pad in our large Cassandra area which tested an average rate per well of 5,224 BOEs per day. Year-to-date, we have sold approximately $400 million of assets, an increase of $100 million over the third quarter. We anticipate further timely non-core asset sales by year-end. After our redetermination with our banks, our credit agreements from our bank group remain unchanged with commitments at $3.5 billion. This demonstrates the confidence our banking group has in the quality of our assets and in our strategic plan. On slide 3, you can see our strong capital structure. We have $38 million in cash on hand and nothing drawn on our $3.5 billion of commitments on our $4 billion borrowing base. We are well-positioned from a liquidity and debt maturity perspective to deal with lower oil prices. With a focus on the Bakken and the Niobrara, our total net production averaged 160,600 BOEs per day after the sale of 8,700 BOEs per day in the second quarter. As you can see on slide 4, 93% of our total production in the third quarter came from our Rocky Mountain region. Within that region, 131,000 BOEs per day, the Bakken, Three Forks represented 82% of our total production. We continue to be a focused Company. On slide 5, we provide a overview of our plays in the Williston Basin where we control 668,000 net acres. We control the sweet spots in the Central, Eastern and Southern Williston Basin and continue to increase productivity with new completion technology. During the third quarter we completed wells with average fracs and volumes of 5 million pounds versus 3.5 million pounds in the second quarter. The third quarter wells achieved 30-day average rates 44% better than the second quarter. Turning to our Redtail field, we completed 15 net wells in the quarter. Slide 8, shows the infrastructure at Redtail, we are pleased to report the construction at Phase 2 of our Redtail plant was completed a bit early during the third quarter. This expands plant inlet capacity to 50 million cubic feet of gas per day from 20 million cubic feet of gas per day. I will now turn it over to Mike Stevens, our CFO, who will discuss our financial results in the third quarter. -------------------------------------------------------------------------------- Michael Stevens, Whiting Petroleum Corporation - CFO [4] -------------------------------------------------------------------------------- On slide 9, you can see our third quarter 2015 financial results. Our net income reflects non-cash charges on non-core assets. The majority of the charge was at our North Ward Estes CO2 field and was related to the decrease in oil and gas prices at quarter end. We also wrote down the goodwill associated with the Kodiak acquisition. Our discretionary cash flow in the third quarter totaled $280 million. Our unit costs in the third quarter 2015 have improved significantly from the third quarter of 2014. Our DD&A rate per BOE has dropped 20% to $21.40. LOE per BOE has decreased 26% to $8.50 and G&A per BOE is down 12% to $3.03. Our guidance for the fourth quarter and full-year 2015 is detailed on slide 11. We left our fourth quarter production guidance unchanged at 153,000 BOEs per day. Here is detailed at quarter's CapEx illustrating the path to our 2016 approximate $1 billion all in CapEx budget. We spent $266 million in development capital in the Bakken and Redtail, and $137 million on non-op drilling facilities EUR exploration and land. We anticipate that CapEx on these items will decline significantly in the fourth quarter. In combination with the impact of dropping three rigs late in the third quarter, we anticipate all in fourth quarter CapEx under $300 million. On slide 12, you can see we maintain a strong balance sheet with $38 million of cash on hand and nothing drawn on our $4 billion borrowing base. Slide 13, shows our outstanding bonds as of September 30, 2015. It also shows that we are well within all of the covenants in our credit agreement and our bond indentures. Slide 14, shows our crude oil hedge positions as of October 1. We are 52% hedged for the fourth quarter 2015, and 45% hedged for 2016. With that, I will turn the call back over to Jim. -------------------------------------------------------------------------------- Jim Volker, Whiting Petroleum Corporation - President & CEO [5] -------------------------------------------------------------------------------- Thanks, Mike. Ladies and gentlemen, to summarize, in the third quarter, we decreased our capital spending 46% and as planned, still maintained a flat production profile after asset sales. We achieved this while keeping our balance sheet strong with $38 million of cash on hand and an undrawn $4 billion borrowing base. We remain committed to our goal of maintaining a strong balance sheet while positioning the Company to run well in a $40 to $50 oil price environment. With that, Keith, would you please open up the conference call for questions. ================================================================================ Questions and Answers -------------------------------------------------------------------------------- Operator [1] -------------------------------------------------------------------------------- (Operator Instructions) Scott Hanold, RBC Capital Markets. -------------------------------------------------------------------------------- Scott Hanold, RBC Capital Markets - Analyst [2] -------------------------------------------------------------------------------- Let me start first and Jim, you ended the comments by saying your position obviously for the support of $40 to $50 environment. Is your current level of activity or where you think you are going to be by the end of this year, that optimal level to be at if this is a lower for longer range? -------------------------------------------------------------------------------- Jim Volker, Whiting Petroleum Corporation - President & CEO [3] -------------------------------------------------------------------------------- Yes. -------------------------------------------------------------------------------- Scott Hanold, RBC Capital Markets - Analyst [4] -------------------------------------------------------------------------------- Okay. And then with respect to obviously the focus is, is a really high focus on CapEx levels and they did come in a little bit above expectations this quarter. Could you give a little color on some of the major items and how that certainly starts to improve as we kind of migrate toward the end of this year? -------------------------------------------------------------------------------- Jim Volker, Whiting Petroleum Corporation - President & CEO [5] -------------------------------------------------------------------------------- Yes, we will. We anticipated that question. Mike's going to try to answer the first part of it and then I am going to answer the second part. -------------------------------------------------------------------------------- Michael Stevens, Whiting Petroleum Corporation - CFO [6] -------------------------------------------------------------------------------- So the main reason that third quarter was elevated due to facilities and non-operated drilling. On the non-operating drilling side, the AOPs that we approved back in 2014, many of them are just now being drilled, completed and then it takes a while for them to bill us. It is a little bit surprising on some of the delay that's went on. The schedule's not very predictable. If you look at the non-operated, of the trend so far this year, it went from $133 million in the first quarter down to $78 million in the second quarter and it stayed up a little higher than we thought at $58 million in the third. We just don't have complete visibility in all that spending. On the facility side, the expansion, basically a lot of the facility costs at Redtail came in a little quicker than we thought. We did complete the plant, moved that up to $50 million a day, we got the Redtail water systems and electrical systems finished quicker than we thought. And all of those items are going to have a positive impact on LOE which is why you can see me guiding the LOE down a little bit when we move into the fourth quarter. So we do expect these items to normalize and CapEx to come in under $300 million in the fourth quarter. The other item that has a lot of impact on CapEx is how many rigs are running. We are running 11 rigs and we dropped three of those in September, so late in the third quarter. So the impact of that will benefit the fourth quarter, but the completion activity will still be going on for those wells drilled. So the ultimate benefit of dropping those three rigs are really happening in the first quarter of 2016. -------------------------------------------------------------------------------- Jim Volker, Whiting Petroleum Corporation - President & CEO [7] -------------------------------------------------------------------------------- And then the talk in general about non-op going forward, we have dealt with the non-op by, as we mentioned in the second quarter press release, packaging up a large number of our non-op Williston Basin on a well bore only sale basis wherein we achieved to date, over $11 million of cash payments and achieved a non-cost bearing overriding royalty interest going forward. So it will be easier to predict the non-op level as it declines. And second of course, as we concentrate therefore on our operated drilling. I hope that helps you. -------------------------------------------------------------------------------- Scott Hanold, RBC Capital Markets - Analyst [8] -------------------------------------------------------------------------------- Yes, thanks. It does. Could you give us a sense in that under $300 million number then, what is the expectation for non-op in Q4 so we can look at the progression of $133 million, $78 million, $52 million? What is the plan number for the fourth quarter for non-op. -------------------------------------------------------------------------------- Jim Volker, Whiting Petroleum Corporation - President & CEO [9] -------------------------------------------------------------------------------- $15 million to $20 million. -------------------------------------------------------------------------------- Scott Hanold, RBC Capital Markets - Analyst [10] -------------------------------------------------------------------------------- $15 million to $20 million. Is that net of any wellbore packages you put together? -------------------------------------------------------------------------------- Jim Volker, Whiting Petroleum Corporation - President & CEO [11] -------------------------------------------------------------------------------- Yes. -------------------------------------------------------------------------------- Scott Hanold, RBC Capital Markets - Analyst [12] -------------------------------------------------------------------------------- Okay. Appreciate it. Thank you. -------------------------------------------------------------------------------- Jim Volker, Whiting Petroleum Corporation - President & CEO [13] -------------------------------------------------------------------------------- You are welcome, Scott. -------------------------------------------------------------------------------- Operator [14] -------------------------------------------------------------------------------- Neal Dingmann, SunTrust. -------------------------------------------------------------------------------- Neal Weasey, SunTrust Robinson Humphrey - Analyst [15] -------------------------------------------------------------------------------- This is actual Neal [Weasey] in for Neal Dingmann. Just a question on Cassandra. You guys had a lot of strong results there after some strong results in Dunn County last quarter. Just curious on where you guys see that well design going after upping the profit levels? And again, a follow-up to that, if you guys see any upside to that Williston type curve, if we could see a revision there by year end? Thanks. -------------------------------------------------------------------------------- Jim Volker, Whiting Petroleum Corporation - President & CEO [16] -------------------------------------------------------------------------------- The answer is we are in the process of looking at that type curve right now. And as you know, we have already announced that we have been seeing really across the board in the Williston basin, over a 40% and in many cases, up to a 50% increase in the first 30-day rates, 60-day rates, et cetera. So the longer we have in order to come up with the adjustment in that type curve to ultimately predict EUR, the better we will be at it. But we do anticipate some uplift in our EUR. I'm not going to give you a number yet, but it should be significant as we move forward with this current completion design. And I might say improvement in our economics as we concentrate on, as you know keeping our costs down. The cost basically has come down from $8.5 million last year to $6.5 million or less this year in the Bakken and they've gone from $6.5 million at Redtail to $4.5 million. We're very pleased with what we have been able to accomplish. We are very pleased with the great cooperation we've received from the service companies and we frankly, anticipate that the improvement in design and the reduction in cost will allow us to prosper at even $40 oil. Thank you. -------------------------------------------------------------------------------- Neal Weasey, SunTrust Robinson Humphrey - Analyst [17] -------------------------------------------------------------------------------- Perfect. Thank you, guys. -------------------------------------------------------------------------------- Jim Volker, Whiting Petroleum Corporation - President & CEO [18] -------------------------------------------------------------------------------- You bet. -------------------------------------------------------------------------------- Operator [19] -------------------------------------------------------------------------------- Jeffrey Campbell, Tuohy Brothers. -------------------------------------------------------------------------------- Jeffrey Campbell, Tuohy Brothers - Analyst [20] -------------------------------------------------------------------------------- Good morning. The first question I wanted to ask you with regard to thinking about 2016 spend. I think you've talked pretty specifically about trying to stay near or within cash flow and that can be tricky because of commodity price swings. I was just wondering A, is there a level of overspend that would be tolerable? And B, will you perhaps increase your hedging in 2016 to help manage staying within cash flow? -------------------------------------------------------------------------------- Jim Volker, Whiting Petroleum Corporation - President & CEO [21] -------------------------------------------------------------------------------- So one thing you will note is that our level of hedging is going to go up as we sell these properties. And so we've sold a few more here. Another 2,600, 2,500 barrels of oil per day that we'll close in November. That was the sale that was in the press release at $52 million and so the percentage will rise with those sales. And yes, we will look to opportunistically put on more hedges. -------------------------------------------------------------------------------- Jeffrey Campbell, Tuohy Brothers - Analyst [22] -------------------------------------------------------------------------------- Thank you. -------------------------------------------------------------------------------- Jim Volker, Whiting Petroleum Corporation - President & CEO [23] -------------------------------------------------------------------------------- Did you want to go back and restate the first part of that question in case I didn't get -- -------------------------------------------------------------------------------- Jeffrey Campbell, Tuohy Brothers - Analyst [24] -------------------------------------------------------------------------------- That was pretty helpful. I just wondered if there was some level of due to the vague recent commodities if there is some level of overspend above cash flow that you would consider tolerable? -------------------------------------------------------------------------------- Jim Volker, Whiting Petroleum Corporation - President & CEO [25] -------------------------------------------------------------------------------- Well, as you know, we've got a $3.5 billion undrawn commitment from our banks. And therefore, we certainly have the ability to sustain some amount of overspending but that is not, and I will repeat, not our plan. If there was some exceptionally good results and we elected to I guess I would say speed up drilling in a particular area, as a result of exceptional results even at let's say $40 oil, if it really made good sense there, we would not be afraid to do that. But that is not, and I will repeat not, currently the plan. -------------------------------------------------------------------------------- Jeffrey Campbell, Tuohy Brothers - Analyst [26] -------------------------------------------------------------------------------- Okay. I think that was pretty explicit. Thank you. For my other question I just wanted to refer to the press release which said the completions in Redtail were going to pick up in the first quarter of 2016. Could you tell me how many uncompleted wells you have in your current Redtail inventory coming into the new year? -------------------------------------------------------------------------------- Jim Volker, Whiting Petroleum Corporation - President & CEO [27] -------------------------------------------------------------------------------- Rick Ross will answer that one. -------------------------------------------------------------------------------- Rick Ross, Whiting Petroleum Corporation - SVP of Operations [28] -------------------------------------------------------------------------------- I would say we've got a small inventory right now of uncompleted wells. And that's really because we are drilling larger pads now. We are drilling a 16-well pad and two 8-well pads. And what is remaining to be completed are just the wells that have been drilled on those pads prior to getting the drilling rig off. And as we mentioned, those will be, the completions will start in the first quarter of next year and probably becoming on production towards the end of the first part of the second quarter. -------------------------------------------------------------------------------- Jeffrey Campbell, Tuohy Brothers - Analyst [29] -------------------------------------------------------------------------------- Okay. Great. Thanks very much. -------------------------------------------------------------------------------- Jim Volker, Whiting Petroleum Corporation - President & CEO [30] -------------------------------------------------------------------------------- You are welcome. -------------------------------------------------------------------------------- Operator [31] -------------------------------------------------------------------------------- David Deckelbaum, KeyBanc. -------------------------------------------------------------------------------- David Deckelbaum, KeyBanc Capital Markets - Analyst [32] -------------------------------------------------------------------------------- Thanks for taking my questions. I was just wondering either you or Mark could add some color to this. Someone had asked before, but how many more tests do have coming up with increased sand loading? Can you talk about the specific pilots that you have ongoing right now that might stretch some of the completion techniques that we are seeing right now? -------------------------------------------------------------------------------- Jim Volker, Whiting Petroleum Corporation - President & CEO [33] -------------------------------------------------------------------------------- Sure. Mark wants to answer that one. -------------------------------------------------------------------------------- Mark Williams, Whiting Petroleum Corporation - SVP of Exploration and Development [34] -------------------------------------------------------------------------------- Sure. I will say in general with regard to our completion program, we made pretty much a wholesale switch now to larger sand volumes and along with that, we are really focusing on distributing that sand, which means more entry points. So we've employed some other techniques that really help in that. We were last year, at 3.5 million pounds per well and now we are up pretty consistently, up very close to 7 million. It varies just a little bit. We have a few that are higher, a few that are a little bit lower but across the board we've increased sand volumes. We're seeing exceptional results in the areas that we talked about pretty much in the Central Basin. We are very concentrated there in Cassandra, Hidden Bench, especially in Tarpon and that is really -- we've seen pretty dramatic uplift in our initial rates. We don't have a tremendous amount of history behind those wells yet. But the last two or three months, we've been employing a lot of techniques to try and increase our number of entry points, [Gaverda] technology, et cetera, and that's where we are really seeing the big productivity gains right now. Again, our rigs are fairly focused in that area. We have rigs in all of our Central Basin area. A little bit gas here is really where we are seeing the best results right now. -------------------------------------------------------------------------------- David Deckelbaum, KeyBanc Capital Markets - Analyst [35] -------------------------------------------------------------------------------- Got it. I appreciate the color on that. And Jim, could you give us some color on -- we saw the incremental $100 million of non-core asset sales, could you give us a lay of the land of where you guys are at right now with remaining packages and expected timelines there? -------------------------------------------------------------------------------- Jim Volker, Whiting Petroleum Corporation - President & CEO [36] -------------------------------------------------------------------------------- So the focus now -- early on, we focused on the sale of higher LOE older producing properties, conventional properties, basically in our inventory. They typically had LOE around $20 a barrel. So we sold 400 million of those and that is about the 8,700 BOEs a day. That's about 400 additional barrels there that we reported here since the previous release. Going forward, we are going to be concentrating on the midstream and that includes the sale of our water distribution system at Redtail. Water distribution and even more importantly, our produced water gathering and disposal system which is now, as a result of the money we put into it in the second and third quarter, pretty much complete and should serve our needs for the foreseeable future. So it is basically time to harvest that particular asset as well as perhaps some of our plants. But I want to underscore that we have strong interest, very strong interest, in all of our midstream assets that I have mentioned previously. But we want to sell them for good price and most importantly, actually we want a good partner in there. Someone who we believe will be a good operator of plants and put in the necessary capital. I am optimistic that we will get both based upon the strong interest we have received to date. -------------------------------------------------------------------------------- David Deckelbaum, KeyBanc Capital Markets - Analyst [37] -------------------------------------------------------------------------------- Okay. Thanks, Jim. -------------------------------------------------------------------------------- Jim Volker, Whiting Petroleum Corporation - President & CEO [38] -------------------------------------------------------------------------------- You are welcome. -------------------------------------------------------------------------------- Operator [39] -------------------------------------------------------------------------------- Ryan Oatman, Cowen. -------------------------------------------------------------------------------- Ryan Oatman, Cowen and Company - Analyst [40] -------------------------------------------------------------------------------- Good morning. The latest Williston results demonstrate initial 30-day rates that are about 30% above the type curve comparable costs. Just want to see if you could speak to the Williston results that underpin that 2016 color you've previously provided of about 147,000 barrels of oil equivalent per day? -------------------------------------------------------------------------------- Eric Hagen, Whiting Petroleum Corporation - VP of IR [41] -------------------------------------------------------------------------------- I think as we've said -- it's Eric Hagen, Ryan. I think as we've said before, those give risk credit for increased sand enhanced completions. So that 147,000 BOE per day guidance we gave did not include the full impact of that. So there could be an upside to that from the enhanced completions. -------------------------------------------------------------------------------- Ryan Oatman, Cowen and Company - Analyst [42] -------------------------------------------------------------------------------- Got you. That's helpful. Maybe a question for Mike, here. I'm looking at the Q4 guidance, you are definitely calling for narrowed differentials lower per unit operating expense. As we look into 2016, I just want to see if you could maybe speak to the sustainability of both of those items? -------------------------------------------------------------------------------- Michael Stevens, Whiting Petroleum Corporation - CFO [43] -------------------------------------------------------------------------------- Well, on differentials first of all, we did finally see a nice step down from around $9 to $7 Company-wide. And that is really pretty close to where it's at in both the Redtail area and the Bakken. I've guided fourth quarter to be between $7 and $8. Right now, it is still trending towards the $7 number. It hasn't improved but it hasn't gotten any worse. As we look out to next year, historically, differentials run about 10% of NYMEX. That would mean differentials should be down around 5%. We don't see that happening yet but we're certainly hoping for that. So I would say right now $7 is a good number as you look forward. And then on LOE, I've guided that down a little bit given some of the systems we've got running now at Redtail. It's going to help our LOE a little bit out there. And our Redtail rate has come down substantially this year. We've really made some nice progress. Down to around, a little under $7 per BOE at Redtail and the Bakken has always been in that range. So we've done good. We've got this last package that we mentioned we are going to sell. That's going to help LOE a little bit as well. So I think going forward, I've guided the midpoint at $8.25. Probably can improve on that a little bit as we move into 2016. I think we will be able to improve it somewhere down to around $8. -------------------------------------------------------------------------------- Jim Volker, Whiting Petroleum Corporation - President & CEO [44] -------------------------------------------------------------------------------- Good questions, Ryan. Thank you. -------------------------------------------------------------------------------- Operator [45] -------------------------------------------------------------------------------- Brian Corales, Howard Weil. -------------------------------------------------------------------------------- Brian Corales, Howard Weil - Analyst [46] -------------------------------------------------------------------------------- Great job on the enhanced completions. It seems like it was a quick step change that you all have seen. Is that all just enhanced completions or is some of that where the rigs are located? -------------------------------------------------------------------------------- Mark Williams, Whiting Petroleum Corporation - SVP of Exploration and Development [47] -------------------------------------------------------------------------------- We did a fair bit of high grading early in this year in the first quarter stretching a little bit into the second quarter. We've got our rigs and have had for the last couple of quarters pretty much where we want them. The results that you are seeing here really have are reflecting the two things that we've talked about before and that's increased sand volume. So essentially we're doubling the amount of sand that we are putting into our completions. And the other one is more entry points which we are achieving by a variety of different methods but one of the more interesting ones is the use of diverter technology and we are getting really good results. The wells that we have used that on are primarily here in the last three months and those are the ones that really stand out from the pack in terms of the initial rates. Still a little early to say how they are going to do in the long-run but we are getting very good initial rates on those. Over 3,000 barrels per day on average for the ones that we're using that technology on. -------------------------------------------------------------------------------- Brian Corales, Howard Weil - Analyst [48] -------------------------------------------------------------------------------- And then, Mark, just one more on the same topic is, are you all also trying to go even more sand than call it, 7 million pounds? Closer to 10? -------------------------------------------------------------------------------- Mark Williams, Whiting Petroleum Corporation - SVP of Exploration and Development [49] -------------------------------------------------------------------------------- Yes. -------------------------------------------------------------------------------- Brian Corales, Howard Weil - Analyst [50] -------------------------------------------------------------------------------- Because I think I already heard some other operators doing that as well. -------------------------------------------------------------------------------- Mark Williams, Whiting Petroleum Corporation - SVP of Exploration and Development [51] -------------------------------------------------------------------------------- Yes. We are selectively testing that in a few places. We see really good results going up to 7 million pounds. But we are selectively testing even more than that in places where we think it makes sense. I personally think that we are going to get good results as we continue to bump up the amount of sand. And the other thing that is happening is we are getting very good cooperation. As Rick will tell you here from the service providers that are pumping those jobs for us, they've been very good about getting the costs for wells at equal to, or in some cases even less than, what we were spending previously. That is all working very much in our favor. -------------------------------------------------------------------------------- Brian Corales, Howard Weil - Analyst [52] -------------------------------------------------------------------------------- All right, guys. Thank you. -------------------------------------------------------------------------------- Jim Volker, Whiting Petroleum Corporation - President & CEO [53] -------------------------------------------------------------------------------- You are welcome. -------------------------------------------------------------------------------- Operator [54] -------------------------------------------------------------------------------- David Cameron, Wells Fargo. -------------------------------------------------------------------------------- David Cameron, Wells Fargo Securities - Analyst [55] -------------------------------------------------------------------------------- Good morning. Niobrara, could you guys just talk a little more about how you think about 2016 out there and maybe some of the recent softs around the Codell and just give us a little more of an update there? -------------------------------------------------------------------------------- Jim Volker, Whiting Petroleum Corporation - President & CEO [56] -------------------------------------------------------------------------------- I will let Mark comment on that. -------------------------------------------------------------------------------- Mark Williams, Whiting Petroleum Corporation - SVP of Exploration and Development [57] -------------------------------------------------------------------------------- So right now we have two rigs out there. The plan is to keep those two rigs. They are very much engaged in our development program and we are getting very good results out of there. The Codell, so far we have drilled four Codell wells. A couple of them have been a little bit better than our typical Niobrara wells. A couple of them just a little bit worse. On average, they are about equal. So we're seeing good consistent results. The problem is we don't have enough production data out there to really predict what the EURs are going to be. So the Codell is now very much part of our development mix and we are drilling Codell's right along with the Niobrara wells and so far we are getting good results. We just don't have quite enough production history to be able to forecast complete results here. -------------------------------------------------------------------------------- Jim Volker, Whiting Petroleum Corporation - President & CEO [58] -------------------------------------------------------------------------------- Dave, this is Jim. I will follow up with that a little bit in the sense that we have recently completed pretty much Eastern portion of the Basin study that of course encompasses all of our acreage. And so it takes advantage of the old wells. I know you are aware of this because of your history here in Denver. As you know, that area out there is pincushioned with old wells that went through the Niobrara and the Codell on down to the D and the J sand. So we have been able across our acreage position now, as a result of that old drilling, our own drilling, our own coring and our own 3D seismic, our own proprietary 3D seismic, to isolate those thick areas of the A, the B, the C and the Codell that have the highest resistivity and to parenthetically comment here, that I will say was difficult for others to comprehend because they looked only at the old logs and what the old logs were telling them, they did not ask what made the old logs read that way. So I want to underscore that the resistivity and the oil in place out there is a lot higher than folks originally thought, us included. As we did our core and we could analyze what was happening to those old logs, essentially the morrow that is in those zones, some of them, masked the great amount of oil in place by showing lower resistivity than is actually the case. That in combination with the 3D seismic that allows us to see the sweet spot of the Colorado mineral belt and the areas of high fracturing or fracture swarms tells us that the entirety of our acreage position is good in multiple zones. Sometimes it is best in the A and the B, sometimes it's best in the Codell. I really believe, more strongly than ever, that this area out there, which as you know, is unchallenged by a high population. In fact, it's a very low population of only about one person per square mile, and it's an energy corridor that not only oil and gas, but wind energy out there, is a perfect place for this large-scale development that we are planning to occur out there. I continue to believe that over time, that the Redtail area can be as big for us to get us up into that, let's say 100,000 barrels per day, just like the Bakken does for us. So anyway, I just want to underscore that the drilling out there being done by us and from what we can tell, the other large acreage owner out there, is underscoring our belief and their belief in this area as warranting a large-scale development. -------------------------------------------------------------------------------- David Cameron, Wells Fargo Securities - Analyst [59] -------------------------------------------------------------------------------- That's great color. Thank you. Just along those same lines, I know you're never done with a completion design, I guess, it's always being tweaked. Are you doing anything different or new out there than say what you talk about two, three months ago as far as completing those wells? -------------------------------------------------------------------------------- Jim Volker, Whiting Petroleum Corporation - President & CEO [60] -------------------------------------------------------------------------------- Yes, Rick would like to talk about that. -------------------------------------------------------------------------------- Rick Ross, Whiting Petroleum Corporation - SVP of Operations [61] -------------------------------------------------------------------------------- This is Rick Ross. Current completion design there are on a 960 basis, about five million to 5.5 million pounds of sand. We are doing cemented liner completions. We've been doing that for some time and we have moved to slip water completions. That is kind of the current approach. One of the other things we will be experimenting with is for the diverter that Mark talked about that we have been successful in North Dakota. So continuing to try and evolve those completions and improve as we go. The major thing that we have done is getting our costs down very significantly working with our service providers, allowing us to get our cost down to $4.5 million per well and still pump quite substantial jobs. -------------------------------------------------------------------------------- David Cameron, Wells Fargo Securities - Analyst [62] -------------------------------------------------------------------------------- Okay. Thanks, Rick. Thanks for the question. -------------------------------------------------------------------------------- Operator [63] -------------------------------------------------------------------------------- Tim Rezvan, Sterne, Agee CRT. -------------------------------------------------------------------------------- Tim Rezvan, Sterne, Agee & Leach, Inc. - Analyst [64] -------------------------------------------------------------------------------- Good morning, folks. Thank you for taking my question. One theme that has not been hit on yet is a pretty impressive reduction in LOE that has come over the last six or so quarters. I know you talked about some of the infrastructure work in the Niobrara. I guess the question is, how much of that reduction is going to stick if oil does rally a bit? And what are you doing now to continue to grind that down to $8 or below? -------------------------------------------------------------------------------- Michael Stevens, Whiting Petroleum Corporation - CFO [65] -------------------------------------------------------------------------------- In terms of grinding it down, this most recent property sale that we mentioned will have some impact on that. Probably help us about $0.25. The systems out at Redtail that we mentioned already, we continue to work our vendors for more concessions, and we continue to work the Kodiak properties to gain more efficiencies on them. Although we've done pretty good on all those different aspects. So that is why I have already talked about LOE probably trending down to around $8. If the price of crude moves back up, I imagine there'll be some increase in LOE, because a good chunk of the LOE, 25% to 30%, is based on energy cost. Higher energy prices will flow through to our LOE but we believe most of it is sustainable. -------------------------------------------------------------------------------- Tim Rezvan, Sterne, Agee & Leach, Inc. - Analyst [66] -------------------------------------------------------------------------------- Okay. Thanks. That's pretty helpful. And I think your comments were interesting before talking about getting the Redtail saltwater disposal system completed earlier than planned and then it was the first asset that you mentioned on the Q4 asset sale list on midstream. Is that a fair conclusion to draw, that the early build might help on a monetization of that? And I guess, maybe that is a justification for that incremental Q3 CapEx that is surprised some folks. Is that a right inference to make? -------------------------------------------------------------------------------- Jim Volker, Whiting Petroleum Corporation - President & CEO [67] -------------------------------------------------------------------------------- Yes. That and the plant and the water disposal system did get done a little early and that contributed to the little higher CapEx there in Q3. That's true. And then if I can just comment for you on the general nature of what we are doing now with these asset sales of the high LOE properties and basically concentrating on drilling our Niobrara and our Williston Basin properties, is that we are really selling off those things that don't do as well, have a thinner margin at lower oil prices and we are concentrating on those things that have the highest margin, that we own, at lower oil and gas prices. So, and at the same time, basically we are targeting enough of those sales that we hope to reduce some of our debt out there with the proceeds of those sales. So then what you will have is a Company that as we go forward and begins to grow from that base which is net of our production sales, will be a company that has excellent metrics. And our goal is to be among the very best in these metrics of LOE per BOE, G&A per BOE, et cetera, DD&A per BOE here in the lower 48. -------------------------------------------------------------------------------- Tim Rezvan, Sterne, Agee & Leach, Inc. - Analyst [68] -------------------------------------------------------------------------------- Okay. And if I could sneak one last one in? Is it safe to say that the LOE on your North Ward Estes property is probably markedly higher than across your unconventional properties? -------------------------------------------------------------------------------- Jim Volker, Whiting Petroleum Corporation - President & CEO [69] -------------------------------------------------------------------------------- Right. It is. I would like to comment on North Ward Estes because I would say we, I, have like that particular property for a long period of time. I will explain briefly what we've done out there at North Ward Estes so that we can sell it if we get a reasonable offer or retain it if we don't get a reasonable offer. And that is, we basically have adjusted, as you do in these secondary and tertiary recovery projects when prices decline, to put the thing basically into the situation where we are not spending any more CapEx and that is pretty easy to do. You just basically stop expanding the flood so you don't have CapEx for further expansion. And to comment where we were on that, we had five phases done of eight phases out there. We have taken the production from about 2,500 barrels of oil per day up to just under 10,000 BOEs a day. And so now what we're doing is we reduced the CapEx and we basically have reduced our LOE by putting in the minimum contractual amount under our CO2 contracts and essentially putting it into a harvest mode where we can positively cash flow that property at $40, $45, $50 oil. Really it does two things when we do that. It helps our LOE per BOE out there, it has come down, and it also makes it a more attractive property. So I think we've accomplished two things out there which makes it possible for us to either retain it or sell it, but in either case it will improve our metrics. I hope that is helpful to you. -------------------------------------------------------------------------------- Tim Rezvan, Sterne, Agee & Leach, Inc. - Analyst [70] -------------------------------------------------------------------------------- It was. Thank you for that response. -------------------------------------------------------------------------------- Jim Volker, Whiting Petroleum Corporation - President & CEO [71] -------------------------------------------------------------------------------- You are welcome. -------------------------------------------------------------------------------- Operator [72] -------------------------------------------------------------------------------- Jason Smith, Bank of America Merrill Lynch. -------------------------------------------------------------------------------- Jason Smith, BofA Merrill Lynch - Analyst [73] -------------------------------------------------------------------------------- Hey, good morning everyone. Good morning Jim. Just coming back to the earlier question on the allocation of your CapEx. You talked a little bit about Q4. Can you just give some color around the $1 billion for next year and basically what you've assumed that the breakdown of D&C versus facilities and non-op in that number? -------------------------------------------------------------------------------- Jim Volker, Whiting Petroleum Corporation - President & CEO [74] -------------------------------------------------------------------------------- Is going to be similar to Q4, Jason. I think Mike give a pretty good breakout of DNC going to around $200 million. -------------------------------------------------------------------------------- Michael Stevens, Whiting Petroleum Corporation - CFO [75] -------------------------------------------------------------------------------- It is roughly 90% D&C, 10% other. -------------------------------------------------------------------------------- Jason Smith, BofA Merrill Lynch - Analyst [76] -------------------------------------------------------------------------------- Got it. Okay, thanks. Your acreage in the Bakken and Redtail, it looks like it's down about 10% from last quarter. Can you talk about what drove that and if there was any of your defined inventory associated with that? -------------------------------------------------------------------------------- Jim Volker, Whiting Petroleum Corporation - President & CEO [77] -------------------------------------------------------------------------------- No. It really wasn't. The number of our drilling locations that we've been counting, which is about 13,000, hasn't really declined. All we did there was primarily let some acreage in Starbuck and Big Island go. You remember Starbuck, that was on the far West side, the thinner portion of the Bakken. And then our Big Island is basically was a Red River play where we essentially have stopped drilling. We had some good wells, developed what we thought were the primary prospects out there and so we let those two go. That was the bulk of the acreage. Starbuck and Big Island. -------------------------------------------------------------------------------- Jason Smith, BofA Merrill Lynch - Analyst [78] -------------------------------------------------------------------------------- Is there anything more at this point that you think you'll allow to expire in the next few quarters? -------------------------------------------------------------------------------- Jim Volker, Whiting Petroleum Corporation - President & CEO [79] -------------------------------------------------------------------------------- Not very much. -------------------------------------------------------------------------------- Jason Smith, BofA Merrill Lynch - Analyst [80] -------------------------------------------------------------------------------- Got it. If I could just throw in a very, very quick one? As you guys have talked about the water gathering and distribution, could you just remind us what the investment was there? -------------------------------------------------------------------------------- Jim Volker, Whiting Petroleum Corporation - President & CEO [81] -------------------------------------------------------------------------------- I don't want to go into that right now since we are in the process of selling it. (Laughter). -------------------------------------------------------------------------------- Jason Smith, BofA Merrill Lynch - Analyst [82] -------------------------------------------------------------------------------- Fair enough. I figured it was worth a try. Thanks, Jim. -------------------------------------------------------------------------------- Jim Volker, Whiting Petroleum Corporation - President & CEO [83] -------------------------------------------------------------------------------- It was a lot. (Laughter). -------------------------------------------------------------------------------- Operator [84] -------------------------------------------------------------------------------- Tarek Ahmed, JPMorgan. -------------------------------------------------------------------------------- Tarek Ahmed, JPMorgan - Analyst [85] -------------------------------------------------------------------------------- Thanks for taking my question. A quick one on what you're seeing in terms of working interest partners and non-consents, how you're thinking about that as you work your capital budget through for 2016? -------------------------------------------------------------------------------- Jim Volker, Whiting Petroleum Corporation - President & CEO [86] -------------------------------------------------------------------------------- I'm sorry, could you repeat that again? -------------------------------------------------------------------------------- Tarek Ahmed, JPMorgan - Analyst [87] -------------------------------------------------------------------------------- What you're seeing from working interest partners in terms of non-consents and how you are thinking about that as you build the CapEx budget for 2016? -------------------------------------------------------------------------------- Jim Volker, Whiting Petroleum Corporation - President & CEO [88] -------------------------------------------------------------------------------- We have virtually no non-consents in what we are drilling. No non-consents. -------------------------------------------------------------------------------- Tarek Ahmed, JPMorgan - Analyst [89] -------------------------------------------------------------------------------- It's not an issue for you guys at all? -------------------------------------------------------------------------------- Jim Volker, Whiting Petroleum Corporation - President & CEO [90] -------------------------------------------------------------------------------- No. -------------------------------------------------------------------------------- Tarek Ahmed, JPMorgan - Analyst [91] -------------------------------------------------------------------------------- And second, and you sort of touched on this earlier, I think you've talked in the past about repaying debt being one of the more NAV accretive things you could do with cash flow or asset sales proceeds at this point. Is there any change to that view or do you still think that way? -------------------------------------------------------------------------------- Jim Volker, Whiting Petroleum Corporation - President & CEO [92] -------------------------------------------------------------------------------- We still think that way. My comments have basically been on so that you don't know where -- you never know where oil prices or natural gas prices are headed. You do know that if you pay off blank million dollars worth of debt, you do know how much that makes your NAV go up. That's what I was trying to say. -------------------------------------------------------------------------------- Tarek Ahmed, JPMorgan - Analyst [93] -------------------------------------------------------------------------------- There is certainty of outcome, that is true. -------------------------------------------------------------------------------- Jim Volker, Whiting Petroleum Corporation - President & CEO [94] -------------------------------------------------------------------------------- Yes. (Laughter). -------------------------------------------------------------------------------- Tarek Ahmed, JPMorgan - Analyst [95] -------------------------------------------------------------------------------- That's all for me. Thank you very much. -------------------------------------------------------------------------------- Operator [96] -------------------------------------------------------------------------------- Mike Kelly, Seaport Global. -------------------------------------------------------------------------------- Mike Kelly, Seaport Global - Analyst [97] -------------------------------------------------------------------------------- I have got two questions for you. I'll give you the quick easy one first. What is the commodity split on the 2,500 BOE that you are going to sell here. -------------------------------------------------------------------------------- Jim Volker, Whiting Petroleum Corporation - President & CEO [98] -------------------------------------------------------------------------------- Let's see. I think it was about 50/50. It was about 50/50 on that one. -------------------------------------------------------------------------------- Mike Kelly, Seaport Global - Analyst [99] -------------------------------------------------------------------------------- Okay, appreciate it. -------------------------------------------------------------------------------- Jim Volker, Whiting Petroleum Corporation - President & CEO [100] -------------------------------------------------------------------------------- The three packages in total were heavier on the oil side. The three packages that we've sold, they're heavier on the oil side. Overall, I think they were probably more like 60/40. -------------------------------------------------------------------------------- Mike Kelly, Seaport Global - Analyst [101] -------------------------------------------------------------------------------- Okay. Great. And then second question here, I was hoping to revisit the question on what is baked into guidance as it pertains to productivity improvements on your wells here. If you just look at Q3, you saw a massive uptick in the 30-day rates in the Bakken and up 44% sequentially. Yet, it didn't translate into a production beat versus the midpoint on your guidance and just hoping to get some color around that. Were you baking in thousand barrels of day 30-day rates or is there some other offsetting negative there that we really haven't discussed yet? Thanks. -------------------------------------------------------------------------------- Eric Hagen, Whiting Petroleum Corporation - VP of IR [102] -------------------------------------------------------------------------------- Mike, I will take that. We already answered the first question in regards to 2016, we've given a risked amount of credit for the improved completions. And for this quarter, really production, the timing of bringing on production and frac protect was really more of an impact on our forecast than anything this quarter. -------------------------------------------------------------------------------- Mike Kelly, Seaport Global - Analyst [103] -------------------------------------------------------------------------------- Got it. Fair enough. Thanks, guys. -------------------------------------------------------------------------------- Jim Volker, Whiting Petroleum Corporation - President & CEO [104] -------------------------------------------------------------------------------- You bet. -------------------------------------------------------------------------------- Operator [105] -------------------------------------------------------------------------------- Paul Grigel, Macquarie. -------------------------------------------------------------------------------- Paul Grigel, Macquarie Research Equities - Analyst [106] -------------------------------------------------------------------------------- Hi, Jim. Good morning. A two-parter here on 2016 spending. First off, is the spending equally weighted amongst the quarters or is it front half weighted? And the second part, if prices remain well below $50, where would the next cut in activity come from given your comments on not wanting to outspend in the current plan? -------------------------------------------------------------------------------- Jim Volker, Whiting Petroleum Corporation - President & CEO [107] -------------------------------------------------------------------------------- Mike will answer the first part. -------------------------------------------------------------------------------- Michael Stevens, Whiting Petroleum Corporation - CFO [108] -------------------------------------------------------------------------------- The budget next year is equal. We are running eight rigs. Like I said before, we dropped three rigs late in September. Completion activity at the 11-rig pace still falls into the fourth quarter. And then by the first quarter we are at the new eight rig program rate, around $250 million per quarter, but it should stay pretty flat. -------------------------------------------------------------------------------- Jim Volker, Whiting Petroleum Corporation - President & CEO [109] -------------------------------------------------------------------------------- In response to your question about what would happen if prices fell further, while we do have the ability to drop two more rigs. The rig drops essentially, since the economics in our two plays are pretty comparable as a result of the improvements and cost versus EUR we've made in both places. So it's really not a comment on which play is better than the other. It's just that we happen to have two rigs in the Williston that would be droppable with only somewhere around $10 million of early term payments. So we could drop two of them and it would not cost us more than $10 million. -------------------------------------------------------------------------------- Paul Grigel, Macquarie Research Equities - Analyst [110] -------------------------------------------------------------------------------- Okay and then just a quick follow-up on that. On the other six rigs, what is the average term on those contracts? -------------------------------------------------------------------------------- Jim Volker, Whiting Petroleum Corporation - President & CEO [111] -------------------------------------------------------------------------------- Well, they run through 2016. But not too far after that. -------------------------------------------------------------------------------- Paul Grigel, Macquarie Research Equities - Analyst [112] -------------------------------------------------------------------------------- Okay. That's all I had. Thank you. -------------------------------------------------------------------------------- Jim Volker, Whiting Petroleum Corporation - President & CEO [113] -------------------------------------------------------------------------------- Thank you. -------------------------------------------------------------------------------- Operator [114] -------------------------------------------------------------------------------- John Nelson, Goldman Sachs. -------------------------------------------------------------------------------- John Nelson, Goldman Sachs - Analyst [115] -------------------------------------------------------------------------------- Good morning and congratulations on the quarter. -------------------------------------------------------------------------------- Jim Volker, Whiting Petroleum Corporation - President & CEO [116] -------------------------------------------------------------------------------- Thank you, John. -------------------------------------------------------------------------------- John Nelson, Goldman Sachs - Analyst [117] -------------------------------------------------------------------------------- You guys hit on asset divestiture. I just wanted to come back to that. You previously set the $500 million to $1 billion target for 2015 and I'm just wondering if that range and even more specifically, timeline, still remains the base plan? Given that you have ample liquidity, is there a potential for some of those sales to slip into 2016 to ensure you think you get the best valuations for those assets? -------------------------------------------------------------------------------- Jim Volker, Whiting Petroleum Corporation - President & CEO [118] -------------------------------------------------------------------------------- At this point I would say that there is no change in the estimate, and it is not very, obviously there's no much -- you would not have to sell too many assets in order to get to that $500 million level from a $400 million level. And there is nothing that I can see that would make me see that it would slip very far. If it did slip, as I've already said, I am optimistic about the sale of midstream assets in Q4. -------------------------------------------------------------------------------- John Nelson, Goldman Sachs - Analyst [119] -------------------------------------------------------------------------------- Have you seen, given those potential buyers who have seen weakness in their stock prices, have you seen any degradation in their appetite overall for midstream assets or does appetite still seem fairly strong for midstream assets you guys have on the market? -------------------------------------------------------------------------------- Jim Volker, Whiting Petroleum Corporation - President & CEO [120] -------------------------------------------------------------------------------- As you would imagine, I think the people's ability varies company to company, just as it varies within the E&P space from folks who are going to say continuing to spend above their cash flow. If they, for example, did a stock or bond offering or whatever prior to today. If they are sitting on some cash, they might be continuing to spend and I think in general, that is the case within the midstream space. And fortunately, there seems to be quite a bit of midstream money out there still from folks who timing-wise have capital still. So I realize what you are talking about with regard to the decline in the unit prices of the number of midstream players, on the other hand, it is a bigger universe than just that, if you follow me. There is private as well as public, and essentially there are backers and there are buyers, if you follow me, that are still well-financed and have a lot of capital to spend. And again, I think the real key isn't so much the price as I think values are pretty easily established. In this game, it's volume times fee or pop or whatever. And our plants have a good mix of both fixed fee and pop contracts so it is not all one or the other. We have a healthy mix there I would say and so I think that's attractive because it has both stability as well as upside. So I think it is basically just -- it's your revenue, less your expenses and present valued. Fortunately for us, our two plants that we have in the Williston Basin have a lot of PDP reserves behind them; our own and third-party. So while I would say there has been some -- as oil prices have come down, NGL prices have come down. On the other hand, volumes are up and our contracts have a good mix of fixed fee and pop. From that standpoint, I think it is a healthy asset to sell and really I don't think we are going to see a price degradation. I think what we're going to see is a selectivity by who is the right partner. -------------------------------------------------------------------------------- Eric Hagen, Whiting Petroleum Corporation - VP of IR [121] -------------------------------------------------------------------------------- I just want to add one thing, John, to that. The plant is located in a very attractive area, Mountrail County, the core of the Bakken. You continue to see a lot of activity there. You even continue to see on the EMP side some good asset purchases, some high-value acreage. So there is still a lot of activity there to backstop that plant. -------------------------------------------------------------------------------- John Nelson, Goldman Sachs - Analyst [122] -------------------------------------------------------------------------------- That is very helpful color. I will let somebody else hop on. Thanks, guys. -------------------------------------------------------------------------------- Jim Volker, Whiting Petroleum Corporation - President & CEO [123] -------------------------------------------------------------------------------- Thanks, John. -------------------------------------------------------------------------------- Operator [124] -------------------------------------------------------------------------------- Mike Scialla, Stifel. -------------------------------------------------------------------------------- Michael Scialla, Stifel Nicolaus - Analyst [125] -------------------------------------------------------------------------------- You give some really good detail on the Niobrara. I wanted to follow up on that. Last quarter, you gave some rates on the Horsetail 30F pad which was testing I think 32 well equivalent per your DSU of -- your 960 DSU. I want to see if there is any update on longer-term rates there and what you are thinking on ultimate spacing for the play? -------------------------------------------------------------------------------- Jim Volker, Whiting Petroleum Corporation - President & CEO [126] -------------------------------------------------------------------------------- Go ahead, Mark. -------------------------------------------------------------------------------- Mark Williams, Whiting Petroleum Corporation - SVP of Exploration and Development [127] -------------------------------------------------------------------------------- So the 30F pad is now behind us and I would say the results have been very encouraging. You got to put that in the context when we started that, we were testing much higher densities than even at the time we felt like were desirable. The 32 well density is going to end up being a little bit high. That's one of the things we've learned. We also tested a variety of different completion technologies in there and tried to get a feel for communication between wellbores, those type of things. So it has been invaluable to us in terms of trying to understand that and help us fine-tune our completion designs. In terms of the overall performance of the 30F pad, it's been great. It's right at their comparable most of what we are dealing with. They are in Razor which has been where we focused most of our development activity. It does extend what we believe is a good developable area out to the East a little bit. Overall, that was really designed to try out a lot of different technologies in the Niobrara. It's been successful in helping us understand the best way to go ahead and complete those wells and what density to drop them on. I think one of the main things is is we come off of that estimate of 32 wells per DSU but for the most part -- -------------------------------------------------------------------------------- Jim Volker, Whiting Petroleum Corporation - President & CEO [128] -------------------------------------------------------------------------------- But they're not very far off. I think you can go ahead and tell them what our plans are here which -- or we can go ahead. Right now, if we said what is the optimum? It's probably 28. It is probably three eight's and a four. Eight in each of the Niobrara zones and four in the Codell. That's what we believe and basically that's what we are permitting out there. I admit that does give us flexibility to, for example, drill somewhat less than that but right now, based upon everything we know about our oil in place out there and the recovery rates that we are seeing, which we think in total on average will be about 15% with a 28-well drilling spacing unit. That will give us close to a 0.5 million barrels per well. That's what it looks like. -------------------------------------------------------------------------------- Michael Scialla, Stifel Nicolaus - Analyst [129] -------------------------------------------------------------------------------- Okay, great. I wanted to ask you one more too on, you've talked a lot about it, potential divestitures. It sounds like Midstream's the near-term focus, North Ward Estes has been mentioned in the past. It sounds like you are pretty, making a lot of progress on the Midstream. Is that enough do you think where you would really feel like you wouldn't want to seriously consider other things? What I wondered about is partial really, I know it's a great asset, but it's not up. Is that a potential candidate down the road as well? -------------------------------------------------------------------------------- Jim Volker, Whiting Petroleum Corporation - President & CEO [130] -------------------------------------------------------------------------------- The answer, to be blunt is, no. (Laughter). On the partial, it is a good asset and we wish we owned more of it. As I said before, I had a chance to buy it all, turned it down and then it came back to us with a chance to buy 20% and we did. So we like it. We think our own Sanish acreage is somewhat better because our own Sanish acreage has the Three Forks underneath it whereas over there, it is not the case. It's partial. At least not in our opinion, good Three Forks. It's thinner as you get near the pinch out of the basin. But the Bakken is good and the well results are good. The initial spacing that was done over there was really not very intense, meaning the wells were a great distance apart. It was only two or three wells per drilling spacing unit and now there is a great opportunity to go back in and with longer laterals really kick up the economics there. Would not want to sell that one, my friend. -------------------------------------------------------------------------------- Michael Scialla, Stifel Nicolaus - Analyst [131] -------------------------------------------------------------------------------- Good. I like blunt answers. Thanks, Jim. -------------------------------------------------------------------------------- Jim Volker, Whiting Petroleum Corporation - President & CEO [132] -------------------------------------------------------------------------------- All right. You're welcome. -------------------------------------------------------------------------------- Operator [133] -------------------------------------------------------------------------------- The last question comes from Kevin Andrus, GMT Capital. -------------------------------------------------------------------------------- Kevin Andrus, GMT Capital - Analyst [134] -------------------------------------------------------------------------------- You guys have laid out a plan for 2016 at $50 oil but how would your plan change if we happen to see higher commodity prices at the $60 level, at the $65 level? Would you put that into the drill bit or would you put it towards debt repayments? -------------------------------------------------------------------------------- Jim Volker, Whiting Petroleum Corporation - President & CEO [135] -------------------------------------------------------------------------------- Yes. (Laughter) I think we'd do a little of both, my friend. I think we'd do a little of both. -------------------------------------------------------------------------------- Kevin Andrus, GMT Capital - Analyst [136] -------------------------------------------------------------------------------- I guess how would that change your -- how would you expect to change your production profile would maintaining a certain production level become more of a priority? If you could expand on that a little bit? -------------------------------------------------------------------------------- Jim Volker, Whiting Petroleum Corporation - President & CEO [137] -------------------------------------------------------------------------------- I don't want to change our guidance right now because none of that has happened but I can tell you that our drilling department here has been very proactive, such that when we have laid down these rigs, and I will just kind of state in case people have lost count. Last year at midyear, the Company had 24 rigs running. So this year with eight we are down to one-third of that. I'm going to say that we do have the opportunity to bring back those rigs pretty quickly with those same drilling contractors and get some credit for the early termination fees that we have paid. So I think that is one good thing that would allow us to ramp up pretty quick. -------------------------------------------------------------------------------- Eric Hagen, Whiting Petroleum Corporation - VP of IR [138] -------------------------------------------------------------------------------- Is that about Rick said about four or five rigs that we could flex back pretty quickly if we needed to? So Kevin, it's Eric Hagen. About four or five rigs we could flex back pretty quickly if we saw higher prices. And we would get some credit for the early termination fees. -------------------------------------------------------------------------------- Kevin Andrus, GMT Capital - Analyst [139] -------------------------------------------------------------------------------- Okay. Thank you. -------------------------------------------------------------------------------- Eric Hagen, Whiting Petroleum Corporation - VP of IR [140] -------------------------------------------------------------------------------- Thanks, Kevin. -------------------------------------------------------------------------------- Operator [141] -------------------------------------------------------------------------------- As that was the last question, I would like to turn the call back to Jim Volker for any closing comments. -------------------------------------------------------------------------------- Jim Volker, Whiting Petroleum Corporation - President & CEO [142] -------------------------------------------------------------------------------- I would like to thank all of the Whiting employees and Directors for their contributions to a solid third quarter. Eric? -------------------------------------------------------------------------------- Eric Hagen, Whiting Petroleum Corporation - VP of IR [143] -------------------------------------------------------------------------------- Mike Stevens and Pete Hagist will be presenting at the Bank of America Merrill Lynch Global Energy Conference Tuesday, November 10, at 9:00 AM Eastern Standard time and Mark Williams will be presenting at the Goldman Sachs Global Energy Conference the week of January 4, 2016. -------------------------------------------------------------------------------- Jim Volker, Whiting Petroleum Corporation - President & CEO [144] -------------------------------------------------------------------------------- In closing, we thank you all for your interest in Whiting Petroleum Corporation and we look forward to meeting with you soon. -------------------------------------------------------------------------------- Operator [145] -------------------------------------------------------------------------------- Thank you. The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.
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