Whiting Petroleum Corporation

Candlestick Charting Synopsis Candlestick chart analysis - The short term candlestick chart reveals bullish signals and a close above the T line after the price had just touched the 200 day moving average at the low. The small down resistance level of the past few months was breached with a candlestick Doji sandwich. This implied the down trend on the short- term chart had been breached. Recent earnings produced a strong gap up off the T line. Whiting Petroleum Corp

Short term analysis

Whiting Petroleum Corp.

The long-term chart shows a strong uptrend from the bottom of 2009 until it peaked out at the beginning of 2011. The next two years showed a major wedge formation that was finally breached in the summer of 2013. Currently, a J hook pattern is in progress. A breakout through the $70 level would make the $95 area a viable target over the next six months.

Whiting Petroleum Corp

J-Hook Long Term Chart

Next wave potential

Wedge Breakout

Fundamental Research Synopsis - the company as a major player in the Bakken fields of North Dakota. This field has become a major contributor of oil production for the United States, running second behind the Texas oilfields. Recent news and political posturing points to North Dakota as having the lowest unemployment rate in the nation. The projected 3% unemployment is probably a misnomer. Currently, there is aggressive recruiting of people to come to the North Dakota area for well-paying jobs. McDonald's is supposedly paying a $2000 bonus to come work for them. Walmarts are paying $17 an hour. Trucking companies have been advertising $100,000 year jobs for transporting oil from the well sites. The magnitude of potential reserves in the Bakken field is creating long-term planning for pipelines and refining in the area. The prospects for oil related firms, with Whiting Petroleum Corporation be in well positions in this area, to have the potential of extremely strong growth for extended period of time.

About Whiting Petroleum Corporation Whiting Petroleum Corporation, a Delaware corporation, is an independent oil and gas company that explores for, develops, acquires and produces crude oil, natural gas and natural gas liquids primarily in the Rocky Mountain, Permian Basin, Michigan, Gulf Coast and Mid-Continent regions of the United States. The Company’s largest projects are in the Bakken and Three Forks plays in North Dakota and its Enhanced Oil Recovery field in Texas. The Company trades publicly under the symbol WLL on the New York Stock Exchange. For further information, please visit http://www.whiting.com.

Whiting Petroleum is an independent exploration and production company with an oil focused asset base. they control one of the largest acreage positions in the Bakken resource play in North Dakota, where we are the #2 oil producer in the state. They also operate one of the largest enhanced oil recovery projects in the United States at our North Ward Estes Field in the Permian Basin of Texas. Whiting aims to deliver sustainable growth through a combination of our high return Bakken assets and our long lived enhanced oil recovery projects.

The company primarily sells oil and gas to end users, marketers, and other purchasers. As of December 31, 2012, its estimated proved reserves totaled 378.8 million barrels equivalent of oil; and had interests in 10,218 gross productive wells in approximately 1,277,400 gross developed acres. The company was founded in 1980 and is based in Denver, Colorado. Whiting Petroleum Corporation has a market cap of $6.8 billion and is part of the energy industry. Shares are up 33.1% year to date as of the close of trading on Wednesday. Currently there are 21 analysts that rate Whiting Petroleum Corporation a buy, no analysts rate it a sell, and 3 rate it a hold.

TheStreet Ratings rates Whiting Petroleum Corporation as a buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth, expanding profit margins, good cash flow from operations and solid stock price performance. These strengths outweigh the fact that the company has had somewhat disappointing return on equity.

Currently, the company’s asset divestiture, strategic acquisitions and strong hedging program have placed it well in the market.

The proceeds from the sale of its Postle assets will enable the company to invest in the resource-rich Niobrara and Bakken formations thereby expanding its future growth prospects. These plays have proved to be the major drivers of production for Whiting Petroleum in the first six months of 2013.

Oil and gas players are perennially on the lookout for reserve additions. Whiting Petroleum’s recent purchase of Williston Basin assets in North Dakota and Montana has given it access to the prolific Bakken and Three Fork shale formations.

In the near term, the company is relying on the low-cost operations of its Redtail and Missouri Breaks assets in Colorado and Montana, respectively, to drive production. Moreover, planned drilling activities and superior frack design execution at the operating plays will act as tailwinds for Whiting Petroleum.

The company’s robust cash flow growth of 42% year over year will offer the financial support to effectively carry out its large-scale exploration and drilling programs.

Bakken Shale Oil Formation

The Bakken Shale ranks as one of the largest oil developments in the U.S. in the past 40 years. The play has single-handedly driven North Dakota’s oil production to levels four times higher than previous peaks in the 1980s. As of 2012, ND is second to Texas in terms of oil production and boasts the lowest unemployment rate in the country at ~3%. The Bakken Shale Play is located in Eastern Montana and Western North Dakota, as well as parts of Saskatchewan and Manitoba in the Williston Basin. Oil was initially discovered in the Bakken play in 1951, but was not commercial on a large scale until the past ten years. The advent of modern horizontal drilling and hydraulic fracturing helps make Bakken oil production economic. The U.S. Geological Survey has estimated the Bakken Shale Formation could yield 4.3 billion barrels of oil and estimates from Continental Resources stretch as high as 40 billion barrels. The name “Bakken” originates from a North Dakota farmer, Henry Bakken, who owned the land where the first well encountered the Bakken formation. Bakken Shale Geology

Bakken Shale Map | Click to Enlarge The Bakken Shale is a rock formation that was deposited in the late Devonian, early Mississippian age. The formation consists of three layers: an upper shale layer, middle dolomite, and a lower layer of shale. The shale layers are petroleum source rocks as well as seals for the layer known as the Three Forks (dolomite) or Sanish (sands) formations. A 2008 USGS study pegged recoverable reserves at approximately 4 billion barrels and a 2010 NDIC study estimates the underlying Three Forks formation could yield an additional 2 billion barrels. Both estimates are likely conservative. The Bakken is estimated to hold as much as 400 billion barrels of oil equivalent in place. Four billion barrels only represents 1% of the oil estimated to be in place, while current recovery estimates range from 3-10%. Continental Resources has publicly expressed beliefs the Bakken will yield anywhere from 24-40 billion barrels.

Bakken Shale Geology

Williston Basin Structural Map | Click to Enlarge The Williston Basin is one of the most structurally simple basins in the world and home to one of the largest oil discoveries of our time – the Bakken Shale. The basin takes the shape of a saucer or bowl being the deepest near Williston, ND, and thinning at its shallow margins. The maximum thickness of Phanerozoic rocks is 16,000 ft. (The Phanerozoic Eon is known for its abundance of fossils) That depth is also referred to as the Precambrian surface. Not many wells have been drilled below this level and the Precambrian rocks do not outcrop. With that, the basins origins are not well understood

While the basin is not well understood, that is changing with the onset of the Bakken oil boom. The Bakken Shale was first discovered over 50 years ago when a well was drilled on the play’s namesake’s property – Henry Bakken. Not much activity ensued, but various companies attempted to develop the oil bearing formation. There wasn’t much success until horizontal drilling incited a short boom in the early 1990s. Even that didn’t last long and the play was largely forgotten until a partnership between Richard Findley, Lyco Energy and Halliburton drilled a successful well in the Elm Coulee Field of Richland County, MT, in 2001. The Elm Coulee Field proved economic two years later and rising oil prices motivated operators to expand into North Dakota. EOG went on to discover the Parshall Field in 2006 and operators have largely been connecting the dots since.

Geology of the Bakken Shale Play

The Bakken Shale is a rock formation from the Late Devonian, Early Mississippian age that is estimated to hold as much as 24 billion barrels of recoverable oil. The play extends into parts of Montana, North Dakota, Saskatchewan and Manitoba. The Bakken formation consists of three layers: an upper black shale layer, middle silty-dolomite, and a lower black layer of shale. The shale layers are petroleum source rocks as well as seals for an oil reservoirs in the dolomite layer and in Three Forks or Sanish formations. The North Dakota Industrial Commission, in a 2010 study estimates the underlying Three Forks Formation could yield 1.9 billion barrels of reserves, but even that number is likely conservative.

In what has now become a famous research paper, Leigh Price estimated the Bakken Shale contained between 271 and 503 billion barrels of oil. With a mid-point of 400 billion barrels, the assumption of 24 Billion bbls recoverable only achieves a 6% recovery factor. If 400 billion barrels is truly a good estimate, there is significant opportunity for technological innovation to increase recoverable reserves by billions of barrels.

Three Forks Geology

The Three Forks Formation is a dolomite that underlies the Bakken Shale. The formation is sourced by the Bakken and produces across parts of North Dakota and Montana. The play is a secondary target in some areas and has proven even more prolific than the Bakken in some areas near the Nesson Anticline. What is the Sanish Formation? Many people called the Three Forks the Three Forks Sanish Formation early in the development of the play. The Sanish sandstone is an informal unit that sits atop the Three Forks in certain portions of the basin. The Sanish Formation is primarily targeted in the Antelope Field in McKenzie County and by Whiting in the Sanish Field in Mountrail County.

Other Plays in the Williston Basin

Other producing formations include the Madison, Duperow, Red River, Tyler, and Spearfish. As seismic studies and wells are completed, operators are becoming equipped with the information needed to develop prospects in many of the legacy conventional plays in the region. In 2012, Whiting Petroleum began targeting the Red River play in some areas.

Bakken Rig Count – 175 – Bakken Shale Pushes Up Marathon Income in 2013 – February 7, 2014

NDIC notes around 192 rigs are active in North Dakota, but around 19 of those are in the process of moving in and rigging up

Feb 7, 2014 By Kirk Eggleston Leave a Comment

Marathon Oil Bakken Acreage Map | Click to Enlarge The Bakken-Three Forks rig count decreased by one rig to 175 rigs running over the past week. The NDIC notes around 192 rigs are active in North Dakota, but around 19 of those are in the process of moving in and rigging up.

Recent Seeking Alpha Chatter

This section contains articles with information and recommendations found on the popular stock discussion website Seeking Alpha, going back a maximum of six months.

The section is divided into “Pro” and “Con”, based on the article’s slant and/or recommendations.

PRO Bakken Producers Like Continental And Whiting Are Finding Profits By Going 'Green'

Summary

Bakken producers have been flaring natural gas for many years. Many are now moving to be "greener".

Whiting and Continental both say they are committed to zero flaring.

Both Continental and Whiting are seeing increased profits from the now captured natural gas; and this trend should continue.

The Bakken shale is one of the biggest oil fields in the US. Continental Resources (CLR) last estimated that there were 903B Boe in-place. At a 3.5% recovery rate, this would yield 32 billion boe. At a 5% recovery rate, it would yield 45 billion boe. Some of this is natural gas.

Unfortunately, developers have often been so anxious to get at the more profitable oil that they have just flared the natural gas rather than try to capture it. In September 2011, 36% of produced gas in the Bakken was flared. As of March 2013, that figure was down to 29%. Environmentalists have been very unhappy about this.

Under current regulations, drillers can flare for up to a year without penalty. After that they have to control the gas somehow such as burning it for power or connecting it to a pipe. Operators can apply for an exemption if such options are impractical. North Dakota's long-term goal is flaring of 5% to 10%. Companies such as Whiting Petroleum (WLL) and Continental Resources have discussed zero flaring. Not coincidentally, these are two of the most profitable companies in the Bakken.

Midstream companies as of March 2013 had committed about $4B in pipeline and processing projects to collect, modify, and move gas. This should help immensely. It is already helping CLR and WLL flare less.

In the case of Continental Resources , it reported net income of $739 million for 2012, which was a 72% gain versus 2011. Responsible for part of this gain was that it halved its 2011 rate of flaring. The increased production of natural gas is having a very positive effect on CLR's EBITDAX (see table below).

(click to enlarge)

CLR's natural gas production has gone up from 65,598 Mcf/d in 2010 to 240,355 Mcf/d in 2013. That's almost a quadruple in four years. At an average realized price of $5.25/Mcf for FY2013, natural gas represented approximately $460.6 million in revenues for CLR. By comparison, oil production represented approximately $3.147B. The natural gas represented almost 13% of total production revenues. That is not something a profit conscious company wants to throw away. It shows that CLR is going "green" in more ways than just one. It shows good management; and it bodes extremely well for CLR's future. Natural gas prices are likely to rise relative to oil long term.

CLR has 1,140,000 net acres in the Bakken as of December 31, 2012. Its next biggest play is the SCOOP (South Central Oklahoma Oil Province) with approximately 400,000 net acres of leasehold in the play. These two plays accounted for 117,089 Boe/d of CLR's total Q4 2013 production of 144,254 Boe/d. As of December 31, 2013, CLR had record proved reserves of 1.08 billion barrels of oil equivalent. This was a 38% increase over 2012E; and this number is still barely tapping the surface of CLR's likely overall reserves. About 30% of total production was natural gas. The value of that production should increase over time as US natural gas prices rise back to their norm with respect to oil. Typically 1 mmbtu of natural gas trades at a 6 to 12 multiple to 1 barrel of oil. In energy terms, 5.8 mmbtu of natural gas is equal to 1 barrel of oil equivalent. Currently, natural gas is trading at roughly $4.5/mmbtu. WTI oil is trading at approximately $100. This puts oil at a factor of approximately 22x; and it means that long-term natural gas prices will likely roughly double with respect to oil prices. That will mean CLR's attention to being "green" will pay off in much bigger profits in the future.

As an investment, CLR also looks good. It has a next five years average analysts' EPS growth estimate per annum of 26.86%. With a P/E of 29.11 and an FPE of 14.79, it is reasonably priced for a great grower with great assets. It has an average analysts' recommendation of 2.1 (a buy); and buyers can feel good that they are investing in one of the "greener" and best managed oil and gas companies in the Bakken.

The two year chart below of CLR provides some technical direction for this trade. (click to enlarge)

The slow stochastic shows that it is neither overbought nor oversold. The main chart shows that it is in a strong uptrend. However, it is likely overextended to the high side. A value investor will want to wait for it to fall back to its 100-day or its 200-day SMA before buying. It appears to have fallen to its 100-day SMA with some regularity, so this should not be a problem. It usually pays to wait for cyclical stocks to cycle.

Whiting Petroleum Corp. is another company aiming at zero flaring in the Bakken. It is again one of the biggest acreage holders in the Bakken (Williston Basin) with 715,035 net acres as of December 31, 2013. It also has 120,000 net acres in the DJ Basin in the oil window of the Niobrara trend. It had average production of 100,965 Boe/d in Q4 2013 (87% oil and NGLs) and proved reserves of 438.5 MMBoe in Q4 2013. 79% of its production was oil. Excluding production associated with the Postle/Northeast Hardesty sale, WLL's production in 2013 was up 21% over 2012. Excluding the same, again proved reserves were up 31% year over year. Its table of 3P reserves is below. (click to enlarge)

The natural gas reserves will again go up in value over time for the same reasons that CLR's will. It has also implemented a new well completion design. This is showing 50% to 75% increases in 30, 60, and 90 day IP rates; and it should increase profits.

WLL's attention to gathering and processing natural gas will pay off. It has a 50% interest in the Robinson Lake Gas Plant. This has an inlet capacity of 90 MMcf/s; and WLL has the ability to increase that to 110 MMcf/d. WLL owns a 50% interest in the Belfield Gas Processing Plant. This has the ability to process 35 MMcf/d. WLL has the Redtail Gas Processing Plant. This is expected to have an initial capacity of 15 MMcf/d of gas in early 2014. WLL expects to expand this capacity to 60 MMcf/d by Q1 of 2015. Gathering and processing WLL's natural gas and NGLs itself should glean WLL some extra money. Selling the natural gas instead of flaring it will make WLL not only greener, but more profitable. Kudos to its management team.

WLL has a P/E of 22.38 and an FPE of 14.64. WLL will only grow EPS -0.70% in FY2014; but this is mostly due to the Postle sale. In 2015, it is expected to grow EPS by +14.70%. Given its lower growth than CLR, it is more expensive. However, it has a slightly higher analysts' average recommendation of 1.9 (a buy). With its great assets, it should still be a good long-term stock to own, although I would probably wait for it to come back to its 100-day or 200-day SMA before buying it. It looks a bit overextended as readers can see from the two year chart of WLL below. (click to enlarge)

Both CLR and WLL should pique investors' interests. Some may wish to average in over 2014. Some may wish to wait for a better entry point. One will probably occur in the next 3 to 6 months. Both are stocks investors might want to own over the long term. I do like CLR better. It is hard to argue with its growth rate. Plus, it does seem to be a leader in delineating the Three Forks (below the Bakken), which should be very productive. Both should benefit as they flare less and as natural gas prices rise over time. NOTE 1: For readers who want a more thorough justification for a likely rise in US natural gas prices in the near future, please read the following article, "US Natural Gas Stores Are Dangerously Low, That's Good For Pipeline And Storage Companies."

NOTE 2: Some of the fundamental fiscal information above is from Yahoo Finance.

(Article by David White on Thursday, March 20, 2014)

Whiting's Niobrara Reserves And Top Shale Oil Producers' 2013 Reserve Replacement Ratios

Today, I will take a look at the 2013 reserve replacement ratios ("RRR") for major shale oil producers ConocoPhillips (COP), Continental Resources (CLR), EOG Resources (EOG), and Whiting Petroleum (WLL). While all these companies produced very good to outstanding results, the most interesting reserves report came out of Whiting Petroleum and the component of reserves coming from the company's Niobrara operations in Colorado.

The RRR is defined as the amount of proved reserves added to a company's proven reserve base in a given year relative to the amount of oil and gas produced during the year. Long-term, a company's reserve replacement ratio must be at least 100% for the company to stay in business. Otherwise, it will eventually run out of oil. Obviously, the higher the RRR, the more bullish the company's future. Here is the 2013 RRR summary for these top shale oil producers:

Top Shale Oil Producers 2013 Organic Reserve Replacement Ratios (RRR), Reserves Added, Total Proven Reserves, & Reserve Life

Company Sym 2013 Reserves Total Proven Reserve Life RRR Added Reserves @2013 (BOE) Prod. Rate Conoco Phillips COP 179 % 1.1 billion 8.9 billion 16.2 Years

Continental Res. CLR 603 % 299 million 1.08 billion 21.8 Years

EOG Resources EOG 264 % 389 million 2.2 billion 10.0 Years

Whiting Pete. WLL 402 % 59.8 million 438.5 million 12.8 Years Source by Company: COP, CLR, EOG, WLL

Highlights from COP's 2013 reserves update:

470 million boe in the Lower 48, primarily in liquids-rich shale plays, including the rapidly-growing Eagle Ford and Bakken;

250 million boe in Canada, from Foster Creek, Christina Lake, and Narrows Lake, as well as additional reserves at Surmont and across western Canada.

190 million boe in Asia-Pacific, primarily from the Australia Pacific LNG Project ("APLNG").

150 million boe in other areas.

Continental Resources' report saw total proved reserves increase 38% year- over-year. Other highlights include:

Year-end 2013 proved reserves had a net present value discounted at 10% (PV- 10) of $20.2 billion, a 52% increase over the PV-10 of $13.3 billion for year-end 2012 proved reserves.

Year-end 2013 proved reserves were 68% crude oil.

SCOOP, an oil- and liquids-rich play in Oklahoma, accounted for 215 million boe of 2013 proved reserves - a 241% increase over proved reserves of 63 million boe at year-end 2012.

For EOG Resources:

Total proved reserves increased 17% over year-end 2012.

Total liquids reserves increased 25% YOY and comprised 60% of total reserves at year-end 2013.

Total reserve replacement cost was an outstanding $13.42/boe.

Whiting Petroleum: Colorado Is The Next Shale Boom State

Whiting Petroleum's total reserves represented a 16% overall increase compared to year-end 2012. The interesting fact coming from Whiting's report was that an estimated 65.9 million boe of proved reserves were added from the company's Redtail Niobrara field in northeastern Colorado. An article in the Denver Post says Colorado is on the verge of breaking a nearly 60-year old oil production record. The books are not yet closed on 2013, but the latest figures show 57.88 million bbls of oil were produced in 2013, just shy of the 58.6 million barrel record set in 1956. The Niobrara will no doubt be a primary growth field in the coming years.

In a February presentation available here, Whiting detailed its acreage position in Colorado's Niobrara shale, i.e., its Redtail play: (click to enlarge)

We can see from this slide that drilling costs are substantially lower than the Bakken at $4-$5.5 million. A subsequent slide in the presentation shows recent well results are significantly exceeding a 400,000 boe type curve (slide 17). At 16 wells per DSU, Whiting estimates it has an inventory of 3,394 gross wells in the play.

A map in this presentation shows the significant oil and gas pipelines running adjacent to WLL's acreages position, so while the company will have to budget cap-ex for takeaway infrastructure, considering the size of the resource (see below) and the nearby major pipelines, the infrastructure overheads will be rather an insignificant consideration in the long run. (click to enlarge)

The slide above shows the company's Niobrara resource potential. Total resource potential at 16 wells per DSU and 15% recovery rates is a whopping 560 million boe. From the RRR chart above, we can see that this is more than WLL's total year-end 2013 proven reserves.

Summary & Conclusion

All the top shale players announced very good to outstanding 2013 year-end reserve replacement ratios. Whiting Petroleum's report stood out for the potential of its acreage in Colorado's Redtail Niobrara play.

The resource potential here is huge: double the company's current total proved reserves. Redtail well costs are relatively low, and access to takeaway infrastructure runs adjacent to the property. This bodes well for Whiting's future, and I find the stock very attractive. The stock could easily hit $100 in the next 18 months (~40%).

Additional disclosure: I am an engineer, not a CFA. The information and data presented in this article was obtained from company documents and/or sources believed to be reliable, but has not been independently verified. Therefore, the author cannot guarantee its accuracy. Please do your own research and contact a qualified investment advisor. I am not responsible for investment decisions you make. Thanks for reading and good luck!

(Article by Michael Fitzsimmons on Monday, March 3, 2014)

Whiting Petroleum Has Everything A Value Investor Is Looking For

Investing in oil and gas companies that have the bulk of their properties in the United States can be a risky venture. If the price of gas and oil in North America goes down, it will have an adverse effect upon these companies. On the other hand if prices increase it will greatly benefit revenue for shareholders. In order to find a good company in this arena, investors need to find one with growing production and good prospects for future drilling. I believe Whiting Petroleum (WLL) Energy is one of these companies.

General Observations

The company was founded in January 1980 in Denver Colorado. In 1983 it merged with two other companies: Keba Oil & Gas and Hingeline-Overthrust and went public. In 1992 Alliant Energy acquired the company but in 2003 it became a public company again and has been ever since. It started off with a market cap of $284 million. It has been an independent oil and gas company acquiring, developing and exploring crude oil and natural gas; primarily in the Rocky Mountains but other regions of the United States also. With a market cap of $7.7 billion, the company is a good size with a good short-term cash position; much better than the industry as a whole. The company has a current ratio of 1.42 which is better than the industry average of 1.27. Both are healthy but its nice to see assets 42% higher than liabilities. The company has done an incredible job growing earnings over the last 10 years. On an average it has increased earnings by 14.32% year over year with most of its growth in the last three. This includes net income and sales. The phenomenal growth in the last few years could be the reason why debt equity ratio is almost twice that of the industry average. (0.68 to 0.38) Long-term debt and deferred long-term liabilities make up 75% of its total liabilities.

(click to enlarge)

With that in mind, it still looks like a good value buy. The company's P/E ratio is only 14.06 while the industry average is clearly higher coming in at 23.09.

Since Whiting has its properties in North America, investors need to be aware of what oil and gas prices are supposed to be like this year.

Petroleum Prices in 2014

The general consensus is that oil prices in the United States will average close to $95 a barrel this year. There are some analysts that are more bearish on prices overall and are worried that if the Permian Basin production really booms prices could drop as low as $70 a barrel.

Since Whiting Petroleum gets most of its production from places like Bakken Shale, and other high production regions here in the United States it could really be affected if prices drop too much. As an investor, is it better to look at competitors that have a global picture? One example would be a company like Anadarko Petroleum (APC) because it has developments around the world besides United States. If the US oil drops significantly, it is in a much better position to weather the storm. OPEC has a goal to keep its oil prices above $100 a barrel through 2014, so oil and gas outside the United States is expected to be higher.

I know gas and petroleum prices are also expected to be lower in 2014, not by a lot but they are expected to be lower.

Since this is the landscape of oil in 2014, the only way for a company like Whiting Petroleum to perform well is to increase production like it has been doing. By looking at a comparison of the company's land parcels, we can see that production increased by just over 9% quarter over quarter. This is what the company will need to do to increase revenues since the price of gas and petroleum is not expected to rise significantly.

The increase in revenue (year-to-year) gives us a bigger picture of how the company has been aggressively beefing up its production. (click to enlarge)

I mentioned earlier about the company's revenue growth and we can see the incredible jump in production by the difference in the company's revenues between 2012 and 2013.

Whiting's oil, NGL and natural gas sales revenue increased $390.9 million the first nine months of 2013 compared to the same period in 2012. Increased production translates into increased sales and the driving force behind the revenue was the increase in oil production-up by 16%. Between oil and gas, production increased 24.86% from 2012 to 2013.

In 2014, besides Bakken, I believe the Niobrara region will be the company's biggest investment.

Niobrara

The Niobrara Shale is a liquids-rich formation that covers parts of Colorado, Kansas, Nebraska and Wyoming. The formation is now estimated to be 33% larger than what was originally thought.

This makes up the company's "Redtail" property. By June 2014, the company is planning to have five rigs up and running and they will shift to "pad drilling." Its development plan for Redtail is to drill eight wells per spacing unit in its Niobrara (A & B) zones. Whiting Petroleum's CEO, James Volker, has reported that the company is generating a 400% internal rate of return on every well drilled in this region and it is the company's most important investment outside of Bakken. A good portion of capital in 2014 will be invested in this region. Part of the company's core growth plan includes seeking property acquisitions that complement its core areas. An example of this would be the recent Williston-basin acquisition.

Williston Basin Acquisition

The Williston Basin purchase in the Bakken region is an example of the company seeking acquisitions that complement its core areas of production. WLL purchased about 17,282 net acres which include 13 operations of 1280 acre drilling space units. It has a 58% average working interest in the present operations.

Oil and gas production for the properties averaged 2420 barrels of (BOE) per day last summer and WLL estimates proved reserves acquired at 17.1 million. The company's cost of revenue (COS) averaged around 17.5%. In the "proven reserves" 85% is oil, so let's estimate that 2057 barrels of that 2420 daily average may be oil. If oil is trading at $95 a barrel, upon sales the revenue equivalent would be about $5.8 million per month. Subtract COS and we are at $4.89 million. Since the company has a 58% working interest, that would translate into roughly $2.77 million gross revenue per month.

With the gross revenues topping $1.7 billion a year, this barely adds 2% to the company's revenue stream, but is a good example of how it is seeking acquisitions to complement its core.

Risks Like most companies in this arena, the price of oil and natural gas has a huge affect upon how a company is able to implement its plans.

(click to enlarge)

What could happen if prices decline?

It could hinder future growth because the company may not be able to borrow as much based upon its credit agreements.

It may lower the amount of oil and natural gas the company can economically produce having an adverse effect upon reserves.

Other things would also be adversely affected if there was a significant/extended decline in oil or natural gas prices. Future business plans; financial conditions; cash flow; liquidity and plans to finance capital expenditures will all be affected by this.

These are risks investors face when looking at small-cap companies in this arena who are focused in the United States alone.

Whiting Petroleum is highly favored by some analysts. The company has had robust revenue growth over the last three years on increased production. The combination of growing profit margins as well as good cash flow makes the company look like a good value investment.

TheStreet.com has rated the company a buy while Howard Weil upgraded shares of the company in January to outperform according toTheFlyOnTheWall.com. The stock is presently trading at $58.50 and Howard Weil has a price target set at $95.00. This is a significant increase from its present position. Its productions in the Bakken and Niobrara regions have done well. If Niobrara produces as well as the company thinks, we could see production continue to increase translating into more revenue which is good for shareholders.

Author's Note: The financial charts in this article came from the company's SEC Filings for the 3Q 2013. The property performance chart was made by the author with information taken from the same SEC filing.

(Article by John Mylant on Sunday, February 2, 2014) Bakken Update: Frac Sand Pricing Could Go Parabolic As Whiting's New Well Design Crushes Q3 Analyst Estimates

Whiting (WLL) had what I consider to be a breakout quarter as it crushed analyst estimates on both the top and bottom lines. It was reminiscent of start of EOG Resources' (EOG) run that began half way through 2012. Whiting's beat was driven by its new well design. It significantly increases production at roughly the same well costs. Although costs do not increase, proppant usage does. By pulverizing the source rock near the well bore, it opens up a much larger void which needs to be filled with large amounts of proppant. Not only does this benefit operators like Whiting, but also frac sand producers like U.S. Silica (SLCA), Hi-Crush (HCLP) and Emerge Energy (EMES). EOG Resources has been using this design the longest, and it uses approximately 1000 pounds of sand per lateral foot. This is from 2.5 to 5 times the proppant of the average Bakken well. These sharp increases in demand for frac sand per well will drive frac sand prices higher, as I reported in a previous article.

Whiting's beat was significant. It reported Q3 revenues of $830.99 million vs. analyst estimates of $684.39 million. Revenues increased 56.6% year over year. On the bottom line, it beat by 21 cents, reporting $1.28/share. Its quarterly net income was $1.71/share compared to $.70/share in the same quarter a year ago. Whiting had a non-cash $15.7 million loss on crude oil and natural gas derivatives and other one-time items. The most important variable for Whiting in Q3 was production growth. It grew 12% over the same quarter a year ago to 92750 Boe/d. It produced 8.53M Boe in Q3. This is exceptional as Whiting sold its Postle Field assets which produced 7560 Boe/d in Q2. Whiting estimates Q4 production of 8.8M to 9.2M Boe. Whiting's FY 2013 estimates have production of 33.9 M to 34.2M Boe. Whiting also announced the sale of 42 thousand acres at Big Tex Prospect for $150 million.

In my opinion, Whiting is making the right moves. I began using a new well design last quarter. I reported on this in July and we should continue to see production improvements per foot. It has divested acreage in both Big Tex and Postle enhanced oil recovery project. This allowed it to add acreage in the Williston Basin that is prospective the lower Bakken silt. This acreage added production of 2420 Boe/d. It also added 32400 net acres in the Niobrara. Wells here have an average cost of $5.5 million and produce EURs above 400 MBoe. This is important, as I have been bullish this area. It is a stacked play with at least 3 good intervals, and in some areas 4. The Niobrara is prospective here, with intervals at A, B, and C. These are all consistent and should produce like returns. It is possible the Codell is also economic, but I don't have enough data to support this assumption.

Those who read my articles know this area has value. We have seen Synergy (SYRG), Bonanza Creek (BCEI), and PDC Energy (PDCE) are all outperformers and stocks I have been bullish. The early success of this sand heavy well design is bullish these operators, as all three could benefit by adopting it. Whiting is focusing on two very exciting core plays. It also accumulated a half million net acres in 3 new U.S. oil resource plays at an average cost of $228/acre.

The most important reason for Whiting's great quarter was its new well style. This contributed an increase in production, adding revenues and net income. This design is based on EOG's well design. There are some differences, and keep in mind EOG is further ahead. I believe Whiting has short term upside as it refines this process. EOG has a better overall design. What needs to be focused on is cost. EOG Resources changed its completion design and increased its proppant usage to 1000+ proppant per lateral foot. Keep in mind, these new completions have little to do just dumping the sand down hole. There must be very good source rock stimulation to open a large enough void to allow for this much sand. Whiting has seen a 50% to 75% improvement in results over its old completion design in the short term. Below I have provided Whiting's well design in Sanish Field for its 2013 completions.

Well Lateral Ft. Stages Water Bbls. Total Proppant Lbs. Proppant/Foot

25176 6498 18 26315 1407298 216.5

25164 7919 22 24793 1795000 226.7

24555 7726 26 26083 1787600 231.4 24556 8205 21 20557 1392800 169.8

24647 6959 22 24719 1853260 266.3

24729 7425 22 24447 1830760 246.6

24728 6801 22 24340 1770740 260.4

25937 9633 30 33863 2729789 283.4

25337 8180 26 25343 2023300 247.3

22971 10388 25 39661 1681580 161.9

25342 9126 30 24606 1796540 196.9

25180 6175 22 25038 1794660 290.6

25217 7975 30 26675 1892660 237.3

25554 9190 30 26276 2091760 227.6

25555 8772 30 25945 2060540 234.9

23567 9629 30 29329 2267720 235.5

25137 7372 22 25110 1753020 237.8 25198 7732 26 25621 1785462 230.9

24242 7292 22 24719 1799900 246.8

25152 6999 22 32852 1795480 256.5

24263 9325 21 19249 1142100 122.5

24264 9291 23 23295 1721820 185.3

23852 7869 15 18323 1049400 133.4

24059 8095 26 27356 1787280 220.8

23562 9809 29 27671 1741880 177.6

22831 8126 26 25607 1722200 211.9

24572 7645 26 24999 1615400 211.3

24573 7738 26 26726 1787540 231.0

24709 6780 23 26556 1708780 252.0

25322 9678 30 36291 2839060 293.4

25323 9711 29 35496 2629160 270.7

25350 6924 22 37873 1378220 199.0

25384 7244 26 27566 1967580 271.6

24740 7744 26 25215 1956710 252.7

24557 9720 30 28319 2229580 229.4

24241 9300 30 28834 2022780 217.5 23817 8999 30 28780 1944720 216.1

24581 7339 26 26112 1957029 266.7

24464 8037 20 21557 1508880 187.7

23758 8542 15 32244 1496680 175.2

23772 9493 15 38121 1435872 151.3

24994 6782 22 22416 1614080 238.0

23879 10174 30 29606 1913940 188.1

24961 7751 30 29581 2352760 303.5

25181 9892 42 103042 6027880 609.4

The above table is a list of Whiting's Sanish Field well design for wells completed this year. It is important to note that none of the above wells used ceramic proppant. Pressures are lower in the Sanish Field, so ceramic proppant is not needed. EOG Resources has been able to use just 20/40 frac sand, in Antelope Field of northeast McKenzie County. This provides further support of frac sand in deeper areas of the basin as well.

When the data is broken down in the table above, we see Whiting used a wide variance of proppant pounds/foot. The lowest concentration was just 122.5 pounds/foot, while the highest was 303.5 pounds per foot. When comparing Whiting's proppant amounts, it is low when compared to other operators. The last well in the above table used Whiting's new well design and used 609.4 pounds of sand per foot. This well (in bold) is the last on the above table. It is just as important to note the big change in water volumes as Whiting used 10 barrels of water per foot. The stages were tightened. This better design garners more resource and will change the way we believe a horizontal well depletes. When we compare the wells completed this year to those from 2008 to 2010, we see even lower volumes of proppant. These wells are provided in the table below.

Well Lateral Ft. Water Bbls. Proppant Lbs. Proppant/Foot

17137 9644 17975 1844000 191.2

16905 8739 18985 1598000 182.9

17173 9612 17560 1801000 187.4

17158 9500 19246 1840000 193.7

17134 8607 19407 1840000 213.8

17253 9509 19125 1840000 193.5

17586 9698 19232 1830000 188.7

17284 9461 16723 1451700 153.4

17240 9378 17765 1539000 164.1

17081 9645 19208 1842000 191.0

This isn't all of Whiting's Sanish Field results in 2008 to 2010, but gives a good idea of its well design. I excluded wells that did not list proppant and/or water amounts in its well file. The average proppant per foot in its early Sanish Field wells is quite low. This is to be expected as operators were trying to get a grasp of both well design and geology. There were many mistakes made, but that is how companies like Whiting figure out where to make improvements. As a general rule, Whiting has kept its proppant per foot in a range below 200 pounds per foot. So far in 2013, Whiting's average range was in the low to mid two hundred pound level.

Outside of Sanish Field, Whiting is still using some ceramic proppant. Ceramics are used mostly in McKenzie County, where the play is at its deepest. It also uses some all sand fracs in McKenzie. It is doing the same in Stark County. Whiting seems to be experimenting with amounts and types of proppant. It continues this to figure out how to adjust proppant amounts and types needed.

Looking forward to its well design, Whiting is planning to use between 4 and 5 million pounds of sand per well. This seems a little light to me, as EOG is using 9 to 10 million pounds per well on long laterals. I am sure it will increase proppant amounts as improves its stimulation of the interval. The key to EOG's and Whiting's success are tighter stages and perforation clusters per stage. The combination of the two pulverizes the source rock near the well bore. This is a much more productive completion design, and it is roughly the same cost as the old design. Focus should not be placed on the now but improvements that are almost surely to be seen over the next year or two. Whiting has one slickwater well, but has several coming on line down the road. This could also bolster EURs out in Missouri Breaks.

There are several other operators testing this approach in the Bakken. The only issue is limited data. EOG has done enough work to prove the approach is successful, but it is the only operator with enough production data. Whiting is very new to this completion style and should see a quick improvement as it gets more comfortable. In the Sanish Field, it increased significantly the amount of proppant per foot. This was over 600 pounds per foot. Although I do not like using 24 hour IP rates, Whiting has seen a marked improvement with this method. I plan to provide a better comparison after more wells come off confidential status. The table below provides these IP rate improvements.

Well Area Liner IP 24

Eide 41-13HR Hidden Bench Uncemented 2715

Eide 41-13-2H Hidden Bench Cemented 3795

Kjelstrup 44-24 TFH Lewis & Clark Uncemented 884

Kjelstrup Fed 11-19-1PH Lewis & Clark Cemented 1348

Mullin 21-24-1H Missouri Breaks Uncemented 481

Weber 24-30-1H Missouri Breaks Cemented 1164

Sundheim Fed 24-35-1H Missouri Breaks Uncemented 563

Barter 21-3H Missouri Breaks Uncemented 476

Sundheim 31-2-1H Missouri Breaks Cemented 1093

Obrigewitch 11-29PH Pronghorn Uncemented 1888

Obrigewitch 41-29PH Pronghorn Uncemented 1398 Obrigewitch 21-29PH Pronghorn Cemented 2432

The above results provide a series of wells throughout Whiting's acreage. Although Whiting does not provide choke information, I would assume all wells were set up on the same size as it could skew results significantly. I will be checking on this when the info is no longer on confidential status. I would guess these wells will be on a 40/64 or 48/64, as this has been the standard sizes Whiting has used for the past couple of years. These wells are in close proximity with each prospect. This is why it is a good comparison. The table below provides the increase in IP rate broken down by prospect.

Prospect 24 Hour IP Rate Improvement Of Cemented Liner

Hidden Bench 28.5%

Lewis & Clark 34.4%

Missouri Breaks 1 58.7%

Missouri Breaks 2 52.5%

Pronghorn 32.4%

The above data is based off of 24 hour IP rates, and is not a good indicator of long term production. We are real early, but Whiting seems confident this design will be significantly better than wells with uncemented liners. If it was unsure of its new results, it wouldn't put together a presentation surrounding this specific completion style. Like EOG's results, these wells should see a flattening of the depletion curve which should lead to some very good 90 day IP rates. Only time will tell for sure. In summary, Whiting's well design is a game changer. Looking at older EOG wells, we know this design adds about 30% to 50% to EURs. In Whiting's case we could see an even better return. The comparisons I have made in EOG's wells had a much better initial well design. Whiting's is a much different comparison as its old wells underperformed EOG's. This production growth comes at roughly the same costs. Whiting's Sanish Field and Pronghorn prospect are not as deep as the center of the basin. Because of this, it uses a straight sand frac. This will increase its sand usage significantly. Whiting has alluded it may use some ceramics and ceramic coated sand in the deeper areas. Whiting has also had success in the Niobrara, with this technique. These wells can use up to 8 million pounds of sand. Although Whiting uses less sand per foot than EOG, we could see this increase as Whiting gets better at source rock stimulation. It is rumored that there are a handful of other Bakken operators using cemented liners with multiple perforation clusters per stage. This should help drive Bakken revenues, and could improve top and bottom line numbers. Longer term, it could substantially increase demand for frac sand. This is why there has been heavy buying of U.S. Silica, Hi-Crush, and Emerge Energy. Even with the run up, we are still in the early innings of this change in well design and increased demand for frac sand.

Additional disclosure: This is not a buy recommendation. The projections or other information regarding the likelihood of various investment outcomes are hypothetical in nature, are not guaranteed for accuracy or completeness, do not reflect actual investment results, do not take into consideration commissions, margin interest and other costs, and are not guarantees of future results. All investments involve risk, losses may exceed the principal invested, and the past performance of a security, industry, sector, market or financial product does not guarantee future results or returns. For more articles like this check out our website at shaleexperts.com. Fracwater Solutions L.L.C. engages in industrial water solutions for oil and gas companies in North Dakota. This includes constructing water depots, pipelines and disposal wells. It also provides contracting services for all types of construction at well sites. Other services include soil remediation. Please contact me via email if you are interested in working with us. For more of my articles and other pertinent information on the oil and gas sector, go to shaleexperts.com.

(Article by Michael Filloon on November 3, 2013)

Whiting's Q3: Cemented Liners, Plug-N-Perf Completion Technique Should Lead To Higher Valuation

Whiting Petroleum (WLL) released Q3 earnings yesterday which were $0.23 better than analyst estimates. It was the best earnings report in quite some time for Whiting with net income of $1.71/share and adjusted net of $1.28/share. The results were based on nicely higher realized prices (+19%) and higher production (+12%). Excluding the Postle field assets sold in July, production was up +23%. This compares to a 18.3% increase in Q2. The increasing rate of production growth is partially attributed to new completion design technology which is yielding improved drill bit results. The new completion technique appears to be applicable across WLL's Williston Basin properties and is a strong catalyst moving forward. As a result, WLL will command a higher P/E ratio based on the outlook for higher production growth.

New Completion Technique Yielding Much Improved Results (click to enlarge)

At a recent JPMorgan Technical presentation (available here), Whiting outlined its new well completion technique employing cemented liners with plug-n-perf (shown above). The number of perforations per stage tripled over the prior sliding sleeve technique and the number of potential entry points quadrupled.

The company then ran an experiment in the Missouri Breaks in which it compared results of the (old) sliding sleeve technique as compared with the (new) cemented liners with perf-n-plug. The results speak for themselves: (click to enlarge)

Indeed, in the Q3 earnings report the company announced results of the new technology. In the Missouri Breaks acreage, the last eight wells that were completed using cemented liners and plug-n-perf technology had average first 30-day cumulative production of yields of 14,400 boe.

According to the company, that was ~60% better than the previous 31 wells in the area that were completed using uncemented liners and sliding sleeves. From the JPMorgan presentation, we also found out this was accomplished for practically no increase in drilling and completion cost: (click to enlarge)

In the Hidden Bench prospect, WLL recently completed the Eide 41-13-2H flowing at an initial rate of 3,795 boe/d using the new cemented liner and a plug-n-perf completion technique. An offset well, the Eide 41-13HR, was completed using an uncemented liner and sliding sleeve technology and flowed at 2,715 boe/d. So the new completion technique is yielding ~40% higher IP rates in this case.

At Pronghorn, WLL recently completed a three-well pad to test the new completion technique. The Obrigewitch 21-29PH was completed using a cemented liner and plug-n-perf technology and flowed at 2,432 boe/d. That is a ~50% increase over two offsetting wells completed on the same pad using the older technology.

So Whiting is seeing a substantial increase in drilling results across its Williston Basin properties: Missouri Breaks, Hidden Bench and Pronghorn - everywhere. Considering the company has over 700,000 net acres in the play, this a big deal. (click to enlarge) I should point out that Seeking Alpha contributor Michael Filloon published an article back in July about the new completion technique. He was spot-on in identifying it as a positive catalyst for WLL.

Summary and Conclusions

Whiting's new cement liners with plug-n-perf completion technique is yielding much improved results across its Williston Basin assets. As a result, the company's has a robust production growth outlook and its valuation should reflect this. Indeed, since the first of September, WLL's stock has really taken off. For those wondering if the run-up was justified, WLL's Q3 results should convince any skeptic. The company now has a PE=20. This is still much less than companies like Kodiak Oil & Gas (KOG) which has a P/E=34, Continental Resources (CLR) with a P/E=29, and the king of the pack, EOG Resources (EOG), which has a P/E=48. It is clear the market will reward companies that can grow production and net income with higher multiples. If Whiting can follow up Q3's production growth with an increasing production rate in Q4, and I see no reason why they cannot, WLL shareholders should see a pleasant revaluation of WLL shares by the market. In the meantime, one risk to keep an eye on would be substantial weakness in WTI prices, which has wobbled lately. Any substantial fall in WTI could present a nice buying opportunity in shares of WLL.

WLL data by YCharts

Additional disclosure: I am an engineer, not a CFA. The information and data presented in this article was obtained from company documents and/or sources believed to be reliable, but has not been independently verified. Therefore, the author cannot guarantee its accuracy. Please do your own research and contact a qualified investment advisor. I am not responsible for investment decisions you make. Thanks for reading and good luck!

(Article by Michael Fitzsimmons on October 24, 2013)

CON Insiders Are Selling Whiting Petroleum

In this article, I will feature one energy stock that has seen intensive insider selling during the last 30 days. Intensive insider selling can be defined by the following three criteria:

1. The stock was sold by three or more insiders within one month.

2. The stock was not purchased by any insiders in the month of intensive selling.

3. At least two sellers decreased their holdings by more than 10%.

Whiting Petroleum Corporation (WLL), an independent oil and gas company, engages in the acquisition, exploration, exploitation, development, and production of crude oil, natural gas liquids, and natural gas in the United States.

(click to enlarge)

Insider selling during the last 30 days

Here is a table of Whiting Petroleum's insider-trading activity during the last 30 days by insider.

Trade Shares Rule Decrease In Name Title Current Ownership Date Sold 10b5-1 Ownership

49,118 shares + 66,992 CFO Nov 1 23,936 No 17.1% Michael options Stevens

Mark Oct 28- 44,582 shares + 14,448

SVP 14,250 No 19.4% Williams 29 options

28,502 shares + 4,036

David Seery VP Oct 30 3,166 No 8.9% options

Bruce 6,461 shares + 5,500

VP Oct 28 23,556 No 66.3% DeBoer options

Sherwin Oct 28-

Director 6,000 No 49,873 shares 10.7% Artus 30

There have been 70,908 shares sold by insiders during the last 30 days. More details about the Rule 10b5-1 trading plan can be found from this link.

Insider selling by calendar month

Here is a table of Whiting Petroleum's insider-trading activity by calendar month.

Month Insider selling / shares Insider buying / shares

November 2013 23,936 0

October 2013 46,972 0

September 2013 0 0

August 2013 0 0 July 2013 0 0

June 2013 0 0

May 2013 0 0

April 2013 0 0

March 2013 0 0

February 2013 0 0

January 2013 0 0

There have been 70,908 shares sold and there have been zero shares purchased by insiders this year. The month of October has seen the most insider selling.

Financials

Whiting Petroleum reported the third-quarter financial results on October 23 with the following highlights:

Revenue $831.0 million

Net income $204.1 million

Cash $1.0 billion Debt $2.9 billion

Production 8.53 MMBOE

(click to enlarge)

Outlook

Whiting Petroleum's guidance for the fourth quarter and full-year 2013 is as follows:

(click to enlarge)

Competition

Whiting Petroleum's competitors include Kodiak Oil & Gas (KOG),Continental Resources (CLR), and EOG Resources (EOG). Here is a table comparing these companies.

Company WLL KOG CLR EOG

Market Cap: 7.85B 3.29B 20.86B 48.76B

Employees: 829 134 753 2,650

Qtrly Rev Growth (yoy): 0.36 1.02 0.69 0.39

Revenue: 2.53B 581.51M 3.02B 12.82B

Gross Margin: 0.70 0.79 0.81 0.86

EBITDA: 1.70B 397.42M 2.26B 6.51B

Operating Margin: 0.29 0.31 0.41 0.15

Net Income: 506.22M 100.45M 728.50M 1.00B

EPS: 4.25 0.38 3.96 3.70

P/E: 15.56 33.01 28.59 48.41

PEG (5 yr expected): 2.18 0.35 0.57 1.87 P/S: 3.14 5.92 6.95 3.79

Whiting Petroleum has the highest PEG ratio among these four companies.

Here is a table of these competitors' insider-trading activities this year.

Company Insider buying / shares Insider selling / shares

KOG 0 725,000

CLR 1,500 47,891

EOG 0 349,407

Only Whiting Petroleum has seen intensive insider selling during the past 30 days.

Conclusion

There have been five different insiders selling Whiting Petroleum and there have not been any insiders buying Whiting Petroleum during the past 30 days. Four of these five insiders decreased their holdings by more than 10%. Whiting Petroleum has an insider ownership of 0.10%.

Whiting Petroleum is trading at a P/E ratio of 15.56 and a forward P/E ratio of 15.41. Whiting Petroleum has a book value of $31.14 per share.

Before entering short Whiting Petroleum, I would like to get a bearish confirmation from the Point and Figure chart. The two main reasons for the proposed short entry are relatively high PEG ratio and the intensive insider selling activity.

(Article by Marcus Aarnio on November 3, 2013)