Whiting Petroleum Corp. Reported a Monster Quarter in More Ways Than One — The Motley Fool

Whiting Petroleum‘s (NYSE:WLL) first-quarter report was excellent, all things considered. Sure, the Bakken oil driller reported another quarterly loss, and its production dropped versus the year-ago period, but that wasn’t unexpected. What was surprising, however, is that the company trounced those muted expectations due in part to some monster well results, which enhanced its ability to continue pushing down costs. Because of that, Whiting is on pace to have a better year than expected as long as crude prices don’t take a dive and ruin its momentum.

Drilling down into the numbers

Whiting Petroleum’s first-quarter results beat the forecasts across the board:

Metric

Q1 2017 Guidance (at the midpoint)

Q1 2017 Actuals

Production

10.4 MMBOE

10.6 MMBOE

EPS

($0.21)

($0.15)

Lease operating expenses per BOE

$9.00

$8.56

General and administrative expenses per BOE

$3.15

$2.34

Interest expense per BOE

$4.80

$3.83

Data source: Whiting Petroleum. BOE = barrels of oil equivalent. MMBOE = million barrels of oil equivalent.  

Several factors fueled the expectation-beating results. Production, for example, benefited from the recent completion of the three-well Loomer pad in North Dakota. Wells from this monster pad, which Whiting completed using a new technique that incorporates more frack stages, diverter agents, and 8.9 million pounds of sand per well, are on pace to produce 1.5 MMBOE apiece over their lifetime. That’s nearly 50% higher than the company’s average expectation for new wells in the region. Because of the higher production from this and other recently completed wells, Whiting’s output came in at the high end of its guidance range. That flowed down into improvements in other metrics on a per-BOE basis since the driller, for example, could spread out general and administrative (G&A) as well as interest expenses across more barrels.

In addition to that, Whiting benefited from several other factors during the quarter. Lease operating expenses (LOE) came in below forecast due to the advantages of a new comprehensive water-handling program, which lowered saltwater disposal costs by 10%. The company also implemented a new maintenance program that has reduced well downtime across its properties by 22%. Furthermore, Whiting also noted that oil differentials, which is the regional difference in oil prices, started shrinking thanks to new pipeline infrastructure in the Bakken, including the start up of Energy Transfer Partners(NYSE:ETP) controversial Dakota Access Pipeline.

Image source: Getty Images.

On pace for a better year

Whiting Petroleum’s expectation-beating results put the company on track to beat its initial full-year guidance. Because of that, the company has adjusted its forecast accordingly. As a result of its strong well results, Whiting is increasing its full-year production guidance from a range of 45 MMBOE to 46 MMBOE up to…

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