Jim Volker, the CEO of Whiting Petroleum Corp (NYSE:WLL), intends to operate within cash flow next year. The company will maintain borrowing base of $3.5 million even after loan redetermination process in next month. Also, the CEO stated that Redtail Niobrara shale assets can produce 100,000 barrels of oil equivalent per day. They will prefer to retire debt instead of opting for buy back process. The company is leading the charge in oil market benefiting from capital budget cuts.
The highlights
Volker said that Bakken differential could decline to nearly $5 from almost $8/barrel if WTI oil prices trade near current levels. Whiting Petroleum’s second-quarter financial report was packed with surprises. The company reported its decision to minimize its capital expenditures budget just a couple of weeks after expanding it. However, that was just one of the announcements covered in the second-quarter conference call last month.
The focus
Whiting Petroleum management team provided numerous insights during its second-quarter conference call. The company revealed that they continue to make new production records. While talking about the production, CEO Volker expressed that they recorded another strong quarter of production at 170,000 BOEs daily. This increased production can be attributed to the company’s newest designs, which are delivering 40% to 50% increase in production compared to older offset wells in the Bakken region.
Cash flow
Whiting Petroleum Corp (NYSE:WLL) unit costs in 2Q2015 decreased significantly over the second quarter of FY2014 due to cost control initiatives and technology-led productivity increases. The DD&A rate per BOE declined 23% to $20.81, G&A per BOE decreased 19% to $2.90 and LOE per BOE dropped 22% to $9.25. This enabled the company to record strong discretionary cash flow in 2Q2015, which came at $381 million, a 53% jump over the first quarter. This improved cash flow will help company to continue to drilling operations without burdening its balance sheet.
