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Must-know: The essentials of Whiting Petroleum’s Bakken activity

Ingrid Pan, CFA

A must-know overview of the Bakken Shale oil play (Part 4 of 12)

(Continued from Part 3)

Whiting and the Bakken

Whiting is the third largest producer in the Bakken region, with the majority of its company-wide production coming from its activity there.

Summary Facts

Bakken Acreage: 730,000
2013 Bakken Capex: ~$1.3 billion
3Q13 Bakken Production: ~65 thousand barrels of oil equivalent per day
3Q13 Total Company Production: ~93 thousand barrels of oil equivalent per day
Percentage Bakken Production: ~70%
Market Cap (12/4/13): $7.3 billion
Enterprise Value (12/4/13): $9.2 billion
3Q13 EBITDAX: $444 million
2014 Consensus EBITDAX: $2.1 billion
EV/3Q13 Annualized EBITDAX: 5.2x
EV/2014 Consensus EBITDAX: 4.3x

Over 2013, Whiting sold off significant amounts of its assets that aren’t in the Bakken, including its Postle Field enhanced oil recovery assets for $817 million and its acreage in the Delaware Basin for $150 million. Meanwhile, WLL has been using the cash from asset sales and redeploying it into plays that it views as core and higher-return, including the Bakken. For example, in September 2013, the company closed a $260 million acquisition in the Bakken/Williston, including 17,282 net acres with net production of 2,420 barrels of oil equivalent per day in August 2013. Whiting estimates that proved reserves in the area totaled 17.1 million barrels of oil equivalent, as of August 1, 2013, comprising ~85% oil.

One thing to note is that WLL’s valuation has lagged its Bakken-levered peers over the past few years, as the market has been concerned with the amount of inventory (wells left to drill) that Whiting has in the region. Plus, some investors viewed Whiting’s position in the play as less “core” than some of its peers.

Continue to Part 5

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