Whiting Petroleum is shifting its focus in the Williston Basin to development projects southwest of its flagship Sanish field, a major core area that provides the Denver-based E&P independent with nearly 40 percent of its total U.S. production.
Whiting has given no hint of abandoning its long-standing position in the Sanish. It’s a prolific Bakken-Three Forks play that supplies the company with more than 30,000 barrels of oil equivalent per day.
“Sanish is a great, great asset, a great, great find, perhaps one of the best fields, (with) over 5 billion barrels in place right there in the Sanish field. We’re very fortunate to have that asset in our portfolio,” James T. Brown, Whiting’s president and chief operating officer, told analysts at the Dec. 5 Wells Fargo Securities Energy, MLP and Pipeline conference in New York.
Six rigs in the Sanish
Whiting is running six of its 20 Williston Basin rigs in the Sanish. By the end of this year, a total of about 300 production wells will have been drilled in the field, with another 200 yet to drill and complete. This should keep Whiting busy in the Sanish for several years. So why change its focus now?
“While we still have about three years of drilling at Sanish, we’re increasing our production through other opportunities outside of the Sanish,” Whiting Investor Relations Director John Kelso told Petroleum News Bakken. “We’re just continuing to move the ball downfield.”
These opportunities include the Pronghorn, Lewis & Clark, Hidden Bench and Missouri Breaks. Average 30, 60 and 90-day production rates from recent wells in three of these newer development areas were already exceeding rates from the average Sanish well during the 2012 third quarter.
Drilling up outside Sanish
In fact, the majority of Whiting’s wells over the past 19 months have been drilled outside the Sanish field. And the company has said it intends to maintain this pace going forward.
“We’ve already got a great program going on down in Pronghorn,” Brown told analysts. “And we’re going to continue moving across the other areas in the southwest part of the basin. So you are going to see our efforts switch from Sanish and the Sanish area.”
Whiting also has growth opportunities in the Rocky Mountain region outside the Williston Basin, in particular its piece of Colorado’s Niobrara oil shale play, where it currently has one rig operating at its Redtail prospect.
“We are starting to see results in the Niobrara that are being competitive with some of our projects in the Williston Basin,” Brown said. “It’s one of those places where we would like to become a little more aggressive and direct more capital.”
Budget yet to be determined
Whiting has yet to release its capital budget and production guidance for 2013. So just how money will be allocated among its U.S. projects and expectations for production growth next year has not been officially disclosed. However, Whiting’s Brown did provide a glimpse at the Wells Fargo conference.
He said Whiting’s budget likely would be in the range of $1.7-$1.8 billion, and production growth should be in the “lower teens,” in the range of 12-13 percent over 2012 growth. At first glance, these numbers are not impressive when compared to 2012’s $2 billion budget and 20-23 percent production growth rate.
However, Whiting is known for increasing the numbers as the year progresses. For example, the company’s initial production growth guidance for 2012 was 16 percent over 2011, about 38 percent below the amount of oil and gas that actually will have been produced by the end of this year.
“We increased our production guidance three times during 2012 based on actual production results and a bigger budget,” Whiting’s Kelso said. “The same type of scenario may play out in 20013.”
More projects than money
However, Whiting concedes that it has more projects across the United States than money to finance them. And Brown said the company is not inclined to tap financial markets and run up its debts just to accelerate programs. One option considered by Whiting, he added, is to joint venture with a third party on projects such as Colorado’s Niobrara play and the Big Island (vertical Red River) and Missouri Breaks (horizontal Middle Bakken and Three Forks) fields in the Williston.
“We bring someone in, get them to pay upfront for the acreage position and then have them pay a disproportionate share of the costs,” Brown explained.
Cutback at ‘Big Tex’
Brown said Whiting’s expenditures in 2013 “are going to break out very similar” to what they were in 2012, with the exception of a reduction in spending for the Permian Basin.
“We’re not going to be as active in the Big Tex area as we were in 2012,” he said.
Brown said Whiting also is not budgeting as much for land expenditures as it did in 2012.
“But I want everyone to fully realize that your land budget is sort of an opportunistic budget,” he said. “You can’t always budget what you’re going to spend on land because you can’t forecast what opportunities are going to present themselves in the coming year.”
In addition to the Rocky Mountains region and the Permian Basin of Texas, Whiting holds oil and gas assets in the Mid-Continent, Gulf Coast and Michigan.
—Ray Tyson
