• 3 minutes Shale Oil Fiasco
  • 7 minutes "Leaked" request by some Democrats that they were asking Nancy to coordinate censure instead of impeachment.
  • 12 minutes Trump's China Strategy: Death By a Thousand Paper Cuts
  • 16 minutes Global Debt Worries. How Will This End?
  • 23 mins americavchina.com
  • 2 hours DUMB IT DOWN-IMPEACHMENT
  • 2 hours Tories on course to win majority
  • 3 hours POTUS Trump signs the HK Bill
  • 24 hours Greta named Time Magazine "Person of the Year"
  • 1 hour Winter Storms Hitting Continental US
  • 11 hours WTO is effectively neutered. Trump *already* won the trade war against China and WTO is helpless to intervene
  • 7 hours Everything you think you know about economics is WRONG!
  • 1 day Forget The Hype, Aramco Shares May be Valued At Zero Next Year
  • 7 hours Aramco Raises $25.6B in World's Biggest IPO
  • 2 hours China Burns More Coal than the Rest of the World !
  • 59 mins 2nd Annual Great Oil Price Prediction Challenge of 2019
Alt Text

All Eyes On China As Oil Demand Dwindles

A gloomy oil demand growth…

Alt Text

Oil Soars On Crude Inventory Draw

Oil prices rose on Wednesday…

Charles Kennedy

Charles Kennedy

Charles is a writer for Oilprice.com

More Info

Premium Content

Oil Giant Cuts Budget By 80 Percent And Suspends Fracking

Whiting Petroleum Corp. (NYSE:WLL), the largest oil producer in North Dakota, has announced that it will suspend all fracking in the state and cut its budget for this year by 80 percent in a move that sent its shares up 9 percent on Wednesday, back down to a record low on Thursday, and $4.02 this morning.

Across the E&P patch, it’s a volatile game of craps right now that has investors torn between responding positively to spending cuts to weather the oil price downturn, and negatively to the notion that all these companies are doing is narrowly avoiding bankruptcy.

As of 1 April, Whiting will halt all fracking and stop completing its wells at 20 Bakken and three Forks sites. By this summer it will cut spending to $160 million for the rest of year to fund maintenance.

These are some of the biggest spending cuts in the industry so far, and investors have responded positively to Whiting’s strategy for waiting out low oil prices. Related: Electric Car War Sends Lithium Prices Sky High

"We believe this conservative strategy should help us to maintain our liquidity position and leave us well positioned to capitalize on a rebound in oil prices," Whiting Chief Executive Jim Volker said in a statement carried by Reuters.

The news comes along with Whiting’s fourth-quarter results, which posted a net loss of $0.80 per share and revenues of $2.05 billion compared with 2014 EPS of $4.15 and revenues of $3.09 billion.

In an earnings call on 25 February, Whiting noted that its production for the fourth quarter averaged 155,210 barrels of oil equivalent per day, and that enhanced completion designs in the Williston Basin drove performance by delivering 22 percent production increases quarter over quarter on a per well basis. Related: Is This The Most Bullish News For Oil Since 2014?

“Despite the sharp drop in commodity prices, our proved reserves increased 5 percent to 821 million barrels of oil equivalent, even after 53 million barrels of oil equivalent of asset sales which equated to almost 7 percent of our year-end 2014 reserves,” Whiting executives noted.

The company sold $512 million of assets last year, ending the year with $2.7 billion of liquidity. It’s also in a better position despite all the setbacks because it doesn’t have any bonds maturing until 2019, and will not be negatively affected by the “March madness” that is threatening other producers.

“Our 2016 plan is designed to maximize current and future returns and preserve balance sheet strength. We're decreasing CapEx by 80 percent from 2015 levels and adjusting our activity levels to four rigs versus our monthly average of 11 in 2015 and our high of 25 rigs in 2014,” according to Whiting. Related: The Allure Of Shale Is Wearing Off

Whiting said on Thursday, a day after reporting its quarterly results, that if oil prices recover back to the $40-$45 per barrel range, it would consider completing some of its wells.

Whiting has some 667,000 net acres in the Williston Basin in North Dakota and Montana, and the wells put on hold there were just in the planning stage. But the side effects of a move like this mean that it will also be putting on hold a pipeline project slated to be built by Tesoro Logistics.

The debt picture might look better, but Whiting’s shares have suffered more than some of its key peers. Shares have slid 63 percent since the beginning of this year.

On Thursday, Whiting’s shares opened at $3.53, its one-year low. The company has a one-year high of $41.57. In Wednesday trading, the company’s shares had jumped 9 percent on news that it would suspend fracking.

Whiting is slashing spending and appeasing investors as much as it can, but right now it’s all about avoiding bankruptcy for this company and its peers as the waiting game continues.

By Charles Kennedy of Oilprice.com

More Top Reads From Oilprice.com:




Download The Free Oilprice App Today

Back to homepage



Leave a comment

Leave a comment




Oilprice - The No. 1 Source for Oil & Energy News
Download on the App Store Get it on Google Play