Whiting Petroleum (WLL) is an independent oil and gas company, with its largest projects based in the Bakken and Three Forks play in North Dakota (41%). WLL holds a net acreage of 683,804 net acres in the Williston Basin, in which the Bakken and Three Forks plays are located.
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 the Bakken. For example, in September, 2013, the company closed a $260 million acquisition in the Bakken and 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.
Apart from the Bakken, WLL also has considerable acreage in the Niobrara play (31%) in northeast Colorado. Rail transport has been a go-to option for Bakken producers, but it’s also catching up with producers based in the Niobrara, to transport their crude to West Coast refiners.
Additionally, Whiting had entered into a contract with CHS Inc., a Fortune 100 company that has diversified business including energy and grains. CHS contracted with Whiting to be the marketer of the propane and butane produced by Whiting’s new Robinson Lake fractionation plant in Mountrail County, North Dakota.
This will enable CHS to access propane which it supplies to consumers in North Dakota. The reason why CHS Inc. was able to enter into a mutually beneficial contract with WLL was because of its extensive rail and rail terminal facilities.
It’s important to note that WLL is a part of the Market Vectors Unconventional Oil & Gas ETF (FRAK), the SPDR S&P Oil & Gas Exploration & Production ETF (XOP), the iShares U.S. Oil & Gas Exploration & Production ETF (IEO), and theVanguard Energy ETF (VDE).
To learn more about other producers that have benefited because of their proximity and ability to transport crude and crude-related products by rail, continue reading the next sections in this series.
© 2013 Market Realist, Inc.