uploads///DEBT REDUCTION

Where Has Whiting Petroleum Focused in 2016?

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Dec. 4 2020, Updated 10:52 a.m. ET

Whiting Petroleum’s management objectives

One of Whiting Petroleum’s (WLL) key management objectives is to reduce its debt. After its Kodiak Oil & Gas acquisition in 2014, WLL took on a significant amount of debt—$5.2 billion on December 31, 2015. Since then, the company has been working on improving its financial position.

WLL’s CEO, James Volker, said in the 3Q16 earnings release, “We believe the focus on balance sheet strength and capital spending discipline in the first nine months of 2016 provides us with a strong financial base to continue to deliver solid operational results and realize the potential of our world class asset base.”

WLL recently announced the divestiture of its Bakken midstream assets. This could be seen as another step toward that goal, but the company hasd’t mentioned how it plans to use the proceeds from the divestiture.

On November 21, 2016, Whiting Petroleum (WLL) announced its intention to sell its Bakken midstream assets to an affiliate of Tesoro Logistics Rockies, a subsidiary of Tesoro Logistics (TLLP), for $375 million.

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Key management comments

In a November 21, 2016, press release, Volker commented, “We expect this sale to further strengthen our balance sheet and provide us with additional financial flexibility to invest for growth in Whiting’s top tier producing assets in the Williston and DJ Basins. This sale aligns with our ongoing strategy to divest non-core midstream assets and focus capital in the company’s highly productive upstream business.”

The Williston Basin is home to one of the biggest shale plays in the United States, the Bakken Shale. Continental Resources (CLR) and Hess Corporation (HES) are two of the key operators in the Bakken Shale. Other operators include Newfield Exploration (NFX) and Oasis Petroleum (OAS).

Top players in the DJ Basin include Noble Energy (NBL) and Anadarko Petroleum (APC). All these companies, including WLL, make up ~15% of the iShares US Oil & Gas Exploration & Production ETF (IEO).

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