UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant x Filed by a Party other than the Registrant ¨
Check the appropriate box:
| ¨ | Preliminary Proxy Statement | |
| ¨ | Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) | |
| ¨ | Definitive Proxy Statement | |
| ¨ | Definitive Additional Materials | |
| x | Soliciting Material Pursuant to Section 240.14a-12 | |
Whiting Petroleum Corporation
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
| x | No fee required | |||
| ¨ | Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11. | |||
| (1) | Title of each class of securities to which transaction applies:
| |||
| (2) | Aggregate number of securities to which transaction applies:
| |||
| (3) | Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is calculated and state how it was determined):
| |||
| (4) | Proposed maximum aggregate value of transaction:
| |||
| (5) | Total fee paid:
| |||
| ¨ | Fee paid previously with preliminary materials. | |||
| ¨ | Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. | |||
| (1) | Amount Previously Paid:
| |||
| (2) | Form, Schedule or Registration Statement No.:
| |||
| (3) | Filing Party:
| |||
| (4) | Date Filed:
| |||
|
|
Whiting Petroleum Corporation
ENERGY + TECHNOLOGY = GROWTH
Second Quarter 2014 Operational and Financial Update
July 31, 2014
|
|
Forward-Looking Statements, Non-GAAP Measures, Reserve and Resource Information
This presentation contains statements that Whiting Petroleum Corporation (“Whiting”) believes to be “forward-looking statements” within the meaning of Section 21E of the Securities Exchange Act of 1934. All statements other than historical facts, including statements regarding the expected benefits of Whiting’s proposed acquisition (the “Acquisition”) of Kodiak Oil & Gas Corp. (“Kodiak”) to Whiting and Kodiak and their shareholders, the anticipated completion of the Acquisition or the timing thereof, the expected future reserves, production, financial position, business strategy, revenues, earnings, costs, capital expenditures and debt levels of the combined company, and plans and objectives of management for future operations, are forward-looking statements. Such forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those expressed in, or implied by, such statements. These risks and uncertainties include, but are not limited to: the ability to obtain shareholder, court and regulatory approvals of the Acquisition; the ability to complete the proposed Acquisition on anticipated terms and timetable; Whiting’s and Kodiak’s ability to integrate successfully after the Acquisition and achieve anticipated benefits from the Acquisition; the possibility that various closing conditions for the Acquisition may not be satisfied or waived; oil and natural gas prices; level of success in exploration, development and production activities; the impacts of federal and state laws; the impacts of hedging on results of operations; uncertainty regarding future operating results and plans, objectives and expectations; and other risks described under the caption “Risk Factors” in Whiting’s and Kodiak’s Annual Reports on Form 10-K for the period ended December 31, 2013. Whiting assumes no obligation, and disclaim any duty, to update the forward-looking statements in this communication. Whiting’s production forecasts and expectations for future periods are dependent upon many assumptions, including estimates of production decline rates from existing wells and the undertaking and outcome of future drilling activity, which may be affected by significant commodity price declines or drilling cost increases.
In this presentation, we refer to Adjusted Net Income, Discretionary Cash Flow and EBITDAX, which are non-GAAP measures that the Company believes are helpful in evaluating the performance of its business. A reconciliation of such non-GAAP measures to the relevant GAAP measures can be found at the end of the presentation.
Whiting uses in this presentation the terms proved, probable and possible reserves. Proved reserves are reserves which, by analysis of geoscience and engineering data, can be estimated with reasonable certainty to be economically producible from a given date forward from known reservoirs under existing economic conditions, operating methods and government regulations prior to the time at which contracts providing the right to operate expire, unless evidence indicates that renewal is reasonably certain. Probable reserves are reserves that are less certain to be recovered than proved reserves, but which, together with proved reserves, are as likely as not to be recovered. Possible reserves are reserves that are less certain to be recovered than probable reserves. Estimates of probable and possible reserves which may potentially be recoverable through additional drilling or recovery techniques are by nature more uncertain than estimates of proved reserves and accordingly are subject to substantially greater risk of not actually being realized by the Company.
Whiting uses in this presentation the term “total resources,” which consists of contingent and prospective resources, which SEC rules prohibit in filings of U.S. registrants. Contingent resources are resources that are potentially recoverable but not yet considered mature enough for commercial development due to technological or business hurdles. For contingent resources to move into the reserves category, the key conditions or contingencies that prevented commercial development must be clarified and removed. Prospective resources are estimated volumes associated with undiscovered accumulations. These represent quantities of petroleum which are estimated to be potentially recoverable from oil and gas deposits identified on the basis of indirect evidence but which have not yet been drilled. This class represents a higher risk than contingent resources since the risk of discovery is also added. For prospective resources to become classified as contingent resources, hydrocarbons must be discovered, the accumulations must be further evaluated and an estimate of quantities that would be recoverable under appropriate development projects prepared. Estimates of resources are by nature more uncertain than reserves and accordingly are subject to substantially greater risk of not actually being realized by the Company.
Energy + Technology = Growth 2
|
|
Whiting Overview
Whiting Petroleum Corporation is an independent oil and gas company that explores for, develops, acquires and produces crude oil, natural gas and natural gas liquids primarily in the Rocky Mountain and Permian Basin regions of the United States. The Company’s largest projects are in the Bakken and Three Forks plays in North Dakota, the Redtail Niobrara play in northeast Colorado and its enhanced oil recovery field in Texas. The Company trades publicly under the symbol WLL on the New York Stock Exchange.
Whiting Petroleum Corporation’s Solberg 34-11 Tripad wells with Nabors drilling rig B15 on the Zalesky 34-8 Tripad, in background.
Q2 2014 Production 109.8 MBOE/d
Proved Reserves(1) 438.5 MMBOE
% Oil Reserves(1) 79% (89% Liquids)
R/P Ratio(2) 13 years
(1) Whiting reserves at December 31, 2013 based on independent engineering.
(2) R/P ratio based on year-end 2013 proved reserves and 2013 production.
Energy + Technology = Growth
| 3 |
|
|
|
Whiting Petroleum – A Company on the Move
Five Significant Second Quarter Achievements
1) Announced Agreement to Acquire Kodiak Oil & Gas Corp. on July 13, 2014, Which Will
Create the #1 Williston Basin Bakken / Three Forks Producer
2) Record Discretionary Cash Flow of $556.2 Million(1); Record Williston Basin Production of
80,195 BOE/d, Up 33% YoY
3) Raised Production Guidance to a mid-point of 20%; Q2 Production Exceeds Top-End of
Production Guidance
4) New Completions Using Cemented Liners and Plug and Perf Technology Yielded a 23%
Increase in EURs Compared to Wells With Uncemented Liners and Sliding Sleeve Technology
5) Spud the 30F Super Pad in the Horsetail Area to Test 32-Well Spacing Pattern in Niobrara
A, B and C Benches in early June 2014; Razor 27I 8-Well Pad Currently Producing
Approximately 4,700 BOE/d
| 4 |
|
(1) Please refer to the Reconciliation of Net Cash Provided by Operating Activities to Discretionary Cash Flow later in this presentation.
Energy + Technology = Growth
|
|
A Focused Company
Q2 2014 Net Production
Williston Basin
Bakken / Three Forks
80,195 BOE/d (Q2 2014)
109.8 MBOE/d
11% 3%
Redtail
86%
HEADQUARTERS
Denver, Colorado
Niobrara A and B
7,235 BOE/d (Q2 2014)
Rocky Mountains Permian Other
Bakken North Ward Estes
110 MMBOE Proved Reserves(1)
104 MMBOE P2 + P3 Reserves(1)
26 3
30.3
48.9
63.5
80.2
40 0
60.0
80.0
100.0
/ Three Forks Production
Major Asset Areas
16.8
26.3
20.0
40.0
2009 2010 2011 2012 2013 Q2
MBOE/d 2014
Energy + Technology = Growth 5
| (1) |
|
At December 31, 2013 based on independent engineering. |
|
|
Williston Basin Highlights
June 30, 2014
Field Target Gross Acres Net Acres
Sanish / Parshall Middle Bakken
174,665 82,462
Skaar Federal 41 -3TFHU
completed June 7, 2014
Three Forks
Pronghorn Pronghorn Sand 180,911 116,848
Lewis & Clark Three Forks 172,009 118,039
Hidden Bench Middle Bakken 61,024 37,667
CASSANDRA
SANISH &
PARSHALL
STARBUCK
flowing 6,071 BOE/d
from the 2nd Bench of
the Three Forks
Three Forks
Tarpon Middle Bakken
Three Forks
8,805 6,267
Starbuck Middle Bakken
Three Forks
Red River
52,020 42,707
TARPON
HIDDEN BENCH
MISSOURI
BREAKS
Slickwater Test
Q2 2014 Completions
in Hidden Bench
Missouri Breaks Middle Bakken
Three Forks
93,678 66,956
Cassandra Middle Bakken
Three Forks
29,827 13,953
LEWIS Big Island Red River 166,126 135,122
& CLARK
Sundheim 21-27-1H
had 44% greater
120-day rate than
offsetting well
(11 Wells ) Average IP of
2,872 BOE/d
Other ND & Montana 120,892 54,141
Total 1,059,957 674,162
BIG
ISLAND
Pronghorn
Energy + Technology = Growth 6
|
|
Redtail Development Program
Economic Sweet Spot
(Weld County, Colorado) OBJECTIVE
Niobrara “B” Shale
Niobrara “A” Shale
DEVELOPMENT PLAN
Mix of 960 and 640-acre spacing units
8 wells per unit spacing Niobrara “B”
Niobrara Initial 30-Day Average Rate
(Gas converted to oil price equivalent ratio 17:1)
Pre 2013 2013-14 BOEPD
1 350
8 Wells per spacing unit Niobrara “A”
3,300+ potential drilling locations
ACREAGE
Whiting has assembled 180,115 gross
(128 721 net) acres in our Redtail
350 – 450
450 – 550
550 – 650
650 – 750
> 750
prospect in the northeastern portion of
the DJ Basin.
Average WI of 71%
Average NRI of 59%
COMPLETED WELL COST
Horizontal: $5.5 MM
DRILLING HIGHLIGHTS
First 8-well pad, the Razor 27I (4 Niobrara
“A”; 4 Niobrara “B”) pad came online
April 15, 2014. The pad was producing
4,699 BOE/d as of late July 2014 .
We spud our Horsetail 30F super pad that
will test 32-well spacing in the Niobrara
“A”, “B” and “C” zones.
7
Source: IHS and internal Whiting production database
Energy + Technology = Growth
|
|
Redtail Development Planning
Defining Optimal Well Density
27L Pad
Drilling Density
- 16 Wells/DSU
- 330 ft.
Target: B-B-B-B
Status: Flowing
27K Pad
Drilling Density
- 16 Wells/DSU
- 330 ft.
Target: A-B-A-B
Status: Flowing
Razor Pilot
16 Wells / 960ac DSU
30F Pad
Drilling Density
- 32 Wells/DSU
- 165 ft.
Target: C-B-A-BA-
B-C-B
Status: Drilling
Horsetail Pilot
32 Wells / 960ac DSU
Planned Wells
Producing Wells
Future Infill Wells Energy + Technology = Growth 8
|
|
Adjusted Net Income and Discretionary Cash Flow
Three and Six Months Ended June 30, 2014 and 2013 (1)(2)
Three Months Ended
June 30,
Six Months Ended
June 30,
2014 2013 2014 2013
(In millions, expect per share data)
Net Income Available to Common
Shareholders $ 151.4 $ 134.7 $ 260.5 $ 220.7
Adjusted Net Income(1) $ 167.9 $ 121.3 $ 294.0 $ 233.0
Adjusted Earnings Per Basic Share $ 1.41 $ 1.03 $ 2.47 $ 1.98
Adjusted Earnings Per Diluted Share $ 1.40 $ 1.02 $ 2.45 $ 1.96
Discretionary Cash Flow(2) $ 556.2 $ 440.9 $ 1,038.1 $ 841.9
(1) Please refer to the Reconciliation of Net Income Available to Common Shareholders to Adjusted Net Income Available to Common Shareholders later in this
presentation.
(2) Please refer to the Reconciliation of Net Cash Provided by Operating Activities to Discretionary Cash Flow later in this presentation.
Energy + Technology = Growth 9
|
|
Guidance for Q3 and Full Year 2014
Guidance
Third Quarter Full-Year
2014 2014
Production (MMBOE) 10.50—10.90 40.70—41.30
Lease operating expense per BOE $ 11.25—$ 12.00 $ 11.60—$ 11.90
General and admin. expense per BOE $ 3.30—$ 3.70 $ 3.40—$ 3.60
Interest expense per BOE $ 3.50—$ 3.80 $ 3.80—$ 4.00
Depr., depletion and amort. per BOE $ 26.50—$ 27.25 $ 26.20—$ 27.00
Prod. taxes (% of sales revenue) 8.25%—8.45% 8.25%—8.45%
Oil price differentials to NYMEX per Bbl(1) ($ 9.00)—($ 11.00) ($ 8.50)—($10.50)
Gas price premium to NYMEX per Mcf(2) $ 1.00—$ 2.00 $ 1.00—$ 2.00
| (1) |
|
Does not include the effect of NGLs. |
(2) Includes the effect of Whiting’s fixed-price gas contracts. Please refer to fixed-price gas contracts later in this presentation.
Energy + Technology = Growth 10
|
|
Oil Focused Strategy Delivers Consistently Strong
Margins
Consistently Delivering Strong EBITDA Margins (1)
Oil $93.03/Bbl
$90.00
NGL $39.30/Bbl
Gas $6.95/Mcf
$
73.88 $76.76
$80.00 $82.16/BOE
$50.00
$60.00
$70.00
$80.00
$50.65/68% $46.16/66%$50.89/66% $
54.31/68% $58.51/71%
zed Prices(1)
$45.01
$61.48
$69.85
$
20.00
$30.00
$40.00
50.00
5%
5% 8% 8% 9% 8% 8% 5% 2% 5% 5% 5% 5% 4%
2% 3% 4% 3% 2% $25.71/57%
$41.58/68%
Whiting Realized
$/BOE
$0.00
$10.00
2009 2010 2011 2012 2013 Q1 2014 Q2 2014
26% 18% 17% 18% 16% 16% 15%
7% 7% Lease Operating Expense Production Taxes G&A Exploration Expense EBITDA
| (1) |
|
Includes hedging adjustments. |
Energy + Technology = Growth 11
|
|
Total Capitalization
($ in Thousands)
Jun. 30, 2014 Dec. 31, 2013
Cash and Cash Equivalents $227,083 $699,460
Long-Term Debt:
Senior Notes $2,303,512 $2,303,834
Credit Agreement--
Senior Subordinated Notes 350,000 350,000
Total Long-Term Debt $2,653,512 $2,653,834
Shareholders’ Equity 4,089,039 3,828,567
Total Capitalization $6,742,551 $6,482,401
Energy + Technology = Growth 12
|
|
Outstanding Bond and Credit Agreement
Coupon / Description Maturity
Amount
Outstanding
Ratings
Moody’s / S&P
6/30/14
Price
6.50% / Sr. Sub. 10/1/2018 $0.350 B Ba3 / BB-104.3
5.00% / Sr. 3/15/2019 $1.100 B Ba2 / BB+ 105.1
5.75% / Sr. 3/15/2021 $ 1.200 B Ba2 /
BB+ 109.8
Bond Finance Covenant: Ratio of pre-tax earnings to fixed charges (interest expense, realized hedging
/ / gains / losses and preferred stock dividends) must be greater than 2:1. It was 13.20:1 at 6/30/14.
Restricted Payments Basket: Approximately $2.7 billion.
Bank Credit Agreement has a borrowing base capacity of $2.8 billion with $1.2 billion committed under which
there were no borrowings as of 6/30/14.
Next redetermination date is 11/1/14.
Bank Credit Agreement Covenants: Total debt to EBITDAX at 6/30/14 was 1.27:1 (must be less than 4.0:1).
Working capital at 6/30/14 was 2.08:1 (must be greater than 1:1).
Energy + Technology = Growth 13
|
|
Disciplined Hedging Strategy
Existing Crude Oil Hedge Positions(1)
Weighted Average As a Percentage of
Derivative Hedge Contracted Volume NYMEX Price June 2014
Instrument Period (Bbls per Month) (per Bbl) Oil Production
Three-way collars(2) 2014
Q3 1,480,000 $ 71.82-$ 85.68-$ 103.85 53.5%
Q4 1,480,000 $ 71.82-$ 85.68-$ 103.85 53.5%
2015
Q1 100,000 $ 70.00-$ 85.00-$ 107.90 3.6%
Q2 100,000 $ 70.00-$ 85.00-$ 107.90 3.6%
Q3 100,000 $ 70.00-$ 85.00-$ 107.90 3.6%
Q4 100,000 $ 70.00-$ 85.00-$ 107.90 3.6%
Collars 2014
Q3 4,060 $ 80.00-$ 122.50 <1%
Q4 3,970 $ 80.00-$ 122.50 <1%
| (1) |
|
As of July 1, 2014. |
(2) A three way collar is a combination of options: a sold call, a purchased put and a sold put. The sold call establishes a maximum price (ceiling) we will receive for the volumes under
contract. The purchased put establishes a minimum price (floor), unless the market price falls below the sold put (sub-floor), at which point the minimum price would be NYMEX plus the
difference between the purchased put and the sold put strike price.
Energy + Technology = Growth 14
|
|
Existing Natural Gas Marketing Contracts(1)
Fixed Price-Contracts
Weighted Average As a Percentage of
Hedge Contracted Volume Contracted Price June 2014
Period (MMBtu per Day) (per MMBtu) Gas Production
2014
$
Existing Fixed-Differential Crude Oil Sales Contracts(1)
Q3 11,000 5.49 13.4%
Q4 11,000 $5.49 13.4%
Gross Differential
Contracted Volume from NYMEX
Period (Bbls per Day) (per Bbl)
2015 25,000 $4.75
2016 30,000 $4.75
2017 35,000 $4.75
2018 40,000 $4.75
2019 45,000 $4.75
Gross Differential
Contracted Volume from NYMEX
Period (Bbls per Day) (per Bbl)(2)
07/2015 to 12/2015 20,000 $5.00-$6.00
01/2016 to 12/2016 20,000 $5.00-$6.00
01/2017 to 12/2017 20,000 $5.00-$6.00
01/2018 to 12/2018 20,000 $5.00-$6.00
01/2019 to 12/2019 20,000 $5.00-$6.00
01/2020 to 06/2020 20,000 $ 5.00-$
6.00
| (1) |
|
As of July 1, 2014. |
(2) The future production volumes in the table above will be sold at a price equal to NYMEX less certain fixed differentials depending on the delivery methods specified in the contract. Based on prevailing storage and transportation costs, we estimate a fixed differential of $5.00 to $6.00 per barrel below NYMEX.
Energy + Technology = Growth 15
|
|
Kodiak Acquisition Overview
This Highly Strategic Combination
Creates Largest Bakken / Three Forks Producer
Drives Higher Growth
Drives Better Metrics
Energy + Technology = Growth 16
|
|
Leading Williston Basin operator
Acreage Overview (855,000 net acres) Q1’14 Bakken / Three Forks Net Production
(Mboepd)
107.3
97.5
86.0
73.3
63.0 ~60.0 54.0 49.4 42.9 42.7
34.0 31.1
Rigs drilling in the Williston Basin
(as of 7/13/14)2,3
18 18 18
14 14
12
10
| 8 |
|
7 6 6 5 |
Energy + Technology = Growth 17
Source: Company presentations, filings and press releases
| 1 |
|
As of December 31, 2013 |
| 2 |
|
Rigs currently drilling on July 13, 2014 per NDIC |
| 3 |
|
As of July 13, 2014, Whiting had two additional rigs moving and |
Kodiak had one additional rig moving, for a combined operated 21
rigs in the Williston Basin
|
|
Larger location inventory with significant opportunity
to accelerate Williston Basin drilling program
Pro Forma Williston Basin Drilling Locations (Net)
| 3 |
|
000 |
3,500
4,000
3,460
P ilWilli B i
2,000
2,500
3,000 Potential Williston Basin
net drilling locations
increase by 158%
| 1 |
|
339 |
500
1,000
1,500
1,339
0
Whiting only
(as of 12/31/2013)
Pro forma Whiting
(as of 6/30/2014)¹
Energy + Technology = Growth
1 Includes 2,639 Whiting and Kodiak locations at 12/31/2013, plus an additional 821 combined Whiting and Kodiak identified locations as of 06/30/2014
18
|
|
Driving value from complementary acreage positions
Central and Eastern Williston Basin
Combined 855,000 net
acres in the core of
Williston Basin
Footprint in the sweet-spot
of the Central and Eastern
Williston Basin is
strategically positioned to
accelerate development of
the combined acreage
position
Ability to drive production,
reserve growth and
operational efficiency
across the position
Bakken Producer
Three Producer
19
Energy + Technology = Growth
Forks
|
|
Enhances size and scale relative to oil-weighted peers
$34.7 $33.5
$19.8 $17.8 $13.5 $11.7 $9.9 $8.7 $ 7.9 $ 7.3 $6.0
Enterprise
Value 6.0
PXD CLR CXO PF Whiting1 XEC Whiting DNR NFX OAS SD Kodiak
($bn)
LQA
EBITDAX2
$3.1 $2.8 $2.4 $2.1 $1.9 $1.7 $1.4
($bn)
1,084
798 606 576 503
$1.0 $1.0 $0.9 $0.7
CLR PF Whiting PXD Whiting CXO XEC DNR NFX OAS SD Kodiak
Reserves
(Mmboe)
468 439 431 377 219 167 1,084 798 606 576 503
CLR PXD PF Whiting NFX CXO DNR Whiting XEC SD OAS Kodiak
188 171 152 141
% liquids 68% 62% 88% 52% 61% 83% 89% 48% 46% 87% 83%
80% oil 79% oil 83% oil
2014E
Production
(Mboepd)3
129 112 111
81 77
48 41
PXD CLR PF Whiting XEC NFX CXO Whiting SD DNR OAS Kodiak
% liquids 68% 70% 88% 53% 56% 60% 88% 53% 95% 89% 88%
84% oil 83% oil 88% oil Energy + Technology = Growth 20
Source: Company filings, equity research, Bloomberg, FactSet as of July 11, 2014
¹ Combined Whiting & Kodiak enterprise values based on transaction value as of July 11, 2014
| 2 |
|
Please see appendix for reconciliation of non-GAAP financial measures |
| 3 |
|
Based on mid point of Whiting and Kodiak public guidance, and Bloomberg Consensus estimates for peers |
|
|
Whiting Petroleum – A Company on the Move
Five Significant Second Quarter Achievements
1) Announced Agreement to Acquire Kodiak Oil & Gas Corp. on July 13, 2014, Which Will
Create the #1 Williston Basin Bakken / Three Forks Producer
2) Record Discretionary Cash Flow of $556.2 Million(1); Record Williston Basin Production of
80,195 BOE/d, Up 33% YoY
3) Raised Production Guidance to a mid-point of 20%; Q2 Production Exceeds Top-End of
Production Guidance
4) New Completions Using Cemented Liners and Plug and Perf Technology Yielded a 23%
Increase in EURs Compared to Wells With Uncemented Liners and Sliding Sleeve Technology
5) Spud the 30F Super Pad in the Horsetail Area to Test 32-Well Spacing Pattern in Niobrara
A, B and C Benches in early June 2014; Razor 27I 8-Well Pad Currently Producing
Approximately 4,700 BOE/d
21
(1) Please refer to the Reconciliation of Net Cash Provided by Operating Activities to Discretionary Cash Flow later in this presentation.
Energy + Technology = Growth
|
|
Appendix
|
|
Adjusted Net Income(1)
($ in Thousands, Except Per Share Data)
Reconciliation of Net Income Available to Common Shareholders to Adjusted Net
Income Available to Common Shareholders
Three Months Ended Six Months Ended
June 30, June 30,
2014 2013 2014 2013
Net income available to common shareholders $ 151,444 $ 134,687 $ 260,513 $ 220,681
Adjustments net of tax:
Amortization of deferred gain on sale (4,708) (5,002) (9,587) (10,017)
Gain on sale of properties (1,132) (2,130) (7,784) (2,158)
Impairment expense 11,369 11,979 22,700 23,557
Change in Production Participation Plan liability (2,291) 4,856—7,627
Total measure of derivative (gain) loss reported
under U.S. GAAP 16,428 (18,710) 31,885 1,077
Total net cash settlements paid on commodity
derivatives during the period (3,229) (4,416) (3,696) (7,751)
Adjusted net income (1) $ 167,881 $ 121,264 $ 294,031 $ 233,016
Adjusted net income available to common
shareholders per share, basic $ 1.41 $ 1.03 $ 2.47 $ 1.98
(1) Adjusted Net Income Available to Common Shareholders is a non-GAAP financial measure. Management believes it provides useful information to investors for analysis of
Whiting’s fundamental business on a recurring basis. In addition, management believes that Adjusted Net Income Available to Common Shareholders is widely used by
professional research analysts and othersin valuation, comparison and investment recommendations of companies in the oil and gas exploration and production industry, and
Adjusted net income available to common
shareholders per share, diluted . $ 1.40 $ 1.02 $ 2.45 $ 1.96
many investors use the published research of industry research analysts in making investment decisions. Adjusted Net Income Available for Common Shareholders should not
be considered in isolation or as a substitute for net income, income from operations, net cash provided by operating activities or other income, cash flow or liquidity measures
under U.S. GAAP and may not be comparable to other similarly titled measures of other companies.
Energy + Technology = Growth 23
|
|
Discretionary Cash Flow(1)
($ in Thousands)
Reconciliation of Net Cash Provided by Operating Activities to
Discretionary Cash Flow
Three Months Ended Six Months Ended
June 30, June 30,
2014 2013 2014 2013
Net cash provided by operating activities . $ 567,769 $ 442,617 $ 891,666 $ 740,231
Exploration . 13,466 24,343 37,588 43,209
Exploratory dry hole costs . (70) (11,628) (3,622) (11,628)
Changes in working capital . (24,978) (14,191) 112,516 70,668
Preferred stock dividends paid .—(269)—(538)
| (1) |
|
$ Discretionary cash flow . 556,187 $ 440,872 $ 1,038,148 $ 841,942 |
(1) Discretionary cash flow is a non GAAP measure. Discretionary cash flow is presented because management believes it provides useful information to investors for analysis of the Company’s ability to internally fund acquisitions, exploration and development. Discretionary cash flow should not be considered in isolation or as a substitute for net income, income from operations, net cash provided by operating activities or other income, cash flow or liquidity measures under U.S. GAAP and may not be comparable to other similarly titled measures of other companies.
Energy + Technology = Growth 24
|
|
EBITDAX
($ in Thousands)
Reconciliation of Net Income to EBITDAX
Year 31
EBITDAX Reconciliation:
2011 2012 2013 Q1 2014
Net Income (Loss)…………………………………………. $ 491,628 $ 414,099 $ 366,003 $ 109,051
Amortization of Deferred Gain……………………. (13,937) (29,458) (31,737) (7,744)
Ended December 31,
Gain on Sale of Properties………………………. (16,313) (3,423) (128,648) (10,559)
Interest Income……………………………………………. (208) (283) (1,134) (302)
Depreciation, Depletion & Amortization………. 468,203 684,724 891,516 235,265
Exploration……………………………………………………. 45,861 59,117 94,755 24,122
Impairment…………………………………………………. 38,783 107,855 358,455 17,985
Stock Compensation……………………………………… 13,509 18,190 22,436 6,732
Interest Expense. 62,516 75,210 112,936 42,144
Change in LT PPP. (865) 13,824 (6,980) 3,636
Noncash (Gain) Loss on MTM Derivatives. (63,093) (115,733) (20,830) 23,793
Income Taxes (Benefit). 288,691 247,912 205,868 76,361
EBITDAX Total. $ 1,314,775 $ 1,472,034 $ 1,862,640 $ 520,484
Energy + Technology = Growth 25
|
|
Important Additional Information and Where to Find It
This communication does not constitute an offer to sell or the solicitation of an offer to buy any securities or a
solicitation of a vote or proxy. The proposed Acquisition anticipates that the Whiting shares to be issued pursuant to
the Acquisition will be exempt from registration under the United States Securities Act of 1933, as amended (the
“Securities Act”), pursuant to Section 3(a)(10) of the Securities Act. Consequently, the Whiting shares will not be
registered under the Securities Act or any state securities laws. In connection with the proposed Acquisition,
Whiting and Kodiak intend to file relevant materials with the SEC and other governmental or regulatory authorities,
including a joint proxy statement and circular. INVESTORS ARE URGED TO READ THE JOINT PROXY STATEMENT AND
CIRCULAR AND ANY OTHER RELEVANT MATERIALS WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN
IMPORTANT INFORMATION ABOUT WHITING, KODIAK AND THE PROPOSED ACQUISITION. The joint proxy
statement and circular and certain other relevant materials (when they become available) and other documents filed
by Whiting or Kodiak with the SEC may be obtained free of charge at the SEC’s website at http://www.sec.gov. In
addition, investors may obtain copies of these documents (when they become available) free of charge by written
request to Whiting Investor Relations, 1700 Broadway, Suite 2300, Denver, CO 80290 2300 or calling (303) 390 4051
or by written request to Kodiak Investor Relations, 1625 Broadway, Suite 250, Denver, CO 80202 4765 or calling (303)
592 8030.
Participants in the Solicitation
Whiting, Kodiak and their respective executive officers and directors may be deemed to be participants in the
solicitation of proxies in connection with the proposed Acquisition. Information about the executive officers and
directors of Whiting and the number of shares of Whiting’s common stock beneficially owned by such persons is set
forth in the proxy statement for Whiting’s 2014 Annual Meeting of Stockholders which was filed with the SEC on
March 23, 2014, and Whiting’s Annual Report on Form 10-K for the period ended December 31, 2013. Information
about the executive officers and directors of Kodiak and the number of Kodiak’s ordinary shares beneficially owned
by such persons is set forth in the proxy statement for Kodiak’s 2014 Annual Meeting of Shareholders which was filed
with the SEC on May 9, 2014, and Kodiak’s Annual Report on Form 10-K for the period ended December 31, 2013.
Investors may obtain additional information regarding the direct and indirect interests of Whiting, Kodiak and their
Energy + Technology = Growth respective executive officers and directors in the Acquisition by reading the joint proxy statement and circular
regarding the Acquisition when it becomes available.
26