Energy Prospectus

Not real easy to figure out how to interpret them so please help...thanks

4th quarter production was more than 1,000 boepd above my forecast. I will update the forecast model tomorrow. - Dan

Whiting Petroleum Corporation’s (WLL) production in the fourth quarter of 2012 totaled 7.917 million barrels of oil equivalent (MMBOE), of which 86% were crude oil/natural gas liquids (NGLs). This fourth quarter 2012 production total equates to a daily average production rate of 86,055 barrels of oil equivalent (BOE), representing a 22% increase over the fourth quarter 2011 average daily rate of 70,685 BOE per day and a 4% increase over the third quarter 2012 average daily rate of 82,615 BOE per day.

Production in 2012 totaled a record 30.21 MMBOE or 82,540 BOE per day. This represents a 22% increase over total production of 24.78 MMBOE or 67,890 BOE per day in 2011. Adding back the 4,500 BOE per day of production that was conveyed to Whiting USA Trust II in March 2012, our production in 2012 was up 28% over 2011.

An updated Net Income & Cash Flow Forecast model for Whiting Petroleum (WLL) has been posted under the Sweet 16 Tab.

I have increased my Fair Value Estimate to $77.50. First Call's Price Target is $60.27.

You can see how I calculate Fair Value at the bottom of each forecast spreadsheet. For WLL I am only using 6X CFPS, which is a very low multiple for a company with double digit production growth locked and this much running room. Their position in the Bakken is extremely valuable.

The only negative I see is that the company backed off a bit from previous production guidance for 2013. I think that is a bit of them wanting to "under-promise and over-deliver". Plus, it includes the production from some non-core assets they intend to sell this year.

One project that the market is still not giving WLL much credit for is their EOR project in West Texas. Once they get this field pressured up, the production should ramp up steadily. When I worked at HESS, the Seminole San Andres Field in the same general area went from 12,000 boepd to 64,000 boepd over a three year period and it stayed at that level for ten years. I believe North Ward Estes Field is an extremely valuable asset for WLL but Wall Street doesn't realize it yet.

"North Ward Estes Field. Net production from our North Ward Estes field averaged 8,540 BOE per day in the fourth quarter of 2012. One of the largest phases at North Ward Estes (Phase 3B) is pressuring up with CO2, and we are beginning to see a production response. Current production from the field is approximately 9,000 BOE per day. Whiting is currently injecting approximately 350 MMcf of CO2 per day into the field, of which about 63% is recycled gas."

I will take a closer look next week when we update our profile. One of our interns is working on it now.