Energy Prospectus

Whiting Petroleum Corporation Announces Third Quarter 2014 Financial and Operating Results

> Record Production Reaches 116,675 BOE/d in Q3 2014, Up 6% Over Q2 2014 (375 boepd above my forecast)

> Record Bakken/Three Forks Production of 87,480 BOE/d in Q3 2014, Up 33% Over Q3 2013 and 9% Sequentially

> Strong Results from Initial Niobrara “C” Zone and Codell/Fort Hays Wells

> Slickwater Fracs Generate Strong Initial Results Across Williston Basin

> Three Tarpon Wells Flow at an Average Rate of 6,960 BOE/d per Well

> Q3 2014 Net Income Available to Common Shareholders of $158.0 Million or $1.32 per Diluted Share and Adjusted Net Income of $148.7 Million or $1.24 per Diluted Share ( my forecast for Adjusted Net Income was $1.27 per diluted share )

> Q3 2014 Discretionary Cash Flow Totals $538.2 Million ( my forecast was $555.5 Million )

Working on forecast model now.

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

Whiting is much more difficult to forecast than the rest of the Sweet 16 because of the pending merger with KOG, which is expected to close by year-end.

My forecast and valuation assumes the two companies are merged in the 4th quarter. Post merger operating cash flows should be approximately $17/share. Keep in mind that a "stock for stock" merger really doesn't matter when it closes, since shareholders are really getting full value for all previous earnings and profits. To do this right, I need to come up with a Net Asset Value for each company, add them together and divide by the post-merger fully diluted share count. That takes a lot more time than I have right now.

My Fair Value Estimate has been adjusted to $114.10 ($6.00 lower than what I had in the newsletter), compared to First Call's Price Target of $96.23. My FVE will change again when I have time to update my KOG model and take more of a "post-merger" look. I've attempted to err on the conservative side in this valuation. [BTW First Call's CFPS estimate is currently $18.86 for 2015.]

WLL closed at $60.03 today, so if my CFPS estimate of $17 is close, this stock is grossly undervalued. There is lots of FEAR out there with concerns about oil prices and how they will impact the Bakken companies. FEAR can take stocks much lower than they deserve. WLL certainly doesn't deserve to trade at less than 4X cash flow per share.

This is a rock solid company. 3rd quarter results were very close to what I was expecting. Production of 116,675 boepd will jump to over 172,000 boepd after the merger with KOG.

Notes from an EPG member at Morgan Stanley taken during CC:

> Niobrara C and Codell tests were positive. Bakken completion designs continue to drive strong results, particularly slickwater.
> Niobrara C and Codell tests positive. Whiting reported initial tests of the Niobrara C and Codell that are tracking 55% and 24% above its 420 MBoe Niobrara A/B type curve. Further success in these zones could unlock significant additional drilling inventory in Colorado.
> Niobrara production growth set to accelerate. Niobrara production grew 19% sequentially in 3Q, and is currently 16% above the 3Q average production rate. By our estimate, completion activity could accelerate growth in 4Q despite the delivery of the fifth rig being pushed back to November from August.

> Bakken: new completions positive. In the Bakken, Whiting reported incremental success from slickwater completions resulting in higher cumulative production and reduced decline rates, which is the ideal outcome to look for versus just resource acceleration. Of the results discussed, the slickwater results in Pronghorn are the most positive in our view due to the material size of that acreage position and the incremental uplift relative to offset wells.
> Kodiak acquisition on track for mid-December close. The shareholder vote in early December is the last key step in consummating the Kodiak acquisition, which we expect will close by mid-December. Of note, 4Q14 guidance does not include volumes related to Kodiak.

Whiting's production was 116,675 boepd in the 3rd quarter. Assuming KOG merger closes in December, they should exit the year at more than 175,000 boepd (80% crude oil). - Dan