Whiting Petroleum Cuts Debt By Vending Fort Berthold Assets

Domestic oil and gas explorer Whiting Petroleum Corporation (NYSE:WLL) ) recently inked a $500 million deal to divest its Fort Berthold assets in North Dakota to a private explorer RimRock Oil & Gas Williston, LLC. The deal will help Whiting Petroleum to reduce debt and streamline its portfolio.

The Dunn and McLean counties assets span over 29,637 acres which include 29 non-operated units and 17 operated units. Production from the Fort Berthold properties averaged around 7,785 barrels of oil equivalent per day in the second quarter of 2017, representing about 7% of the total production in the quarter. Subject to satisfactory conditions, the deal is set for closure in Sep 1.

The deal is part of the company’s strategy to bolster its balance sheet and increase its liquidity and enable it to exploit the growth opportunities. The company also wants to shift its focus on its top tier assets and unload the non-core properties. In sync with the objective, Whiting Petroleum also sold 50% of its stake in both Robinson Lake natural gas processing plant and Belfield plant last year.

Per the current deal, RimRock will pay $500 million in cash to acquire the assets and Whiting Petroleum will use the amount to pay back the $550 million of its current bank debt. The divestment also provides the company with additional financial flexibility to develop its core properties in Williston Basin, which is expected to have around 4,850 gross drilling locations. Further, the lease operating expense for these properties was $12.60 per barrel of oil equivalent (Boe) during the last 12 months, much higher than lease operating expense of Whiting Petroleum’s other Bakken properties, averaging around $7.50 per Boe. Therefore the divestment is likely to help lower the company’s total lease operating costs and in turn generating positive cash flows.

Zacks Rank and key Picks

Headquartered in Colorado, Whiting Petroleum acquires and produces crude oil, natural gas and natural gas liquids primarily in the Rocky Mountain region of the United States. The company’s largest projects are in the Bakken and Three Forks plays in North Dakota and Niobrara play in northeast Colorado. The company currently carries a Zacks Rank #3(Hold).

Whiting Petroleum Corporation Price

Whiting Petroleum Corporation Price | Whiting Petroleum Corporation Quote

Some better-ranked players in the same industry include Penn Virginia Corporation (NASDAQ:PVAC) , Range Resources Corporation (NYSE:RRC) and Rex Energy Corporation (NASDAQ:REXX) .

Penn Virginia and Range Resources sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Rex Energy currently carries a Zacks Rank #2(Buy).

Penn Virginia reported a positive average surprise of 32.93% in the trailing four quarters.

Range Resources is expected to post year over year growth of 124.78% and 116.47% in sales and earnings respectively in 2017.

Rex Energy reported a positive average surprise of 7.93% in the trailing four quarters.

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