WHITING PETROLEUM CORP - FORM 8-K - EX-99.1

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8-K - FORM 8-K - WHITING PETROLEUM CORP	d594820d8k.htm
EX-4.1 - EX-4.1 - WHITING PETROLEUM CORP	d594820dex41.htm
EX-12.1 - EX-12.1 - WHITING PETROLEUM CORP	d594820dex121.htm

Exhibit 99.1

WHITING PETROLEUM CORPORATION

UNAUDITED PRO FORMA FINANCIAL INFORMATION

The following unaudited pro forma information is derived from the historical consolidated financial statements of Whiting Petroleum Corporation (the “Company”) and adjusted to reflect the sale to BreitBurn Operating L.P. of its interests in certain oil and gas producing properties located in its enhanced oil recovery projects in the Postle and Northeast Hardesty fields in Texas County, Oklahoma, including the related Dry Trail plant gathering and processing facilities, oil delivery pipeline, 60% interest in the 120-mile Transpetco CO₂ pipeline, CO₂ supply contracts, certain crude oil swap contracts and other related assets and liabilities (collectively the “Postle Properties”), effective April 1, 2013, for a cash purchase price of $836.9 million after selling costs and closing adjustments, which is also subject to post-closing adjustments.

The following unaudited pro forma balance sheet as of June 30, 2013 gives effect to the disposition of the Postle Properties as if it had occurred on June 30, 2013. The unaudited pro forma statements of operations for the six months ended June 30, 2013 and the year ended December 31, 2012 both give effect to the disposition of the Postle Properties as if it had occurred on January 1, 2012.

The unaudited pro forma combined financial statements reflect pro forma adjustments that are described in the accompanying notes and are based on available information and certain assumptions we believe are reasonable. However, actual results may differ from those reflected in these statements. In our opinion, all adjustments that are necessary to present fairly the pro forma information have been made. The following unaudited pro forma statements do not purport to represent what the Company’s financial position or results of operations would have been if the disposition of the Postle Properties had occurred on the dates indicated above, nor are they indicative of future financial position or results of operations. These unaudited pro forma financial statements should be read in conjunction with the Company’s historical financial statements and related notes for the periods presented.

WHITING PETROLEUM CORPORATION

UNAUDITED PRO FORMA BALANCE SHEET

AS OF JUNE 30, 2013

(In thousands)


	Whiting Historical			Pro Forma Adjustments (Note 2)			Whiting Pro Forma
ASSETS
Current assets:
Cash and cash equivalents	$	23,312		$	—		$	23,312
Accounts receivable trade, net		345,792			—			345,792
Prepaid expenses and other		26,011			—			26,011
Assets held for sale		701,701			(701,701	)(a)		—

Total current assets		1,096,816			(701,701	)		395,115

Property and equipment:
Oil and gas properties, successful efforts method:
Proved properties		9,021,657			—			9,021,657
Unproved properties		381,653			—			381,653
Other property and equipment		169,549			—			169,549

Total property and equipment		9,572,859			—			9,572,859
Less accumulated depreciation, depletion and amortization		(2,691,827	)		—			(2,691,827	)

Total property and equipment, net		6,881,032			—			6,881,032
Debt issuance costs		27,276			—			27,276
Other long-term assets		112,586			—			112,586

TOTAL ASSETS	$	8,117,710		$	(701,701	)	$	7,416,009

LIABILITIES AND EQUITY
Current liabilities:
Current portion of long-term debt	$	250,000		$	—		$	250,000
Accounts payable trade		105,899			—			105,899
Accrued capital expenditures		104,803			—			104,803
Accrued liabilities and other		149,064			23,933	(b)		172,997
Revenues and royalties payable		160,653			—			160,653
Deposit received on properties held for sale		85,980			(85,980	)(e)		—
Taxes payable		44,777			7,518	(c)		52,295
Derivative liabilities		9,262			—			9,262
Deferred income taxes		9,803			—			9,803
Liabilities related to assets held for sale		8,616			(8,616	)(a)		—

Total current liabilities		928,857			(63,145	)		865,712
Long-term debt		2,000,000			(750,956	)(e)		1,249,044
Deferred income taxes		1,190,146			26,624	(d)		1,216,770
Derivative liabilities		857			—			857
Production Participation Plan liability		106,613			(19,404	)(b)		87,209
Asset retirement obligations		89,675			—			89,675
Deferred gain on sale		95,139			—			95,139
Other long-term liabilities		26,072			—			26,072

Total liabilities		4,437,359			(806,881	)		3,630,478

Equity:
Preferred stock, $0.001 par value, 5,000,000 shares authorized; 6.25% convertible perpetual preferred stock, no shares authorized, issued or outstanding as of June 30, 2013 and 172,391 shares issued and outstanding as of December 31, 2012		—			—			—
Common stock, $0.001 par value, 300,000,000 shares authorized; 120,134,157 issued and 118,654,184 outstanding as of June 30, 2013, 118,582,477 issued and 117,631,451 outstanding as of December 31, 2012		120			—			120
Additional paid-in capital		1,572,835			—			1,572,835
Accumulated other comprehensive loss		(826	)		—			(826	)
Retained earnings		2,100,069			(4,529	)(b)
					109,709	(f)		2,205,249

Total Whiting shareholders’ equity		3,672,198			105,180			3,777,378
Noncontrolling interest		8,153			—			8,153

Total equity		3,680,351			105,180			3,785,531

TOTAL LIABILITIES AND EQUITY	$	8,117,710		$	(701,701	)	$	7,416,009

The accompanying notes are an integral part of these unaudited pro forma financial statements.

WHITING PETROLEUM CORPORATION

UNAUDITED PRO FORMA STATEMENT OF OPERATIONS

FOR THE SIX MONTHS ENDED JUNE 30, 2013

(In thousands, except per share data)


	Whiting Historical			Pro Forma Adjustments (Note 3)			Whiting Pro Forma
REVENUES AND OTHER INCOME:
Oil, NGL and natural gas sales	$	1,256,982		$	(111,152	)(g)	$	1,145,830
Loss on hedging activities		(648	)		—			(648	)
Amortization of deferred gain on sale		15,930			—			15,930
Gain on sale of properties		3,432			—			3,432
Interest income and other		1,244			—			1,244

Total revenues and other income		1,276,940			(111,152	)		1,165,788

COSTS AND EXPENSES:
Lease operating		204,958			(23,099	)(g)		181,859
Production taxes		105,085			(7,501	)(g)		97,584
Depreciation, depletion and amortization		424,605			(24,550	)(g)		400,055
Exploration and impairment		80,673			—			80,673
General and administrative		58,098			(1,107	)(h)		56,991
Interest expense		44,591			(9,131	)(i)		35,460
Change in Production Participation Plan liability		12,130			—			12,130
Commodity derivative (gain) loss, net		1,065			(11,179	)(j)		(10,114	)

Total costs and expenses		931,205			(76,567	)		854,638

INCOME BEFORE INCOME TAXES		345,735			(34,585	)		311,150
INCOME TAX EXPENSE (BENEFIT):
Current		(2,089	)		(13,454	)(k)		(15,543	)
Deferred		126,636			—			126,636

Total income tax expense (benefit)		124,547			(13,454	)		111,093

NET INCOME		221,188			(21,131	)		200,057
Net loss attributable to noncontrolling interest		31			—			31

NET INCOME AVAILABLE TO SHAREHOLDERS		221,219			(21,131	)		200,088
Preferred stock dividends		(538	)		—			(538	)

NET INCOME AVAILABLE TO COMMON SHAREHOLDERS	$	220,681			(21,131	)	$	199,550

EARNINGS PER COMMON SHARE:
Basic	$	1.87		$	(0.18	)	$	1.69

Diluted	$	1.86		$	(0.18	)	$	1.68

WEIGHTED AVERAGE SHARES OUTSTANDING:
Basic		117,859						117,859

Diluted		118,929						118,929

The accompanying notes are an integral part of these unaudited pro forma financial statements.

WHITING PETROLEUM CORPORATION

UNAUDITED PRO FORMA STATEMENT OF OPERATIONS

FOR THE YEAR ENDED DECEMBER 31, 2012

(In thousands, except per share data)


	Whiting Historical			Pro Forma Adjustments (Note 3)			Whiting Pro Forma
REVENUES AND OTHER INCOME:
Oil, NGL and natural gas sales	$	2,137,714		$	(239,528	)(g)	$	1,898,186
Gain on hedging activities		2,338			—			2,338
Amortization of deferred gain on sale		29,458			—			29,458
Gain on sale of properties		3,423			—			3,423
Interest income and other		519			—			519

Total revenues and other income		2,173,452			(239,528	)		1,933,924

COSTS AND EXPENSES:
Lease operating		376,424			(45,517	)(g)		330,907
Production taxes		171,625			(16,649	)(g)		154,976
Depreciation, depletion and amortization		684,724			(55,347	)(g)		629,377
Exploration and impairment		166,972			—			166,972
General and administrative		108,573			(1,570	)(h)		107,003
Interest expense		75,210			(16,739	)(i)		58,471
Change in Production Participation Plan liability		13,824			—			13,824
Commodity derivative gain, net		(85,911	)		—			(85,911	)

Total costs and expenses		1,511,441			(135,822	)		1,375,619

INCOME BEFORE INCOME TAXES		662,011			(103,706	)		558,305
INCOME TAX EXPENSE (BENEFIT):
Current		(669	)		(40,342	)(k)		(41,011	)
Deferred		248,581			—			248,581

Total income tax expense (benefit)		247,912			(40,342	)		207,570

NET INCOME		414,099			(63,364	)		350,735
Net loss attributable to noncontrolling interest		90			—			90

NET INCOME AVAILABLE TO SHAREHOLDERS		414,189			(63,364	)		350,825
Preferred stock dividends		(1,077	)		—			(1,077	)

NET INCOME AVAILABLE TO COMMON SHAREHOLDERS	$	413,112		$	(63,364	)	$	349,748

EARNINGS PER COMMON SHARE:
Basic	$	3.51		$	(0.54	)	$	2.97

Diluted	$	3.48		$	(0.53	)	$	2.95

WEIGHTED AVERAGE SHARES OUTSTANDING:
Basic		117,601						117,601

Diluted		119,028						119,028

The accompanying notes are an integral part of these unaudited pro forma financial statements.

WHITING PETROLEUM CORPORATION

NOTES TO UNAUDITED PRO FORMA FINANCIAL INFORMATION

Note 1. Basis of Presentation

On July 15, 2013, Whiting Petroleum Corporation (“Whiting” or the “Company”) completed the sale to BreitBurn Operating L.P. (“BreitBurn”) of Whiting’s interests in certain oil and gas producing properties located in its enhanced oil recovery projects in the Postle and Northeast Hardesty fields in Texas County, Oklahoma, including the related Dry Trail plant gathering and processing facilities, oil delivery pipeline, 60% interest in the 120-mile Transpetco CO₂ pipeline, CO₂ supply contracts, certain crude oil swap contracts and other related assets and liabilities (collectively the “Postle Properties”), effective April 1, 2013, for a cash purchase price of $836.9 million after selling costs and closing adjustments, which is also subject to post-closing adjustments. The Company used the net proceeds from this transaction to repay a portion of the debt outstanding under its credit agreement.

The unaudited pro forma balance sheet as of June 30, 2013 gives effect to the disposition of the Postle Properties as if it had occurred on June 30, 2013. The unaudited pro forma statements of operations for the six months ended June 30, 2013 and the year ended December 31, 2012 both give effect to the disposition of the Postle Properties as if it had occurred on January 1, 2012.

The unaudited pro forma combined financial statements reflect pro forma adjustments that are described in the accompanying notes and are based on available information and certain assumptions we believe are reasonable, however, actual results may differ from those reflected in these statements. In our opinion, all adjustments that are necessary to present fairly the pro forma information have been made. The following unaudited pro forma statements do not purport to represent what the Company’s financial position or results of operations would have been if the disposition of the Postle Properties had occurred on the dates indicated above, nor are they indicative of future financial position or results of operations. These unaudited pro forma financial statements should be read in conjunction with the Company’s historical financial statements and related notes for the periods presented.

Earnings Per Share—Basic earnings per common share is calculated by dividing net income available to common shareholders by the weighted average number of common shares outstanding during each period. Diluted earnings per common share is calculated by dividing adjusted net income available to common shareholders by the weighted average number of diluted common shares outstanding, which includes the effect of potentially dilutive securities. Potentially dilutive securities for the diluted earnings per share calculations consist of unvested restricted stock awards and outstanding stock options using the treasury method, as well as convertible perpetual preferred stock using the if-converted method. In the computation of diluted earnings per share, excess tax benefits that would be created upon the assumed vesting of unvested restricted shares or the assumed exercise of stock options (i.e. hypothetical excess tax benefits) are included in the assumed proceeds component of the treasury share method to the extent that such excess tax benefits are more likely than not to be realized.

Note 2. Adjustments to the Unaudited Pro Forma Balance Sheet

The following adjustments have been made to the accompanying unaudited pro forma balance sheet as of June 30, 2013:

(a)

Reflects the elimination of assets and liabilities related to the Postle Properties sold.

(b)

Reflects a one-time charge of $23.9 million under the Company’s Production Participation Plan (“Plan”) for the sale of the Postle Properties and the related reduction in the long-term Plan liability of $19.4 million, as well as their net effects on retained earnings. These amounts and their corresponding tax effects were not included in the pro forma statement of operations due to their nonrecurring nature but will be included in the Company’s net results during the third quarter of 2013.

(c)

Reflects the current taxes payable on the gain on sale discussed in (f) below.

(d)

Reflects the elimination of deferred tax assets and liabilities related to the Postle Properties sold.

(e)

Reflects the receipt of net proceeds from the sale of the Postle Properties of $836.9 million, all of which was used to repay a portion of the Company’s debt outstanding under its credit agreement.

(f)

Reflects the net effect on retained earnings of the Postle Properties gain on sale. If the Postle Properties divestiture had occurred on June 30, 2013, the resulting after-tax gain would have been $109.7 million, based on the carrying value of the net assets sold on that date relative to the net proceeds received and net of the related tax effects of $34.1 million. Whiting intends to utilize its net operating loss carryforwards and other tax credits in order to reduce the amount of cash taxes that it would otherwise owe as a result of this property sale. The gain and related taxes were not included in the pro forma statements of operations due to their nonrecurring nature.

Note 3. Adjustments to the Unaudited Pro Forma Statements of Operations

The following adjustments have been made to the accompanying unaudited pro forma statement of operations for the six months ended June 30, 2013 and the year ended December 31, 2012:

(g)

Reflects the elimination of revenues and operating expenses of the Postle Properties.

(h)

Reflects the reduction to general and administrative expenses resulting from the decrease in employee compensation and benefits for those employees that were not retained by Whiting following the sale of the Postle Properties.

(i)

Reflects the reduction to interest expense associated with the repayment of $836.9 million in debt outstanding under Whiting’s credit agreement.

(j)

Reflects the elimination of the unrealized loss on mark-to-market derivatives, which hedges were transferred to BreitBurn upon closing of the purchase and sale transaction.

(k)

Reflects the income tax effects of the pro forma adjustments presented, based on Whiting’s combined statutory tax rate of 38.9% that was in effect during the periods for which pro forma statements of operations have been presented.

WHITING PETROLEUM CORP - FORM 8-K - EX-99.1 - September 9, 2013

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