Whiting Adds 32,000 Acres in DJ Basin, 400,000 More In ‘Stealth Areas'

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Purchased 32,506 net acres in the DJ Basin for about $400-$500 per net acre.

Whiting Petroleum Corp. (NYSE: WLL) announced it has purchased 32,506 net acres in the DJ Basin and talked about what’s to come after the $860 million sell off of the Postle and Northeast Hardesty Fields in Oklahoma.

The DJ Basin WLL acreage was acquired after the second quarter for about $400-500 per net acre. About 50% of the net acres are in the core of Whiting’s Redtail Prospect and have no expiration issues, said David Tameron, senior analyst for Wells Fargo Securities.

The company also has land it is testing for oil in undisclosed areas.

Whiting has 87,559 net acres in the Redtail with average working interests of 73% and net revenue interests of 59%.

Whiting is planning 16 wells per drilling spacing units (DSU) but are testing 32 wells per DSU. The company has a goal to drive well costs down to $5 million from about $5.5 million area through efficiencies and synergies, Tameron said.

The company also appears in play to make acquisitions, mostly by picking up working interest on its existing footprint in the Niobrara, said Pearce Hammond managing director and co-head of E&P research.

The company is not planning to divest its North Ward Estes field in the Permian Basis and development will continue for the next five years before an ultimate decision is made on whether to drill or divest, Hammond said.

Tameron said there would be no monetization of North Ward Estes for some time.

James Volker, Whiting’s board chairman and CEO said, “I love that field.”

The company expressed no interest in monetizing the Big Tex prospect in the Permian Basin, though it may look to partner through a joint venture.

Hammond said the company is also “currently holding 200,000-250,000 net acres in a couple of stealth areas.” He noted that oil resource testing would be ongoing in the second half of 2013.

Tameron said Whiting is also looking at the oil window of the Smackover and horizontal opportunities in Louisiana.

The company’s Missouri Breaks in the Bakken is working better because of bigger fracs with up to 7 million pounds of sand. The Bakken’s Lewis and Clark area will be tested next.

In July, Whiting closed a sale to BreitBurn Energy Partners LP in the Postle and northeast Hardesty Fields in Oklahoma. The sale included related Dry Trail plant gathering and processing facilities, oil delivery pipeline, 60% interest in the 120-mile Transpetco CO2 pipeline, CO2 supply contracts and certain crude oil swaps.

The all-cash purchase price was $859.8 million, with net proceeds from the sale to be approximately $850 million after estimated expenses and $836 million after adjustments for revenue.

Tameron said the Postle sale was a competitive process with a number of strong bidders.