Whiting Petroleum to Sell Postle Assets for $859.8 Million

  Whiting Petroleum to Sell Postle Assets for $859.8 Million

Business Wire

DENVER -- June 24, 2013

Whiting Petroleum Corporation (NYSE: WLL) announced today that it has signed a
purchase and sale agreement to sell to BreitBurn Energy Partners L.P. (NASDAQ:
BBEP)  certain producing oil and gas properties located in its Enhanced Oil
Recovery (EOR) projects in the Postle and NE Hardesty Fields, Texas County,
Oklahoma. The sale includes the related gathering and Dry Trail plant
processing facilities, oil delivery pipeline, 60% interest in the 120-mile
Transpetco-operated CO[2] transportation pipeline, CO[2] supply contracts and
certain crude oil swaps. The cash purchase price is $859.8 million, subject to
certain post-closing adjustments. The sale is expected to close in July 2013,
subject to customary closing conditions, and will have an effective date of
April 1, 2013. Whiting will operate the properties under a transition services
agreement until October 31, 2013.

James J. Volker, Whiting's Chairman and CEO, commented, "We are pleased with
the sale price of these EOR fields. The transaction also allows us to deploy
more capital to our core development areas in the Northern Rockies, Central
Rockies and Permian Basin."

Whiting estimates the properties subject to the sale consist of net daily
production of approximately 7.64 MBOE/d or 8.6% of its March 2013 production.
Whiting estimates the proved developed producing reserves of the properties
were approximately 30.7 MMBOE and other proved reserves were 13.5 MMBOE as of
April 1, 2013.

Whiting expects the net proceeds from the sale to be approximately $850.6
million after deducting estimated expenses. Whiting will convey its crude oil
swaps, as set forth in the table below, to BreitBurn at closing. Whiting
expects to use the net proceeds to repay a portion of the debt outstanding
under its credit agreement. As of March 31, 2013 the borrowings under the
credit agreement were $1.5 billion, which includes $44.9 million as Whiting’s
cost of the oil swaps conveyed.

Upon the completion of the sale, the borrowing base under Whiting’s credit
agreement will be $2.15 billion, of which $2.0 billion has been committed by
lenders and is available for borrowing. Therefore, Whiting will have
approximately $1.35 billion available under its credit agreement as summarized
below.

    $2.00   billion commitment
        -1.50     billion borrowed at March 31, 2013
        + .85     billion Postle pay down
        $1.35     billion available
                  

In addition, Whiting has requested its banks to provide the remaining $150
million available under the credit agreement. After the sale we expect
Whiting’s debt to capitalization ratio to be approximately 21.3%. Whiting had
approximately $1.47 billion of regular federal income tax net operating loss
carry forward at December 31, 2012. Therefore, Whiting expects its federal and
state income taxes on the sale to be only approximately $20 million.

Wells Fargo Securities, LLC acted as financial advisor to Whiting with respect
to this transaction and Raymond James & Associates, Inc. provided a fairness
opinion to the Company’s board of directors.

Outlook for Second Quarter and Full-Year 2013

The following table provides guidance for the second quarter and full-year
2013 based on our prior guidance, issued on April 24, 2013, adjusted only for
the sale of Postle and NE Hardesty. This includes Whiting’s current full-year
2013 capital budget of $2.2 billion and does not reflect an increase in our
capital budget or production from the application of Whiting’s $1.35 billion
of availability under its credit agreement. We intend to provide updated
guidance in our second quarter earnings press release that reflects the use of
this additional availability.

Whiting will classify the Postle assets as discontinued operations moving
forward. The following guidance is only related to continuing operations. As a
result, the Postle results have been completely eliminated from continuing
operations guidance effective January 1, 2013.

                                  Guidance
                                      Second Quarter      Full-Year
                                      2013                  2013
Production (MMBOE) ^(1)               7.55 - 7.75           31.20 - 32.00
Lease operating expense per           $ 12.10 - $ 12.60     $ 12.00 - $ 12.50
BOE
General and admin. expense            $ 6.25 - $ 6.65       $ 4.25 - $ 4.65
per BOE ^(2)
Interest expense per BOE              $ 2.70 - $ 3.10       $ 2.50 - $ 2.80
Depr., depletion and amort.           $ 25.80 - $ 26.60     $ 25.90 - $ 26.90
per BOE
Prod. taxes (% of production          8.70% - 8.90%         8.70% - 8.90%
revenue)
Oil price differentials to            ($ 6.50) - ($         ($ 6.50) - ($
NYMEX per Bbl^(3)                     7.50)                 7.50)
Gas price premium to NYMEX            $ 0.20 - $ 0.50       $ 0.20 - $ 0.50
per Mcf

^(1)  Full-year guidance has been adjusted as if the Postle sale occurred
       January 1, 2013.
^(2)   Includes a $21.6 million charge under the Whiting Production
       Participation Plan related to the Postle sale.
^(3)   Does not include the effect of NGLs.
       

Oil Hedges

Upon closing of the Postle transaction, the following crude oil swaps will be
conveyed to the buyer of the Postle Properties:

                                       Weighted       As a Percentage
                                              Average          of
Derivative     Hedge      Contracted          NYMEX Price      March 2013
                          Volume
Instrument     Period     (Bbls per           (per Bbl)        Oil Production
                          Month)
                                                               
Swaps          2013
               Q2         185,033             $98.50           8.6%
               Q3         187,067             $98.50           8.7%
               Q4         187,067             $98.50           8.7%
                                                               
               2014
               Q1         165,000             $94.75           7.7%
               Q2         166,833             $94.75           7.8%
               Q3         168,667             $94.75           7.9%
               Q4         168,667             $94.75           7.9%
                                                               
               2015
               Q1         150,000             $94.75           7.0%
               Q2         151,667             $94.75           7.1%
               Q3         153,333             $94.75           7.2%
               Q4         153,333             $94.75           7.2%
                                                               
               2016
               Q1         133,467             $93.50           6.2%
                                                               

About Whiting Petroleum Corporation

Whiting Petroleum Corporation, a Delaware corporation, is an independent oil
and gas company that explores for, develops, acquires and produces crude oil,
natural gas and natural gas liquids primarily in the Rocky Mountain, Permian
Basin, Mid-Continent, Michigan and Gulf Coast regions of the United States.
The Company’s largest projects are in the Bakken and Three Forks plays in
North Dakota and its Enhanced Oil Recovery fields in Oklahoma and Texas. The
Company trades publicly under the symbol WLL on the New York Stock Exchange.
For further information, please visit http://www.whiting.com.

Forward-Looking Statements

This news release contains statements that we believe to be "forward-looking
statements" within the meaning of the Private Securities Litigation Reform Act
of 1995. All statements other than historical facts, including, without
limitation, statements regarding our future financial position, business
strategy, projected revenues, earnings, costs, capital expenditures and debt
levels, and plans and objectives of management for future operations, are
forward-looking statements. When used in this news release, words such as we
"expect," "intend," "plan," "estimate," "anticipate," "believe" or "should" or
the negative thereof or variations thereon or similar terminology are
generally intended to identify forward-looking statements. Such
forward-looking statements are subject to risks and uncertainties that could
cause actual results to differ materially from those expressed in, or implied
by, such statements.

These risks and uncertainties include, but are not limited to: the
satisfaction of the conditions to the sale of the Postle properties and other
risks related to the completion of the sale of the Postle properties and
actions related thereto; Whiting’s and BreitBurn’s ability to complete the
sale of the Postle properties on anticipated terms and schedule; declines in
oil, NGL or natural gas prices; our level of success in exploration,
development and production activities; adverse weather conditions that may
negatively impact development or production activities; the timing of our
exploration and development expenditures; our ability to obtain sufficient
quantities of CO[2 ]necessary to carry out our enhanced oil recovery projects;
inaccuracies of our reserve estimates or our assumptions underlying them;
revisions to reserve estimates as a result of changes in commodity prices;
risks related to our level of indebtedness and periodic redeterminations of
the borrowing base under our credit agreement; our ability to generate
sufficient cash flows from operations to meet the internally funded portion of
our capital expenditures budget; our ability to obtain external capital to
finance exploration and development operations and acquisitions; federal and
state initiatives relating to the regulation of hydraulic fracturing; the
potential impact of federal debt reduction initiatives and tax reform
legislation being considered by the U.S. Federal government that could have a
negative effect on the oil and gas industry; impacts of the global recession
and tight credit markets; our ability to identify and complete acquisitions
and to successfully integrate acquired businesses; unforeseen underperformance
of or liabilities associated with acquired properties; our ability to
successfully complete potential asset dispositions and the risks related
thereto; the impacts of hedging on our results of operations; failure of our
properties to yield oil or gas in commercially viable quantities; uninsured or
underinsured losses resulting from our oil and gas operations; our inability
to access oil and gas markets due to market conditions or operational
impediments; the impact and costs of compliance with laws and regulations
governing our oil and gas operations; our ability to replace our oil and
natural gas reserves; any loss of our senior management or technical
personnel; competition in the oil and gas industry in the regions in which we
operate; risks arising out of our hedging transactions; and other risks
described under the caption "Risk Factors" in our Annual Report on Form 10-K
for the period ended December 31, 2012. We assume no obligation, and disclaim
any duty, to update the forward-looking statements in this news release.

Contact:

Whiting Petroleum Corporation
John B. Kelso, Director of Investor Relations
303-837-1661
john.kelso@whiting.com
 
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