- Company drops gathering pipeline project with Tesoro Logistics
- North Dakota drilling activity wilts under low crude prices
Whiting Petroleum Corp. is suspending plans to drill at 20 Bakken and Three Forks well sites as low oil prices continue to weigh heavily on the exploration and production company.
The company, which controls 667,000 net acres in the Williston Basin that stretches across North Dakota and Montana, had not yet begun drilling the wells, a person familiar with company operations said. Whiting is also shelving a gathering pipeline project it hired Tesoro Logistics to build.
OPEC’s goal to shut in high-cost oil supply has driven down prices, forcing highly indebted producers in North Dakota to close wells or suspend plans to bring new ones online. The state’s rig count dropped to 41, the lowest since July 2009, according to North Dakota’s Dept. of Mineral Resources. Production fell by 30,000 barrels a day in December from the previous month, Jonathan Garrett, an upstream research analyst at Wood Mackenzie, said by phone.
"There’s just a very, very small part of the play that’s even close to economic at these prices,” said Garrett, referring to the Bakken formation. “At least for near-term pricing, there’s not a lot of faith in a robust recovery.”
Whiting Petroleum slashed capital spending by 46 percent in the third quarter of 2015, Chief Executive Officer James J. Volker said in an earnings call. The Denver, Colorado-based company releases its fourth-quarter and full-year 2015 earnings on February 24.
"Whiting’s a good example of a company with a lot of bank debt, and cash flows are, as for all oil producers, challenged in this commodity price environment," Subash Chandra, a managing director with Guggenheim Securities in New York., said on the phone. “The number one priority right now is to maintain liquidity.”
Whiting spokesman Andrew Siegel declined to comment when reached by phone. Tesoro Logistics spokeswoman Destin Singleton declined to comment on the phone.
Shares fell 9.1 percent to $4.30 at 12:53 p.m. in New York and are on pace for the lowest settlement since the company went public in November 2003.