[X]
|
ANNUAL
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
[ ]
|
TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
Delaware
|
20-0098515
|
(State
or other jurisdiction
of
incorporation or organization)
|
(I.R.S.
Employer
Identification
No.)
|
1700
Broadway, Suite 2300
Denver, Colorado
|
80290-2300
|
(Address of principal executive offices) |
(Zip
code)
|
Common
Stock, $0.001 par value
Preferred
Share Purchase Rights
(Title
of Class)
|
New
York Stock Exchange
New
York Stock Exchange
(Name
of each exchange on which
registered)
|
Large
accelerated filer
T
|
Accelerated
filer
£
|
Non-accelerated
filer
£
|
Smaller
reporting company
£
|
It
em
1.
|
Business
|
Proved
Reserves
(1)
|
||||||||||||||||||||||||
Core
Area
|
Oil
(2)
(MMBbl)
|
Natural
Gas (Bcf)
|
Total
(MMBOE)
|
%
Oil
(2)
|
Pre-Tax
PV10% Value
(3)
|
December
2008 Average Daily Production (MBOE/d)
|
||||||||||||||||||
(In
millions)
|
||||||||||||||||||||||||
Permian
Basin
|
88.1 | 57.8 | 97.7 | 90 | % | $ | 455.2 | 11.7 | ||||||||||||||||
Rocky
Mountains
|
49.2 | 203.9 | 83.2 | 59 | % | 548.2 | 27.7 | |||||||||||||||||
Mid-Continent
|
37.2 | 11.7 | 39.1 | 95 | % | 416.2 | 7.2 | |||||||||||||||||
Gulf
Coast
|
3.1 | 41.6 | 10.1 | 31 | % | 105.2 | 5.0 | |||||||||||||||||
Michigan
|
2.4 | 39.7 | 9.0 | 27 | % | 78.2 | 3.5 | |||||||||||||||||
Total
|
180.0 | 354.8 | 239.1 | 75 | % | $ | 1,603.0 | 55.1 | ||||||||||||||||
Discounted
Future Income Taxes
|
- | - | - | - | (226.6 | ) | - | |||||||||||||||||
Standardized
Measure of Discounted Future Net Cash Flows
|
- | - | - | - | $ | 1,376.4 | - |
(1)
|
Oil
and gas reserve quantities and related discounted future net cash flows
have been derived from oil and gas prices as of December 31, 2008 pursuant
to current SEC and FASB guidelines.
|
(2)
|
Oil
includes natural gas liquids.
|
(3)
|
Pre-tax
PV10% may be considered a non-GAAP financial measure as defined by the SEC
and is derived from the standardized measure of discounted future net cash
flows, which is the most directly comparable GAAP financial
measure. Pre-tax PV10% is computed on the same basis as the
standardized measure of discounted future net cash flows but without
deducting future income taxes. We believe pre-tax PV10% is a
useful measure for investors for evaluating the relative monetary
significance of our oil and natural gas properties. We further
believe investors may utilize our pre-tax PV10% as a basis for comparison
of the relative size and value of our reserves to other companies because
many factors that are unique to each individual company impact the amount
of future income taxes to be paid. Our management uses this
measure when assessing the potential return on investment related to our
oil and gas properties and acquisitions. However, pre-tax PV10%
is not a substitute for the standardized measure of discounted future net
cash flows. Our pre-tax PV10% and the standardized measure of
discounted future net cash flows do not purport to present the fair value
of our oil and natural gas
reserves.
|
•
|
pursuing
the development of projects that we believe will generate attractive rates
of return;
|
|
•
|
maintaining
a balanced portfolio of lower risk, long-lived oil and gas properties that
provide stable cash flows;
|
|
•
|
seeking
property acquisitions that complement our core
areas; and
|
|
•
|
allocating
a portion of our capital budget to leasing and exploring prospect
areas.
|
Oil
(MMBbl)
|
Natural
Gas
(Bcf)
|
Total
(MMBOE)
|
%
of Total
Proved
|
Future
Capital Expenditures
(In
millions)
|
||||||||||||||||
Permian
Basin:
|
||||||||||||||||||||
PDP
|
26.8 | 31.1 | 31.9 | 33 | % | |||||||||||||||
PDNP
|
21.8 | 3.8 | 22.4 | 23 | % | |||||||||||||||
PUD
|
39.5 | 23.0 | 43.4 | 44 | % | |||||||||||||||
Total
Proved
|
88.1 | 57.8 | 97.7 | 100 | % | $ | 494.0 | |||||||||||||
Rocky
Mountains:
|
||||||||||||||||||||
PDP
|
36.2 | 113.1 | 55.0 | 66 | % | |||||||||||||||
PDNP
|
0.9 | 6.4 | 2.0 | 2 | % | |||||||||||||||
PUD
|
12.1 | 84.4 | 26.2 | 32 | % | |||||||||||||||
Total
Proved
|
49.2 | 203.9 | 83.2 | 100 | % | $ | 287.7 | |||||||||||||
Mid-Continent:
|
||||||||||||||||||||
PDP
|
22.7 | 8.6 | 24.2 | 62 | % | |||||||||||||||
PDNP
|
8.4 | 1.8 | 8.6 | 22 | % | |||||||||||||||
PUD
|
6.1 | 1.3 | 6.3 | 16 | % | |||||||||||||||
Total
Proved
|
37.2 | 11.7 | 39.1 | 100 | % | $ | 149.0 | |||||||||||||
Gulf
Coast:
|
||||||||||||||||||||
PDP
|
1.9 | 25.7 | 6.2 | 61 | % | |||||||||||||||
PDNP
|
0.2 | 3.6 | 0.8 | 8 | % | |||||||||||||||
PUD
|
1.0 | 12.3 | 3.1 | 31 | % | |||||||||||||||
Total
Proved
|
3.1 | 41.6 | 10.1 | 100 | % | $ | 48.0 | |||||||||||||
Michigan:
|
||||||||||||||||||||
PDP
|
1.1 | 30.0 | 6.1 | 68 | % | |||||||||||||||
PDNP
|
1.0 | 5.1 | 1.9 | 21 | % | |||||||||||||||
PUD
|
0.3 | 4.6 | 1.0 | 11 | % | |||||||||||||||
Total
Proved
|
2.4 | 39.7 | 9.0 | 100 | % | $ | 3.5 | |||||||||||||
Total
Company:
|
||||||||||||||||||||
PDP
|
88.7 | 208.5 | 123.4 | 52 | % | |||||||||||||||
PDNP
|
32.3 | 20.7 | 35.7 | 15 | % | |||||||||||||||
PUD
|
59.0 | 125.6 | 80.0 | 33 | % | |||||||||||||||
Total
Proved
|
180.0 | 354.8 | 239.1 | 100 | % | $ | 982.2 |
•
|
to
remove or remediate previously disposed materials, including materials
disposed or released by prior owners or operators or other third
parties;
|
|
•
|
to
clean up contaminated property, including contaminated groundwater;
or
|
|
•
|
to
perform remedial operations to prevent future contamination, including the
plugging and abandonment of wells drilled and left inactive by prior
owners and
operators.
|
Item 1A
.
|
Risk
Factors
|
•
|
changes
in global supply and demand for oil and gas;
|
|
•
|
the
actions of the Organization of Petroleum Exporting
Countries;
|
|
•
|
the
price and quantity of imports of foreign oil and gas;
|
|
•
|
political
and economic conditions, including embargoes, in oil-producing countries
or affecting other oil-producing activity;
|
|
•
|
the
level of global oil and gas exploration and production
activity;
|
|
•
|
the
level of global oil and gas inventories;
|
|
•
|
weather
conditions;
|
|
•
|
technological
advances affecting energy consumption;
|
|
•
|
domestic
and foreign governmental regulations;
|
|
•
|
proximity
and capacity of oil and gas pipelines and other transportation
facilities;
|
|
•
|
the
price and availability of competitors’ supplies of oil and gas in captive
market areas; and
|
|
•
|
the
price and availability of alternative
fuels.
|
•
|
delays
imposed by or resulting from compliance with regulatory
requirements;
|
|
•
|
pressure
or irregularities in geological formations;
|
|
•
|
shortages
of or delays in obtaining qualified personnel or equipment, including
drilling rigs and CO
2
;
|
|
•
|
equipment
failures or accidents;
|
|
•
|
adverse
weather conditions, such as freezing temperatures, hurricanes and
storms;
|
|
•
|
reductions
in oil and natural gas prices; and
|
|
•
|
title
problems.
|
•
|
requiring
us to dedicate a substantial portion of our cash flow from operations to
required payments on debt, thereby reducing the availability of cash flow
for working capital, capital expenditures and other general business
activities;
|
|
•
|
limiting
our ability to obtain additional financing in the future for working
capital, capital expenditures, acquisitions and general corporate and
other activities;
|
|
•
|
limiting
our flexibility in planning for, or reacting to, changes in our business
and the industry in which we operate;
|
|
•
|
placing
us at a competitive disadvantage relative to other less leveraged
competitors; and
|
|
•
|
making
us vulnerable to increases in interest rates, because debt under Whiting
Oil and Gas’ credit agreement may be at variable
rates.
|
•
|
pay
dividends on, redeem or repurchase our capital stock or redeem or
repurchase our subordinated debt;
|
|
•
|
make
loans to others;
|
|
•
|
make
investments;
|
|
•
|
incur
additional indebtedness or issue preferred stock;
|
|
•
|
create
certain liens;
|
|
•
|
sell
assets;
|
|
•
|
enter
into agreements that restrict dividends or other payments from our
restricted subsidiaries to us;
|
|
•
|
consolidate,
merge or transfer all or substantially all of the assets of us and our
restricted subsidiaries taken as a whole;
|
|
•
|
engage
in transactions with affiliates;
|
|
•
|
enter
into hedging contracts;
|
|
•
|
create
unrestricted subsidiaries; and
|
|
•
|
enter
into sale and leaseback
transactions.
|
•
|
our
proved reserves;
|
|
•
|
the
level of oil and natural gas we are able to produce from existing
wells;
|
|
•
|
the
prices at which oil and natural gas are sold; and
|
|
•
|
our
ability to acquire, locate and produce new
reserves.
|
•
|
some
of the acquired businesses or properties may not produce revenues,
reserves, earnings or cash flow at anticipated levels;
|
|
•
|
we
may assume liabilities that were not disclosed to us or that exceed our
estimates;
|
|
•
|
we
may be unable to integrate acquired businesses successfully and realize
anticipated economic, operational and other benefits in a timely manner,
which could result in substantial costs and delays or other operational,
technical or financial problems;
|
|
•
|
acquisitions
could disrupt our ongoing business, distract management, divert resources
and make it difficult to maintain our current business standards, controls
and procedures; and
|
|
•
|
we
may issue additional equity or debt securities related to future
acquisitions.
|
•
|
the
amount of recoverable reserves;
|
|
•
|
future
oil and natural gas prices;
|
|
•
|
estimates
of operating costs;
|
|
•
|
estimates
of future development costs;
|
|
•
|
timing
of future development costs;
|
|
•
|
estimates
of the costs and timing of plugging and
abandonment; and
|
|
•
|
potential
environmental and other
liabilities.
|
•
|
environmental
hazards, such as uncontrollable flows of oil, gas, brine, well fluids,
toxic gas or other pollution into the environment, including groundwater
and shoreline contamination;
|
|
•
|
abnormally
pressured formations;
|
|
•
|
mechanical
difficulties, such as stuck oil field drilling and service tools and
casing collapse;
|
|
•
|
fires
and explosions;
|
|
•
|
personal
injuries and death; and
|
|
•
|
natural
disasters.
|
•
|
discharge
permits for drilling operations;
|
|
•
|
drilling
bonds;
|
|
•
|
reports
concerning operations;
|
|
•
|
the
spacing of wells;
|
|
•
|
unitization
and pooling of properties; and
|
|
•
|
taxation.
|
I
tem
1B.
|
Unresolved Staff
Comments
|
I
tem
2.
|
Properties
|
Developed
Acreage
|
Undeveloped
Acreage
|
Total
Acreage
|
||||||||||||||||||||||
Gross
|
Net
|
Gross
|
Net
|
Gross
|
Net
|
|||||||||||||||||||
California
|
35,747 | 10,724 | 2,284 | 34 | 38,031 | 10,758 | ||||||||||||||||||
Colorado
|
36,253 | 18,053 | 32,379 | 8,429 | 68,632 | 26,482 | ||||||||||||||||||
Louisiana
|
41,156 | 10,729 | 4,960 | 2,619 | 46,116 | 13,348 | ||||||||||||||||||
Michigan
|
136,236 | 59,647 | 47,671 | 26,222 | 183,907 | 85,869 | ||||||||||||||||||
Montana
|
41,449 | 13,425 | 33,240 | 14,554 | 74,689 | 27,979 | ||||||||||||||||||
North
Dakota
|
258,161 | 135,280 | 343,815 | 192,232 | 601,976 | 327,512 | ||||||||||||||||||
Oklahoma
|
87,248 | 55,108 | 2,692 | 2,321 | 89,940 | 57,429 | ||||||||||||||||||
Texas
|
219,776 | 136,151 | 88,049 | 61,897 | 307,825 | 198,048 | ||||||||||||||||||
Utah
|
19,560 | 11,743 | 262,031 | 62,858 | 281,591 | 74,601 | ||||||||||||||||||
Wyoming
|
100,830 | 55,088 | 72,610 | 48,611 | 173,440 | 103,699 | ||||||||||||||||||
Other*
|
15,976 | 8,933 | 2,399 | 999 | 18,375 | 9,932 | ||||||||||||||||||
Total
|
992,392 | 514,881 | 892,130 | 420,776 | 1,884,522 | 935,657 |
Year
Ended December 31,
|
||||||||||||
2008
|
2007
|
2006
|
||||||||||
Oil
production (MMBbls)
|
12.4 | 9.6 | 9.8 | |||||||||
Natural
gas production (Bcf)
|
30.4 | 30.8 | 32.1 | |||||||||
Total
production (MMBOE)
|
17.5 | 14.7 | 15.2 | |||||||||
Daily
production (MBOE/d)
|
47.9 | 40.3 | 41.5 | |||||||||
Average
sales prices:
|
||||||||||||
Oil
(per Bbl)
|
$ | 86.99 | $ | 64.57 | $ | 57.27 | ||||||
Effect
of oil hedges on average price (per Bbl)
|
(8.58 | ) | (2.21 | ) | (0.95 | ) | ||||||
Oil
net of hedging (per Bbl)
|
$ | 78.41 | $ | 62.36 | $ | 56.32 | ||||||
Natural
gas (per Mcf)
|
$ | 7.68 | $ | 6.19 | $ | 6.59 | ||||||
Effect
of natural gas hedges on average price (per Mcf)
|
- | - | 0.06 | |||||||||
Natural
gas net of hedging (per Mcf)
|
$ | 7.68 | $ | 6.19 | $ | 6.65 | ||||||
Per
BOE data:
|
||||||||||||
Sales
price (net of hedging)
|
$ | 69.06 | $ | 53.57 | $ | 50.52 | ||||||
Lease
operating expenses
|
$ | 13.77 | $ | 14.20 | $ | 12.12 | ||||||
Production
taxes
|
$ | 5.00 | $ | 3.56 | $ | 3.11 | ||||||
Depreciation,
depletion and amortization expenses
|
$ | 15.84 | $ | 13.11 | $ | 10.74 | ||||||
General
and administrative expenses
|
$ | 3.52 | $ | 2.66 | $ | 2.49 |
Oil
Wells
|
Natural
Gas Wells
|
Total
Wells
(1)
|
||||||||||||||||||||||
Gross
|
Net
|
Gross
|
Net
|
Gross
|
Net
|
|||||||||||||||||||
Permian
Basin
|
3,611 | 1,687 | 387 | 121 | 3,998 | 1,808 | ||||||||||||||||||
Rocky
Mountains
|
1,953 | 378 | 480 | 241 | 2,433 | 619 | ||||||||||||||||||
Mid-Continent
|
551 | 268 | 205 | 36 | 756 | 304 | ||||||||||||||||||
Gulf
Coast
|
92 | 54 | 481 | 116 | 573 | 170 | ||||||||||||||||||
Michigan
|
80 | 35 | 1,031 | 401 | 1,111 | 436 | ||||||||||||||||||
Total
|
6,287 | 2,422 | 2,584 | 915 | 8,871 | 3,337 |
|
(1)
|
102
wells are multiple completions. These 102 wells contain a total
of 222 completions. One or more completions in the same bore
hole are counted as one well.
|
Gross
Wells
|
Net
Wells
|
|||||||||||||||||||||||
Productive
|
Dry
|
Total
|
Productive
|
Dry
|
Total
|
|||||||||||||||||||
2008:
|
||||||||||||||||||||||||
Development
|
283 | 20 | 303 | 113.3 | 9.2 | 122.5 | ||||||||||||||||||
Exploratory
|
2 | 3 | 5 | 1.9 | 1.3 | 3.2 | ||||||||||||||||||
Total
|
285 | 23 | 308 | 115.2 | 10.5 | 125.7 | ||||||||||||||||||
2007:
|
||||||||||||||||||||||||
Development
|
262 | 5 | 267 | 128.6 | 3.8 | 132.4 | ||||||||||||||||||
Exploratory
|
9 | 1 | 10 | 6.1 | 0.1 | 6.2 | ||||||||||||||||||
Total
|
271 | 6 | 277 | 134.7 | 3.9 | 138.6 | ||||||||||||||||||
2006:
|
||||||||||||||||||||||||
Development
|
401 | 14 | 415 | 300.6 | 9.0 | 309.6 | ||||||||||||||||||
Exploratory
|
17 | 5 | 22 | 10.2 | 2.3 | 12.5 | ||||||||||||||||||
Total
|
418 | 19 | 437 | 310.8 | 11.3 | 322.1 |
Region
|
Drilling
|
Workover
|
||||||
Rocky
Mountain
|
8 | 5 | ||||||
Permian
|
0 | 2 | ||||||
Mid-Continent/Michigan
|
0 | 3 | ||||||
North
Ward Estes
|
0 | 20 | ||||||
Postle
|
1 | 6 | ||||||
Gulf
Coast
|
0 | 1 | ||||||
Total
|
9 | 37 |
Item
3.
|
Legal
Proceedings
|
I
tem
4.
|
Submission of Matters to a Vote of Security
Holders
|
Name
|
Age
|
Position
|
James
J. Volker
|
62
|
Chairman,
President and Chief Executive Officer
|
James
T. Brown
|
56
|
Senior
Vice President, Operations
|
Bruce
R. DeBoer
|
56
|
Vice
President, General Counsel and Corporate Secretary
|
Heather
M. Duncan
|
38
|
Vice
President, Human Resources
|
J.
Douglas Lang
|
59
|
Vice
President, Reservoir Engineering/Acquisitions
|
Rick
A. Ross
|
50
|
Vice
President, Operations
|
David
M. Seery
|
54
|
Vice
President, Land
|
Michael
J. Stevens
|
43
|
Vice
President and Chief Financial Officer
|
Mark
R. Williams
|
52
|
Vice
President, Exploration and Development
|
Brent
P. Jensen
|
39
|
Controller
and
Treasurer
|
I
tem
5.
|
Market for the Registrant’s Common Equity, Related
Stockholder Matters and Issuer Purchases of Equity
Securities
|
High
|
Low
|
|||||||
Fiscal
Year Ended December 31, 2008
|
||||||||
Fourth
Quarter (Ended December 31,
2008)
|
$ | 69.58 | $ | 24.36 | ||||
Third
Quarter (Ended September 30,
2008)
|
$ | 112.42 | $ | 62.09 | ||||
Second
Quarter (Ended June 30,
2008)
|
$ | 108.53 | $ | 63.07 | ||||
First
Quarter (Ended March 31,
2008)
|
$ | 66.19 | $ | 44.60 | ||||
Fiscal
Year Ended December 31, 2007
|
||||||||
Fourth
Quarter (Ended December 31,
2007)
|
$ | 59.06 | $ | 44.09 | ||||
Third
Quarter (Ended September 30,
2007)
|
$ | 45.14 | $ | 35.85 | ||||
Second
Quarter (Ended June 30,
2007)
|
$ | 47.50 | $ | 38.71 | ||||
First
Quarter (Ended March 31,
2007)
|
$ | 46.04 | $ | 35.81 |
12/31/03
|
12/31/04
|
12/31/05
|
12/31/06
|
12/31/07
|
12/31/08
|
|||||||||||||||||||
Whiting
Petroleum Corporation
|
$ | 100 | $ | 164 | $ | 217 | $ | 253 | $ | 313 | $ | 182 | ||||||||||||
Standard &
Poor’s Composite 500 Index
|
100 | 109 | 112 | 128 | 132 | 81 | ||||||||||||||||||
Dow
Jones US Oil Companies, Secondary Index
|
100 | 140 | 230 | 241 | 344 | 204 |
I
tem
6.
|
Selected Financial
Data
|
Year
Ended December 31,
|
|||||||||||||||||||||
2008
|
2007
|
2006
|
2005
|
2004
|
|||||||||||||||||
(dollars
in millions, except per share data)
|
|||||||||||||||||||||
Consolidated
Statements of Income Information:
|
|||||||||||||||||||||
Revenues
and other income:
|
|||||||||||||||||||||
Oil
and natural gas sales
|
$ | 1,316.5 | $ | 809.0 | $ | 773.1 | $ | 573.2 | $ | 281.1 | |||||||||||
Loss
on oil and natural gas hedging activities
|
(107.6 | ) | (21.2 | ) | (7.5 | ) | (33.4 | ) | (4.9 | ) | |||||||||||
Gain
on sale of oil and gas properties
|
— | 29.7 | 12.1 | — | 1.0 | ||||||||||||||||
Gain
on sale of marketable securities
|
— | — | — | — | 4.8 | ||||||||||||||||
Amortization
of deferred gain on sale
|
12.1 | — | — | — | — | ||||||||||||||||
Interest
income and other
|
1.1 | 1.2 | 1.1 | 0.6 | 0.1 | ||||||||||||||||
Total
revenues and other income
|
1,222.1 | 818.7 | 778.8 | 540.4 | 282.1 | ||||||||||||||||
Costs
and expenses:
|
|||||||||||||||||||||
Lease
operating
|
241.2 | 208.9 | 183.6 | 111.6 | 54.2 | ||||||||||||||||
Production
taxes
|
87.5 | 52.4 | 47.1 | 36.1 | 16.8 | ||||||||||||||||
Depreciation,
depletion and amortization
|
277.5 | 192.8 | 162.8 | 97.6 | 54.0 | ||||||||||||||||
Exploration
and impairment
|
55.3 | 37.3 | 34.5 | 16.7 | 6.3 | ||||||||||||||||
General
and administrative
|
61.7 | 39.0 | 37.8 | 30.6 | 19.2 | ||||||||||||||||
Change
in Production Participation Plan liability
|
32.1 | 8.6 | 6.2 | 9.7 | 1.7 | ||||||||||||||||
Interest
expense
|
65.1 | 72.5 | 73.5 | 42.0 | 15.9 | ||||||||||||||||
Gain
on mark-to-market derivatives
|
(7.1 | ) | — | — | — | — | |||||||||||||||
Total
costs and expenses
|
813.3 | 611.5 | 545.5 | 344.3 | 168.1 | ||||||||||||||||
Income
before income taxes
|
408.8 | 207.2 | 233.3 | 196.1 | 114.0 | ||||||||||||||||
Income
tax expense
|
156.7 | 76.6 | 76.9 | 74.2 | 44.0 | ||||||||||||||||
Net
income
|
$ | 252.1 | $ | 130.6 | $ | 156.4 | $ | 121.9 | $ | 70.0 | |||||||||||
Net
income per common share, basic
|
$ | 5.96 | $ | 3.31 | $ | 4.26 | $ | 3.89 | $ | 3.38 | |||||||||||
Net
income per common share, diluted
|
$ | 5.94 | $ | 3.29 | $ | 4.25 | $ | 3.88 | $ | 3.38 | |||||||||||
Other
Financial Information:
|
|||||||||||||||||||||
Net
cash provided by operating activities
|
$ | 763.0 | $ | 394.0 | $ | 411.2 | $ | 330.2 | $ | 134.1 | |||||||||||
Net
cash used in investing activities
|
$ | (1,134.9 | ) | $ | 467.0 | $ | 527.6 | $ | 1,126.9 | $ | 524.4 | ||||||||||
Net
cash provided by financing activities
|
$ | 366.8 | $ | 77.3 | $ | 116.4 | $ | 805.5 | $ | 338.4 | |||||||||||
Ratio
of earnings to fixed charges (1)
|
6.92 | x | 3.65 | x | 4.14 | x | 5.64 | x | 8.01 | x | |||||||||||
Capital
expenditures
|
$ | 1,330.9 | $ | 519.6 | $ | 552.0 | $ | 1,126.9 | $ | 530.6 | |||||||||||
Consolidated
Balance Sheet Information:
|
|||||||||||||||||||||
Total
assets
|
$ | 4,029.1 | $ | 2,952.0 | $ | 2,585.4 | $ | 2,235.2 | $ | 1,092.2 | |||||||||||
Total
debt
|
$ | 1,239.8 | $ | 868.2 | $ | 995.4 | $ | 875.1 | $ | 328.4 | |||||||||||
Stockholders’
equity
|
$ | 1,808.8 | $ | 1,490.8 | $ | 1,186.7 | $ | 997.9 | $ | 612.4 |
(1)
|
For
the purpose of calculating the ratio of earnings to fixed charges,
earnings consist of income before income taxes and income from equity
investees, plus fixed charges, distributed income from equity investees,
and amortization of capitalized interest, less capitalized
interest. Fixed charges consist of interest expensed, interest
capitalized, amortized premiums, discounts and capitalized expenses
related to indebtedness, and an estimate of interest within rental
expense.
|
I
tem
7.
|
Management’s Discussion and Analysis of Financial
Condition and Results of
Operations
|
•
|
pursuing
the development of projects that we believe will generate attractive rates
of return;
|
|
•
|
maintaining
a balanced portfolio of lower risk, long-lived oil and gas properties that
provide stable cash flows;
|
|
•
|
seeking
property acquisitions that complement our core
areas; and
|
|
•
|
allocating
a portion of our capital budget to leasing and exploring prospect
areas.
|
Development Area
|
2009
Planned Capital Expenditures
(In
millions)
|
|||
Northern
Rockies
|
$ | 242.3 | ||
CO
2
Projects
(1)
|
129.3 | |||
Central
Rockies
|
72.4 | |||
Other
(2)
|
30.0 | |||
Total
|
$ | 474.0 |
|
(1)
|
2009
planned capital expenditures at our CO
2
projects include $36.9 million for purchased CO
2
at
North Ward Estes and $15.3 million for Postle CO
2
purchases.
|
(2) | Comprised primarily of exploration salaries, lease delay rentals and seismic and other development. |
Year
Ended December 31,
|
||||||||||||
2008
|
2007
|
2006
|
||||||||||
Net
production:
|
||||||||||||
Oil
(MMBbls)
|
12.4 | 9.6 | 9.8 | |||||||||
Natural
gas (Bcf)
|
30.4 | 30.8 | 32.1 | |||||||||
Total
production (MMBOE)
|
17.5 | 14.7 | 15.2 | |||||||||
Net
sales (in millions):
|
||||||||||||
Oil
(1)
|
$ | 1,082.8 | $ | 618.5 | $ | 561.2 | ||||||
Natural
gas (1)
|
233.7 | 190.5 | 211.9 | |||||||||
Total
oil and natural gas sales
|
$ | 1,316.5 | $ | 809.0 | $ | 773.1 | ||||||
Average
sales prices:
|
||||||||||||
Oil
(per Bbl)
|
$ | 86.99 | $ | 64.57 | $ | 57.27 | ||||||
Effect
of oil hedges on average price (per Bbl)
|
(8.58 | ) | (2.21 | ) | (0.95 | ) | ||||||
Oil
net of hedging (per Bbl)
|
$ | 78.41 | $ | 62.36 | $ | 56.32 | ||||||
Average
NYMEX price
|
$ | 97.24 | $ | 72.30 | $ | 66.25 | ||||||
Natural
gas (per Mcf)
|
$ | 7.68 | $ | 6.19 | $ | 6.59 | ||||||
Effect
of natural gas hedges on average price (per Mcf)
|
- | - | 0.06 | |||||||||
Natural
gas net of hedging (per Mcf)
|
$ | 7.68 | $ | 6.19 | $ | 6.65 | ||||||
Average
NYMEX price
|
$ | 9.06 | $ | 6.86 | $ | 7.23 | ||||||
Cost
and expense (per BOE):
|
||||||||||||
Lease
operating expenses
|
$ | 13.77 | $ | 14.20 | $ | 12.12 | ||||||
Production
taxes
|
$ | 5.00 | $ | 3.56 | $ | 3.11 | ||||||
Depreciation,
depletion and amortization expense
|
$ | 15.84 | $ | 13.11 | $ | 10.74 | ||||||
General
and administrative expenses
|
$ | 3.52 | $ | 2.66 | $ | 2.49 |
(1)
|
Before
consideration of hedging
transactions.
|
Year
Ended December 31,
|
||||||||
2008
|
2007
|
|||||||
Depletion
|
$ | 270,770 | $ | 186,838 | ||||
Depreciation
|
3,439 | 3,123 | ||||||
Accretion
of asset retirement obligations
|
3,239 | 2,850 | ||||||
Total
|
$ | 277,448 | $ | 192,811 |
Year
Ended December 31,
|
||||||||
2008
|
2007
|
|||||||
Exploration
|
$ | 29,302 | $ | 27,344 | ||||
Impairment
|
25,955 | 9,979 | ||||||
Total
|
$ | 55,257 | $ | 37,323 |
Year
Ended December 31,
|
|||||||||
2008
|
2007
|
||||||||
General
and administrative expenses
|
$ | 103,231 | $ | 72,008 | |||||
Reimbursements
and allocations
|
(41,547 | ) | (32,962 | ) | |||||
General
and administrative expenses, net
|
$ | 61,684 | $ | 39,046 |
Year
Ended December 31,
|
||||||||
2008
|
2007
|
|||||||
Senior
Subordinated Notes
|
$ | 43,461 | $ | 44,691 | ||||
Credit
Agreement
|
18,377 | 24,428 | ||||||
Amortization
of debt issue costs and debt discount
|
4,801 | 5,022 | ||||||
Accretion
of tax sharing liability
|
1,267 | 1,505 | ||||||
Other
|
301 | 522 | ||||||
Capitalized
interest
|
(3,129 | ) | (3,664 | ) | ||||
Total
interest expense
|
$ | 65,078 | $ | 72,504 |
Year
Ended December 31,
|
||||||||
2007
|
2006
|
|||||||
Depletion
|
$ | 186,838 | $ | 157,868 | ||||
Depreciation
|
3,123 | 2,675 | ||||||
Accretion
of asset retirement obligations
|
2,850 | 2,288 | ||||||
Total
|
$ | 192,811 | $ | 162,831 |
Year
Ended December 31,
|
||||||||
2007
|
2006
|
|||||||
Exploration
|
$ | 27,344 | $ | 30,079 | ||||
Impairment
|
9,979 | 4,455 | ||||||
Total
|
$ | 37,323 | $ | 34,534 |
Year
Ended December 31,
|
|||||||||
2007
|
2006
|
||||||||
General
and administrative expenses
|
$ | 72,008 | $ | 60,972 | |||||
Reimbursements
and allocations
|
(32,962 | ) | (23,164 | ) | |||||
General
and administrative expenses, net
|
$ | 39,046 | $ | 37,808 |
Year
Ended December 31,
|
||||||||
2007
|
2006
|
|||||||
Senior
Subordinated Notes
|
$ | 44,691 | $ | 44,530 | ||||
Credit
Agreement
|
24,428 | 21,478 | ||||||
Amortization
of debt issue costs and debt discount
|
5,022 | 5,208 | ||||||
Accretion
of tax sharing liability
|
1,505 | 2,016 | ||||||
Other
|
522 | 813 | ||||||
Capitalized
interest
|
(3,664 | ) | (556 | ) | ||||
Total
interest expense
|
$ | 72,504 | $ | 73,489 |
Drilling
and Development Expenditures
|
Exploration
Expenditures
|
Total
Expenditures
|
%
of Total
|
|||||||||||||
Rocky
Mountains
|
$ | 482,916 | $ | 9,901 | $ | 492,817 | 52 | % | ||||||||
Permian
Basin
|
279,236 | 10,729 | 289,965 | 31 | % | |||||||||||
Mid-Continent
|
94,331 | 1,984 | 96,315 | 10 | % | |||||||||||
Gulf
Coast
|
43,002 | 537 | 43,539 | 4 | % | |||||||||||
Michigan
|
18,581 | 6,151 | 24,732 | 3 | % | |||||||||||
Total incurred
|
918,066 | 29,302 | 947,368 | 100 | % | |||||||||||
Increase
in accrued capital expenditures
|
(25,972 | ) | - | (25,972 | ) | |||||||||||
Total paid
|
892,094 | 29,302 | $ | 921,396 |
Payments
due by period
|
||||||||||||||||||||
Contractual
Obligations
|
Total
|
Less
than 1 year
|
1-3
years
|
3-5
years
|
More
than 5 years
|
|||||||||||||||
Long-term
debt (a)
|
$ | 1,240,000 | $ | - | $ | 620,000 | $ | 370,000 | $ | 250,000 | ||||||||||
Cash
interest expense on debt (b)
|
229,471 | 58,285 | 96,317 | 60,285 | 14,584 | |||||||||||||||
Asset
retirement obligations (c)
|
54,348 | 6,456 | 2,363 | 4,928 | 40,601 | |||||||||||||||
Tax
sharing liability (d)
|
23,687 | 2,112 | 3,787 | 3,261 | 14,527 | |||||||||||||||
Derivative
contract liability fair value (e)
|
45,485 | 17,354 | 18,510 | 9,621 | - | |||||||||||||||
Purchase
obligations (f)
|
151,135 | 25,882 | 64,493 | 52,878 | 7,882 | |||||||||||||||
Drilling
rig contracts (g)
|
131,844 | 55,802 | 64,748 | 11,294 | - | |||||||||||||||
Operating
leases (h)
|
13,893 | 2,520 | 6,060 | 5,313 | - | |||||||||||||||
Total
|
$ | 1,889,863 | $ | 168,411 | $ | 876,278 | $ | 517,580 | $ | 327,594 |
(a)
|
Long-term
debt consists of the 7.25% Senior Subordinated Notes due 2012 and 2013,
the 7% Senior Subordinated Notes due 2014 and the outstanding debt under
our credit agreement, and assumes no principal repayment until the due
date of the instruments.
|
(b)
|
Cash
interest expense on the 7.25% Senior Subordinated Notes due 2012 and 2013
and the 7% Senior Subordinated Notes due 2014 is estimated assuming no
principal repayment until the due date of the instruments. The
interest rate swap on the $75.0 million of our $150.0 million
fixed rate 7.25% Senior Subordinated Notes due 2012 is assumed to equal
5.6% until the due date of the instrument. Cash interest
expense on the credit agreement is estimated assuming no principal
repayment until the instrument due date and is estimated at a fixed
interest rate of 2.5%.
|
(c)
|
Asset
retirement obligations represent the present value of estimated amounts
expected to be incurred in the future to plug and abandon oil and gas
wells, remediate oil and gas properties and dismantle their related
facilities.
|
(d)
|
Amounts
shown represent the present value of estimated payments due to Alliant
Energy based on projected future income tax benefits attributable to an
increase in our tax bases. As a result of the Tax Separation
and Indemnification Agreement signed with Alliant Energy, the increased
tax bases are expected to result in increased future income tax deductions
and, accordingly, may reduce income taxes otherwise payable by
us. Under this agreement, we have agreed to pay Alliant Energy
90% of the future tax benefits we realize annually as a result of this
step up in tax basis for the years ending on or prior to December 31,
2013. In 2014, we will be obligated to pay Alliant Energy the
present value of the remaining tax benefits assuming all such tax benefits
will be realized in future years.
|
(e)
|
We
have entered into derivative contracts primarily in the form of costless
collars to hedge our exposure to crude oil and natural gas price
fluctuations. With respect to open derivative contracts at
December 31, 2008 with certain counterparties, the forward price curves
for crude oil and natural gas generally exceeded the price curves that
were in effect when these contracts were entered into, resulting in a
derivative fair value liability. If current market prices are
higher than a collar’s price ceiling when the cash settlement amount is
calculated, we are required to pay the contract
counterparties. The ultimate settlement amounts under our
derivative contracts are unknown, however, as they are subject to
continuing market and commodity price
risk.
|
(f)
|
We
have two take-or-pay purchase agreements, one agreement expiring in March
2014 and one agreement expiring in December 2014, whereby we have
committed to buy certain volumes of CO
2
, for
use in enhanced recovery projects in our Postle field in Oklahoma and our
North Ward Estes field in Texas. The purchase agreements are
with different suppliers. Under the terms of the agreements, we
are obligated to purchase a minimum daily volume of CO
2
(as
calculated on an annual basis) or else pay for any deficiencies at the
price in effect when the minimum delivery was to have
occurred. The CO
2
volumes planned for use on the enhanced recovery projects in the Postle
and North Ward Estes fields currently exceed the minimum daily volumes
provided in these take-or-pay purchase agreements. Therefore,
we expect to avoid any payments for
deficiencies.
|
(g)
|
We
currently have nine drilling rigs under long-term contract, of which four
drilling rigs expire in 2009, two in 2010, one in 2011, and two in
2012. We also have one workover rig under contract until
2009. All of these rigs are operating in the Rocky Mountains
region.
As of
December 31, 2008, early termination of these contracts would have
required maximum penalties of $90.5 million. No other drilling
rigs working for us are currently under long-term contracts or contracts
that cannot be terminated at the end of the well that is currently being
drilled. Due to the short-term and indeterminate nature of the
drilling time remaining on rigs drilling on a well-by-well basis, such
obligations have not been included in this
table.
|
(h)
|
We
lease 107,400 square feet of administrative office space in Denver,
Colorado under an operating lease arrangement expiring in 2013, and an
additional 46,700 square feet of office space in Midland, Texas expiring
in 2012.
|
•
|
the
quality and quantity of available data;
|
|
•
|
the
interpretation of that data;
|
|
•
|
the
accuracy of various mandated economic assumptions; and
|
|
•
|
the
judgments of the persons preparing the
estimates.
|
Ite
m 7A
.
|
Quantitative and Qualitative Disclosure About
Market Risk
|
Commodity
|
Period
|
Monthly
Volume
(Bbl)
|
Weighted
Average NYMEX Floor/Ceiling
|
|||
Crude
Oil
|
01/2009
to 03/2009
|
544,000
|
$50.74/$62.55
|
|||
Crude
Oil
|
04/2009
to 06/2009
|
518,000
|
$55.12/$65.68
|
|||
Crude
Oil
|
07/2009
to 09/2009
|
496,000
|
$57.12/$69.55
|
|||
Crude
Oil
|
10/2009
to 12/2009
|
478,000
|
$61.04/$74.89
|
|||
Crude
Oil
|
01/2010
to 03/2010
|
430,000
|
$60.27/$74.81
|
|||
Crude
Oil
|
04/2010
to 06/2010
|
415,000
|
$62.69/$80.09
|
|||
Crude
Oil
|
07/2010
to 09/2010
|
405,000
|
$60.28/$76.98
|
|||
Crude
Oil
|
10/2010
to 12/2010
|
390,000
|
$60.29/$78.23
|
|||
Crude
Oil
|
01/2011
to 03/2011
|
360,000
|
$60.32/$80.33
|
|||
Crude
Oil
|
04/2011
to 06/2011
|
360,000
|
$60.32/$80.33
|
|||
Crude
Oil
|
07/2011
to 09/2011
|
360,000
|
$60.32/$80.33
|
|||
Crude
Oil
|
10/2011
to 12/2011
|
360,000
|
$60.32/$80.33
|
|||
Crude
Oil
|
01/2012
to 03/2012
|
330,000
|
$60.35/$81.70
|
|||
Crude
Oil
|
04/2012
to 06/2012
|
330,000
|
$60.35/$81.70
|
|||
Crude
Oil
|
07/2012
to 09/2012
|
330,000
|
$60.35/$81.70
|
|||
Crude
Oil
|
10/2012
to 12/2012
|
330,000
|
$60.35/$81.70
|
|||
Crude
Oil
|
01/2013
to 03/2013
|
290,000
|
$60.40/$81.66
|
|||
Crude
Oil
|
04/2013
to 06/2013
|
290,000
|
$60.40/$81.66
|
|||
Crude
Oil
|
07/2013
to 09/2013
|
290,000
|
$60.40/$81.66
|
|||
Crude
Oil
|
10/2013
|
290,000
|
$60.40/$81.66
|
|||
Crude
Oil
|
11/2013
|
190,000
|
$59.29/$78.43
|
Commodity
|
Period
|
Monthly
Volume
(Bbl)/(MMBtu)
|
Weighted
Average NYMEX Floor/Ceiling
|
|||
Crude
Oil
|
01/2009
to 03/2009
|
50,118
|
$76.00/$135.85
|
|||
Crude
Oil
|
04/2009
to 06/2009
|
48,794
|
$76.00/$137.55
|
|||
Crude
Oil
|
07/2009
to 09/2009
|
47,510
|
$76.00/$136.41
|
|||
Crude
Oil
|
10/2009
to 12/2009
|
46,240
|
$76.00/$135.72
|
|||
Crude
Oil
|
01/2010
to 03/2010
|
45,084
|
$76.00/$135.09
|
|||
Crude
Oil
|
04/2010
to 06/2010
|
43,978
|
$76.00/$134.85
|
|||
Crude
Oil
|
07/2010
to 09/2010
|
42,966
|
$76.00/$134.89
|
|||
Crude
Oil
|
10/2010
to 12/2010
|
41,924
|
$76.00/$135.11
|
|||
Crude
Oil
|
01/2011
to 03/2011
|
40,978
|
$74.00/$139.68
|
|||
Crude
Oil
|
04/2011
to 06/2011
|
40,066
|
$74.00/$140.08
|
|||
Crude
Oil
|
07/2011
to 09/2011
|
39,170
|
$74.00/$140.15
|
|||
Crude
Oil
|
10/2011
to 12/2011
|
38,242
|
$74.00/$140.75
|
|||
Crude
Oil
|
01/2012
to 03/2012
|
37,412
|
$74.00/$141.27
|
|||
Crude
Oil
|
04/2012
to 06/2012
|
36,572
|
$74.00/$141.73
|
|||
Crude
Oil
|
07/2012
to 09/2012
|
35,742
|
$74.00/$141.70
|
|||
Crude
Oil
|
10/2012
to 12/2012
|
35,028
|
$74.00/$142.21
|
|||
Natural
Gas
|
01/2009
to 03/2009
|
216,333
|
$7.00/$22.50
|
|||
Natural
Gas
|
04/2009
to 06/2009
|
201,263
|
$6.00/$14.85
|
|||
Natural
Gas
|
07/2009
to 09/2009
|
192,870
|
$6.00/$15.60
|
|||
Natural
Gas
|
10/2009
to 12/2009
|
185,430
|
$7.00/$14.85
|
|||
Natural
Gas
|
01/2010
to 03/2010
|
178,903
|
$7.00/$18.65
|
|||
Natural
Gas
|
04/2010
to 06/2010
|
172,873
|
$6.00/$13.20
|
|||
Natural
Gas
|
07/2010
to 09/2010
|
167,583
|
$6.00/$14.00
|
|||
Natural
Gas
|
10/2010
to 12/2010
|
162,997
|
$7.00/$14.20
|
|||
Natural
Gas
|
01/2011
to 03/2011
|
157,600
|
$7.00/$17.40
|
|||
Natural
Gas
|
04/2011
to 06/2011
|
152,703
|
$6.00/$13.05
|
|||
Natural
Gas
|
07/2011
to 09/2011
|
148,163
|
$6.00/$13.65
|
|||
Natural
Gas
|
10/2011
to 12/2011
|
142,787
|
$7.00/$14.25
|
|||
Natural
Gas
|
01/2012
to 03/2012
|
137,940
|
$7.00/$15.55
|
|||
Natural
Gas
|
04/2012
to 06/2012
|
134,203
|
$6.00/$13.60
|
|||
Natural
Gas
|
07/2012
to 09/2012
|
130,173
|
$6.00/$14.45
|
|||
Natural
Gas
|
10/2012
to 12/2012
|
126,613
|
$7.00/$13.40
|
Commodity
|
Period
Remaining
|
Monthly
Volume (MMbtu)
|
2009
Price Per MMbtu
|
|||
Natural
Gas
|
01/2009
to 05/2011
|
23,000
|
$
5.14
|
|||
Natural
Gas
|
01/2009
to 09/2012
|
67,000
|
$
4.56
|
I
tem
8.
|
Financial Statements and Supplementary
Data
|
December
31,
|
||||||||
2008
|
2007
|
|||||||
ASSETS
|
||||||||
CURRENT
ASSETS:
|
||||||||
Cash
and cash equivalents
|
$ | 9,624 | $ | 14,778 | ||||
Accounts
receivable trade, net
|
122,833 | 110,437 | ||||||
Derivative
assets
|
46,780 | - | ||||||
Deferred
income taxes
|
- | 27,720 | ||||||
Deposits
on oil field equipment
|
17,170 | - | ||||||
Prepaid
expenses and other
|
20,667 | 9,232 | ||||||
Total
current assets
|
217,074 | 162,167 | ||||||
PROPERTY
AND EQUIPMENT:
|
||||||||
Oil
and gas properties, successful efforts method:
|
||||||||
Proved
properties
|
4,423,197 | 3,313,777 | ||||||
Unproved
properties
|
106,436 | 55,084 | ||||||
Other
property and equipment
|
91,099 | 37,778 | ||||||
Total
property and equipment
|
4,620,732 | 3,406,639 | ||||||
Less
accumulated depreciation, depletion and amortization
|
(886,065 | ) | (646,943 | ) | ||||
Total
property and equipment, net
|
3,734,667 | 2,759,696 | ||||||
DEBT
ISSUANCE COSTS
|
10,779 | 15,016 | ||||||
DERIVATIVE
ASSETS
|
38,104 | - | ||||||
OTHER
LONG-TERM ASSETS
|
28,457 | 15,132 | ||||||
TOTAL
|
$ | 4,029,081 | $ | 2,952,011 | ||||
See
notes to consolidated financial statements.
|
(Continued)
|
Year
Ended December 31,
|
||||||||||||
2008
|
2007
|
2006
|
||||||||||
REVENUES
AND OTHER INCOME:
|
||||||||||||
Oil
and natural gas sales
|
$ | 1,316,480 | $ | 809,017 | $ | 773,120 | ||||||
Loss
on oil and natural gas hedging activities
|
(107,555 | ) | (21,189 | ) | (7,501 | ) | ||||||
Gain
on sale of properties
|
- | 29,682 | 12,092 | |||||||||
Amortization
of deferred gain on sale
|
12,143 | - | - | |||||||||
Interest
income and other
|
1,051 | 1,208 | 1,116 | |||||||||
Total
revenues and other income
|
1,222,119 | 818,718 | 778,827 | |||||||||
COSTS
AND EXPENSES:
|
||||||||||||
Lease
operating
|
241,248 | 208,866 | 183,642 | |||||||||
Production
taxes
|
87,548 | 52,407 | 47,095 | |||||||||
Depreciation,
depletion and amortization
|
277,448 | 192,811 | 162,831 | |||||||||
Exploration
and impairment
|
55,257 | 37,323 | 34,534 | |||||||||
General
and administrative
|
61,684 | 39,046 | 37,808 | |||||||||
Interest
expense
|
65,078 | 72,504 | 73,489 | |||||||||
Change
in Production Participation Plan liability
|
32,124 | 8,599 | 6,156 | |||||||||
Gain
on mark-to-market derivatives
|
(7,088 | ) | - | - | ||||||||
Total
costs and expenses
|
813,299 | 611,556 | 545,555 | |||||||||
INCOME
BEFORE INCOME TAXES
|
408,820 | 207,162 | 233,272 | |||||||||
INCOME
TAX EXPENSE:
|
||||||||||||
Current
|
2,361 | 550 | 12,346 | |||||||||
Deferred
|
154,316 | 76,012 | 64,562 | |||||||||
Total
income tax expense
|
156,677 | 76,562 | 76,908 | |||||||||
NET
INCOME
|
$ | 252,143 | $ | 130,600 | $ | 156,364 | ||||||
NET
INCOME PER COMMON SHARE, BASIC
|
$ | 5.96 | $ | 3.31 | $ | 4.26 | ||||||
NET
INCOME PER COMMON SHARE, DILUTED
|
$ | 5.94 | $ | 3.29 | $ | 4.25 | ||||||
WEIGHTED
AVERAGE SHARES OUTSTANDING, BASIC
|
42,310 | 39,483 | 36,736 | |||||||||
WEIGHTED
AVERAGE SHARES OUTSTANDING, DILUTED
|
42,447 | 39,645 | 36,826 | |||||||||
See
notes to consolidated financial statements.
|
Year
Ended December 31,
|
||||||||||||
2008
|
2007
|
2006
|
||||||||||
CASH
FLOWS FROM OPERATING ACTIVITIES:
|
||||||||||||
Net
income
|
$ | 252,143 | $ | 130,600 | $ | 156,364 | ||||||
Adjustments
to reconcile net income to net cash provided by operating
activities:
|
||||||||||||
Depreciation,
depletion and amortization
|
277,448 | 192,811 | 162,831 | |||||||||
Deferred
income taxes
|
154,316 | 76,012 | 64,562 | |||||||||
Amortization
of debt issuance costs and debt discount
|
4,801 | 5,022 | 5,208 | |||||||||
Accretion
of tax sharing liability
|
1,267 | 1,505 | 2,016 | |||||||||
Stock-based
compensation
|
4,177 | 5,057 | 3,969 | |||||||||
Gain
on sale of properties
|
- | (29,682 | ) | (12,092 | ) | |||||||
Amortization
of deferred gain on sale
|
(12,143 | ) | - | - | ||||||||
Undeveloped
leasehold and oil and gas property impairments
|
25,955 | 9,979 | 4,455 | |||||||||
Change
in Production Participation Plan liability
|
32,124 | 8,599 | 6,156 | |||||||||
Unrealized
gain on mark-to-market derivatives
|
(6,189 | ) | - | - | ||||||||
Other
non-current
|
(18,825 | ) | (5,086 | ) | 2,653 | |||||||
Changes
in current assets and liabilities:
|
||||||||||||
Accounts
receivable trade
|
(12,396 | ) | (12,606 | ) | 3,235 | |||||||
Prepaid
expenses and other
|
(29,136 | ) | 1,404 | (2,268 | ) | |||||||
Accounts
payable and accrued liabilities
|
55,964 | (3,833 | ) | 20,412 | ||||||||
Accrued
interest
|
(1,567 | ) | 2,116 | (2,770 | ) | |||||||
Other
current liabilities
|
35,090 | 12,134 | (3,522 | ) | ||||||||
Net
cash provided by operating activities
|
763,029 | 394,032 | 411,209 | |||||||||
CASH
FLOWS FROM INVESTING ACTIVITIES:
|
||||||||||||
Cash
acquisition capital expenditures
|
(438,759 | ) | (21,568 | ) | (87,562 | ) | ||||||
Drilling
and development capital expenditures
|
(892,094 | ) | (497,988 | ) | (464,407 | ) | ||||||
Proceeds
from sale of oil and gas properties
|
1,450 | 52,585 | 24,390 | |||||||||
Proceeds
from sale of marketable securities
|
764 | - | - | |||||||||
Net
proceeds from sale of 11,677,500 units in Whiting USA Trust
I
|
193,692 | - | - | |||||||||
Net
cash used in investing activities
|
(1,134,947 | ) | (466,971 | ) | (527,579 | ) | ||||||
CASH
FLOWS FROM FINANCING ACTIVITIES:
|
||||||||||||
Issuance
of common stock
|
- | 210,394 | - | |||||||||
Long-term
borrowings under credit agreement
|
1,105,000 | 384,400 | 325,000 | |||||||||
Repayments
of long-term borrowings under credit agreement
|
(735,000 | ) | (514,400 | ) | (205,000 | ) | ||||||
Repayments
to Alliant Energy Corporation
|
(3,236 | ) | (3,019 | ) | (3,675 | ) | ||||||
Debt
issuance costs
|
- | (75 | ) | (253 | ) | |||||||
Tax
effect from restricted stock vesting
|
- | 45 | 288 | |||||||||
Net
cash provided by financing activities
|
366,764 | 77,345 | 116,360 | |||||||||
NET
CHANGE IN CASH AND CASH EQUIVALENTS
|
(5,154 | ) | 4,406 | (10 | ) | |||||||
CASH
AND CASH EQUIVALENTS:
|
||||||||||||
Beginning
of period
|
14,778 | 10,372 | 10,382 | |||||||||
End
of period
|
$ | 9,624 | $ | 14,778 | $ | 10,372 | ||||||
See
notes to consolidated financial statements.
|
(Continued)
|
Year
Ended December 31,
|
||||||||||||
2008
|
2007
|
2006
|
||||||||||
SUPPLEMENTAL
CASH FLOW DISCLOSURES:
|
||||||||||||
Cash
paid for income taxes
|
$ | 1,667 | $ | 1,446 | $ | 12,063 | ||||||
Cash
paid for interest
|
$ | 60,578 | $ | 63,861 | $ | 69,034 | ||||||
NONCASH
INVESTING ACTIVITIES:
|
||||||||||||
Accrued
capital expenditures during the year
|
$ | 84,960 | $ | 58,988 | $ | 25,742 | ||||||
See
notes to consolidated financial statements.
|
(Concluded)
|
Common
Stock
|
||||||||||||||||||||||||||||||||
Shares
|
Amount
|
Additional
Paid-in Capital
|
Accumulated
Other Comprehensive Income (Loss)
|
Deferred
Compensation
|
Retained
Earnings
|
Total
Stockholders’ Equity
|
Comprehensive
Income
|
|||||||||||||||||||||||||
BALANCES-January
1, 2006
|
36,842 | 37 | 753,093 | (34,620 | ) | (2,031 | ) | 281,383 | 997,862 | $ | 88,327 | |||||||||||||||||||||
Net
income
|
- | - | - | - | - | 156,364 | 156,364 | 156,364 | ||||||||||||||||||||||||
Change
in derivative fair values, net of taxes of $15,409
|
- | - | - | 24,140 | - | - | 24,140 | 24,140 | ||||||||||||||||||||||||
Realized
loss on settled derivative contracts, net of taxes of
$2,923
|
- | - | - | 4,578 | - | - | 4,578 | 4,578 | ||||||||||||||||||||||||
Restricted
stock issued
|
126 | - | - | - | - | - | - | - | ||||||||||||||||||||||||
Restricted
stock forfeited
|
(10 | ) | - | - | - | - | - | - | - | |||||||||||||||||||||||
Restricted
stock used for tax withholdings
|
(10 | ) | - | (440 | ) | - | - | - | (440 | ) | - | |||||||||||||||||||||
Tax
effect from restricted stock vesting
|
- | - | 288 | - | - | - | 288 | - | ||||||||||||||||||||||||
Adoption
of SFAS 123R
|
- | - | (2,122 | ) | - | 2,031 | - | (91 | ) | - | ||||||||||||||||||||||
Stock-based
compensation
|
- | - | 3,969 | - | - | - | 3,969 | - | ||||||||||||||||||||||||
BALANCES-December
31, 2006
|
36,948 | 37 | 754,788 | (5,902 | ) | - | 437,747 | 1,186,670 | $ | 185,082 | ||||||||||||||||||||||
Adoption
of FIN 48
|
- | - | - | - | - | (323 | ) | (323 | ) | - | ||||||||||||||||||||||
Net
income
|
- | - | - | - | - | 130,600 | 130,600 | 130,600 | ||||||||||||||||||||||||
Change
in derivative fair values, net of taxes of $31,012
|
- | - | - | (53,637 | ) | - | - | (53,637 | ) | (53,637 | ) | |||||||||||||||||||||
Realized
loss on settled derivative contracts, net of taxes of
$7,766
|
- | - | - | 13,423 | - | - | 13,423 | 13,423 | ||||||||||||||||||||||||
Issuance
of stock, secondary offering
|
5,425 | 5 | 210,389 | - | - | - | 210,394 | - | ||||||||||||||||||||||||
Restricted
stock issued
|
150 | - | - | - | - | - | - | - | ||||||||||||||||||||||||
Restricted
stock forfeited
|
(12 | ) | - | - | - | - | - | - | - | |||||||||||||||||||||||
Restricted
stock used for tax withholdings
|
(31 | ) | - | (1,403 | ) | - | - | - | (1,403 | ) | - | |||||||||||||||||||||
Tax
effect from restricted stock vesting
|
- | - | 45 | - | - | - | 45 | - | ||||||||||||||||||||||||
Stock-based
compensation
|
- | - | 5,057 | - | - | - | 5,057 | - | ||||||||||||||||||||||||
BALANCES-December
31, 2007
|
42,480 | 42 | 968,876 | (46,116 | ) | - | 568,024 | 1,490,826 | $ | 90,386 | ||||||||||||||||||||||
Net
income
|
- | - | - | - | - | 252,143 | 252,143 | 252,143 | ||||||||||||||||||||||||
Change
in derivative fair values, net of taxes of $1,812
|
- | - | - | (3,072 | ) | - | - | (3,072 | ) | (3,072 | ) | |||||||||||||||||||||
Realized
loss on settled derivative contracts, net of taxes of
$39,903
|
- | - | - | 67,652 | - | - | 67,652 | 67,652 | ||||||||||||||||||||||||
Ineffectiveness
gain on hedging activities, net of taxes of $703
|
- | - | - | (1,193 | ) | - | - | (1,193 | ) | (1,193 | ) | |||||||||||||||||||||
Restricted
stock issued
|
139 | 1 | - | - | - | - | 1 | - | ||||||||||||||||||||||||
Restricted
stock forfeited
|
(7 | ) | - | - | - | - | - | - | - | |||||||||||||||||||||||
Restricted
stock used for tax withholdings
|
(30 | ) | - | (1,743 | ) | - | - | - | (1,743 | ) | - | |||||||||||||||||||||
Stock-based
compensation
|
- | - | 4,177 | - | - | - | 4,177 | - | ||||||||||||||||||||||||
BALANCES-December
31, 2008
|
42,582 | $ | 43 | $ | 971,310 | $ | 17,271 | $ | - | $ | 820,167 | $ | 1,808,791 | $ | 315,530 | |||||||||||||||||
See
notes to consolidated financial statements.
|
1.
|
SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES
|
2.
|
ACQUISITIONS
AND DIVESTITURES
|
Flat
Rock
|
||||
Purchase
price
|
$ | 359,380 | ||
Allocation
of purchase price:
|
||||
Proved
properties
|
$ | 251,895 | ||
Unproved
properties
|
79,498 | |||
Gas
gathering and processing facilities
|
35,736 | |||
Liabilities
assumed
|
(7,749 | ) | ||
Total
|
$ | 359,380 |
Pro
Forma
(Unaudited)
|
||||||||||||
Whiting
(As
reported)
|
Flat
Rock
|
Consolidated
|
||||||||||
Twelve
months ended December 31, 2008:
|
||||||||||||
Total
revenues
|
$ | 1,222,119 | $ | 17,761 | $ | 1,239,880 | ||||||
Net
income
|
252,143 | 1,144 | 253,287 | |||||||||
Net
income per common share – basic
|
5.96 | 0.03 | 5.99 | |||||||||
Net
income per common share – diluted
|
5.94 | 0.03 | 5.97 | |||||||||
Twelve
months ended December 31, 2007:
|
||||||||||||
Total
revenues
|
$ | 818,718 | $ | 24,648 | $ | 843,366 | ||||||
Net
income
|
130,600 | (4,560 | ) | 126,040 | ||||||||
Net
income per common share – basic
|
3.31 | (0.12 | ) | 3.19 | ||||||||
Net
income per common share – diluted
|
3.29 | (0.11 | ) | 3.18 |
3.
|
LONG-TERM
DEBT
|
December
31,
|
||||||||
2008
|
2007
|
|||||||
Credit
agreement
|
$ | 620,000 | $ | 250,000 | ||||
7%
Senior Subordinated Notes due 2014
|
250,000 | 250,000 | ||||||
7.25%
Senior Subordinated Notes due 2013, net of unamortized debt discount of
$1,541 and $1,966, respectively
|
218,459 | 218,034 | ||||||
7.25%
Senior Subordinated Notes due 2012, net of unamortized debt discount of
$397 and $537, respectively
|
151,292 | 150,214 | ||||||
Total
debt
|
$ | 1,239,751 | $ | 868,248 |
4.
|
ASSET
RETIREMENT OBLIGATIONS
|
Year
Ended December 31,
|
||||||||
2008
|
2007
|
|||||||
Beginning
asset retirement obligation
|
$ | 37,192 | $ | 37,534 | ||||
Additional
liability incurred
|
3,503 | 1,490 | ||||||
Revisions
in estimated cash flows
|
16,287 | 76 | ||||||
Accretion
expense
|
3,236 | 2,850 | ||||||
Obligations
on sold or conveyed properties
|
(536 | ) | (2,557 | ) | ||||
Liabilities
settled
|
(5,334 | ) | (2,201 | ) | ||||
Ending
asset retirement obligation
|
$ | 54,348 | $ | 37,192 |
5.
|
DERIVATIVE
FINANCIAL INSTRUMENTS
|
Whiting
Petroleum Corporation
|
||||||||||||||||
Contracted
Volumes
|
NYMEX
Price Collar Ranges
|
|||||||||||||||
Period
|
Crude
Oil
(Bbl)
|
Natural
Gas (Mcf)
|
Crude
Oil
(per
Bbl)
|
Natural
Gas
(per
Mcf)
|
||||||||||||
2009
|
6,247,873 | 577,820 |
$57.57
- $73.95
|
$6.50
- $17.11
|
||||||||||||
2010
|
5,046,289 | 495,390 |
$62.34
- $83.00
|
$6.50
- $15.06
|
||||||||||||
2011
|
4,435,039 | 436,510 |
$61.68
- $86.26
|
$6.50
- $14.62
|
||||||||||||
2012
|
4,065,091 | 384,002 |
$61.70
- $87.63
|
|
$6.50
- $14.27
|
|||||||||||
2013
|
3,090,000 | - |
$60.33
- $81.46
|
|
n/a
|
|||||||||||
Total
|
22,884,292 | 1,893,722 |
Whiting
Petroleum Corporation
|
||||||||||||||||
Contracted
Volumes
|
NYMEX
Price Collar Ranges
|
|||||||||||||||
Period
|
Crude
Oil
(Bbl)
|
Natural
Gas (Mcf)
|
Crude
Oil
(per
Bbl)
|
Natural
Gas
(per
Mcf)
|
||||||||||||
2009
|
139,873 | 577,820 |
$76.00
- $137.43
|
$6.50
- $17.11
|
||||||||||||
2010
|
126,289 | 495,390 |
$76.00
- $134.98
|
$6.50
- $15.06
|
||||||||||||
2011
|
115,039 | 436,510 |
$74.00
- $140.15
|
$6.50
- $14.62
|
||||||||||||
2012
|
105,091 | 384,002 |
$74.00
- $141.72
|
$6.50
- $14.27
|
||||||||||||
Total
|
486,292 | 1,893,722 |
Third-party
Public Holders of Trust Units
|
||||||||||||||||
Contracted
Volumes
|
NYMEX
Price Collar Ranges
|
|||||||||||||||
Period
|
Crude
Oil
(Bbl)
|
Natural
Gas
(Mcf)
|
Crude
Oil
(per
Bbl)
|
Natural
Gas
(per
Mcf)
|
||||||||||||
2009
|
438,113 | 1,809,868 |
$76.00
- $137.43
|
$6.50
- $17.11
|
||||||||||||
2010
|
395,567 | 1,551,678 |
$76.00
- $134.98
|
$6.50
- $15.06
|
||||||||||||
2011
|
360,329 | 1,367,249 |
$74.00
- $140.15
|
$6.50
- $14.62
|
||||||||||||
2012
|
329,171 | 1,202,785 |
$74.00
- $141.72
|
$6.50
- $14.27
|
||||||||||||
Total
|
1,523,180 | 5,931,580 |
6.
|
FAIR
VALUE DISCLOSURES
|
·
|
Level
1: Quoted Prices in Active Markets for Identical Assets – inputs to the
valuation methodology are quoted prices (unadjusted) for identical
assets or liabilities in active
markets.
|
·
|
Level
2: Significant Other Observable Inputs – inputs to the valuation
methodology include quoted prices for similar assets and liabilities in
active markets, and inputs that are observable for the asset or liability,
either directly or indirectly, for substantially the full term of the
financial instrument.
|
·
|
Level
3: Significant Unobservable Inputs – inputs to the valuation methodology
are unobservable and significant to the fair value
measurement.
|
Level
1
|
Level
2
|
Level
3
|
December
31, 2008
|
|||||||||||||
Assets
|
||||||||||||||||
Current
portion of commodity derivative assets
|
$ | - | $ | 46,780 | $ | - | $ | 46,780 | ||||||||
Non-current
commodity derivative assets
|
- | 38,104 | - | 38,104 | ||||||||||||
Other
long-term assets
(1)
|
- | 1,690 | - | 1,690 | ||||||||||||
Total
|
$ | - | $ | 86,574 | $ | - | $ | 86,574 | ||||||||
Liabilities
|
||||||||||||||||
Current
portion of commodity derivative liabilities
|
$ | - | $ | 17,354 | $ | - | $ | 17,354 | ||||||||
Non-current
commodity derivative liabilities
|
- | 28,131 | - | 28,131 | ||||||||||||
Long-term
debt
(1)
|
- | 1,690 | - | 1,690 | ||||||||||||
Total
|
$ | - | $ | 47,175 | $ | - | $ | 47,175 |
|
(1) Amount
represents interest rate swap (see note on Long-Term
Debt).
|
7.
|
STOCKHOLDERS’
EQUITY
|
2008
|
||||
Number
of simulations
|
100,000 | |||
Expected
volatility
|
36.3 | % | ||
Risk-free
rate
|
2.24 | % |
Number
of Shares
|
Weighted
Average
Grant
Date
Fair Value
|
|||||||
Restricted
stock awards nonvested, January 1, 2006
|
145,763 | $ | 32.34 | |||||
Granted
|
125,999 | $ | 43.38 | |||||
Vested
|
(58,409 | ) | $ | 27.81 | ||||
Forfeited
|
(10,089 | ) | $ | 37.87 | ||||
Restricted
stock awards nonvested, December 31, 2006
|
203,264 | $ | 39.33 | |||||
Granted
|
150,815 | $ | 45.24 | |||||
Vested
|
(101,985 | ) | $ | 36.13 | ||||
Forfeited
|
(12,438 | ) | $ | 44.28 | ||||
Restricted
stock awards nonvested, December 31, 2007
|
239,656 | $ | 44.15 | |||||
Granted
|
138,518 | $ | 40.67 | |||||
Vested
|
(112,384 | ) | $ | 43.46 | ||||
Forfeited
|
(7,026 | ) | $ | 50.66 | ||||
Restricted
stock awards nonvested, December 31, 2008
|
258,764 | $ | 42.41 |
8.
|
EMPLOYEE
BENEFIT PLANS
|
Year
Ended December 31,
|
||||||||
2008
|
2007
|
|||||||
Beginning
Production Participation Plan liability
|
$ | 34,042 | $ | 25,443 | ||||
Change
in liability for accretion, vesting and change in
estimates
|
70,811 | 27,225 | ||||||
Reduction
in liability for cash payments accrued and recognized as compensation
expense
|
(38,687 | ) | (18,626 | ) | ||||
Ending
Production Participation Plan liability
|
$ | 66,166 | $ | 34,042 |
Year
Ended December 31,
|
||||||||||||
2008
|
2007
|
2006
|
||||||||||
General
and administrative expense
|
$ | 27,852 | $ | 7,293 | $ | 5,196 | ||||||
Exploration
expense
|
4,272 | 1,306 | 960 | |||||||||
Total
|
$ | 32,124 | $ | 8,599 | $ | 6,156 |
9.
|
INCOME
TAXES
|
Year
Ended December 31,
|
||||||||||||
2008
|
2007
|
2006
|
||||||||||
Current
income tax expense:
|
||||||||||||
Federal
|
$ | - | $ | 32 | $ | 11,576 | ||||||
State
|
2,361 | 518 | 770 | |||||||||
Total
current income tax expense
|
2,361 | 550 | 12,346 | |||||||||
Deferred
income tax expense:
|
||||||||||||
Federal
|
142,393 | 72,937 | 65,402 | |||||||||
State
|
11,923 | 3,075 | (840 | ) | ||||||||
Total
deferred income tax expense
|
154,316 | 76,012 | 64,562 | |||||||||
Total
|
$ | 156,677 | $ | 76,562 | $ | 76,908 |
Year
Ended December 31,
|
||||||||||||
2008
|
2007
|
2006
|
||||||||||
U.S.
statutory income tax expense
|
$ | 143,087 | $ | 72,506 | $ | 81,645 | ||||||
State
income taxes, net of federal benefit
|
13,458 | 4,176 | 907 | |||||||||
Tax
credits
|
- | 330 | (4,206 | ) | ||||||||
Statutory
depletion
|
(583 | ) | (405 | ) | (1,245 | ) | ||||||
Enacted
changes in state tax laws
|
- | (599 | ) | (1,295 | ) | |||||||
Change
in valuation allowance
|
- | 67 | 1,163 | |||||||||
Permanent
items
|
715 | 570 | (187 | ) | ||||||||
Other
|
- | (83 | ) | 126 | ||||||||
Total
|
$ | 156,677 | $ | 76,562 | $ | 76,908 |
Year
Ended December 31,
|
||||||||
2008
|
2007
|
|||||||
Deferred
income tax assets:
|
||||||||
Net
operating loss carryforward
|
$ | 124,560 | $ | 20,952 | ||||
Derivative
instruments
|
- | 26,680 | ||||||
Production
Participation Plan liability
|
24,548 | 12,581 | ||||||
Tax
sharing liability
|
11,109 | 10,598 | ||||||
Asset
retirement obligations
|
13,050 | 11,806 | ||||||
Underwriter
fees
|
6,935 | - | ||||||
Restricted
stock compensation
|
1,979 | 2,274 | ||||||
Enhanced
oil recovery credit carryforwards
|
7,946 | 7,946 | ||||||
Alternative
minimum tax credit carryforwards
|
9,653 | 9,653 | ||||||
State
deductibles
|
2,215 | 2,135 | ||||||
Foreign
tax credit carryforwards
|
1,230 | 1,230 | ||||||
Other
|
655 | 110 | ||||||
Total
deferred income tax assets
|
203,880 | 105,965 | ||||||
Less
valuation allowances
|
(1,230 | ) | (1,230 | ) | ||||
Net
deferred income tax assets
|
202,650 | 104,735 | ||||||
Deferred
income tax liabilities:
|
||||||||
Oil
and gas properties
|
548,596 | 319,979 | ||||||
Derivative
instruments
|
12,482 | - | ||||||
Trust
distributions
|
47,869 | - | ||||||
Other
|
- | - | ||||||
Total
deferred income tax liabilities
|
608,947 | 319,979 | ||||||
Total
net deferred income tax liabilities
|
$ | 406,297 | $ | 215,244 |
Year
Ended December 31,
|
||||||||
2008
|
2007
|
|||||||
Assets:
|
||||||||
Current
deferred income taxes
|
$ | - | $ | 27,720 | ||||
Liabilities:
|
||||||||
Current
deferred income taxes
|
15,395 | - | ||||||
Non-current
deferred income taxes
|
390,902 | 242,964 | ||||||
Net
deferred income tax liabilities
|
$ | 406,297 | $ | 215,244 |
Year
Ended December 31,
|
||||||||
2008
|
2007
|
|||||||
Beginning
balance at January 1
|
$ | 170 | $ | 396 | ||||
Increases
related to tax position taken in the current year
|
129 | 96 | ||||||
Decreases
associated with accounting method change
|
- | (322 | ) | |||||
Ending
balance at December 31
|
$ | 299 | $ | 170 |
10.
|
RELATED
PARTY TRANSACTIONS
|
December
31, 2008
|
December
31, 2007
|
|||||||
Assets
|
||||||||
Unit
distributions due from Trust
(1)
|
$ | 1,596 | $ | - | ||||
Total
|
$ | 1,596 | $ | - | ||||
Liabilities
|
||||||||
Unit
distributions payable to Trust
(2)
|
$ | 10,120 | - | |||||
Current
portion of derivative liability
|
12,570 | - | ||||||
Non-current
derivative liability
|
18,907 | - | ||||||
Total
|
$ | 41,597 | $ | - |
|
(1)
|
This
amount represents Whiting’s 15.8% interest in the net proceeds due from
the Trust and is included within Accounts Receivable Trade, Net in the
Company’s consolidated balance
sheets.
|
|
(2)
|
This
amount represents net proceeds from the Trust’s underlying properties as
well as realized cash settlements on Trust derivatives, that the Company
has received between the last Trust distribution date and December 31,
2008, but which the Company has not yet distributed to the Trust as of
December 31, 2008. Due to ongoing processing of Trust revenues
and expenses after December 31, 2008, the amount of Whiting’s next
scheduled distribution to the Trust, and the related distribution by the
Trust to its unit holders, will differ from this amount. This
amount is included within Accounts Payable in the Company’s consolidated
balance sheet.
|
11.
|
COMMITMENTS
AND CONTINGENCIES
|
2009
|
$ | 2,520 | ||
2010
|
2,677 | |||
2011
|
3,383 | |||
2012
|
2,931 | |||
2013
|
2,382 | |||
Total
|
$ | 13,893 |
12.
|
SUBSEQUENT
EVENTS
|
13.
|
OIL
AND GAS ACTIVITIES
|
Year
Ended December 31,
|
||||||||||||
2008
|
2007
|
2006
|
||||||||||
Development
|
$ | 914,616 | $ | 506,057 | $ | 408,828 | ||||||
Proved
property acquisition
|
294,056 | 8,128 | 29,778 | |||||||||
Unproved
property acquisition
|
98,841 | 13,598 | 38,628 | |||||||||
Exploration
|
42,621 | 56,741 | 81,877 | |||||||||
Total
|
$ | 1,350,134 | $ | 584,524 | $ | 559,111 |
Year
Ended December 31,
|
||||||||
2008
|
2007
|
|||||||
Proved
oil and gas properties
|
$ | 4,423,197 | $ | 3,313,777 | ||||
Unproved
oil and gas properties
|
106,436 | 55,084 | ||||||
Accumulated
depreciation, depletion and amortization
|
(873,233 | ) | (637,549 | ) | ||||
Oil
and gas properties, net
|
$ | 3,656,400 | $ | 2,731,312 |
Year
Ended December 31,
|
||||||||||||
2008
|
2007
|
2006
|
||||||||||
Beginning
balance at January 1
|
$ | 525 | $ | 10,194 | $ | 4,193 | ||||||
Additions
to capitalized exploratory well costs pending the determination of proved
reserves
|
12,794 | 19,203 | 51,798 | |||||||||
Reclassifications
to wells, facilities and equipment based on the determination of
proved reserves
|
(13,319 | ) | (28,872 | ) | (43,276 | ) | ||||||
Capitalized
exploratory well costs charged to expense
|
- | - | (2,521 | ) | ||||||||
Ending
balance at December 31
|
$ | - | $ | 525 | $ | 10,194 |
14.
|
DISCLOSURES
ABOUT OIL AND GAS PRODUCING ACTIVITIES
(UNAUDITED)
|
Oil
(MBbl)
|
Natural
Gas
(MMcf)
|
|||||||
Balance—January
1, 2006
|
199,199 | 386,412 | ||||||
Extensions
and discoveries
|
4,125 | 19,362 | ||||||
Sales
of minerals in place
|
(1,213 | ) | (983 | ) | ||||
Purchases
of minerals in place
|
670 | 4,009 | ||||||
Production
|
(9,799 | ) | (32,147 | ) | ||||
Revisions
to previous estimates
|
2,053 | (57,780 | ) | |||||
Balance—December
31, 2006
|
195,035 | 318,873 | ||||||
Extensions
and discoveries
|
10,973 | 40,936 | ||||||
Sales
of minerals in place
|
(1,194 | ) | (10,382 | ) | ||||
Purchases
of minerals in place
|
691 | - | ||||||
Production
|
(9,579 | ) | (30,764 | ) | ||||
Revisions
to previous estimates
|
392 | 8,079 | ||||||
Balance—December
31, 2007
|
196,318 | 326,742 | ||||||
Extensions
and discoveries
|
20,395 | 57,093 | ||||||
Sales
of minerals in place
|
(3,919 | ) | (14,277 | ) | ||||
Purchases
of minerals in place
|
513 | 90,329 | ||||||
Production
|
(12,448 | ) | (30,419 | ) | ||||
Revisions
to previous estimates
|
(20,851 | ) | (74,689 | ) | ||||
Balance—December
31, 2008
|
180,008 | 354,779 | ||||||
Proved
developed reserves:
|
||||||||
December
31, 2006
|
122,496 | 226,516 | ||||||
December
31, 2007
|
127,291 | 237,030 | ||||||
December
31, 2008
|
120,961 | 229,224 |
December
31,
|
||||||||||||
2008
|
2007
|
2006
|
||||||||||
Future
cash flows
|
$ | 8,558,178 | $ | 19,747,430 | $ | 12,635,239 | ||||||
Future
production costs
|
(4,220,329 | ) | (6,022,667 | ) | (4,248,973 | ) | ||||||
Future
development costs
|
(982,193 | ) | (1,186,826 | ) | (1,176,778 | ) | ||||||
Future
income tax expense
|
(474,332 | ) | (3,952,146 | ) | (2,064,596 | ) | ||||||
Future
net cash flows
|
2,881,324 | 8,585,791 | 5,144,892 | |||||||||
10%
annual discount for estimated timing of cash flows
|
(1,504,876 | ) | (4,574,125 | ) | (2,752,650 | ) | ||||||
Standardized
measure of discounted future net cash flows
|
$ | 1,376,448 | $ | 4,011,666 | $ | 2,392,242 |
December
31,
|
||||||||||||
2008
|
2007
|
2006
|
||||||||||
Beginning
of year
|
$ | 4,011,665 | $ | 2,392,242 | $ | 2,882,901 | ||||||
Sale
of oil and gas produced, net of production costs
|
(987,682 | ) | (547,744 | ) | (542,383 | ) | ||||||
Sales
of minerals in place
|
(54,735 | ) | (72,360 | ) | (30,520 | ) | ||||||
Net
changes in prices and production costs
|
(4,059,904 | ) | 2,261,006 | (579,948 | ) | |||||||
Extensions,
discoveries and improved recoveries
|
259,930 | 440,337 | 162,969 | |||||||||
Development
costs, net
|
108,922 | (4,030 | ) | (212,076 | ) | |||||||
Purchases
of mineral in place
|
135,288 | 17,098 | 29,663 | |||||||||
Revisions
of previous quantity estimates
|
(289,381 | ) | 43,019 | (167,956 | ) | |||||||
Net
change in income taxes
|
1,851,178 | (757,127 | ) | 561,302 | ||||||||
Accretion
of discount
|
401,167 | 239,224 | 288,290 | |||||||||
End
of year
|
$ | 1,376,448 | $ | 4,011,665 | $ | 2,392,242 |
2008
|
2007
|
2006
|
||||||||||
Oil
(per Bbl)
|
$ | 38.51 | $ | 88.62 | $ | 54.81 | ||||||
Natural
Gas (per Mcf)
|
$ | 4.58 | $ | 6.31 | $ | 5.41 |
15.
|
QUARTERLY
FINANCIAL DATA (UNAUDITED)
|
Three
Months Ended
|
||||||||||||||||
March
31,
2008
|
June
30,
2008
|
September
30,
2008
|
December
31,
2008
|
|||||||||||||
Year ended December 31,
2008
:
|
||||||||||||||||
Oil
and natural gas
sales
|
$ | 286,731 | $ | 390,536 | $ | 425,392 | $ | 213,821 | ||||||||
Operating
profit
(1)
|
162,828 | 252,198 | 258,224 | 36,986 | ||||||||||||
Net
income
|
62,314 | 80,449 | 112,417 | (3,037 | ) | |||||||||||
Basic
net income per
share
|
1.47 | 1.90 | 2.66 | (0.07 | ) | |||||||||||
Diluted
net income per
share
|
1.47 | 1.90 | 2.65 | (0.07 | ) | |||||||||||
Three
Months Ended
|
||||||||||||||||
March
31,
2007
|
June
30,
2007
|
September
30,
2007
|
December
31,
2007
|
|||||||||||||
Year ended December 31,
2007
:
|
||||||||||||||||
Oil
and natural gas
sales
|
$ | 159,714 | $ | 192,646 | $ | 205,594 | $ | 251,063 | ||||||||
Operating
profit
(1)
|
56,474 | 79,249 | 89,617 | 129,593 | ||||||||||||
Net
income
|
10,666 | 26,471 | 47,713 | 45,750 | ||||||||||||
Basic
net income per
share
|
0.29 | 0.72 | 1.14 | 1.08 | ||||||||||||
Diluted
net income per
share
|
0.29 | 0.72 | 1.13 | 1.08 |
I
tem
9.
|
Changes in and Disagreements with Accountants on
Accounting and Financial
Disclosure
|
I
tem
9A.
|
Controls and
Procedures
|
I
tem
9B.
|
Other
Information
|
Name
|
Position
|
Shares
|
James
J. Volker
|
Chairman,
President and Chief Executive Officer
|
74,860
|
James
T. Brown
|
Senior
Vice President, Operations
|
16,535
|
Michael
J. Stevens
|
Vice
President and Chief Financial Officer
|
24,953
|
It
em
10.
|
Directors, Executive Officers and Corporate
Governance
|
I
tem
11.
|
Executive
Compensation
|
I
tem
12.
|
Security Ownership of Certain Beneficial Owners
and Management and Related Stockholder
Matters
|
Plan
Category
|
Number
of securities to be issued upon exercise of outstanding options, warrants
and rights
|
Weighted-average
exercise price of outstanding options, warrants and
rights
|
Number
of securities remaining available for future issuance under equity
compensation plans (excluding securities reflected in the first
column)
|
|||||||||
Equity
compensation plans approved by security holders(1)
|
- | N/A | 1,510,261 | (2) | ||||||||
Equity
compensation plans not approved by security holders
|
- | N/A | - | |||||||||
Total
|
- | N/A | 1,510,261 | (2) |
|
_____________
|
(1)
|
Includes
only the Whiting Petroleum Corporation 2003 Equity Incentive
Plan.
|
(2)
|
Excludes
258,764 shares of restricted common stock previously issued for which the
restrictions have not lapsed.
|
Item
13.
|
Certain Relationships, Related Transactions and
Director Independence
|
I
tem
14.
|
Principal Accounting Fees and
Services
|
I
tem
15.
|
Exhibits, Financial Statement
Schedules
|
|
(a)
|
1.
|
Financial
statements – The following financial statements and the report of
independent registered public accounting firm are contained in Item
8.
|
|
a.
|
Report
of Independent Registered Public Accounting
Firm
|
|
b.
|
Consolidated
Balance Sheets as of December 31, 2008 and
2007
|
|
c.
|
Consolidated
Statements of Income for the Years ended December 31, 2008, 2007 and
2006
|
|
d.
|
Consolidated
Statements of Cash Flows for the Years ended December 31, 2008, 2007
and 2006
|
|
e.
|
Consolidated
Statements of Stockholders’ Equity and Comprehensive Income for the Years
ended December 31, 2008, 2007 and
2006
|
|
f.
|
Notes
to Consolidated Financial
Statements
|
|
2.
|
Financial
statement schedules – The following financial statement schedule is filed
as part of this Annual Report on Form
10-K:
|
|
3.
|
Exhibits
– The exhibits listed in the accompanying index to exhibits are filed as
part of this Annual Report on Form
10-K.
|
(b)
|
Exhibits
|
|
The
exhibits listed in the accompanying exhibit index are filed (except where
otherwise indicated) as part of this
report.
|
(c)
|
Financial
Statement Schedules.
|
December
31,
|
||||||||
2008
|
2007
|
|||||||
ASSETS
|
||||||||
Current
assets
|
$ | 2,859 | $ | 4,530 | ||||
Investment
in subsidiaries
|
1,187,019 | 919,186 | ||||||
Intercompany
receivable
|
1,249,869 | 1,256,550 | ||||||
TOTAL
|
$ | 2,439,747 | $ | 2,180,266 | ||||
LIABILITIES
AND STOCKHOLDERS’ EQUITY
|
||||||||
Current
liabilities
|
$ | 8,292 | $ | 2,587 | ||||
Long-term
debt
|
618,061 | 617,497 | ||||||
Other
long-term liabilities
|
21,874 | 23,240 | ||||||
Stockholders’
equity
|
1,791,520 | 1,536,942 | ||||||
TOTAL
|
$ | 2,439,747 | $ | 2,180,266 |
Year
Ended December 31,
|
||||||||||||
2008
|
2007
|
2006
|
||||||||||
Operating
expenses:
|
||||||||||||
General
and administrative
|
$ | 3,619 | $ | 4,290 | $ | 3,367 | ||||||
Interest
expense
|
1,830 | 2,112 | 2,671 | |||||||||
Equity
in earnings of subsidiaries
|
255,504 | 134,636 | 160,410 | |||||||||
Income
before income taxes
|
250,055 | 128,234 | 154,372 | |||||||||
Income
tax benefit
|
(2,088 | ) | (2,366 | ) | (1,992 | ) | ||||||
Net
income
|
$ | 252,143 | $ | 130,600 | $ | 156,364 | ||||||
See
notes to condensed financial statements.
|
Year
Ended December 31,
|
||||||||||||
2008
|
2007
|
2006
|
||||||||||
Cash
flows provided by (used in) operating
activities
|
$ | 8,883 | $ | 4,633 | $ | (846 | ) | |||||
Cash
flows from investing activities
|
||||||||||||
Investment
in subsidiaries
|
- | - | - | |||||||||
Cash
flows from financing activities:
|
||||||||||||
Intercompany
receivable
|
(5,647 | ) | (1,659 | ) | 4,233 | |||||||
Other
financing activities
|
(3,236 | ) | (2,974 | ) | (3,387 | ) | ||||||
Net
cash (used in) provided by financing activities
|
(8,883 | ) | (4,633 | ) | 846 | |||||||
Net
change in cash and cash equivalents
|
- | - | - | |||||||||
Cash
and cash equivalents:
|
||||||||||||
Beginning
of period
|
- | - | - | |||||||||
End
of period
|
$ | - | $ | - | $ | - | ||||||
NONCASH
INVESTING ACTIVITES:
|
||||||||||||
Conveyance
to Whiting USA Trust I increasing investment in
subsidiaries
|
$ | 111,223 | $ | - | $ | - | ||||||
Sale
of Whiting USA Trust I units decreasing investment in
subsidiaries
|
$ | (93,683 | ) | $ | - | $ | - | |||||
Distributions
from Whiting USA Trust I decreasing investment in
subsidiaries
|
$ | (5,212 | ) | $ | - | $ | - | |||||
NONCASH
FINANCING ACTIVITES:
|
||||||||||||
Conveyance
to Whiting USA Trust I decreasing intercompany receivable
|
$ | (111,223 | ) | $ | - | $ | - | |||||
Sale
of Whiting USA Trust I units increasing intercompany
receivable
|
$ | 93,683 | $ | - | $ | - | ||||||
Distributions
from Whiting USA Trust I increasing intercompany
receivable
|
$ | 5,212 | $ | - | $ | - | ||||||
Issuance
of common stock increasing stockholders' equity
|
$ | - | $ | 210,394 | $ | - | ||||||
Issuance
of common stock decreasing intercompany receivable
|
$ | - | $ | (210,394 | ) | $ | - | |||||
See
notes to condensed financial statements.
|
2.
|
LONG-TERM
DEBT AND OTHER LONG-TERM
LIABILITIES
|
December
31,
|
||||||||
2008
|
2007
|
|||||||
Long-term
debt:
|
||||||||
7%
Senior Subordinated Notes due 2014
|
$ | 250,000 | $ | 250,000 | ||||
7.25%
Senior Subordinated Notes due 2013, net of unamortized debt discount of
$1,541 and $1,966, respectively
|
218,459 | 218,034 | ||||||
7.25%
Senior Subordinated Notes due 2012, net of unamortized debt discount of
$397 and $537, respectively
|
149,602 | 149,463 | ||||||
Other
long-term liabilities:
|
||||||||
Tax
sharing liability
|
21,575 | 23,070 | ||||||
Other
|
299 | 170 | ||||||
Total
long-term debt and other long-term liabilities
|
$ | 639,935 | $ | 640,737 |
2009
|
2010
|
2011
|
2012
|
2013
|
Thereafter
|
Total
|
$
2,112
|
$ 1,961
|
$ 1,826
|
$
151,685
|
$
221,577
|
$
264,824
|
$
643,985
|
3.
|
WHITING
USA TRUST I
|
4.
|
SUBSEQUENT
EVENT
|
WHITING
PETROLEUM CORPORATION
|
||
By
|
/s/
James J. Volker
|
|
James
J. Volker
|
||
Chairman,
President and Chief Executive
Officer
|
Signature
|
Title
|
Date
|
/s/ James J.
Volker
James
J. Volker
|
Chairman,
President, Chief
Executive
Officer and Director
(Principal
Executive Officer)
|
February
25, 2009
|
/s/ Michael J.
Stevens
Michael
J. Stevens
|
Vice
President and
Chief
Financial Officer
(Principal
Financial Officer)
|
February
25, 2009
|
/s/ Brent P.
Jensen
Brent
P. Jensen
|
Controller
and Treasurer
(Principal
Accounting Officer)
|
February
25, 2009
|
/s/ Thomas L.
Aller
Thomas
L. Aller
|
Director
|
February
25, 2009
|
/s/ D. Sherwin
Artus
D.
Sherwin Artus
|
Director
|
February
25, 2009
|
/s/ Thomas P.
Briggs
Thomas
P. Briggs
|
Director
|
February
25, 2009
|
/s/ William N.
Hahne
William
N. Hahne
|
Director
|
February
25, 2009
|
/s/ Graydon D.
Hubbard
Graydon
D. Hubbard
|
Director
|
February
25, 2009
|
/s/ Palmer L.
Moe
Palmer
L. Moe
|
Director
|
February
25, 2009
|
Exhibit
Number
|
Exhibit Description
|
(3.1)
|
Amended
and Restated Certificate of Incorporation of Whiting Petroleum Corporation
[Incorporated by reference to Exhibit 3.1 to Whiting Petroleum
Corporation’s Registration Statement on Form S-1 (Registration No.
333-107341)].
|
(3.2)
|
Amended
and Restated By-laws of Whiting Petroleum Corporation [Incorporated by
reference to Exhibit 3.1 to Whiting Petroleum Corporation’s Quarterly
Report on Form 10-Q for the quarter ended September 30, 2008 (File No.
001-31899)].
|
(3.3)
|
Certificate
of Designations of the Board of Directors Establishing the Series and
Fixing the Relative Rights and Preferences of Series A Junior
Participating Preferred Stock [Incorporated by reference to Exhibit 3.1 to
Whiting Petroleum Corporation’s Current Report on Form 8-K dated February
23, 2006 (File No. 001-31899)].
|
(4.1)
|
Third
Amended and Restated Credit Agreement, dated as of August 31, 2005, among
Whiting Oil and Gas Corporation, Whiting Petroleum Corporation, the
financial institutions listed therein and JPMorgan Chase Bank, N.A., as
Administrative Agent [Incorporated by reference to Exhibit 4 to Whiting
Petroleum Corporation’s Current Report on Form 8-K dated August 31,
2005 (File No. 001-31899)].
|
(4.2)
|
Indenture,
dated May 11, 2004, by and among Whiting Petroleum Corporation, Whiting
Oil and Gas Corporation, Whiting Programs, Inc., Equity Oil Company and
The Bank of New York Trust Company, N.A., as successor trustee
[Incorporated by reference to Exhibit 4.1 to Whiting Petroleum
Corporation’s Quarterly Report on Form 10-Q for the quarter ended
March 31, 2004 (File No. 001-31899)].
|
(4.3)
|
Subordinated
Indenture, dated as of April 19, 2005, by and among Whiting Petroleum
Corporation, Whiting Oil and Gas Corporation, Whiting Programs, Inc.,
Equity Oil Company and The Bank of New York Trust Company, N.A., as
successor trustee [Incorporated by reference to Exhibit 4.4 to Whiting
Petroleum Corporation’s Registration Statement on Form S-3 (Reg. No.
333-121615)].
|
(4.4)
|
First
Supplemental Indenture, dated as of April 19, 2005, by and among Whiting
Petroleum Corporation, Whiting Oil and Gas Corporation, Equity Oil
Company, Whiting Programs, Inc. and The Bank of New York Trust Company,
N.A., as successor trustee [Incorporated by reference to Exhibit 4.2 to
Whiting Petroleum Corporation’s Current Report on Form 8-K dated April 11,
2005 (File No. 001-31899)].
|
(4.5)
|
Indenture,
dated October 4, 2005, by and among Whiting Petroleum Corporation, Whiting
Oil and Gas Corporation, Whiting Programs, Inc. and The Bank of New York
Trust Company, N.A., as successor trustee [Incorporated by reference to
Exhibit 4.1 to Whiting Petroleum Corporation’s Current Report on Form 8-K
dated October 4, 2005 (File No. 001-31899)].
|
(4.6)
|
Rights
Agreement, dated as of February 23, 2006, between Whiting Petroleum
Corporation and Computershare Trust Company, Inc. [Incorporated by
reference to Exhibit 4.1 to Whiting Petroleum Corporation’s Current Report
on Form 8-K dated February 23, 2006 (File No.
001-31899)].
|
(10.1)*
|
Whiting
Petroleum Corporation 2003 Equity Incentive Plan, as amended through
October 23, 2007 [Incorporated by reference to Exhibit 10.2 to Whiting
Petroleum Corporation’s Current Report on Form 8-K dated October 23, 2007
(File No. 001-31899)].
|
(10.2)*
|
Form
of Restricted Stock Agreement pursuant to the Whiting Petroleum
Corporation 2003 Equity Incentive Plan for time-based vesting awards prior
to October 23, 2007 [Incorporated by reference to Exhibit 10.1 to Whiting
Petroleum Corporation’s Quarterly Report on Form 10-Q for the quarter
ended September 30, 2004 (File No.
001-31899)].
|
(10.3)*
|
Form
of Restricted Stock Agreement pursuant to the Whiting Petroleum
Corporation 2003 Equity Incentive Plan for performance vesting awards
prior to October 23, 2007 and prior to February 23, 2008 [Incorporated by
reference to Exhibit 10.1 to Whiting Petroleum Corporation’s Quarterly
Report on Form 10-Q for the quarter ended March 31, 2007 (File No.
001-31899)].
|
(10.4)*
|
Form
of Restricted Stock Agreement pursuant to the Whiting Petroleum
Corporation 2003 Equity Incentive Plan for performance vesting awards on
and after October 23, 2007 [Incorporated by reference to Exhibit 10.3 to
Whiting Petroleum Corporation’s Current Report on Form 8-K dated October
23, 2007 (File No. 001-31899)].
|
(10.5)*
|
Form
of Restricted Stock Agreement pursuant to the Whiting Petroleum
Corporation 2003 Equity Incentive Plan for time-based vesting awards on
and after October 23, 2007 [Incorporated by reference to Exhibit 10.4 to
Whiting Petroleum Corporation’s Current Report on Form 8-K dated October
23, 2007 (File No. 001-31899)].
|
(10.6)*
|
Form
of Restricted Stock Agreement pursuant to the Whiting Petroleum
Corporation 2003 Equity Incentive Plan for performance vesting awards on
and after February 23, 2008 [Incorporated by reference to Exhibit 10.1 to
Whiting Petroleum Corporation’s Quarterly Report on Form 10-Q for the
quarter ended March 31, 2008 (File No. 001-31899)].
|
(10.7)*
|
Whiting
Petroleum Corporation Production Participation Plan, as amended and
restated February 4, 2008 [Incorporated by reference to Exhibit 10.6 to
Whiting Petroleum Corporation’s Annual Report on Form 10-K for the year
ended December 31, 2007 (File No. 001-31899)].
|
(10.8)
|
Tax
Separation and Indemnification Agreement between Alliant Energy
Corporation, Whiting Petroleum Corporation and Whiting Oil and Gas
Corporation [Incorporated by reference to Exhibit 10.3 to Whiting
Petroleum Corporation’s Registration Statement on Form S-1 (Registration
No. 333-107341)].
|
(10.9)*
|
Summary
of Non-Employee Director Compensation for Whiting Petroleum
Corporation.
|
(10.10)*
|
Production
Participation Plan Credit Service Agreement, dated February 23, 2007,
between Whiting Petroleum Corporation and James J. Volker [Incorporated by
reference to Exhibit 10.7 to Whiting Petroleum Corporation’s Annual Report
on Form 10-K for the year ended December 31, 2006 (File No.
001-31899)].
|
(10.11)*
|
Amended
and Restated Production Participation Plan Supplemental Payment Agreement,
dated January 14, 2008, between Whiting Petroleum Corporation and J.
Douglas Lang [Incorporated by reference to Exhibit 10.6 to Whiting
Petroleum Corporation’s Annual Report on Form 10-K for the year ended
December 31, 2007 (File No. 001-31899)].
|
(10.12)*
|
Form
of Indemnification Agreement for directors and executive officers of
Whiting Petroleum Corporation [Incorporated by reference to Exhibit 10.10
to Whiting Petroleum Corporation’s Quarterly Report on Form 10-Q for the
quarter ended September 30, 2008 (File No. 001-31899)].
|
(10.13)*
|
Form
of Executive Excise Tax Gross-Up Agreement for executive officers of
Whiting Petroleum Corporation [Incorporated by reference to Exhibit 10.1
to Whiting Petroleum Corporation’s Current Report on Form 8-K dated
January 13, 2009 (File No. 001-31899)].
|
(10.14)*
|
Form
of Stock Option Agreement pursuant to the Whiting Petroleum Corporation
2003 Equity Incentive Plan.
|
(12.1)
|
Statement
regarding computation of ratios of earnings to fixed
charges.
|
(21)
|
Subsidiaries
of Whiting Petroleum Corporation.
|
(23.1)
|
Consent
of Deloitte & Touche LLP.
|
(23.2)
|
Consent
of Cawley, Gillespie & Associates, Inc., Independent Petroleum
Engineers.
|
(31.1)
|
Certification
by the Chairman, President and Chief Executive Officer pursuant to Section
302 of the Sarbanes-Oxley Act.
|
(31.2)
|
Certification
by the Vice President and Chief Financial Officer pursuant to Section 302
of the Sarbanes-Oxley Act.
|
(32.1)
|
Certification
of the Chairman, President and Chief Executive Officer pursuant to 18
U.S.C.
Section 1350.
|
(32.2)
|
Certification
of the Vice President and Chief Financial Officer pursuant to
18 U.S.C. Section 1350.
|
(99.1)
|
Proxy
Statement for the 2009 Annual Meeting of Stockholders, to be filed within
120 days of December 31, 2008 [To be filed with the Securities and
Exchange Commission under Regulation 14A within 120 days after December
31, 2008; except to the extent specifically incorporated by reference, the
Proxy Statement for the 2009 Annual Meeting of Stockholders shall not be
deemed to be filed with the Securities and Exchange Commission as part of
this Annual Report on Form 10-K].
|
Committee Service
|
||||||||||||||||
Board
Service
|
Audit
|
Compensation
|
Nominating
and
Governance
|
|||||||||||||
Annual
Retainer
|
$ | 42,000 | ||||||||||||||
Restricted
Stock (value), three year vesting
|
$ | 100,000 | ||||||||||||||
Committee
Chair Annual Retainer
|
$ | 25,000 | $ | 15,000 | $ | 15,000 | ||||||||||
Committee
Chair Restricted Stock (value)
|
$ | 25,000 | $ | 15,000 | $ | 15,000 | ||||||||||
Committee
Member Annual Retainer
|
$ | 5,000 | $ | 3,000 | $ | 3,000 | ||||||||||
Meeting
Fee
|
$ | 1,500 | $ | 1,500 | $ | 1,500 | $ | 1,500 |
Year
Ended December 31,
|
||||||||||||||||||||
2008
|
2007
|
2006
|
2005
|
2004
|
||||||||||||||||
Fixed
charges:
|
||||||||||||||||||||
Interest
expensed
|
$ | 59,010 | $ | 65,977 | $ | 66,265 | $ | 35,245 | $ | 11,800 | ||||||||||
Interest
capitalized
|
3,129 | 3,664 | 556 | - | 200 | |||||||||||||||
Amortized
premiums, discounts and capitalized expenses related to
indebtedness
|
6,068 | 6,527 | 7,224 | 6,802 | 4,056 | |||||||||||||||
Estimate
of interest within rental expense
|
431 | 424 | 386 | 298 | 182 | |||||||||||||||
Total
fixed charges
|
$ | 68,638 | $ | 76,592 | $ | 74,431 | $ | 42,345 | $ | 16,238 | ||||||||||
Earnings:
|
||||||||||||||||||||
Income
before income taxes
|
$ | 408,820 | $ | 207,162 | $ | 233,272 | $ | 196,098 | $ | 114,005 | ||||||||||
Income
from equity investees
|
(1,625 | ) | (1,365 | ) | (282 | ) | (409 | ) | - | |||||||||||
Fixed
charges (above)
|
68,638 | 76,592 | 74,431 | 42,345 | 16,238 | |||||||||||||||
Amortization
of capitalized interest
|
463 | 97 | 41 | 41 | 21 | |||||||||||||||
Distributed
income from equity investees
|
1,775 | 928 | 987 | 657 | - | |||||||||||||||
Interest
capitalized
|
(3,129 | ) | (3,664 | ) | (556 | ) | - | (200 | ) | |||||||||||
Total
earnings
|
$ | 474,942 | $ | 279,750 | $ | 307,893 | $ | 238,732 | $ | 130,064 | ||||||||||
Ratio
of earnings to fixed charges (unaudited)
|
6.92 | x | 3.65 | x | 4.14 | x | 5.64 | x | 8.01 | x |
Name
|
Jurisdiction
of Incorporation or
Organization
|
Percent Ownership
|
Whiting
Oil and Gas Corporation
|
Delaware
|
100%
|
Equity
Oil Company
|
Colorado
|
100%
|
Whiting
Programs, Inc.
|
Delaware
|
100%
|
/s/
Deloitte & Touche LLP
|
|
Deloitte
& Touche LLP
|
|
Denver,
Colorado
|
|
February
25, 2009
|
Sincerely,
|
|
/s/
Cawley, Gillespie & Associates, Inc.
|
|
Cawley,
Gillespie & Associates, Inc.
|
|
February
25, 2009
|
2.
|
Based
on my knowledge, this report does not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this
report;
|
3.
|
Based
on my knowledge, the financial statements and other financial information
included in this report, fairly present in all material respects the
financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this
report;
|
4.
|
The
registrant’s other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal
control over financial reporting (as defined in Exchange Act Rules
13a-15(f) and 15d-15(f)) for the registrant and
have:
|
|
a)
|
Designed
such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under our supervision, to ensure
that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this report is being
prepared;
|
|
b)
|
Designed
such internal control over financial reporting, or caused such internal
control over financial reporting to be designed under our supervision, to
provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting
principles;
|
|
c)
|
Evaluated
the effectiveness of the registrant’s disclosure controls and procedures
and presented in this report our conclusions about the effectiveness of
the disclosure controls and procedures, as of the end of the period
covered by this report based on such evaluation;
and
|
|
d)
|
Disclosed
in this report any change in the registrant’s internal control over
financial reporting that occurred during the registrant’s most recent
fiscal quarter (the registrant’s fourth fiscal quarter in the case of an
annual report) that has materially affected, or is reasonably likely to
materially affect, the registrant’s internal control over financial
reporting; and
|
5.
|
The
registrant’s other certifying officer and I have disclosed, based on our
most recent evaluation of internal control over financial reporting, to
the registrant’s auditors and the audit committee of registrant’s board of
directors (or persons performing the equivalent
functions):
|
|
a)
|
All
significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant’s ability to record,
process, summarize and report financial information;
and
|
|
b)
|
Any
fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant’s internal control
over financial reporting.
|
Date:
February 25, 2009
|
|
/s/
James J. Volker
|
|
James
J. Volker
|
|
Chairman,
President and Chief Executive Officer
|
1.
|
I
have reviewed this Annual Report on Form 10-K of Whiting Petroleum
Corporation;
|
2.
|
Based
on my knowledge, this report does not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this
report;
|
3.
|
Based
on my knowledge, the financial statements and other financial information
included in this report, fairly present in all material respects the
financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this
report;
|
4.
|
The
registrant’s other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal
control over financial reporting (as defined in Exchange Act Rules
13a-15(f) and 15d-(f)) for the registrant and
have:
|
|
a)
|
Designed
such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under our supervision, to ensure
that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this report is being
prepared;
|
|
b)
|
Designed
such internal control over financial reporting, or caused such internal
control over financial reporting to be designed under our supervision, to
provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting
principles;
|
|
c)
|
Evaluated
the effectiveness of the registrant’s disclosure controls and procedures
and presented in this report our conclusions about the effectiveness of
the disclosure controls and procedures, as of the end of the period
covered by this report based on such evaluation;
and
|
|
d)
|
Disclosed
in this report any change in the registrant’s internal control over
financial reporting that occurred during the registrant’s most recent
fiscal quarter (the registrant’s fourth fiscal quarter in the case of an
annual report) that has materially affected, or is reasonably likely to
materially affect, the registrant’s internal control over financial
reporting; and
|
5.
|
The
registrant’s other certifying officer and I have disclosed, based on our
most recent evaluation of internal control over financial reporting, to
the registrant’s auditors and the audit committee of registrant’s board of
directors (or persons performing the equivalent
functions):
|
|
a)
|
All
significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant’s ability to record,
process, summarize and report financial information;
and
|
|
b)
|
Any
fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant’s internal control
over financial reporting.
|
Date:
February 25
,
2009
|
|
/s/
Michael J. Stevens
|
|
Michael
J. Stevens
|
|
Vice
President and Chief Financial Officer
|
/s/
James J. Volker
|
|
James
J. Volker
|
|
Chairman,
President and Chief Executive Officer
|
|
Date:
February 25, 2009
|
/s/
Michael J. Stevens
|
|
Michael
J. Stevens
|
|
Vice
President and Chief Financial Officer
|
|
Date:
February 25, 2009
|