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Whiting Petroleum: shift to pad drilling in Bakken saved $2M per well

Whiting Petroleum Corp. (NYSE: WLL), one of the largest acreage holders in North Dakota’s Bakken Shale, shaved nearly $2 million off the cost of its Bakken wells in the second quarter of 2012.

The Denver, Co.-based independent exploration and production company released its second quarter 2012 financial and operating results, and with it, detailed its plans for the oil-rich play.

James J. Volker, Whiting’s Chairman and CEO, commented: “We added more than 10,500 net acres to our Williston Basin acreage position in the second quarter and now hold over 712,000 net acres in the Basin. With further drilling in our new development areas and our established core properties, we expect a strong second half in 2012.”

In the Bakken, the company increased production nearly 10% quarter over quarter, including a 10% increase in Sanish field output where pad drilling saved the company roughly $2 million per well.

Currently, 25% of the company’s 29 rigs under contract are PAD drilling capable, but, by year-end 2012, another 25% are expected to be PAD capable, bringing the total to 50%. With the shift to PAD drilling, the company believes it can drop Bakken well costs to $7 million.

With soft natural gas prices and PAD drilling, operaters in the oily play are expected to continue to increase rig counts as service costs plateau.

Of the 29 current rigs, 19 were in play in the Bakken in the second quarter of this year. Four new rigs are expected to be added to the Williston rig count, but three less efficient Bakken rigs will be released before year-end for a net increase of 1.

In a note to investors July 26, Global Hunter Securities analysts emphasized Whiting’s lead position when it comes to Bakken well costs and noted that “dropping the less efficient rigs and keeping well count flat is remarkable.”

Remarkable to Whiting was the July 5 completion of the Sanish field—the company’s highest-rate wing well to date. The Smith 41-12H flowed 2,974 boe/d from the Middle Bakken. The well’s 6,996-foot lateral was fracture stimulated in a total of 22 stages.

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