Fourth Quarter (4Q) Update | Capital Markets | Capital Expenditure | Drilling Activity

Whiting Details Preliminary Q4, Full Year 2020 Results

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Whiting Petroleum Corp. issued preliminary fourth quarter 2020 operating results.

For the fourth quarter of 2020, oil production exceeded the high end of the Company's guidance as it was positively impacted by a higher oil percentage from wells turned in line during the quarter, as well as a slightly lower decline rate on base production. The Company also benefited from mild weather allowing for continuous workover activity.

Lease operating expense was lower than guidance primarily due to less well repair activity, primarily related to extended ESP run times. Capital expenditures were also slightly lower than expected due to the timing of some facility expenditures and completion activity. The Company continues to benefit in both areas from its cost-cutting measures and renegotiated contract terms.

General and administrative expenses included restructuring and related non-recurring costs totaling approximately $3 million for the fourth quarter of 2020 and $45 million for the full year of 2020. Net of this amount, the expenses were in line with the Company's expectations and, for the quarter, reflect the lower cost structure that was implemented during 2020. As reflected in its guidance, the Company expects G&A to increase from this past quarterly amount as certain costs are resumed post-bankruptcy and as the pandemic environment recedes. In addition, the Company will begin accruing for its redesigned employee and executive performance incentive plan as described below.

Proved Reserves

As of December 31, 2020, our estimated proved reserves totaled 260 million barrels of oil equivalent (MMBOE). The PV10% was $1,197 million using SEC pricing, as noted below.

The following table summarizes by area, our estimated proved reserves as of December 31, 2020 with the corresponding pre-tax PV10% values:

Executive Compensation

Whiting also announced recent changes to its executive compensation program which are designed to implement an industry-leading compensation structure that aligns earned payments with shareholder interests. Relative to historical industry practice, the new structure prioritizes greater alignment with absolute returns to shareholders and places a greater emphasis on free cash flow.

Key features of the new compensation structure include:

• Short-term incentive metrics focused on returns and long-term cash generation;
• Mandatory stock settlement for our CEO, CFO and COO of any portion of the short-term incentive paid above target;
• Long-term incentives heavily weighted toward performance-based awards (70% for our CEO, 60% for our CFO and COO);
• Use of absolute total stockholder return as the sole performance metric for a significant portion of our performance-based long-term incentives;
• In the event of a change in control, payment of one third of the CEO severance will be in stock with a mandatory post-termination holding period.

Lynn A. Peterson, President and CEO of Whiting, commented: "We remain focused on generating value for our shareholders. As such, a new compensation plan has been established that further aligns management with our shareholders. The new plan prioritizes shareholder returns and cash generation, while keeping continued focus on sustainability, maintenance of production levels and achievement of strategic goals.

Reflecting on the recent increase in oil prices Peterson noted, "Using an oil price of $50 per barrel and a natural gas price of $3 per MMBtu, the Company's estimated proved reserves increase by approximately 20% and its estimated PV10% doubles. The increase in pricing also has a dramatic impact on our drillable inventory as shown in our latest investor presentation."

Other Business

On January 26, 2021, Whiting agreed to a settlement with a general unsecured claimant and certain of its affiliates and thereafter released 948,897 shares from the bankruptcy claims pool. These shares have a lock-up feature which prevents the sale of more than 15% of the shares during any thirty-day period during the six-month period following the issuance of the shares.