According to an SEC 8-K form filed December 7, 2017, the board of directors at Whiting Petroleum Corporation have “concluded that a material charge for impairment to one of its assets was required under generally accepted accounting principles applicable to the company.”
The asset in question is the company’s Redtail field in the DJ Basin. The company expects to record an aggregate impairment charge between $800 million and $900 million in Q4 2017, the filing reported.
This decision was based on the recent and comparative performance results of the DJ Basin to the Williston Basin, and the application of the five-year vintage rule at the Redtail field. The company has reduced reserves and impaired its investment at the Redtail field. Proved undeveloped reserves accounted for approximately 90% of the reserve reduction at the Redtail field.
After the reserve adjustment and accounting for 50 MMBOE of reserves associated with the previously announced sale of its Fort Berthold Indian Reservation properties, the company expects its yearend 2017 SEC proved reserve volumes to be comparable to year-end 2016 SEC proved reserve volumes, primarily due to additions and upward revisions in the Williston Basin and 2017 SEC pricing.
Whiting Petroleum does not expect that the impairment charge will result in any current or future cash expenditures.
Whiting will concentrate development activities in the Williston basin in 2018
Whiting has decided to concentrate development activities in the Williston basin during 2018, where it is the number two oil producer out of 140 in North Dakota producers monitored by the North Dakota Industrial Commission (Sept. data from NDIC). According to the NDIC, Whiting’s North Dakota wells produced a total of 3.4 MMBO for the month of September.
