Whiting Petroleum Corporation has reported fourth quarter 2007 net income of $45.8 million, or $1.08 per basic and diluted share, on total revenues of $232.4 million. This compares to fourth quarter 2006 net income of $28.0 million, or $0.76 per basic and diluted share, on total revenues of $186.6 million. Discretionary cash flow in the fourth quarter of 2007 totaled $139.9 million, compared to the $83.8 million reported for the same period in 2006. The 64% increase in net income and the 67% increase in discretionary cash flow in the fourth quarter of 2007 versus the comparable 2006 period was primarily the result of a 48% increase in the Company's net realized oil price.
Production in the fourth quarter of 2007 totaled 3.71 million barrels of oil equivalent (MMBOE), of which 2.47 million barrels were crude oil (67%) and 1.24 MMBOE was natural gas (33%). This fourth quarter 2007 production total equates to a daily average production rate of 40,340 barrels of oil equivalent (BOE), which compares to the 41,300 BOE per day average rate in 2006's fourth quarter. The moderate decline in volumes was primarily the result of property sales in 2007, which represented approximately 1,130 BOE per day as of the dates of disposition.
Full-year 2007 Results
For the full-year 2007, Whiting reported net income of $130.6 million, or $3.31 per basic share and $3.29 per diluted share, on total revenues of $818.7 million. This compared to 2006 net income of $156.4 million, or $4.26 per basic share and $4.25 per diluted share, on total revenues of $778.8 million. Discretionary cash flow in 2007 totaled $422.2 million compared to $426.2 million in 2006.
Oil and gas production in 2007 totaled 14.71 MMBOE, or an average of 40,290 BOE per day. This rate compared to the 41,530 BOE per day average, or 15.16 MMBOE total, produced in 2006. Again, the moderate decline in volumes was primarily the result of property sales in 2007, which represented approximately 1,130 BOE per day as of the dates of disposition.
Proved Reserves
Whiting's total proved reserves at December 31, 2007 were 250.8 MMBOE, of which 78% was oil. We invested 73% of our $556.6 million exploration and development expenditures in 2007 in the conversion of proved undeveloped (PUD) reserves to proved developed reserves through the development of conventional PUD reserves and the expansion and implementation of our two CO2 projects. This helped bring our proved developed reserves as a percentage of our total reserves to 67%, compared to 65% at year-end 2006 and 59% at year-end 2005. The continuing development or de-risking of our proved reserve base is further reflected in the increase of our proved developed producing reserves. Despite the 14.7 MMBOE of production during 2007, Whiting's proved developed producing reserves increased 10 MMBOE from year-end 2006. With only 27% of our 2007 capital budget directed toward adding reserves, we managed to increase our total proved reserves to 250.8 MMBOE from 248.2 MMBOE at year-end 2006. During 2007, Whiting had 14.7 MMBOE of production and 2.9 MMBOE of divestitures. Offsetting this 17.6 MMBOE of production and property sales, 20.2 MMBOE of proved reserves were added during 2007. Of this 20.2 MMBOE, 17.8 MMBOE was generated through extensions and discoveries and 2.4 MMBOE came from acquisitions and revisions to previous estimates. Whiting's December 31, 2007 reserve estimates were prepared by the independent petroleum engineering consulting firm of Cawley Gillespie & Associates, Inc.
James J. Volker, Whiting's Chairman, President and CEO, commented, "This is an exciting time for Whiting and our shareholders as we plan to build our 2008 production with additional drilling on our 2007 discoveries and the response from our CO2 injection. This year, we expect to show organic growth in both production and reserves through our drilling programs in the Bakken and in the Piceance Basin and from the implementation of our two CO2 projects. To this end, we have set a 2008 capital budget of $640 million, of which we plan to invest approximately 54% in exploration and development of currently non-proved reserves. This represents a change from 2007 when approximately 27% of our $556.6 million in exploration and development expenditures was directed toward non-proved reserves. In 2007, $284.9 million was directed to our CO2 projects, including CO2 purchases."
"In 2008, we expect to invest approximately $154 million, including CO2 purchases, in Postle and North Ward Estes. The $154 million is composed of $80 million at Postle and $74 million at North Ward Estes. Therefore, investment in these properties will decline approximately $130.9 million on a year-over-year basis."
Mr. Volker continued, "In addition to the reserves we are finding in the Bakken oil play and our Piceance Basin gas play, over time we believe significant upside potential exists from 94.4 MMBOE of probable and possible reserves in the Postle, North Ward Estes and ancillary fields. Our current mix of oil and natural gas reserves is 78% oil and 22% natural gas, and our production volumes are currently 67% oil, including natural gas liquids (NGLs), and 33% natural gas. Crude continues to sell at a premium to natural gas based on their approximate 6-to-1 Btu equivalency. We expect that relationship to continue."
During 2007, Whiting received proceeds of $52.6 million from the sale of properties located primarily in South Texas. The divested properties had proved reserves of 2.9 MMBOE and average net daily production of 1,130 BOE as of their dates of disposition.