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Document and Entity Information - shares	6 Months Ended
Document and Entity Information - shares	Jun. 30, 2020	Jul. 31, 2020
Document and Entity Information
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Jun. 30, 2020
Document Transition Report	false
Entity File Number	001-31899
Entity Registrant Name	WHITING PETROLEUM CORP
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	20-0098515
Entity Address, Address Line One	1700 Lincoln Street, Suite 4700
Entity Address, City or Town	Denver
Entity Address, State or Province	CO
Entity Address, Postal Zip Code	80203-4547
City Area Code	303
Local Phone Number	837-1661
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Large Accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		91,461,283
Entity Central Index Key	0001255474
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2020
Document Fiscal Period Focus	Q2
Amendment Flag	false
Common Stock [Member]
Document and Entity Information
Title of 12(b) Security	Common Stock
Trading Symbol	WLL
Security Exchange Name	NYSE
Preferred Stock Purchase Rights [Member]
Document and Entity Information
Title of 12(b) Security	Preferred Stock Purchase Rights
No Trading Symbol Flag	true
Security Exchange Name	NYSE

CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Jun. 30, 2020	Dec. 31, 2019
Current assets:
Cash and cash equivalents	$ 492,088	$ 8,652
Restricted cash	26,787
Accounts receivable trade, net	165,492	308,249
Prepaid expenses and other	28,692	14,082
Total current assets	713,059	330,983
Property and equipment:
Oil and gas properties, successful efforts method	4,820,221	12,812,007
Other property and equipment	173,877	178,689
Total property and equipment	4,994,098	12,990,696
Less accumulated depreciation, depletion and amortization	(2,016,619)	(5,735,239)
Total property and equipment, net	2,977,479	7,255,457
Other long-term assets	41,665	50,281
TOTAL ASSETS	3,732,203	7,636,721
Current liabilities:
Current portion of long-term debt	912,259
Accounts payable trade	31,485	80,100
Revenues and royalties payable	136,401	202,010
Accrued capital expenditures	18,533	64,263
Accrued liabilities and other	48,830	85,007
Accrued lease operating expenses	28,446	38,262
Accrued interest	3,590	53,928
Taxes payable	12,265	26,844
Total current liabilities	1,191,809	550,414
Long-term debt		2,799,885
Asset retirement obligations	91,543	131,208
Operating lease obligations		31,722
Deferred income taxes	69,847	73,593
Other long-term liabilities	7,745	24,928
Total debt not subject to compromise	1,360,944	3,611,750
Liabilities subject to compromise	2,549,538
Total liabilities	3,910,482	3,611,750
Commitments and contingencies
Equity (Deficit):
Common stock, $0.001 par value, 225,000,000 shares authorized; 91,636,883 issued and 91,461,283 outstanding as of June 30, 2020 and 91,743,571 issued and 91,326,469 outstanding as of December 31, 2019	92	92
Additional paid-in capital	6,409,627	6,409,991
Accumulated deficit	(6,587,998)	(2,385,112)
Total equity (deficit)	(178,279)	4,024,971
TOTAL LIABILITIES AND EQUITY (DEFICIT)	$ 3,732,203	$ 7,636,721

CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares	Jun. 30, 2020	Dec. 31, 2019
CONSOLIDATED BALANCE SHEETS [Abstract]
Common stock, par value (in dollars per share)	$ 0.001	$ 0.001
Common stock, shares authorized	225,000,000	225,000,000
Common stock, shares issued	91,636,883	91,743,571
Common stock, shares outstanding	91,461,283	91,326,469

CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
OPERATING REVENUES
Oil, NGL and natural gas sales	$ 91,600	$ 426,264	$ 336,446	$ 815,753
Revenue from Contract with Customer, Product and Service [Extensible List]	us-gaap:OilAndGasMember	us-gaap:OilAndGasMember	us-gaap:OilAndGasMember	us-gaap:OilAndGasMember
OPERATING EXPENSES
Lease operating expenses	$ 53,242	$ 86,987	$ 125,582	$ 171,064
Transportation, gathering, compression and other	9,044	11,128	18,007	20,969
Production and ad valorem taxes	8,419	39,420	30,842	67,576
Depreciation, depletion and amortization	83,549	203,009	267,517	401,141
Exploration and impairment	421,156	13,406	4,174,613	33,155
General and administrative	28,136	32,573	75,303	67,547
Derivative (gain) loss, net	6,632	(24,877)	(224,739)	38,028
(Gain) loss on sale of properties	511	1,063	(353)	1,086
Amortization of deferred gain on sale	(1,908)	(2,326)	(3,945)	(4,697)
Total operating expenses	608,781	360,383	4,462,827	795,869
INCOME (LOSS) FROM OPERATIONS	(517,181)	65,881	(4,126,381)	19,884
OTHER INCOME (EXPENSE)
Interest expense	(16,425)	(48,728)	(61,675)	(96,827)
Gain on extinguishment of debt			25,883
Interest income and other	76	642	72	958
Reorganization items, net	(41,813)		(41,813)
Total other expense	(58,162)	(48,086)	(77,533)	(95,869)
INCOME (LOSS) BEFORE INCOME TAXES	(575,343)	17,795	(4,203,914)	(75,985)
INCOME TAX EXPENSE (BENEFIT)
Current	(1,028)		2,718
Deferred		23,482	(3,746)	(1,373)
Total income tax expense (benefit)	(1,028)	23,482	(1,028)	(1,373)
NET LOSS	$ (574,315)	$ (5,687)	$ (4,202,886)	$ (74,612)
INCOME (LOSS) PER COMMON SHARE
Basic (in dollars per share)	$ (6.28)	$ (0.06)	$ (45.98)	$ (0.82)
Diluted (in dollars per share)	$ (6.28)	$ (0.06)	$ (45.98)	$ (0.82)
WEIGHTED AVERAGE SHARES OUTSTANDING
Basic (in shares)	91,429	91,286	91,409	91,261
Diluted (in shares)	91,429	91,286	91,409	91,261

CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$ (4,202,886)	$ (74,612)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation, depletion and amortization	267,517	401,141
Deferred income tax benefit	(3,746)	(1,373)
Amortization of debt issuance costs, debt discount and debt premium	9,786	15,734
Stock-based compensation	3,401	8,617
Amortization of deferred gain on sale	(3,945)	(4,697)
(Gain) loss on sale of properties	(353)	1,086
Oil and gas property impairments	4,154,369	13,179
Gain on extinguishment of debt	(25,883)
Non-cash derivative (gain) loss	(178,525)	42,371
Non-cash reorganization items, net	38,145
Other, net	829	3,492
Changes in current assets and liabilities:
Accounts receivable trade, net	152,560	(1,813)
Prepaid expenses and other	(12,036)	3,453
Accounts payable trade and accrued liabilities	(51,783)	20,261
Revenues and royalties payable	(65,609)	(41,637)
Taxes payable	(14,579)	(3,269)
Net cash provided by operating activities	67,262	381,933
CASH FLOWS FROM INVESTING ACTIVITIES
Drilling and development capital expenditures	(223,905)	(425,349)
Acquisition of oil and gas properties	(351)	(4,507)
Other property and equipment	(423)	(8,233)
Proceeds from sale of properties	28,243	15,444
Net cash used in investing activities	(196,436)	(422,645)
CASH FLOWS FROM FINANCING ACTIVITIES
Borrowings under credit agreement	1,185,000	1,160,000
Repayments of borrowings under credit agreement	(490,000)	(1,120,000)
Repurchase of 1.25% Convertible Senior Notes due 2020	(52,890)
Restricted stock used for tax withholdings	(304)	(3,693)
Principal payments on finance lease obligations	(2,409)	(2,522)
Net cash provided by financing activities	639,397	33,785
NET CHANGE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH	510,223	(6,927)
CASH, CASH EQUIVALENTS AND RESTRICTED CASH
Beginning of period	8,652	13,607
End of period	518,875	6,680
SUPPLEMENTAL CASH FLOW DISCLOSURES
Interest paid, net of amounts capitalized	72,199	79,341
Cash paid for reorganization items	3,668
NONCASH INVESTING AND FINANCING ACTIVITIES
Accrued capital expenditures and accounts payable related to property additions	38,504	$ 122,098
Derivative termination settlement payments used to repay borrowings under credit agreement	$ 157,741

CONSOLIDATED STATEMENTS OF CASH FLOWS (Parenthetical)	Jun. 30, 2020
1.25% Convertible Senior Notes due 2020 [Member]
Interest Rate (as a percent)	1.25%

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY (DEFICIT) - USD ($) shares in Thousands, $ in Thousands	Common Stock [Member]	Additional Paid-in Capital [Member]	Accumulated Deficit [Member]	Total
BALANCES at Dec. 31, 2018	$ 92	$ 6,414,170	$ (2,143,946)	$ 4,270,316
BALANCES (in shares) at Dec. 31, 2018	92,067
Increase (Decrease) in Shareholders' Equity
Net income (loss)			(68,925)	(68,925)
Restricted stock forfeited (in shares)	(106)
Restricted stock used for tax withholdings		(3,693)		(3,693)
Restricted stock used for tax withholdings (in shares)	(130)
Stock-based compensation		4,651		4,651
BALANCES at Mar. 31, 2019	$ 92	6,415,128	(2,212,871)	4,202,349
BALANCES (in shares) at Mar. 31, 2019	91,831
BALANCES at Dec. 31, 2018	$ 92	6,414,170	(2,143,946)	4,270,316
BALANCES (in shares) at Dec. 31, 2018	92,067
Increase (Decrease) in Shareholders' Equity
Net income (loss)				(74,612)
BALANCES at Jun. 30, 2019	$ 92	6,419,093	(2,218,558)	4,200,627
BALANCES (in shares) at Jun. 30, 2019	91,891
BALANCES at Mar. 31, 2019	$ 92	6,415,128	(2,212,871)	4,202,349
BALANCES (in shares) at Mar. 31, 2019	91,831
Increase (Decrease) in Shareholders' Equity
Net income (loss)			(5,687)	(5,687)
Restricted stock issued (in shares)	63
Restricted stock forfeited (in shares)	(3)
Stock-based compensation		3,965		3,965
BALANCES at Jun. 30, 2019	$ 92	6,419,093	(2,218,558)	4,200,627
BALANCES (in shares) at Jun. 30, 2019	91,891
BALANCES at Dec. 31, 2019	$ 92	6,409,991	(2,385,112)	4,024,971
BALANCES (in shares) at Dec. 31, 2019	91,744
Increase (Decrease) in Shareholders' Equity
Net income (loss)			(3,628,571)	(3,628,571)
Restricted stock issued (in shares)	185
Restricted stock forfeited (in shares)	(238)
Restricted stock used for tax withholdings		(304)		(304)
Restricted stock used for tax withholdings (in shares)	(54)
Stock-based compensation		2,068		2,068
Adjustment to equity component of 2020 Convertible Senior Notes upon extinguishment		(3,461)		(3,461)
BALANCES at Mar. 31, 2020	$ 92	6,408,294	(6,013,683)	394,703
BALANCES (in shares) at Mar. 31, 2020	91,637
BALANCES at Dec. 31, 2019	$ 92	6,409,991	(2,385,112)	4,024,971
BALANCES (in shares) at Dec. 31, 2019	91,744
Increase (Decrease) in Shareholders' Equity
Net income (loss)				(4,202,886)
BALANCES at Jun. 30, 2020	$ 92	6,409,627	(6,587,998)	(178,279)
BALANCES (in shares) at Jun. 30, 2020	91,637
BALANCES at Mar. 31, 2020	$ 92	6,408,294	(6,013,683)	394,703
BALANCES (in shares) at Mar. 31, 2020	91,637
Increase (Decrease) in Shareholders' Equity
Net income (loss)			(574,315)	(574,315)
Stock-based compensation		1,333		1,333
BALANCES at Jun. 30, 2020	$ 92	$ 6,409,627	$ (6,587,998)	$ (178,279)
BALANCES (in shares) at Jun. 30, 2020	91,637

BASIS OF PRESENTATION

6 Months Ended

Jun. 30, 2020

BASIS OF PRESENTATION [Abstract]

BASIS OF PRESENTATION

1. BASIS OF PRESENTATION

Description of Operations—Whiting Petroleum Corporation, a Delaware corporation, is an independent oil and gas company engaged in the development, production, acquisition and exploration of crude oil, NGLs and natural gas primarily in the Rocky Mountains region of the United States. Unless otherwise specified or the context otherwise requires, all references in these notes to “Whiting” or the “Company” are to Whiting Petroleum Corporation and its consolidated subsidiaries, Whiting Oil and Gas Corporation (“Whiting Oil and Gas”), Whiting US Holding Company, Whiting Canadian Holding Company ULC, Whiting Resources Corporation, Whiting Programs, Inc, Whiting Raven Colorado Corp. and Whiting ND Sakakawea LLC.

Voluntary Reorganization under Chapter 11 of the Bankruptcy Code—On April 1, 2020 (the “Petition Date”), Whiting Petroleum Corporation, Whiting Oil and Gas, Whiting US Holding Company, Whiting Canadian Holding Company ULC and Whiting Resources Corporation (collectively, the “Debtors”) commenced voluntary cases (the “Chapter 11 Cases”) under chapter 11 of the Bankruptcy Code. The Chapter 11 Cases are being administered jointly under the caption In re Whiting Petroleum Corporation, et al. Case No. 20-32021. The Debtors continue to operate their businesses as “debtors-in-possession” under the jurisdiction of the Bankruptcy Court, in accordance with the applicable provisions of the Bankruptcy Code and the orders of the Bankruptcy Court.

On July 1, 2020, the Bankruptcy Court entered an order approving the Debtors’ disclosure statement, allowing for solicitation of the Debtors’ chapter 11 plan of reorganization (the “Plan”) to commence. A Bankruptcy Court hearing to consider confirmation of the Plan is scheduled to be held on August 10, 2020.

The commencement of a voluntary proceeding in bankruptcy constituted an immediate event of default under Whiting Oil and Gas’ credit agreement (the “Credit Agreement”) and the indentures governing the Company’s senior notes, resulting in the automatic and immediate acceleration of all of the Company’s debt outstanding.

The Company has applied FASB ASC Topic 852 – Reorganizations (“ASC 852”) in preparing the condensed consolidated financial statements, which specifies the accounting and financial reporting requirements for entities reorganizing through chapter 11 bankruptcy proceedings. These requirements include distinguishing transactions associated with the reorganization separate from activities related to the ongoing operations of the business. Accordingly, pre-petition liabilities that may be impacted by the chapter 11 proceedings have been classified as liabilities subject to compromise on the condensed consolidated balance sheet as of June 30, 2020. Additionally, certain expenses, realized gains and losses and provisions for losses that are realized or incurred during the Chapter 11 Cases, including adjustments to the carrying value of certain indebtedness are recorded as reorganization items, net in the condensed consolidated statements of operations for the three and six months ended June 30, 2020. Refer to the “Chapter 11 Cases” footnote for more information on the events of the bankruptcy proceedings as well as the accounting and reporting impacts of the reorganization.

Ability to Continue as a Going Concern—The accompanying condensed consolidated financial statements are prepared in accordance with generally accepted accounting principles applicable to a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business.

As discussed above, the filing of the Chapter 11 Cases constituted an event of default under the Company’s outstanding debt agreements, resulting in the automatic and immediate acceleration of all of the Company’s debt outstanding. The Company projects that it will not have sufficient cash on hand or available liquidity to repay such debt. These conditions and events raise substantial doubt about the Company’s ability to continue as a going concern.

As part of the Chapter 11 Cases, the Company submitted the Plan to the Bankruptcy Court. The Company’s operations and its ability to develop and execute its business plan are subject to a high degree of risk and uncertainty associated with the Chapter 11 Cases. The outcome of the Chapter 11 Cases is subject to a high degree of uncertainty and is dependent upon factors that are outside of the Company’s control, including actions of the Bankruptcy Court and the Company’s creditors. There can be no assurance that the Company will confirm and consummate the plan of reorganization as contemplated by the restructuring support agreement (“RSA”) with certain holders of the Company’s senior notes or complete another plan of reorganization with respect to the Chapter 11 Cases. As

a result, the Company has concluded that management’s plans do not alleviate substantial doubt about the Company’s ability to continue as a going concern.

While operating as a debtor-in-possession, the Company may sell or otherwise dispose of or liquidate assets or settle liabilities, subject to the approval of the Bankruptcy Court or as otherwise permitted in the ordinary course of business, for amounts other than those reflected in the accompanying condensed consolidated financial statements. Further, the Plan or other bankruptcy proceedings could materially change the amounts and classifications of assets and liabilities reported in the condensed consolidated financial statements, including liabilities subject to compromise which will be resolved in connection with the Chapter 11 Cases. The accompanying condensed consolidated financial statements do not include any adjustments related to the recoverability and classification of assets or the amounts and classification of liabilities or any other adjustments that might be necessary should the Company be unable to continue as a going concern or as a consequence of the Chapter 11 Cases.

Condensed Consolidated Financial Statements—The unaudited condensed consolidated financial statements include the accounts of Whiting Petroleum Corporation and its consolidated subsidiaries. Investments in entities which give Whiting significant influence, but not control, over the investee are accounted for using the equity method. Under the equity method, investments are stated at cost plus the Company’s equity in undistributed earnings and losses. All intercompany balances and transactions have been eliminated upon consolidation. These financial statements have been prepared in accordance with GAAP and the SEC rules and regulations for interim financial reporting. In the opinion of management, the accompanying financial statements include all adjustments (consisting of normal recurring accruals and adjustments) necessary to present fairly, in all material respects, the Company’s interim results. However, operating results for the periods presented are not necessarily indicative of the results that may be expected for the full year. The condensed consolidated financial statements and related notes included in this Quarterly Report on Form 10-Q should be read in conjunction with Whiting’s consolidated financial statements and related notes included in the Company’s Annual Report on Form 10-K for the period ended December 31, 2019. Except as disclosed herein, there have been no material changes to the information disclosed in the notes to consolidated financial statements included in the Company’s 2019 Annual Report on Form 10-K.

Reclassifications—Certain prior period balances in the condensed consolidated balance sheets have been combined pursuant to Rule 10-01(a)(2) of Regulation S-X of the SEC. Such reclassifications had no impact on net loss, cash flows or shareholders’ equity previously reported.

Cash, Cash Equivalents and Restricted Cash—Cash equivalents consist of demand deposits and highly liquid investments which have an original maturity of three months or less. Cash and cash equivalents potentially subject the Company to a concentration of credit risk as substantially all of its deposits held in financial institutions were in excess of the Federal Deposit Insurance Corporation (“FDIC”) insurance limits as of June 30, 2020 and December 31, 2019. The Company maintains its cash and cash equivalents in the form of money market and checking accounts with financial institutions that are also lenders under the Credit Agreement. The Company has not experienced any losses on its deposits of cash and cash equivalents.

Restricted cash as of June 30, 2020 includes $23 million of funds related to derivative termination settlements that were directed by the counterparty to be held in a segregated account until the Company emerges from chapter 11 bankruptcy, at which point the Company intends to apply the funds toward its outstanding borrowings under the Credit Agreement. Refer to the “Derivative Financial Instruments” footnote for additional information on terminated derivative settlements. Additionally, $4 million of the restricted cash balance as of June 30, 2020 consists of amounts set aside as adequate assurance for certain utility and credit card providers, which funds will also be restricted until the Company emerges from chapter 11 bankruptcy.

The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the condensed consolidated balance sheets and statements of cash flows (in thousands):


	June 30,		December 31,
	2020		2019
Cash and cash equivalents	$	492,088	$	8,652
Restricted cash		26,787		-
Total cash, cash equivalents and restricted cash	$	518,875	$	8,652

Accounts Receivable Trade—Whiting’s accounts receivable trade consist mainly of receivables from oil and gas purchasers and joint interest owners on properties the Company operates. The Company’s collection risk is inherently low based on the viability of its oil and gas purchasers as well as its general ability to withhold future revenue disbursements to recover any non-payment of joint interest billings. The Company’s oil and gas receivables are generally collected within two months, and to date, the Company has not experienced material credit losses.

The Company routinely evaluates expected credit losses for all material trade and other receivables to determine if an allowance for credit losses is warranted. Expected credit losses are estimated based on (i) historic loss experience for pools of receivable balances with similar characteristics, (ii) the length of time balances have been outstanding and (iii) the economic status of each counterparty. These loss estimates are then adjusted for current and expected future economic conditions, which may include an assessment of the probability of non-payment, financial distress or expected future commodity prices and the impact that any current or future conditions could have on a counterparty’s credit quality and liquidity. As of June 30, 2020 and December 31, 2019, the Company had an allowance for credit losses of $11 million and $9 million, respectively.

CHAPTER 11 CASES

6 Months Ended

Jun. 30, 2020

CHAPTER 11 CASE [Abstract]

CHAPTER 11 CASES

2. CHAPTER 11 CASES

Plan of Reorganization under Chapter 11 of the Bankruptcy Code—On April 1, 2020, the Debtors commenced the Chapter 11 Cases as described in the “Basis of Presentation” footnote above. To ensure ordinary course operations, the Debtors have obtained approval from the Bankruptcy Court for certain “first day” motions, including motions to obtain customary relief intended to continue ordinary course operations after the Petition Date. In addition, the Debtors have received authority to use cash collateral of the lenders under the Credit Agreement on an interim basis.

On April 23, 2020, the Debtors entered into the RSA with certain holders of the Company’s senior notes to support a restructuring in accordance with the terms set forth in the Plan. The Plan and the related disclosure statement were each filed with the Bankruptcy Court on April 23, 2020. Below is a summary of the treatment that the stakeholders of the Company would receive under the Plan:

●	Holders of Credit Agreement Claims. The holders of obligations under the Credit Agreement would have such obligations refinanced or repaid in full in cash upon the Debtors’ emergence from chapter 11.

●	Holders of Senior Notes, Rejection Damages Claims and Litigation Claims. The holders of Whiting’s senior notes and other general unsecured claims (including rejection damages claims and litigation claims) would receive 97% of the reorganized company’s equity interests.

●	Trade and Other Claims. The holders of the Debtors’ other secured, priority and trade vendor claims would receive payment in full in cash following emergence.

●	Existing Equity Holders. The holders of the Company’s existing stock would receive (a) 3% of the reorganized company’s equity interests and (b) warrants on the terms set forth in the Plan.

Unsecured Creditors’ Committee—On April 10, 2020, the United States Trustee appointed the official committee for unsecured creditors (the “Creditors’ Committee”). The Creditors’ Committee and its legal representatives have a right to be heard on all matters affecting unsecured creditors that come before the Bankruptcy Court with respect to the Debtors.

Solicitation of the Plan—On July 1, 2020, the Bankruptcy Court entered into an order approving the Debtors’ disclosure statement, allowing for solicitation of the Plan to commence. A Bankruptcy Court hearing to consider confirmation of the Plan is scheduled to be held on August 10, 2020.

Executory Contracts—Subject to certain exceptions, under the Bankruptcy Code the Debtors may assume, assign or reject certain executory contracts and unexpired leases subject to the approval of the Bankruptcy Court and fulfillment of certain other conditions. Generally, the rejection of an executory contract or unexpired lease is treated as a pre-petition breach of such contract and, subject to certain exceptions, relieves the Debtors from performing future obligations under such contract but entitles the counterparty or lessor to a pre-petition general unsecured claim for damages caused by such deemed breach. Alternatively, the assumption of an executory contract or unexpired lease requires the Debtors to cure existing monetary defaults under such executory contract or unexpired lease, if any, and provide adequate assurance of future performance. Accordingly, any description of an executory contract or unexpired lease with the Debtors in this document, including where applicable quantification of the Company’s obligations under such executory or unexpired lease of the Debtors, is qualified by any overriding rejection rights the Company has under the Bankruptcy Code. On July 18, 2020, the Debtors filed their preliminary schedules of assumed and rejected executory contracts and unexpired leases with the Bankruptcy Court. The Debtors reserve all rights to further modify such schedules at any time prior to the effective date of the Plan.

Liabilities Subject to Compromise—The accompanying condensed consolidated balance sheets include amounts classified as “liabilities subject to compromise,” which represent pre-petition liabilities that have been allowed, or that the Company anticipates will be allowed, as claims in the Chapter 11 Cases, although they may be settled for less. The Company will continue to evaluate these liabilities throughout the Chapter 11 Cases and adjust amounts as necessary. Such adjustments may be material.

The following table summarizes the components of liabilities subject to compromise included in the condensed consolidated balance sheets (in thousands):


	June 30, 2020
Debt subject to compromise	$	2,368,497
Accounts payable trade		48,434
Accrued liabilities and other		63,557
Accrued interest on debt subject to compromise		30,028
Asset retirement obligations ⁽¹⁾		39,022
Total liabilities subject to compromise	$	2,549,538

(1)	Amount relates to an executory contract for certain offshore facilities in California.

Magnitude of Potential Claims—The Debtors have filed with the Bankruptcy Court schedules and statements setting forth, among other things, the assets and liabilities of each of the Debtors. These schedules and statements may be subject to further amendment or modification after filing. Certain holders of pre-petition claims that are not governmental units were required to file proofs of claim by the deadline for general claims, which was June 15, 2020.

The Debtors have received approximately 1,600 proofs of claim from third parties as of July 31, 2020 for an amount totaling approximately $2.8 billion. Such amount includes duplicate claims across multiple debtor legal entities. These claims will be reconciled to amounts recorded in the Company’s accounting records. Differences in amounts recorded and claims filed by creditors will be investigated and resolved, including through the filing of objections with the Bankruptcy Court, where appropriate. The Bankruptcy Court does not allow for claims that have been acknowledged as duplicates. In addition, the Company may ask the Bankruptcy Court to disallow claims that the Company believes have been later amended or superseded, are without merit, are overstated or should be disallowed for other reasons. As a result of this process, the Company may identify additional liabilities that will need to be recorded or reclassified to liabilities subject to compromise. In light of the substantial number of claims filed, and expected to be filed, the claims resolution process may take considerable time to complete and likely will continue after the Debtors emerge from bankruptcy.

Interest Expense—The Company has discontinued recording interest on debt instruments classified as liabilities subject to compromise as of the Petition Date. The contractual interest expense on liabilities subject to compromise not accrued in the condensed consolidated statements of operations was approximately $34 million for the three months from the Petition Date through June 30, 2020.

Reorganization Items, Net—The Company has incurred and will continue to incur significant costs as a direct result of the Chapter 11 Cases subsequent to the Petition Date. These costs, which are expensed as incurred, are recorded in reorganization items, net in the Company’s condensed consolidated statements of operations. The following table summarizes the components of reorganization items, net for the three and six months ended June 30, 2020 (in thousands):


	Three and Six Months Ended
	June 30, 2020
Legal and professional advisory fees ⁽¹⁾	$	26,668
Write-off of unamortized debt issuance costs and premium⁽²⁾		15,145
Total reorganization items, net	$	41,813

(1)	As of June 30, 2020, $23 million of these fees are accrued and unpaid and are presented in accrued liabilities and other in the condensed consolidated balance sheet. The remaining $4 million represents cash charges for the three and six months ended June 30, 2020.

(2)	Non-cash reorganization item. Refer to the “Long-Term Debt” footnote for further information.

OIL AND GAS PROPERTIES

6 Months Ended

Jun. 30, 2020

OIL AND GAS PROPERTIES [Abstract]

OIL AND GAS PROPERTIES

3. OIL AND GAS PROPERTIES

Net capitalized costs related to the Company’s oil and gas producing activities at June 30, 2020 and December 31, 2019 are as follows (in thousands):



	June 30,		December 31,
	2020		2019
Costs of completed wells and facilities	$	4,267,233	$	9,847,159
Proved leasehold costs		376,329		2,702,236
Unproved leasehold costs		90,561		103,278
Wells and facilities in progress		86,098		159,334
Total oil and gas properties, successful efforts method		4,820,221		12,812,007
Accumulated depletion		(1,936,121)		(5,656,929)
Oil and gas properties, net	$	2,884,100	$	7,155,078

The following table presents impairment expense for unproved properties for the three and six months ended June 30, 2020 and 2019, which is reported in exploration and impairment expense in the condensed consolidated statements of operations (in thousands):


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2020		2019		2020		2019
Impairment expense for unproved properties	$	132	$	2,308	$	12,483	$	5,830

Refer to the “Fair Value Measurements” footnote for more information on proved property measurements recorded during the three and six months ended June 30, 2020 and 2019.

ACQUISITIONS AND DIVESTITURES

6 Months Ended

Jun. 30, 2020

ACQUISITIONS AND DIVESTITURES [Abstract]

ACQUISITIONS AND DIVESTITURES

4. ACQUISITIONS AND DIVESTITURES

2020 Acquisitions and Divestitures

On January 9, 2020, the Company completed the divestiture of its interests in 30 non-operated, producing oil and gas wells and related undeveloped acreage located in McKenzie County, North Dakota for aggregate sales proceeds of $25 million (before closing adjustments).

There were no significant acquisitions during the six months ended June 30, 2020.

2019 Acquisitions and Divestitures

On July 29, 2019, the Company completed the divestiture of its interests in 137 non-operated, producing oil and gas wells located in the McKenzie, Mountrail and Williams counties of North Dakota for aggregate sales proceeds of $27 million (before closing adjustments).

On August 15, 2019, the Company completed the divestiture of its interests in 58 non-operated, producing oil and gas wells located in Richland County, Montana and Mountrail and Williams counties of North Dakota for aggregate sales proceeds of $26 million (before closing adjustments).

There were no significant acquisitions during the six months ended June 30, 2019.

LONG-TERM DEBT

6 Months Ended

Jun. 30, 2020

LONG-TERM DEBT [Abstract]

LONG-TERM DEBT

5. LONG-TERM DEBT

Long-term debt, including the current portion, consisted of the following at June 30, 2020 and December 31, 2019 (in thousands):


	June 30,		December 31,
	2020		2019
Credit Agreement	$	912,259	$	375,000
1.25% Convertible Senior Notes due 2020		186,592		262,075
5.75% Senior Notes due 2021		773,609		773,609
6.25% Senior Notes due 2023		408,296		408,296
6.625% Senior Notes due 2026		1,000,000		1,000,000
Total principal		3,280,756		2,818,980
Unamortized debt discounts and premiums ⁽¹⁾		-		(2,575)
Unamortized debt issuance costs on notes ⁽¹⁾		-		(16,520)
Total debt, prior to reclassification to liabilities subject to compromise		3,280,756		2,799,885
Less amounts reclassified to liabilities subject to compromise ⁽²⁾		(2,368,497)		-
Total debt not subject to compromise ⁽³⁾		912,259		2,799,885
Less current portion of long-term debt ⁽⁴⁾		(912,259)		-
Total long-term debt	$	-	$	2,799,885

(1)

As a result of the Chapter 11 Cases and the adoption of ASC 852, the Company wrote off all unamortized premium and issuance cost balances to reorganization items, net in the condensed consolidated statements of operations for the three and six months ended June 30, 2020. Refer to the “Chapter 11 Cases” footnote for more information.

(2)	Debt subject to compromise includes the principal balances of all of the Company’s senior notes, which are unsecured claims in the Chapter 11 Cases. Refer to the “Basis of Presentation” and “Chapter 11 Cases” footnotes for more information.

(3)	Debt not subject to compromise includes all borrowings outstanding under the Credit Agreement, which are secured claims in the Chapter 11 Cases. Refer to the “Basis of Presentation” and “Chapter 11 Cases” footnotes for more information.

(4)	Due to uncertainties regarding the outcome of the Chapter 11 Cases, the Company has classified the borrowings outstanding under the Credit Agreement as current as of June 30, 2020. Refer to the “Basis of Presentation” and “Chapter 11 Cases” footnotes for more information.

Chapter 11 Cases and Effect of Automatic Stay

On April 1, 2020, the Debtors filed for relief under chapter 11 of the Bankruptcy Code. The commencement of a voluntary proceeding in bankruptcy constituted an immediate event of default under the Credit Agreement and the indentures governing the Company’s senior notes, resulting in the automatic and immediate acceleration of all of the Company’s outstanding debt. In conjunction with the filing of the Chapter 11 Cases, the Company did not make the $187 million principal payment due on its 1.25% 2020 Convertible Senior Notes due April 1, 2020 (the “2020 Convertible Senior Notes”). Any efforts to enforce payment obligations related to the acceleration of the Company’s debt have been automatically stayed as a result of the filing of the Chapter 11 Cases, and the creditors’ rights of enforcement

are subject to the applicable provisions of the Bankruptcy Code. Refer to the “Basis of Presentation” and “Chapter 11 Cases” footnotes for more information on the Chapter 11 Cases.

Credit Agreement

Whiting Oil and Gas, the Company’s wholly owned subsidiary, has a credit agreement with a syndicate of banks that had a borrowing base of $2.05 billion and aggregate commitments of $1.75 billion prior to default. As of June 30, 2020, the Company had $912 million of borrowings outstanding under the Credit Agreement. As a result of the commencement of the Chapter 11 Cases, the Company is no longer in compliance with the covenants under the Credit Agreement and the lenders’ commitments under the Credit Agreement have been terminated. The Company is therefore unable to make additional borrowings or issue additional letters of credit under the Credit Agreement.

Prior to default, a portion of the Credit Agreement in an aggregate amount not to exceed $50 million was available to issue letters of credit for the account of Whiting Oil and Gas or other designated subsidiaries of the Company. As of June 30, 2020, $2 million in letters of credit were outstanding under the agreement.

Prior to default, the borrowing base under the Credit Agreement was determined at the discretion of the lenders, based on the collateral value of the Company’s proved reserves that have been mortgaged to such lenders, and is subject to regular redeterminations on May 1 and November 1 of each year, as well as special redeterminations described in the Credit Agreement. Such redeterminations have not occurred and are not expected to occur for the duration of the Chapter 11 Cases.

The Credit Agreement provides for interest only payments until maturity, when the Credit Agreement expires and all outstanding borrowings are due. Interest under the Credit Agreement accrues at the Company’s option at either (i) a base rate for a base rate loan plus a margin between 0.50% and 1.50% based on the ratio of outstanding borrowings to the borrowing base, where the base rate is defined as the greatest of the prime rate, the federal funds rate plus 0.5% per annum, or an adjusted LIBOR rate plus 1.0% per annum, or (ii) an adjusted LIBOR rate for a Eurodollar loan plus a margin between 1.50% and 2.50% based on the ratio of outstanding borrowings to the borrowing base. Prior to the chapter 11 proceedings, the Company incurred commitment fees of 0.375% or 0.50% based on the ratio of outstanding borrowings to the borrowing base on the unused portion of the aggregate commitments of the lenders under the Credit Agreement, which were included as a component of interest expense. During the chapter 11 proceedings, the commitment fee has been terminated and instead all amounts outstanding under the Credit Agreement will bear interest per annum at the applicable rate stated in the agreement plus a 2.0% default rate. At June 30, 2020, the weighted average interest rate on the outstanding principal balance under the Credit Agreement was 4.7%.

Prior to default, the Credit Agreement had a maturity date of April 12, 2023, provided that if at any time and for so long as any senior notes (other than the 2020 Convertible Senior Notes) had a maturity date prior to 91 days after April 12, 2023, the maturity date shall be the date that is 91 days prior to the maturity of such senior notes.

The Credit Agreement contains restrictive covenants that may limit the Company’s ability to, among other things, incur additional indebtedness, sell assets, make loans to others, make investments, enter into mergers, enter into hedging contracts, incur liens and engage in certain other transactions without the prior consent of its lenders. Except for limited exceptions, the Credit Agreement also restricts the Company’s ability to make any dividend payments or distributions on its common stock. These restrictions apply to all of the Company’s restricted subsidiaries (as defined in the Credit Agreement). As of June 30, 2020, there were no retained earnings free from restrictions. The Credit Agreement requires the Company, as of the last day of any quarter, to maintain the following ratios (as defined in the Credit Agreement): (i) a consolidated current assets to consolidated current liabilities ratio (which includes an add back of the available borrowing capacity under the credit agreement) of not less than 1.0 to 1.0 and (ii) a total debt to last four quarters’ EBITDAX ratio of not greater than 4.0 to 1.0.

Under the Credit Agreement, a cross-default provision provides that a default under certain other debt of the Company or certain of its subsidiaries in an aggregate principal amount exceeding $100 million may constitute an event of default under such Credit Agreement. Additionally, under the indentures governing the Company’s senior notes and senior convertible notes, a cross-default provision provides that a default under certain other debt of the Company or certain of its subsidiaries in an aggregate principal amount exceeding $100 million (or $50 million in the case of the senior notes due in 2021) may constitute an event of default under such indenture.

The obligations of Whiting Oil and Gas under the Credit Agreement are collateralized by a first lien on substantially all of Whiting Oil and Gas’ and Whiting Resource Corporation’s properties. The Company has guaranteed the obligations of Whiting Oil and Gas under the Credit Agreement and has pledged the stock of its subsidiaries as security for its guarantee.

Senior Notes and Convertible Senior Notes

Senior Notes—In September 2013, the Company issued at par $800 million of 5.75% Senior Notes due March 15, 2021 and issued at 101% of par an additional $400 million of 5.75% Senior Notes due March 15, 2021 (collectively, the “2021 Senior Notes”). Prior to the Petition Date, the debt premium recorded in connection with the issuance of the 2021 Senior Notes was amortized to interest expense over the term of the notes using the effective interest method, with an effective interest rate of 5.5% per annum. As a result of the Chapter 11 Cases and the adoption of ASC 852, the remaining unamortized premium balance was written off to reorganization items, net in the condensed consolidated statements of operations. Refer to the “Chapter 11 Cases” footnote for more information.

In March 2015, the Company issued at par $750 million of 6.25% Senior Notes due April 1, 2023 (the “2023 Senior Notes”).

In December 2017, the Company issued at par $1.0 billion of 6.625% Senior Notes due January 15, 2026 (the “2026 Senior Notes” and together with the 2021 Senior Notes and the 2023 Senior Notes, the “Senior Notes”).

During 2016, the Company exchanged $326 million aggregate principal amount of 2021 Senior Notes and $342 million aggregate principal amount of 2023 Senior Notes for the same aggregate principal amount of convertible notes. Subsequently during 2016, all $668 million aggregate principal amount of these convertible notes was converted into approximately 16.3 million shares of the Company’s common stock pursuant to the terms of the notes.

Repurchases of 2021 Senior Notes. In September 2019, the Company paid $24 million to repurchase $25 million aggregate principal amount of the 2021 Senior Notes, which payment consisted of the average 94.708% purchase price plus all accrued and unpaid interest on the notes. The Company financed the repurchases with borrowings under the Credit Agreement. As a result of the repurchases, the Company recognized a $1 million gain on extinguishment of debt, which included a non-cash charge for the acceleration of unamortized debt issuance costs and debt premium on the notes.

In October 2019, the Company paid an additional $72 million to repurchase $75 million aggregate principal amount of the 2021 Senior Notes, which payment consisted of the average 95.467% purchase price plus all accrued and unpaid interest on the notes. The Company financed the repurchases with borrowings under the Credit Agreement. As a result of the repurchases, the Company recognized a $3 million gain on extinguishment of debt, which included a noncash charge for the acceleration of unamortized debt issuance costs and debt premium on the notes. As of June 30, 2020, $774 million of 2021 Senior Notes remained outstanding.

2020 Convertible Senior Notes—In March 2015, the Company issued at par $1.25 billion of the 2020 Convertible Senior Notes for net proceeds of $1.2 billion, net of initial purchasers’ fees of $25 million. During 2016, the Company exchanged $688 million aggregate principal amount of its 2020 Convertible Senior Notes for the same aggregate principal amount of new mandatory convertible senior notes. Subsequently during 2016, all $688 million aggregate principal amount of these mandatory convertible notes was converted into approximately 17.8 million shares of the Company’s common stock pursuant to the terms of the notes.

In September 2019, the Company paid $299 million to complete a cash tender offer for $300 million aggregate principal amount of the 2020 Convertible Senior Notes, which payment consisted of the 99.0% purchase price plus all accrued and unpaid interest on the notes, which were allocated to the liability and equity components based on their relative fair values. The Company financed the tender offer with borrowings under the Credit Agreement. As a result of the tender offer, the Company recognized a $4 million gain on extinguishment of debt, which was net of a $7 million charge for the non-cash write-off of unamortized debt issuance costs and debt discount and a $1 million charge for transaction costs. In addition, the Company recorded an $8 million reduction to the equity component of the 2020 Convertible Senior Notes. There was no deferred tax impact associated with this reduction due to the full valuation allowance in effect as of September 30, 2019.

In March 2020, the Company paid $53 million to repurchase $73 million aggregate principal amount of the 2020 Convertible Senior Notes, which payment consisted of the average 72.5% purchase price plus all accrued and unpaid interest on the notes, which were allocated to the liability and equity components based on their relative fair values. The Company financed the repurchases with borrowings under the Credit Agreement. As a result of these repurchases, the Company recognized a $23 million gain on extinguishment

of debt, which was net of a $0.2 million charge for the non-cash write-off of unamortized debt issuance costs and debt discount. In addition, the Company recorded a $3 million reduction to the equity component of the 2020 Convertible Senior Notes. There was no deferred tax impact associated with this reduction due to the full valuation allowance in effect as of March 31, 2020.

Prior to January 1, 2020, the 2020 Convertible Senior Notes were convertible only upon the achievement of certain contingent market conditions, which were not met. After January 1, 2020, the 2020 Convertible Senior Notes were convertible at any time until the second scheduled trading day immediately preceding the April 1, 2020 maturity date of the notes and holders of $3 million aggregate principal amount of 2020 Convertible Senior Notes timely elected to convert. Upon conversion, such holders of the converted 2020 Convertible Senior Notes were entitled to receive an insignificant cash payment on April 1, 2020, which the Company did not pay. As a result of such conversion the Company recognized a $3 million gain on extinguishment of debt for the six months ended June 30, 2020. Additionally, at maturity, the Company was obligated to pay in cash the $187 million outstanding principal amount of the 2020 Convertible Senior Notes that did not convert, which the Company did not pay. Under the Bankruptcy Code, the holders of the 2020 Convertible Senior Notes and the prior holders that converted their notes are stayed from taking any action against the Company as a result of the Company’s non-payment. Refer to “Chapter 11 Cases and Effect of Automatic Stay” above for more information.

Upon issuance, the Company separately accounted for the liability and equity components of the 2020 Convertible Senior Notes. The liability component was recorded at the estimated fair value of a similar debt instrument without the conversion feature. The difference between the principal amount of the 2020 Convertible Senior Notes and the estimated fair value of the liability component was recorded as a debt discount and was amortized to interest expense over the term of the notes using the effective interest method, with an effective interest rate of 5.6% per annum. The fair value of the liability component of the 2020 Convertible Senior Notes as of the issuance date was estimated at $1.0 billion, resulting in a debt discount at inception of $238 million. The equity component, representing the value of the conversion option, was computed by deducting the fair value of the liability component from the initial proceeds of the 2020 Convertible Senior Notes issuance. This equity component was recorded, net of deferred taxes and issuance costs, in additional paid-in capital within shareholders’ equity, and will not be remeasured as long as it continues to meet the conditions for equity classification.

Transaction costs related to the 2020 Convertible Senior Notes issuance were allocated to the liability and equity components based on their relative fair values. Issuance costs attributable to the liability component were recorded as a reduction to the carrying value of long-term debt on the consolidated balance sheets and were amortized to interest expense over the term of the notes using the effective interest method. Issuance costs attributable to the equity component were recorded as a charge to additional paid-in capital within shareholders’ equity.

The 2020 Convertible Senior Notes consisted of the following at June 30, 2020 and December 31, 2019 (in thousands):


	June 30,		December 31,
	2020		2019
Liability component
Principal	$	186,592	$	262,075
Less: unamortized note discount		-		(2,829)
Less: unamortized debt issuance costs		-		(220)
Net carrying value	$	186,592	$	259,026
Equity component ⁽¹⁾	$	125,009	$	128,452

(1)	Recorded in additional paid-in capital, net of $5 million of issuance costs and $50 million of deferred taxes.

The following table presents the interest expense recognized on the 2020 Convertible Senior Notes related to the stated interest rate and amortization of the debt discount for the three and six months ended June 30, 2020 and June 30, 2019 (in thousands):


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2020		2019		2020		2019
Interest expense on 2020 Convertible Senior Notes	$	-	$	7,574	$	3,463	$	15,068

Security and Guarantees

The Senior Notes and the 2020 Convertible Senior Notes are unsecured obligations of Whiting Petroleum Corporation and these unsecured obligations are subordinated to all of the Company’s secured indebtedness, which consists of the Credit Agreement.

The Company’s obligations under the Senior Notes and the 2020 Convertible Senior Notes are guaranteed by the Company’s 100%-owned subsidiaries, Whiting Oil and Gas, Whiting US Holding Company, Whiting Canadian Holding Company ULC and Whiting Resources Corporation (the “Guarantors”). These guarantees are full and unconditional and joint and several among the Guarantors. Any subsidiaries other than these Guarantors are minor subsidiaries as defined by Rule 3-10(h)(6) of Regulation S-X of the SEC. Whiting Petroleum Corporation has no assets or operations independent of this debt and its investments in its consolidated subsidiaries.

ASSET RETIREMENT OBLIGATIONS

6 Months Ended

Jun. 30, 2020

ASSET RETIREMENT OBLIGATIONS [Abstract]

ASSET RETIREMENT OBLIGATIONS

6. ASSET RETIREMENT OBLIGATIONS

The Company’s asset retirement obligations represent the present value of estimated future costs associated with the plugging and abandonment of oil and gas wells, removal of equipment and facilities from leased acreage and land restoration (including removal of certain onshore and offshore facilities in California) in accordance with applicable local, state and federal laws. The current portions as of June 30, 2020 and December 31, 2019 were $5 million and $4 million, respectively, and have been included in accrued liabilities and other in the consolidated balance sheets. The following table provides a reconciliation of the Company’s asset retirement obligations for the six months ended June 30, 2020 (in thousands):


Asset retirement obligation at January 1, 2020	$	134,893
Additional liability incurred		58
Revisions to estimated cash flows		(1,243)
Accretion expense		6,107
Obligations on sold properties		(693)
Liabilities settled		(2,788)
Asset retirement obligations reclassified to liabilities subject to compromise ⁽¹⁾		(39,022)
Asset retirement obligation at June 30, 2020	$	97,312

(1)	Refer to the “Chapter 11 Cases” footnote for more information on liabilities subject to compromise.

DERIVATIVE FINANCIAL INSTRUMENTS

6 Months Ended

Jun. 30, 2020

DERIVATIVE FINANCIAL INSTRUMENTS [Abstract]

DERIVATIVE FINANCIAL INSTRUMENTS

7. DERIVATIVE FINANCIAL INSTRUMENTS

The Company is exposed to certain risks relating to its ongoing business operations, and it uses derivative instruments to manage its commodity price risk. In addition, the Company periodically enters into contracts that contain embedded features which are required to be bifurcated and accounted for separately as derivatives.

Commodity Derivative Contracts—Historically, prices received for crude oil and natural gas production have been volatile because of supply and demand factors, worldwide political factors, general economic conditions and seasonal weather patterns. Whiting primarily enters into derivative contracts such as crude oil and natural gas swaps and collars to achieve a more predictable cash flow by reducing its exposure to commodity price volatility, thereby ensuring adequate funding for the Company’s capital programs and facilitating the management of returns on drilling programs and acquisitions. The Company does not enter into derivative contracts for speculative or trading purposes.

Crude Oil and Natural Gas Swaps and Collars. Swaps establish a fixed price for anticipated future oil or gas production, while collars are designed to establish floor and ceiling prices on anticipated future oil or gas production. While the use of these derivative instruments limits the downside risk of adverse price movements, they may also limit future revenues from favorable price movements.

The table below details the Company’s swap derivatives entered into to hedge forecasted crude oil and natural gas production revenues as of June 30, 2020.

Commodity

Settlement Period

Index

Derivative Instrument

Total Volumes ⁽¹⁾

Units

Weighted Average Swap Price

Crude Oil

Crude Oil

2020

NYMEX WTI

Fixed Price Swaps

1,564,000

Bbl

$40.96

Crude Oil

2021

NYMEX WTI

Fixed Price Swaps

2,737,500

Bbl

$40.05

Total

4,301,500

Bbl

Natural Gas

Natural Gas

2021

NYMEX Henry Hub

Fixed Price Swaps

3,650,000

MMBtu

$2.60

(1)

Subsequent to June 30, 2020, the Company entered into additional swap contracts for 459,000 Bbl of crude oil volumes for the remainder of 2020 and additional collar contracts for 854,000 Bbl, 3,739,000 Bbl and 1,365,000 Bbl of crude oil volumes for the remainder of 2020, 2021 and the first nine months of 2022, respectively. The Company also entered into additional swap contracts for 3,650,000 MMBtu of natural gas volumes for 2021 and additional collar contracts for 3,660,000 MMBtu, 10,950,000 MMBtu and 8,190,000 MMBtu of natural gas volumes for the remainder of 2020, 2021 and the first nine months of 2022, respectively.

Effect of Chapter 11 Cases—The commencement of the Chapter 11 Cases constituted a termination event with respect to the Company’s derivative instruments, which permits the counterparties of such derivative instruments to terminate their outstanding hedges. Such termination events are not stayed under the Bankruptcy Code. During April 2020, certain of the lenders under the Credit Agreement elected to terminate their master ISDA agreements and outstanding hedges with the Company for aggregate settlement proceeds of $145 million. The proceeds from these terminations along with $13 million of March 2020 hedge settlement proceeds received in April 2020 were applied to the outstanding borrowings under the Credit Agreement. An additional $23 million of settlement proceeds from terminated derivative positions will be held in escrow until the completion of the Chapter 11 Cases and are recorded in restricted cash in the condensed consolidated balance sheet as of June 30, 2020. As a result of these terminations, all of the Company’s outstanding derivative contracts are concentrated with two counterparties as of June 30, 2020. Both of these counterparties are participants in the Credit Agreement and have investment-grade ratings from Moody’s and Standard & Poor’s.

Derivative Instrument Reporting—All derivative instruments are recorded in the condensed consolidated financial statements at fair value, other than derivative instruments that meet the “normal purchase normal sale” exclusion or other derivative scope exceptions. The following tables summarize the effects of derivative instruments on the condensed consolidated statements of operations for the three and six months ended June 30, 2020 and 2019 (in thousands):


		(Gain) Loss Recognized in Income
Not Designated as	Statements of Operations	Three Months Ended June 30,
ASC 815 Hedges	Classification	2020		2019
Commodity contracts	Derivative (gain) loss, net	$	6,632	$	(24,877)
Total		$	6,632	$	(24,877)


		(Gain) Loss Recognized in Income
Not Designated as	Statements of Operations	Six Months Ended June 30,
ASC 815 Hedges	Classification	2020		2019
Commodity contracts	Derivative (gain) loss, net	$	(224,739)	$	38,028
Total		$	(224,739)	$	38,028

Offsetting of Derivative Assets and Liabilities. The Company nets its financial derivative instrument fair value amounts executed with the same counterparty pursuant to ISDA master agreements, which provide for net settlement over the term of the contract and in the event of default or termination of the contract. The following tables summarize the location and fair value amounts of all the Company’s derivative instruments in the consolidated balance sheets, as well as the gross recognized derivative assets, liabilities and amounts offset in the consolidated balance sheets (in thousands):


		June 30, 2020⁽¹⁾
						Net
		Gross				Recognized
		Recognized		Gross		Fair Value
Not Designated as		Assets/		Amounts		Assets/
ASC 815 Hedges	Balance Sheet Classification	Liabilities		Offset		Liabilities
Derivative assets
Commodity contracts - current	Prepaid expenses and other	$	3,714	$	(289)	$	3,425
Commodity contracts - non-current	Other long-term assets		77		(77)		-
Total derivative assets		$	3,791	$	(366)	$	3,425
Derivative liabilities
Commodity contracts - current	Accrued liabilities and other	$	1,730	$	(289)	$	1,441
Commodity contracts - non-current	Other long-term liabilities		943		(77)		866
Total derivative liabilities		$	2,673	$	(366)	$	2,307


		December 31, 2019 ⁽¹⁾
						Net
		Gross				Recognized
		Recognized		Gross		Fair Value
Not Designated as		Assets/		Amounts		Assets/
ASC 815 Hedges	Balance Sheet Classification	Liabilities		Offset		Liabilities
Derivative assets
Commodity contracts - current	Prepaid expenses and other	$	75,654	$	(74,768)	$	886
Commodity contracts - non-current	Other long-term assets		5,648		(5,648)		-
Total derivative assets		$	81,302	$	(80,416)	$	886
Derivative liabilities
Commodity contracts - current	Accrued liabilities and other	$	85,053	$	(74,768)	$	10,285
Commodity contracts - non-current	Other long-term liabilities		6,534		(5,648)		886
Total derivative liabilities		$	91,587	$	(80,416)	$	11,171

(1)

Because substantially all of the counterparties to the Company’s financial derivative contracts subject to master netting arrangements are lenders under the Credit Agreement, which eliminates its need to post or receive collateral associated with its derivative positions, columns for cash collateral pledged or received have not been presented in these tables.

Contingent Features in Financial Derivative Instruments. None of the Company’s derivative instruments contain credit-risk-related contingent features. Counterparties to the Company’s financial derivative contracts are high credit-quality financial institutions that are lenders under the Credit Agreement. The Company uses primarily Credit Agreement participants to hedge with, since these institutions are secured equally with the holders of Whiting’s bank debt, which eliminates the potential need to post collateral when Whiting is in a derivative liability position. As a result, the Company is not required to post letters of credit or corporate guarantees for its derivative counterparties in order to secure contract performance obligations.

FAIR VALUE MEASUREMENTS

6 Months Ended

Jun. 30, 2020

FAIR VALUE MEASUREMENTS [Abstract]

FAIR VALUE MEASUREMENTS

8. FAIR VALUE MEASUREMENTS

The Company follows FASB ASC Topic 820, Fair Value Measurement and Disclosure, which establishes a three-level valuation hierarchy for disclosure of fair value measurements. The valuation hierarchy categorizes assets and liabilities measured at fair value into one of three different levels depending on the observability of the inputs employed in the measurement. The three levels are defined as follows:

●	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.

A financial instrument’s categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the asset or liability.

Cash, cash equivalents, restricted cash, accounts receivable and accounts payable are carried at cost, which approximates their fair value because of the short-term maturity of these instruments. The Company’s Credit Agreement has a recorded value that approximates its fair value since its variable interest rate is tied to current market rates and the applicable margins represent market rates.

The Company’s senior notes are recorded at cost and the convertible senior notes are recorded at fair value at the date of issuance. The following table summarizes the fair values and carrying values of these instruments as of June 30, 2020 and December 31, 2019 (in thousands):


	June 30, 2020				December 31, 2019
	Fair		Carrying		Fair		Carrying
	Value ⁽¹⁾		Value ⁽²⁾		Value ⁽¹⁾		Value ⁽²⁾
1.25% Convertible Senior Notes due 2020	$	35,452	$	186,592	$	260,214	$	259,026
5.75% Senior Notes due 2021		148,920		773,609		732,995		772,080
6.25% Senior Notes due 2023		78,597		408,296		343,989		405,392
6.625% Senior Notes due 2026		192,500		1,000,000		681,250		988,387
Total	$	455,469	$	2,368,497	$	2,018,448	$	2,424,885

(1)	Fair values are based on quoted market prices for these debt securities, and such fair values are therefore designated as Level 1 within the valuation hierarchy.

(2)

Carrying values are presented net of unamortized debt issuance costs and debt discounts or premiums. All unamortized debt issuance costs and debt discounts and premiums were written off in April 2020 as a result of the Chapter 11 Cases and the adoption of ASC 852. Refer to the “Chapter 11 Cases” footnote for more information.

The Company’s derivative financial instruments are recorded at fair value and include a measure of the Company’s own nonperformance risk or that of its counterparty, as appropriate. The following tables present information about the Company’s financial assets and liabilities measured at fair value on a recurring basis as of June 30, 2020 and December 31, 2019, and indicate the fair value hierarchy of the valuation techniques utilized by the Company to determine such fair values (in thousands):


							Total Fair Value
	Level 1		Level 2		Level 3		June 30, 2020
Financial Assets
Commodity derivatives – current	$	-	$	3,425	$	-	$	3,425
Total financial assets	$	-	$	3,425	$	-	$	3,425
Financial Liabilities
Commodity derivatives – current	$	-	$	1,441	$	-	$	1,441
Commodity derivatives – non-current		-		866		-		866
Total financial liabilities	$	-	$	2,307	$	-	$	2,307


							Total Fair Value
	Level 1		Level 2		Level 3		December 31, 2019
Financial Assets
Commodity derivatives – current	$	-	$	886	$	-	$	886
Total financial assets	$	-	$	886	$	-	$	886
Financial Liabilities
Commodity derivatives – current	$	-	$	10,285	$	-	$	10,285
Commodity derivatives – non-current		-		886		-		886
Total financial liabilities	$	-	$	11,171	$	-	$	11,171

The following methods and assumptions were used to estimate the fair values of the Company’s financial assets and liabilities that are measured on a recurring basis:

Commodity Derivatives. Commodity derivative instruments consist mainly of swaps and collars for crude oil and natural gas. The Company’s swaps are valued based on an income approach. Both the option and the swap models consider various assumptions, such as quoted forward prices for commodities, time value and volatility factors. These assumptions are observable in the marketplace throughout the full term of the contract, can be derived from observable data or are supported by observable levels at which transactions are executed in the marketplace, and are therefore designated as Level 2 within the valuation hierarchy. The discount rates used in the fair values of these instruments include a measure of either the Company’s or the counterparty’s nonperformance risk, as appropriate. The Company utilizes its counterparties’ valuations to assess the reasonableness of its own valuations.

Non-recurring Fair Value Measurements—The Company applies the provisions of the fair value measurement standard on a non-recurring basis to its non-financial assets and liabilities, including proved property. These assets and liabilities are not measured at fair value on an ongoing basis but are subject to fair value adjustments only in certain circumstances. The Company did not recognize any impairment write-downs with respect to its proved property during the three and six months ended June 30, 2019. The following tables present information about the Company’s non-financial assets measured at fair value on a non-recurring basis during the three and six months ended June 30, 2020, and indicate the fair value hierarchy of the valuation techniques utilized by the Company to determine such fair values (in thousands):


									Loss (Before
	Net Carrying								Tax) Six
	Value as of								Months Ended
	March 31,		Fair Value Measurements Using						June 30,
	2020		Level 1		Level 2		Level 3		2020
Proved property ⁽¹⁾	$	816,234	$	-	$	-	$	816,234	$	3,732,096

(1)

During the first quarter of 2020, certain proved oil and gas properties across the Company’s Williston Basin resource play with a previous carrying amount of $4.5 billion were written down to their fair value as of March 31, 2020 of $816 million, resulting in a non-cash impairment charge of $3.7 billion, which was recorded within exploration and impairment expense. These impaired properties were written down due to a reduction in anticipated future cash flows primarily driven by an expectation of sustained depressed oil prices and a resultant decline in future development plans for the properties.


									Loss (Before
	Net Carrying								Tax) Three and Six
	Value as of								Months Ended
	June 30,		Fair Value Measurements Using						June 30,
	2020		Level 1		Level 2		Level 3		2020
Proved property ⁽²⁾	$	85,418	$	-	$	-	$	85,418	$	409,079

(2)

During the second quarter of 2020, other proved oil and gas properties in the Company’s Williston Basin resource play with a previous carrying amount of $494 million were written down to their fair value as of June 30, 2020 of $85 million, resulting in a non-cash impairment charge of $409 million, which was recorded within exploration and impairment expense. These impaired properties were written down due to a reduction in anticipated future cash flows primarily driven by an expectation of sustained

depressed oil prices and a resultant decline in future development plans for the properties assessed during the second quarter of 2020.

Proved Property Impairments. The Company tests proved property for impairment whenever events or changes in circumstances indicate that the fair value of these assets may be reduced below their carrying value. As a result of the significant decrease in the forward price curves for crude oil and natural gas during the first and second quarters of 2020, the associated decline in anticipated future cash flows and the resultant decline in future development plans for the properties, the Company performed proved property impairment tests as of March 31, 2020 and June 30, 2020. The fair value was ascribed using income approach analyses based on the net discounted future cash flows from the producing properties and related assets. The discounted cash flows were based on management’s expectations for the future. Unobservable inputs included estimates of future oil and gas production from the Company’s reserve reports, commodity prices based on forward strip price curves (adjusted for basis differentials) as of March 31, 2020 and June 30, 2020, operating and development costs, expected future development plans for the properties and a discount rate of 16% and 17% as of March 31, 2020 and June 30, 2020, respectively, based on a weighted-average cost of capital (all of which were designated as Level 3 inputs within the fair value hierarchy). The impairment tests indicated that a proved property impairment had occurred, and the Company therefore recorded non-cash impairment charges to reduce the carrying value of the impaired properties to their fair value at March 31, 2020 and June 30, 2020. Additional impairments may be recorded in future periods if commodity prices deteriorate or further reductions to the development plans of the properties are indicated by market conditions.

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

+ References + Details

REVENUE RECOGNITION

6 Months Ended

Jun. 30, 2020

REVENUE RECOGNITION [Abstract]

REVENUE RECOGNITION

9. REVENUE RECOGNITION

The Company recognizes revenue in accordance with FASB ASC Topic 606 – Revenue from Contracts with Customers (“ASC 606”). Revenue is recognized at the point in time at which the Company’s performance obligations under its commodity sales contracts are satisfied and control of the commodity is transferred to the customer. The Company has determined that its contracts for the sale of crude oil, unprocessed natural gas, residue gas and NGLs contain monthly performance obligations to deliver product at locations specified in the contract. Control is transferred at the delivery location, at which point the performance obligation has been satisfied and revenue is recognized. Fees included in the contract that are incurred prior to control transfer are classified as transportation, gathering, compression and other, and fees incurred after control transfers are included as a reduction to the transaction price. The transaction price at which revenue is recognized consists entirely of variable consideration based on quoted market prices less various fees and the quantity of volumes delivered. The table below presents the disaggregation of revenue by product type for the three and six months ended June 30, 2020 and 2019 (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,
	2020		2019		2020		2019
OPERATING REVENUES
Oil sales	$	91,904	$	403,870	$	323,849	$	763,324
NGL and natural gas sales ⁽¹⁾		(304)		22,394		12,597		52,429
Oil, NGL and natural gas sales	$	91,600	$	426,264	$	336,446	$	815,753

(1)	Negative NGL and natural gas sales revenue is a result of third-party transportation, gathering and processing costs exceeding the average price realized for certain NGL and natural gas volumes sold during the three months ended June 30, 2020.

Whiting receives payment for product sales from one to three months after delivery. At the end of each month when the performance obligation is satisfied, the variable consideration can be reasonably estimated and amounts due from customers are accrued in accounts receivable trade, net in the consolidated balance sheets. As of June 30, 2020 and December 31, 2019, such receivable balances were $54 million and $161 million, respectively. Variances between the Company’s estimated revenue and actual payments are recorded in the month the payment is received, however, differences have been and are insignificant. Accordingly, the variable consideration is not constrained.

The Company has elected to utilize the practical expedient in ASC 606 that states the Company is not required to disclose the transaction price allocated to remaining performance obligations if the variable consideration is allocated entirely to a wholly unsatisfied performance obligation. Under the Company’s contracts, each monthly delivery of product represents a separate performance obligation, therefore, future volumes are wholly unsatisfied, and disclosure of the transaction price allocated to remaining performance obligations is not required.

SHAREHOLDERS' EQUITY

6 Months Ended

Jun. 30, 2020

SHAREHOLDERS' EQUITY

SHAREHOLDERS' EQUITY

10. SHAREHOLDERS’ EQUITY

NOL Rights Plan—As of December 31, 2019, the Company had federal net operating loss (“NOL”) carryforwards of $3.4 billion. The Company’s ability to use its NOLs would be substantially limited if it experiences an “ownership change” as defined in Section 382 of the Internal Revenue Code (“IRC”). A company generally experiences an ownership change if the percentage of its shares of stock owned by its “5-percent shareholders,” as such term is defined in Section 382 of the IRC, increases by more than 50% over a rolling three-year period.

On March 26, 2020 the Company adopted a Section 382 Rights Agreement (the “Rights Agreement”) designed to preserve the Company’s ability to use its NOLs to offset possible future U.S. taxable income. The Rights Agreement is intended to reduce the likelihood that changes in the Company’s investor base would limit the future use of its tax benefits.

On March 26, 2020, in connection with the adoption of the Rights Agreement, the Company’s Board of Directors declared a dividend of one preferred share purchase right (a “Right”) payable on April 6, 2020 to the stockholders of record on that date. Each Right is attached to and trades only with common shares until a triggering event, which is defined in the Rights Agreement as close of business on the tenth day following the public announcement or public disclosure of facts indicating that a person or group that already owns 4.9% or more of the Company’s common stock (“acquiring person or group”) acquires additional shares. A triggering event entitles the registered holder to purchase from the Company one one-thousandth of a share of Series A Preferred Stock, par value of $0.001 per share, at a price of $7.00 per one one-thousandth of a preferred share represented by a Right, subject to adjustment. Rights held by the acquiring person or group will become void and will not be exercisable.

The Board of Directors has the discretion to exempt certain transactions, persons or entities from the operation of the Rights Agreement and also has the ability to amend or terminate the Rights Agreement prior to a triggering event. Additionally, the Board of Directors may cause the Company to redeem the Rights in whole, but not in part, at a price of $0.001 per Right. The Rights will expire on the day following the certification of the voting results for Whiting’s 2021 annual meeting of shareholders unless Whiting’s shareholders ratify the Rights Agreement at or prior to such meeting, in which case the Rights Agreement will continue in effect until March 26, 2023 unless terminated earlier in accordance with its terms.

Final Order of the Bankruptcy Court—On April 1, 2020, the Bankruptcy Court entered a final order (i) approving notification and hearing procedures for certain transfers of and declarations of worthlessness with respect to common stock and (ii) granting related relief (as amended on April 24, 2020, the “Order”). The Order sets forth the procedures (including notice requirements) that certain shareholders and potential shareholders must comply with regarding transfers of, or declarations of worthlessness with respect to, the Company’s common stock (as defined in the Order), as well as certain obligations with respect to notifying the Company of current share ownership (the “Procedures”). The Procedures are intended to reduce the likelihood that changes in the Company’s investor base would limit its future use of its tax benefits. The terms and conditions of the Procedures were immediately effective and enforceable upon entry of the Order by the Bankruptcy Court.

Any actions in violation of the Procedures (including the notice requirements) are null and void ab initio, and (i) the person or entity making such a transfer will be required to take remedial actions specified by the Company to appropriately reflect that such transfer of the Company’s common stock is null and void ab initio and (ii) the person or entity making such a declaration of worthlessness with respect to the Company’s common stock will be required to file an amended tax return revoking such declaration and any related deduction to reflect that such declaration is void ab initio.

STOCK-BASED COMPENSATION

6 Months Ended

Jun. 30, 2020

STOCK-BASED COMPENSATION [Abstract]

STOCK-BASED COMPENSATION

11. STOCK-BASED COMPENSATION

Equity Incentive Plan—The Company maintains the Whiting Petroleum Corporation 2013 Equity Incentive Plan, as amended and restated (the “2013 Equity Plan”), which replaced the Whiting Petroleum Corporation 2003 Equity Incentive Plan (the “2003 Equity Plan”) and originally granted the authority to issue 1,325,000 shares of the Company’s common stock. During 2016, shareholders approved an amendment to the 2013 Equity Plan granting the authority to issue an additional 1,375,000 shares of the Company’s common stock. In May 2019, shareholders approved an additional amendment to the 2013 Equity Plan granting the authority to issue an additional 3,000,000 shares of the Company’s common stock. Upon shareholder approval of the 2013 Equity Plan, the 2003 Equity Plan was terminated. The 2003 Equity Plan continues to govern awards that were outstanding as of the date of its termination, which awards remain in effect pursuant to their terms. Any shares netted or forfeited under the 2003 Equity Plan and any shares forfeited under the 2013 Equity Plan will be available for future issuance under the 2013 Equity Plan. However, shares netted for tax withholding

under the 2013 Equity Plan will be cancelled and will not be available for future issuance. Under the amended and restated 2013 Equity Plan, during any calendar year no officer or other key employee participant may be granted options or stock appreciation rights for more than 500,000 shares of common stock or more than 500,000 shares of restricted stock (“RSAs”), restricted stock units (“RSUs”), performance shares (“PSAs”), or performance share units (“PSUs”), the value of which is based on the fair market value of a share of common stock. In addition, no non-employee director participant may be granted during any calendar year options or stock appreciation rights for more than 25,000 shares of common stock, or more than 25,000 shares of RSAs or RSUs. As of June 30, 2020, 3,886,734 shares of common stock remained available for grant under the 2013 Equity Plan.

The Company has granted service-based RSAs and RSUs to executive officers and employees, which generally vest ratably over a three-year service period. The Company has granted service-based RSAs to directors, which generally vest over a one-year service period. In addition, the Company has granted PSAs and PSUs to executive officers that are subject to market-based vesting criteria, which generally vest over a three-year service period. The Company accounts for forfeitures of awards granted under these plans as they occur in determining compensation expense. The Company recognizes compensation expense for all awards subject to market-based vesting conditions regardless of whether it becomes probable that these conditions will be achieved or not, and compensation expense for share-settled awards is not reversed if vesting does not actually occur.

During the six months ended June 30, 2020 and 2019, 53,198 and 389,303 shares, respectively, of service-based RSAs and RSUs were granted to executive officers and directors under the 2013 Equity Plan. The Company determines compensation expense for these share-settled awards using their fair value at the grant date, which is based on the closing bid price of the Company’s common stock on such date. The weighted average grant date fair value of service-based RSAs and RSUs was $4.94 per share and $27.97 per share for the six months ended June 30, 2020 and 2019, respectively. On March 31, 2020, all of the RSAs issued to executive officers in 2020 were forfeited and concurrently replaced with cash incentives. Refer to “2020 Compensation Adjustments” below for more information.

During the six months ended June 30, 2020 and 2019, 1,616,504 and 308,432 shares, respectively, of service-based RSUs were granted to executive officers and employees under the 2013 Equity Plan. The Company determines compensation expense for cash-settled RSUs using the fair value at the end of each reporting period, which is based on the closing bid price of the Company’s common stock on such date. On March 31, 2020, all of the RSUs issued to executive officers in 2020 were forfeited and concurrently replaced with cash incentives. Refer to “2020 Compensation Adjustments” below for more information.

During the six months ended June 30, 2020 and 2019, 1,665,153 and 317,512, respectively, of PSAs and PSUs subject to certain market-based vesting criteria were granted to executive officers under the 2013 Equity Plan. These market-based awards cliff vest on the third anniversary of the grant date, and the number of shares that will vest at the end of that three-year performance period is determined based on the rank of Whiting’s cumulative stockholder return compared to the stockholder return of a peer group of companies on each anniversary of the grant date over the three-year performance period. The number of awards earned could range from zero up to two times the number of shares initially granted. However, awards earned up to the target shares granted (or 100%) will be settled in shares, while awards earned in excess of the target shares granted will be settled in cash. The cash-settled component of such awards is recorded as a liability in the consolidated balance sheets and will be remeasured at fair value using a Monte Carlo valuation model at the end of each reporting period. On March 31, 2020, all of the PSAs and PSUs issued to executive officers in 2020 were forfeited and concurrently replaced with cash incentives. Refer to “2020 Compensation Adjustments” below for more information.

For awards subject to market conditions, the grant date fair value is estimated using a Monte Carlo valuation model. The Monte Carlo model is based on random projections of stock price paths and must be repeated numerous times to achieve a probabilistic assessment. Expected volatility is calculated based on the historical volatility and implied volatility of Whiting’s common stock, and the risk-free interest rate is based on U.S. Treasury yield curve rates with maturities consistent with the three-year vesting period. The key assumptions used in valuing these market-based awards were as follows:


	2020	2019
Number of simulations	2,500,000	2,500,000
Expected volatility	76.52%	72.95%
Risk-free interest rate	1.51%	2.60%
Dividend yield	—	—

The weighted average grant date fair value of the market-based awards that will be settled in shares, as determined by the Monte Carlo valuation model, was $4.31 per share and $25.97 per share in 2020 and 2019, respectively.

2020 Compensation Adjustments. All of the RSAs, RSUs, PSAs and PSUs granted to executive officers in 2020 were forfeited on March 31, 2020 and were replaced with cash retention incentives. The cash retention incentives are subject to a service period and may be clawed back if an executive officer terminates employment for any reason other than a qualifying termination prior to the earlier of (i) the effective date of a plan of reorganization approved under chapter 11 of the Bankruptcy Code or (ii) March 30, 2021. The transactions were considered concurrent replacement of the stock compensation awards previously issued. As such, the $12 million fair value of the awards, consisting of the after-tax value of the cash incentives, was capitalized to prepaid expenses and other in the condensed consolidated balance sheets as of March 31, 2020 and is being amortized over the relevant service period. Amortization of the fair value of these cash incentives totaled $7 million during the three and six months ended June 30, 2020 and is included in general and administrative expenses in the condensed consolidated statements of operations. The difference between the cash and after-tax value of the cash retention incentives of approximately $9 million, which is not subject to the claw back provisions contained within the agreements, was expensed to general and administrative expenses in the condensed consolidated statements of operations during the first quarter of 2020.

The following table shows a summary of the Company’s service-based and market-based awards activity for the six months ended June 30, 2020:


	Number of Awards		Weighted Average
	Service‑Based	Market-Based	Grant Date
	RSAs & RSUs	PSAs & PSUs	Fair Value
Nonvested awards, January 1	467,502	448,387	$	28.28
Granted	53,198	1,665,153		4.33
Vested	(181,728)	-		27.52
Forfeited	(128,870)	(1,773,101)		7.53
Nonvested awards, June 30	210,102	340,439	$	25.45

There was no significant stock option activity during the six months ended June 30, 2020 and 2019.

Total stock compensation expense recognized for restricted stock was $1 million and $4 million for the three months ended June 30, 2020 and 2019, respectively, and $2 million and $10 million for the six months ended June 30, 2020 and 2019, respectively.

INCOME TAXES

6 Months Ended

Jun. 30, 2020

INCOME TAXES [Abstract]

INCOME TAXES

12. INCOME TAXES

Income tax expense during interim periods is based on applying an estimated annual effective income tax rate to year-to-date income, plus any significant unusual or infrequently occurring items which are recorded in the interim period. The provision for income taxes for the three and six months ended June 30, 2020 and 2019 differs from the amount that would be provided by applying the statutory U.S. federal income tax rate of 21% to pre-tax income primarily due to (i) an alternative minimum tax refund received for the three months ended June 30, 2020, (ii) a full valuation allowance in effect on the Company’s U.S. deferred tax assets (“DTAs”) for the three months ended June 30, 2020 and June 30, 2019 and (iii) state income taxes and the effects of permanent taxable differences for the six months ended June 30, 2019.

In assessing the realizability of DTAs, management considers whether it is more likely than not that some portion, or all, of the Company’s DTAs will not be realized. In making such determination, the Company considers all available positive and negative evidence, including future reversals of temporary differences, tax-planning strategies and projected future taxable income and results of operations. If the Company concludes that it is more likely than not that some portion, or all, of its DTAs will not be realized, the tax asset is reduced by a valuation allowance. The Company assesses the appropriateness of its valuation allowance on a quarterly basis. At June 30, 2020, the Company had a full valuation allowance on its U.S. DTAs.

The computation of the annual estimated effective tax rate at each interim period requires certain estimates and significant judgment including, but not limited to, the expected operating income for the year, projections of the proportion of income earned and taxed in various jurisdictions, permanent and temporary differences, and the likelihood of recovering deferred tax assets generated in the current year. The accounting estimates used to compute the provision for income taxes may change as new events occur, more experience is obtained, additional information becomes known or as the tax environment changes.

On March 26, 2020 the Company adopted a Rights Agreement and on April 1, 2020 the Bankruptcy Court entered an Order containing certain Procedures, each of which are intended to preserve the Company’s ability to use its net operating losses to offset possible future U.S. taxable income by reducing the likelihood of an ownership change under Section 382 of the IRC. Refer to the “Shareholders’ Equity” footnote for more information on the Rights Agreement and the Order.

EARNINGS PER SHARE

6 Months Ended

Jun. 30, 2020

EARNINGS PER SHARE [Abstract]

EARNINGS PER SHARE

13. EARNINGS PER SHARE

The reconciliations between basic and diluted earnings (loss) per share are as follows (in thousands, except per share data):


	Three Months Ended June 30,				Six Months Ended June 30,
	2020		2019		2020		2019
Basic Loss Per Share
Net loss	$	(574,315)	$	(5,687)	$	(4,202,886)	$	(74,612)
Weighted average shares outstanding		91,429		91,286		91,409		91,261
Loss per common share	$	(6.28)	$	(0.06)	$	(45.98)	$