Executive Summary

Q3 2021 delivered stronger topline and profitability on higher commodity prices: revenue $401.0M, GAAP net income $198.2M ($5.00 diluted EPS), and adjusted net income $141.6M ($3.57 diluted EPS) versus Q2 revenue $351.6M, GAAP net loss $(61.5)M, and adjusted net income $117.5M ($3.01) .
Operations were stable: production averaged 92.1 MBOE/d (oil 51.8 MBO/d), capex $67M; adjusted EBITDAX rose to $201.1M, net cash from operations was $189.9M, and adjusted free cash flow $127.7M .
Liquidity strengthened; net debt fell to $59M with total liquidity $689M, and management expects to end 2021 debt-free with positive cash on the balance sheet, a key stock narrative catalyst for capital return optionality .
Hedge losses remained a headwind to GAAP (derivative loss $122.6M, cash oil hedge settlements $79M), while adjusted results and cash generation remained robust; differential improvements and LOE declines also supported margins sequentially .

What Went Well and What Went Wrong

What Went Well

Strong free cash flow and deleveraging: adjusted FCF $127.7M; net debt down to $59M with expectation to end 2021 with no debt and positive cash. “Under current prices, the Company expects to continue to generate substantial free cash flow during the fourth quarter and end the year with no debt and positive cash on our balance sheet.” — Lynn A. Peterson, CEO .
Sequential operational efficiency: LOE fell to $56.6M (6.68/BOE) from $64.2M (7.61/BOE) on fewer workovers and cost reduction measures; sales price net of hedging rose to $35.75/BOE from $33.50/BOE .
Stable production and rising adjusted profitability: production held 92.1 MBOE/d vs. 92.6 MBOE/d, while adjusted EBITDAX increased to $201.1M from $176.4M on stronger commodity prices .

What Went Wrong

Hedging headwinds to GAAP earnings: derivative loss of $122.6M and $79M cash oil hedge settlements weighed on reported results despite stronger fundamentals .
Oil volumes modestly down sequentially: oil production averaged 51.8 MBO/d vs. 53.4 MBO/d in Q2 2021, reflecting natural declines and timing despite overall BOE stability .
Continued hedge drag across commodities: realized oil price of $49.97/bbl versus NYMEX $70.55/bbl; gas realized $1.60/Mcf versus NYMEX $3.95/MMBtu due to hedges, limiting upside capture in a higher price environment .

Financial Results

Headline P&L and Cash Generation

Metric	Q1 2021	Q2 2021	Q3 2021
Revenue ($USD Millions)	$307.4	$351.6	$401.0
GAAP Net Income ($USD Millions)	$(0.9)	$(61.5)	$198.2
Diluted EPS (GAAP) ($USD)	$(0.02)	$(1.57)	$5.00
Adjusted Net Income ($USD Millions)	$107.9	$117.5	$141.6
Adjusted Diluted EPS ($USD)	$2.79	$3.01	$3.57
Adjusted EBITDAX ($USD Millions)	$170.2	$176.4	$201.1
Net Cash from Operations ($USD Millions)	$153.2	$183.2	$189.9
Adjusted Free Cash Flow ($USD Millions)	$108.2	$111.3	$127.7

Notes:

Material GAAP-to-adjusted differences primarily reflect non-cash mark-to-market on hedges and property sale gains .

Production and Pricing Mix

KPI	Q1 2021	Q2 2021	Q3 2021
Total Production (MBOE)	8,090	8,431	8,472
Oil (MBbl)	4,822	4,860	4,763
NGLs (MBbl)	1,559	1,793	1,919
Natural Gas (MMcf)	10,249	10,666	10,745
Production Avg (MBOE/d)	89.9	92.6	92.1
Oil Avg (MBO/d)	53.5	53.4	51.8
Realized Oil Price ($/Bbl)	$45.08	$49.82	$49.97
Realized NGL Price ($/Bbl)	$17.28	$15.29	$24.88
Realized Gas Price ($/Mcf)	$2.06	$1.21	$1.60
Sales Price, net of hedging ($/BOE)	$32.80	$33.50	$35.75

Costs and Capital

KPI	Q1 2021	Q2 2021	Q3 2021
Capex ($USD Millions)	$56	$58	$67
LOE ($USD Millions)	$59.3	$64.2	$56.6
LOE ($/BOE)	$7.34	$7.61	$6.68
G&A ($USD Millions)	$10.3	$12.0	$12.0
G&A ($/BOE)	$1.27	$1.42	$1.41
Derivative Loss (GAAP) ($USD Millions)	$146.7	$255.4	$122.6
Cash Oil Hedge Settlements ($USD Millions)	$39	$66	$79

Balance Sheet and Liquidity

KPI	Q1 2021	Q2 2021	Q3 2021
Net Debt ($USD Millions)	$220	$98	$59
Liquidity ($USD Millions)	$528	$650	$689
Long-term Debt ($USD Millions)	$245	$115	$72

Guidance Changes

Metric	Period	Previous Guidance (Aug 4, 2021)	Current (Nov 3, 2021)	Change
Production (MBOE/d)	FY 2021	88–92	No update provided; management reiterates expectation to end FY21 debt-free with positive cash	Maintained (no formal update)
Oil Production (MBO/d)	FY 2021	50–53	No update provided	Maintained
Capex ($MM)	FY 2021	$240–$252	No update provided	Maintained
LOE ($MM)	FY 2021	$235–$245	No update provided	Maintained
G&A Cash ($MM)	FY 2021	$41–$45 (excl. non-cash)	No update provided	Maintained
Oil Diff. to NYMEX ($/Bbl)	FY 2021	$4.50–$6.50	No update provided	Maintained
Leverage/Net Cash	FY 2021	N/A	Expect positive net cash and no credit facility balance by year-end	Raised (balance sheet target clarified)

Note: No explicit new guidance ranges were published in the Q3 release; management reiterated year-end net cash expectations.

Earnings Call Themes & Trends

Topic	Previous Mentions (Q1 & Q2 2021)	Current Period (Q3 2021)	Trend
Hedging impact on GAAP vs. adjusted	Emphasized hedge drag on GAAP, adjusted metrics better represent fundamentals	Continued significant derivative loss and cash settlements; adjusted results and FCF strong	Persistent hedge headwind; improving cash generation
Capital allocation and deleveraging	Plan to pay down debt to zero by year-end; strong FCF generation	Reiterated expectation to end 2021 with no debt and positive cash	Strengthening balance sheet
Operational efficiency (LOE/costs)	Q1 LOE up due to winter workovers; Q2 LOE elevated; focus on cost reductions	LOE declined QoQ to $56.6M and $6.68/BOE on fewer workovers and cost actions	Improving
Production trajectory	Stable volumes around ~90–93 MBOE/d; better-than-forecast well performance in Q2	92.1 MBOE/d; oil slightly lower; overall stable	Stable
Portfolio optimization (M&A)	Announced Sanish acquisition, Redtail divestiture; refocus to higher return inventory	Q3 benefited from gain on sale of properties	Executing portfolio shift
Liquidity and credit facility	Borrowing base $750M; liquidity $528M (Q1) → $650M (Q2)	Liquidity increased to $689M; expect no outstanding credit balance by YE	Improving

Management Commentary

“The team continues to execute on our business plan as demonstrated by the substantial cash provided by operating activities of $190 million during the quarter and $526 million for the nine-month period… under current prices, the Company expects to continue to generate substantial free cash flow during the fourth quarter and end the year with no debt and positive cash on our balance sheet.” — Lynn A. Peterson, President & CEO .
“As of September 30, 2021, the Company had a borrowing base of $750 million, borrowings of $72 million and unrestricted cash of $13 million, resulting in total liquidity of $689 million… forecasts to be in a positive net cash position with no outstanding balance on its credit facility by the end of 2021.” .

Q&A Highlights

The Q3 call (Nov 4, 2021, 11:00 a.m. ET) covered operational performance, hedging impacts on GAAP vs. adjusted results, capital allocation priorities, and progress toward a debt-free balance sheet; management reiterated FCF generation and liquidity trajectory .
Replay and access details were provided in the press release and 8-K (domestic dial-in and webcast URL) .

Estimates Context

Wall Street consensus (S&P Global) for Q3 2021 and prior quarters was unavailable for ticker WLLAW due to missing CIQ mapping despite attempts to retrieve “Primary EPS Consensus Mean” and “Revenue Consensus Mean”; therefore, estimate comparisons could not be provided via S&P Global and are noted as unavailable [GetEstimates error: Missing CIQ mapping for ticker 'WLLAW'].

Key Takeaways for Investors

Sequential improvement driven by pricing tailwinds: revenue rose to $401.0M and adjusted EBITDAX to $201.1M; adjusted EPS $3.57 vs. $3.01 in Q2, signaling resilient core profitability despite hedge impacts .
Free cash flow and deleveraging remain the central thesis: $127.7M adjusted FCF and net debt down to $59M with total liquidity $689M; management expects year-end net cash, a meaningful de-risking catalyst .
Cost control momentum: LOE fell to $6.68/BOE, supporting margin outlook as hedging rolls off over time; monitor sustainability of lower workovers and operating costs into Q4 .
Hedge drag is the main GAAP volatility driver: derivative loss and cash settlements continue to mask underlying strength; focus on adjusted metrics and cash generation for valuation .
Production stability with portfolio optimization: 92.1 MBOE/d with modest oil softness; asset sales gains in Q3 reflect continued focus on higher-return inventory (Sanish/Redtail strategy from Q2) .
Guidance effectively maintained from Q2; absence of a new Q3 guidance table suggests discipline with prior ranges while highlighting the stronger balance sheet outcome by year-end .
Near-term trading implications: narrative supports FCF and de-leveraging; watch hedge disclosures and any Q4 differential and LOE trends, as well as confirmation of year-end net cash to unlock capital return optionality .

Appendix: Additional Operating Metrics

Realized Pricing and Hedging Settlements

Metric	Q1 2021	Q2 2021	Q3 2021
Weighted Avg NYMEX Oil ($/Bbl)	$57.83	$66.03	$70.55
Oil Hedge Effect ($/Bbl)	$(8.16)	$(13.64)	$(16.57)
NGL Hedge Effect ($/Bbl)	N/A	$(0.47)	$(1.93)
Gas Hedge Effect ($/Mcf)	$0.01	$(0.04)	$(0.82)
Oil Cash Hedge Settlements ($MM)	$39	$66	$79
Gas Cash Hedge Settlements ($MM)	N/A (Q4'20 $2)	$0.4	$9

Selected Financial Statement Line Items (Quarter)

Line Item ($USD Thousands)	Q2 2021	Q3 2021
Total Operating Revenues	$351,646	$401,037
Total Operating Expenses	$409,431	$199,304
Derivative Loss, net	$255,409	$122,559
Gain on Sale of Properties	$(10,110)	$(90,194)
Interest Expense	$(3,981)	$(3,871)

Sources: Q3 2021 Form 8-K and Exhibit 99 press release, and Q1/Q2 2021 8-K press releases . Earnings call transcript link references .

Whiting Holdings LLC (WLLAW)·Q3 2021 Earnings Summary