Whiting Petroleum's (NYSE:WLL) second-quarter earnings report was full of surprises. One of the biggest was the company's quick decision to reduce its capital expenditures budget just two weeks after increasing it. That change, however, was just one of the topics discussed on the company's second-quarter conference call. Here's a closer look at five key areas the company's management team addressed on that call.

1. We continue to set production records
One of the more pleasant surprises during the quarter was the company's stronger-than-expected production. In discussing its production, CEO James Volker said that the company "posted another record quarter of total company production at 170,000 BOEs per day."

One of the driving forces behind the robust production was the company's newest completion designs, which Volker pointed out are "delivering 40% to 50% production increases relative to our older offset wells" in the Bakken. Suffice it to say, the company was very pleased with this result.

2. We've cut costs and really improved cash flow
The other really pleasant surprise during the quarter was the company's unexpected earnings beat as it earned money when analysts expected the company to merely break even. Fueling this unexpected profit was the dramatic improvement in the company's costs. CFO Michael Stevens noted these improvements:

Our unit costs in the second quarter of 2015 have decreased significantly from the second quarter of 2014 due in large part to cost control measures and technology-driven productivity increases. Our DD&A rate per BOE has dropped 23% to $20.81. LOE per BOE has decreased 22% to $9.25. And G&A per BOE is down 19% to $2.90.

This actually enabled the company to deliver really strong discretionary cash flow in the second quarter, which Stevens pointed out totaled $381 million, or a 53% increase over the first quarter. This cash flow is key to the company's ability to continue to drill without burdening its balance sheet amid the continued weakness in oil prices. 

3. We're preserving our financial position
Despite the solid financial results, Whiting isn't resting on its laurels. The company is continuing to improve its financial position and, as Volker pointed out, Whiting "sold additional non-core properties with high LOE per BOE for $185 million" during the quarter bringing its total to $300 million in asset sales year to date. These sales are part of the company's plan to "deliver strong production growth without adding debt" as Whiting remains committed to its plan "to operate within cash flow" according to Volker. What the company is doing is selling higher-cost production and reinvesting the proceeds into lower-cost shale, instead of using debt to invest in new wells. 

4. We've quickly responded to the recent decline in oil
That commitment to maintaining its current financial position was on full display when the company quickly reversed its July 17 announcement to raise its 2015 capex budget from $2 billion to $2.3 billion and cut it back to $2.15 billion just two weeks later. In commenting on that decision Volker said, "With the recent decline in commodity prices, we have elected to drop an additional three rigs in the second half of the year and run an eight-rig program." This unexpected oil price decline over that time period can be seen on the following chart:

WTI Crude Oil Spot Price Chart

WTI Crude Oil Spot Price data by YCharts

While the quick reversal made the company look a bit foolish, it felt that it was better to be safe and respond quickly than to be sorry later if oil prices kept heading lower.

5. We're remaining flexible
Given how volatile oil has been over the past year, Whiting Petroleum has decided that the best course of action is for its capex budget to remain flexible so that it can keep it equal to cash flow. However, Volker was quick to point out that this also means, "If oil prices are higher than anticipated later this year, we can ramp up and deliver even greater growth."

He later noted that "every $5 increase in the price of oil is somewhere around $200 million of additional cash flow to us." Meaning that the company has the flexibility at higher oil prices to increase its capex to further increase production. Having said that, Volker did note that the company would like to see oil stay in the $60 or above range for more than six months before it starts to add more rigs to grow production just to be sure that oil has found its footing.

Investor takeaway
Whiting Petroleum has had its share of struggles since oil prices collapsed last year. However, it has rapidly reduced its costs in an effort to improve its cash flow, which it believes is now strong enough to support its plan to keep the company slowly growing at the current oil price. That said, it plans to remain as flexible as possible and will continue to adjust its budget to market conditions as it strives to maintain a solid financial footing.

Matt DiLallo has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.