Photo credit: Lindsey G. 

Whiting Petroleum's (NYSE:WLL) recent third-quarter results were deeply affected by weak oil prices. That said, the company is on the path toward long-term sustainability, which was clear from comments made by CEO James Volker on its third-quarter conference call. Here are five things he wanted listeners to know.

1. We saw some fantastic well results during the quarter
One of the highlights during the quarter were recent well results from the company's operations in the Bakken Shale. Volker first noted, "Our new completion designs in the Williston Basin are delivering 44% production increases over second quarter 2015 on a per well basis." The big design change was increased sand volumes, which averaged 5.2 million pounds per well during the quarter compared to 3.5 million pounds the previous quarter.

In addition to the overall average being strong, the company also delivered two real monster wells, with Volker noting, "We reported outstanding results at our Johnson pad in our large Cassandra area, which tested an average rate per well of 5,224 BOEs per day." Again, sand appeared to be the key, with the company completing both wells with a hybrid-style completion using 7 million pounds of sand per well.

2. We cut the fat, not muscle
One important thing Volker pointed out on the call was the fact that Whiting "decreased [its] capital spending 46% and, as planned, still maintained a flat production profile after asset sales." What Whiting Petroleum has been able to accomplish is to basically keep its head above water during this tough time, while still not cutting into the core of the company. Instead, it is trimming away noncore assets, while still maintaining a flat production profile even after those sales.

3. We're on firm financial footing
One of the reasons why the company has focused on reducing its expenses and trimming away the fat is to ensure that its financial position doesn't deteriorate. Volker pointed out that the company achieved its objective of flat production "while keeping our balance sheet strong" and that the company "remain[s] committed to our goal of maintaining a strong balance sheet."

Whiting also maintained strong liquidity during the quarter with Volker noting:

After our redetermination with our banks, our credit agreements from our bank group remain unchanged with commitments at $3.5 billion. This demonstrates the confidence our banking group has in the quality of our assets, and in our strategic plan.

This is a somewhat surprising outcome after analysts had grown concerned that credit facilities would see significant borrowing capacity reductions due to weak oil prices. However, Whiting and Bakken peer Oasis Petroleum (NYSE:OAS) was among the companies that passed this test with flying colors after banks didn't cut borrowing bases as deeply as feared.

4. We've positioned the company to run well in a $40 to $50 oil price environment
While Whiting's capex spending is down 46% year over year, it still needs to fall further. The company's current goal is to balance cash flow with capex in 2016 at a $50 oil price. At that price, the company would generate about $1 billion in cash flow, which is just enough funding to drill a sufficient amount of wells to keep production flat.

That $1 billion level would represent a more than 50% reduction from 2015 spending, but is achievable because of the progress the company is making on costs. Volker noted that during the third quarter:

We spent $266 million in development capital in the Bakken and Redtail and $137 million on non-op drilling, facilities, EUR, exploration and land. We anticipate that CapEx on these items will decline significantly in the fourth quarter. In combination with the impact of dropping three rigs late in the third quarter, we anticipate all-in fourth quarter CapEx under $300 million.

In other words, quarter over quarter spending is expected to drop by more than $100 million and Whiting will then only need to reduce its quarterly run rate by $50 million to hit its target.

While that's quite an achievement, it is worth noting that some of its rivals are not only already at cash flow break-even, but in Oasis Petroleum's case are actually generating free cash flow. Oasis Petroleum was free cash flow positive in both the second and third quarters and projects that trend to continue during the fourth quarter and into 2016, even while delivering flat to moderate production growth at a $50 oil price.

5. We won't outspend cash flow unless it makes a lot of sense
While Oasis is solidly cash flow positive, Whiting's primary goal is to refrain from overspending its cash flow in the year ahead. When asked on the call if the company could see itself outspending cash flow Volker responded by saying:

Well, as you know, we've got a $3.5 billion undrawn commitment from our banks and therefore we certainly have the ability to sustain some amount of overspending, but that is not, I'll repeat, not our plan. If there were some exceptionally good results, and we elected to I guess I'd say speed up drilling in a particular area, as a result of exceptional results even at let's say $40 oil, if it really made good sense there, wouldn't be afraid to do that. But that's not, repeat not currently the plan.

In other words, the company would only outspend cash flow next year if its drilling returns were simply too good to pass up, but that's clearly not what it intends to do.

Investor takeaway
There was one very clear trend on Whiting Petroleum's third-quarter conference call, which is the fact that the company is making progress on becoming a more sustainable entity at lower oil prices. That meant improving its well results, cutting out the fat and maintaining a strong financial footing. It is now on the cusp of achieving that goal, with it expected to turn the corner next year at a $50 oil price and at a slightly reduced quarterly run rate for capex. 

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.