DEFA14A

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

 

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of the

Securities Exchange Act of 1934

(Amendment No.     )

 

 

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Whiting Petroleum Corporation

(Name of Registrant as Specified In Its Charter)

 

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On August 5, 2014, Whiting Petroleum Corporation posted the attached corporate presentation to its website.

 

 

 


Whiting Petroleum Corporation
ENERGY + TECHNOLOGY = GROWTH
Current Corporate Presentation
August 2014


Forward-Looking Statements, Non-GAAP
Measures, Reserve and Resource Information
Forward-Looking Statements, Non-GAAP
Measures, Reserve and Resource Information
2
Energy
+
Technology
=
Growth
                   This presentation contains statements that Whiting Petroleum
Corporation (“Whiting”) believes to be “forward-looking statements” within
the meaning of Section 21E of the Securities Exchange Act of 1934. All
statements other than historical facts, including statements regarding the
expected benefits of Whiting’s proposed acquisition (the “Acquisition”) of
Kodiak Oil & Gas Corp. (“Kodiak”) to Whiting and Kodiak and their
shareholders, the anticipated completion of the Acquisition or the timing
thereof, the expected future reserves, production, financial position, business
strategy, revenues, earnings, costs, capital expenditures and debt levels of
the combined company, and plans and objectives of management for future
operations, are forward-looking statements. Such forward-looking
statements are subject to risks and uncertainties that could cause actual
results to differ materially from those expressed in, or implied by, such
statements.  These risks and uncertainties include, but are not limited to: the
ability to obtain shareholder, court and regulatory approvals of the
Acquisition; the ability to complete the proposed Acquisition on anticipated
terms and timetable; Whiting’s and Kodiak’s ability to integrate successfully
after the Acquisition and achieve anticipated benefits from the Acquisition;
the possibility that various closing conditions for the Acquisition may not be
satisfied or waived; oil and natural gas prices; level of success in exploration,
development and production activities; the impacts of federal and state laws;
the impacts of hedging on results of operations; uncertainty regarding future
operating results and plans, objectives and expectations; and other risks
described under the caption “Risk Factors” in Whiting’s and Kodiak’s  Annual
Reports on Form 10-K for the period ended December 31, 2013 and Quarterly
Reports on Form 10-Q for the three months ended June 30, 2014. Whiting
assumes no obligation, and disclaim any duty, to update the forward-looking
statements in this communication.  Whiting’s production forecasts and
expectations for future periods are dependent upon many assumptions,
including estimates of production decline rates from existing wells and the
undertaking and outcome of future drilling activity, which may be affected by
significant commodity price declines or drilling cost increases.
                In this presentation, we refer to Adjusted Net Income, Discretionary
Cash Flow and EBITDAX, which are non-GAAP measures that the Company
believes are helpful in evaluating the performance of its business. A
reconciliation of such non-GAAP measures to the relevant GAAP measures
can be found at the end of the presentation.  
              Whiting uses in this presentation the terms proved, probable and
possible reserves.  Proved reserves are reserves which, by analysis of
geoscience and engineering data, can be estimated with reasonable
certainty to be economically producible from a given date forward from
known reservoirs under existing economic conditions, operating methods
and government regulations prior to the time at which contracts providing
the right to operate expire, unless evidence indicates that renewal is
reasonably certain.  Probable reserves are reserves that are less certain to
be recovered than proved reserves, but which, together with proved
reserves, are as likely as not to be recovered. Possible reserves are reserves
that are less certain to be recovered than probable reserves.  Estimates of
probable and possible reserves which may potentially be recoverable
through additional drilling or recovery techniques are by nature more
uncertain than estimates of proved reserves and accordingly are subject to 
substantially greater risk of not actually being realized by the Company.
               Whiting uses in this presentation the term “total resources,” which
consists of contingent and prospective resources, which SEC rules prohibit in
filings of U.S. registrants.  Contingent resources are resources that are
potentially recoverable but not yet considered mature enough for
commercial development due to technological or business hurdles. For
contingent resources to move into the reserves category, the key conditions
or contingencies that prevented commercial development must be clarified
and removed.  Prospective resources are estimated volumes associated with
undiscovered accumulations. These represent quantities of petroleum which
are estimated to be potentially recoverable from oil and gas deposits
identified on the basis of indirect evidence but which have not yet been
drilled. This class represents a higher risk than contingent resources since
the risk of discovery is also added.  For prospective resources to become
classified as contingent resources, hydrocarbons must be discovered, the
accumulations must be further evaluated and an estimate of quantities that
would be recoverable under appropriate development projects prepared. 
Estimates of resources are by nature more uncertain than reserves and
accordingly are subject to substantially greater risk of not actually being 
realized by the Company.


Whiting Overview
Whiting Petroleum Corporation’s Solberg 34-11 Tripad wells with Nabors drilling rig
B15 on the Zalesky 34-8 Tripad, in background.
Whiting Overview
Whiting Petroleum Corporation is an independent oil
and gas company that explores for, develops, acquires
and produces crude oil, natural gas and natural gas
liquids primarily in the Rocky Mountain and Permian
Basin regions of the United States.  The Company’s
largest projects are in the Bakken and Three Forks
plays in North Dakota, the Redtail Niobrara play in
northeast Colorado and its enhanced oil recovery field in
Texas.  The Company trades publicly under the symbol
WLL on the New York Stock Exchange.
Q2 2014 Production
109.8 MBOE/d
Proved Reserves
(1)
438.5 MMBOE
% Oil Reserves
(1)
79% (89% Liquids)
R/P Ratio
(2)
13 years
(1) Whiting reserves at December 31, 2013 based on independent engineering.
(2) R/P ratio based on year-end 2013 proved reserves and 2013 production.
3
Energy
+
Technology
=
Growth


Whiting Petroleum –
A Company on the Move
Five Significant Second Quarter Achievements
4
(1)
Please refer to the Reconciliation of Net Cash Provided by Operating Activities to  Discretionary Cash Flow later in this presentation.
Energy
+
Technology
=
Growth
1) Announced Agreement to Acquire Kodiak Oil & Gas Corp. on July
13, 2014
2) Record Discretionary Cash Flow of $556.2 Million
(1)
; Record Williston Basin Production of
80,195 BOE/d, Up 33% YoY
3) Raised Production Guidance to a mid-point of 20%; Q2 Production Exceeds Top-End of
Production Guidance
4) New Completions Using Cemented Liners and Plug and Perf Technology Yielded a 23%
Increase in EURs Compared to Wells With Uncemented Liners and Sliding Sleeve Technology
5) Spud the 30F Super Pad in the Horsetail Area to Test 32-Well Spacing Pattern in Niobrara
A, B and C Benches in early June 2014; Razor 27I 8-Well Pad Currently Producing
Approximately  4,700 BOE/d as of July 21, 2014


A Focused Company
Major Asset Areas
5
Energy
+
Technology
=
Growth
(1) At December 31, 2013 based on independent engineering.
86%
11%
3%
16.8
26.3
30.3
48.9
63.5
80.2
-
20.0
40.0
60.0
80.0
100.0
2009
2010
2011
2012
2013
Q2
2014
Bakken / Three Forks Production
MBOE/d
Q2 2014 Net Production
109.8 MBOE/d
Rocky Mountains
Permian
Other


Property Area
2014 CAPEX
(MM)
Gross
Wells
Net
Wells
% of
Total
Northern Rockies
1,101
199
137.2
39%
Central Rockies
575
120
104.9
21%
EOR Project
203
NA
(3)
NA
(3)
7%
Libby Ranch CO2
Develop.
(1)
56
2%
Other Exploration Drilling
44
9
7.3
2%
Non-Operated
332
12%
Land
116
4%
Facilities
151
5%
Exploration Expense
(2)
72
3%
Well Work, Misc. Costs, Other
150
5%
Total Budget
$2,800
328
249.4
100%
Capital Budget for Key Property Areas in 2014
2014 Mid-Point Production Growth Guidance of +20%
(1)
For
development
of
CO
prospect
at
Bravo
Dome
in
northeastern
New
Mexico.
(2)
Comprised
primarily
of
exploration
salaries,   lease
delay
rentals
and
seismic
activities.
(3)
This
multi-year
CO 
project
involves
many
re-entries,
workovers
and
conversions.
Therefore,
it
is
budgeted
on
a
project
basis
not
a
well
basis.
6
Energy
+
Technology
=
Growth
Northern Rockies
$1,101 MM
Central Rockies
$575 MM
EOR Project
(3)
$203 MM
Libby Ranch CO2
Development
$56 MM
(1)
Other
Exploration
Drilling
$44 MM
Non-Operated
$332 MM
Land
$116 MM
Facilities
$151 MM
Exploration
Expense
(2)
$72 MM
Well Work, Misc.
Costs, Other
$150 MM
2
2


Field
Target
Gross Acres
Net Acres
Sanish / Parshall
Middle Bakken
Three Forks
174,665
82,462
Pronghorn
Pronghorn Sand
180,911
116,848
Lewis & Clark
Three Forks
172,009
118,039
Hidden Bench
Middle Bakken
Three Forks
61,024
37,667
Tarpon
Middle Bakken
Three Forks
8,805
6,267
Starbuck
Middle Bakken
Three Forks
Red River
52,020
42,707
Missouri Breaks
Middle Bakken
Three Forks
93,678
66,956
Cassandra
Middle Bakken
Three Forks
29,827
13,953
Big Island
Red River
166,126
135,122
Other ND & Montana
120,892
54,141
Total
1,059,957
674,162
Williston Basin Highlights
June 30, 2014
7
Energy
+
Technology
=
Growth
Slickwater Test
Sundheim 21-27-1H
had 44% greater
120-day rate than
offsetting well
Waldock Federal 14-4-
3XH completed with 93
stage coiled tubing frac
Q2 2014 Completions
in Hidden Bench
(11 Wells ) Average IP of
2,872 BOE/d
Skaar Federal 41-3TFHU
completed June 7, 2014
flowing 6,071 BOE/d
from the 2nd Bench of
the Three Forks


Annulus
Stages
Frac Ports
per Stage
Potential
Entry
Points
Free fluid
between
packers
30
1
30
Annulus
Stages
Perforation
Clusters
per Stage
Potential
Entry
Points
Cemented
40
3
120
Older Style
Sliding Sleeve Completion
New Style
Cemented Liner Completion
Maximizing Recovery Efficiency
Improving Frac Distribution
8
Energy
+
Technology
=
Growth


Exploiting the Bakken and Three Forks in the Williston
Primary and Prospective Drilling Locations
9
Energy
+
Technology
=
Growth
MISSOURI BREAKS
8 WELLS
CASSANDRA
12 WELLS
SANISH
15 WELLS
PRONGHORN
6 WELLS
TARPON
12 WELLS
HIDDEN BENCH
16 WELLS


Redtail Development Program
Economic Sweet Spot
(Weld County, Colorado)
OBJECTIVE
Niobrara “B”
Shale
Niobrara “A”
Shale
DEVELOPMENT PLAN
Mix of 960 and 640-acre spacing units
8 Wells per spacing unit Niobrara “B”
8 Wells per spacing unit Niobrara “A”
3,300+ potential drilling locations
ACREAGE
Whiting has assembled 180,115 gross
(128,721 net) acres in our Redtail
prospect in the northeastern portion of
the DJ Basin.
Average WI of 71%
Average NRI of 59%
COMPLETED WELL COST
Horizontal:  $5.5 MM
DRILLING HIGHLIGHTS
First 8-well pad, the Razor 27I (4 Niobrara
“A”; 4 Niobrara “B”) pad came online
April 15, 2014. The pad was producing
4,699 BOE/d as of July 21, 2014 . 
We spud our Horsetail 30F super pad that
will test 32-well spacing in the Niobrara
“A”, “B”
and “C”
zones. 
10
Source: IHS and internal Whiting production database
Energy
+
Technology
=
Growth
Pre 2013
2013 -
14
BOEPD
1 –
350
350 –
450
450 –
550
550 –
650
650 –
750
> 750
Niobrara Initial 30-Day Average Rate
(Gas converted to oil price equivalent ratio 17:1)


Niobrara  Reservoir
Whiting RAZOR 25-2514H
GR                   Zone        PHI           Minerals        BVFluid                  RES
0                         200
30                          -10                            0                           100 0.2                  2000    
A
A
B
B
C
C
Niobrara  Resource Potential
(1)
*
**
GOR=500 cf/bo
Stimulated Rock Volume
Reservoir
Porosity
(%)
Thickness
(ft)
OOIP    
(MMBOE/
960ac)*
% WLL
Wells
#
Gross
Wells
NIO A
13%
35
19
81
1,344
NIO B
13%
65
40
81
1,343
NIO C
11%
25
11
80
1,316
70
OOIP by Zone
Recoverable Oil 16 Well / DSU Density
(Total OOIP A Zone + B Zone = 59 MMBOE/DSU)**
16 wells            
10% Recovery
16 wells            
15% Recovery
16 wells            
20% Recovery
370 MBOE
560 MBOE
740 MBOE
(1) Please refer to the beginning of this presentation for
disclosures regarding “Reserve and Resource Information.”
Estimates updated as of December 31, 2013
Recoverable Oil 32 Well / DSU Density
(Total OOIP A Zone + B Zone + C Zone = 70 MMBOE/DSU)**
32 wells            
15% Recovery
32 wells            
20% Recovery
32 wells            
25% Recovery
330 MBOE
440 MBOE
550 MBOE
Redtail Development Program
Niobrara Reservoirs
11
Energy
+
Technology
=
Growth


27L Pad
Drilling Density
-
16 Wells/DSU
-
330 ft.
Target:   B-B-B-B
Status: Flowing
27K Pad
Drilling Density
-
16 Wells/DSU
-
330 ft.
Target:   A-B-A-B
Status: Flowing
Razor Pilot
16 Wells / 960ac DSU
30F Pad
Drilling Density
-
32 Wells/DSU
-
165 ft.
Target: C-B-A-B-
A-B-C-B
Status: Drilling
Horsetail Pilot
32 Wells / 960ac DSU
Planned Wells
Producing Wells
Future Infill Wells
Redtail Development Planning
Defining Optimal Well Density
12
Energy
+
Technology
=
Growth


Redtail Niobrara A & B Type Curve: 420 MBOE
Per Well Results: 85%-100% IRRs
(1)(2)(3)
13
Energy
+
Technology
=
Growth
EUR -
420 MBOE, Development Phase CAPEX $5.5 MM
NYMEX Oil Price/Bbl
$90
$100
ROI
3.2
3.7
IRR (%)
85%
100%
Payout (Yrs.)
1.2
1.0
PV10 ($MM)
6.28
7.87
10
100
1000
0
20
40
60
80
100
120
140
160
180
Months on Production
(1)
Please refer to the beginning of this presentation for disclosures regarding "Reserve and Resource Information."   All volumes shown are un-risked.  Our pre-tax PV10% values do not 
purport to present the fair value of our oil and natural gas reserves.
(2)
EURs, ROIs, IRRs and PV10% values will vary well to well.  Estimates updated as of December 31, 2013.
(3)
Based on a mix of 17 640- and 960-acre spaced wells drilled since March 21, 2013.


Redtail Infrastructure Plan: A Great Place to Find an
Oil Field!
June 2014
Redtail Facilities Plan
Planned Gathering System
Gas Gathering Lines
141 Miles
Oil Gathering Lines
111 Miles
SW Gathering Lines
54 Miles
Frac Water Supply Lines
16 Miles
Redtail Gas Plant
Train 1 Capacity (Online)
20 MMcf/d
Train 2 Capacity (Q1 2015)
50 MMcf/d
Train 3 Capacity (2016)
70MMcf/d
Takeaway Capacity (2016)
140 MMcf/d
Capital Investment
Gas Plant
$100 MM
Gas Gathering / Field Compression
$95 MM
Oil Gathering / LACTs
$80 MM
Electricity
$40 MM
Total
$315 MM
14
Energy
+
Technology
=
Growth
Kinder Morgan
Interstate
Trailblazer
8”
Residue Pipeline
Constructed By TallGrass
Pony
Express
Redtail Plant
Terrace Plant
TallGrass
Pawnee
Terminal
Northeast Colorado Lateral
to Pony Express
TallGrass
Buckingham
Terminal


Strong CFPS Growth While Maintaining a Healthy
Balance Sheet
15
(1)
Please refer to the Reconciliation of Net Cash Provided by Operating
activities to Cash Flow Per Share later in this presentation.
(2)
Please refer to the Reconciliation of Net Income to EBITDAX and Long-term
Debt to Net Debt later in this presentation.
Energy
+
Technology
=
Growth
1.33x
0.77x
1.04x
1.19x
1.05x
0.00x
0.20x
0.40x
0.60x
0.80x
1.00x
1.20x
1.40x
2009
2010
2011
2012
2013
Net Debt to EBITDAX
(2)
$4.53
$9.25
$10.05
$11.77
$14.59
$0.00
$2.00
$4.00
$6.00
$8.00
$10.00
$12.00
$14.00
$16.00
2009
2010
2011
2012
Cash Flow Per Share Growth
(1)
2013


(1)
Includes hedging adjustments.
Consistently Delivering Strong EBITDA Margins
(1)
$45.01
$61.48
Oil $93.03/Bbl
NGL $39.30/Bbl
Gas $6.95/Mcf
$73.88
$69.85
$76.76
Oil Focused Strategy Delivers Consistently Strong
Margins
16
Energy
+
Technology
=
Growth
$82.16/BOE
$80.00
$0.00
$10.00
$20.00
$30.00
$40.00
$50.00
$60.00
$70.00
$80.00
$90.00
2009
2010
2011
2012
2013
Q1 2014
Q2 2014
26%
18%
17%
18%
16%
16%
15%
7%
7%
8%
8%
9%
8%
8%
5%
5%
5%
5%
5%
5%
4%
5%
2%
2%
3%
4%
3%
2%
$25.71/57%
$41.58/68%
$50.65/68%
$46.16/66%
$50.89/66%
$54.31/68%
$58.51/71%
Lease Operating Expense
Production Taxes
G&A
Exploration Expense
EBITDA


Appendix


Reconciliation of Net Cash Provided by Operating Activities to
Discretionary Cash Flow
(1)
Discretionary cash flow is a non-GAAP measure.  Discretionary cash flow is presented because management believes it provides useful information to investors for
analysis of the Company’s ability to internally fund acquisitions, exploration and development.  Discretionary cash flow should not be considered in isolation or as a
substitute for net income, income from operations, net cash provided by operating activities or other income, cash flow or liquidity measures under U.S. GAAP and
may not be comparable to other similarly titled measures of other companies.
Discretionary Cash Flow
(1)
($ in Thousands)
18
Energy
+
Technology
=
Growth
Three Months Ended
Six Months Ended
June 30,
June 30,
2014
2013
2014
2013
Net cash provided by operating activities …………
$
567,769
$
442,617
$
891,666
$
740,231
Exploration ………………………………………………….
13,466
24,343
37,588
43,209
Exploratory dry hole costs ……………………………
(70)
(11,628)
(3,622)
(11,628)
Changes in working capital …………………………..
(24,978)
(14,191)
112,516
70,668
Preferred stock dividends paid ………………………..
-
(269)
-
(538)
Discretionary cash flow      ...………………………….
(1)
.
$
556,187
$
440,872
$
1,038,148
$
841,942


Reconciliation of Net Cash Provided by Operating Activities to Cash
Flow Per Diluted Share
Cash Flow Per Diluted Share
($ in Thousands)
19
Cash Flow Per Share:
Year Ended December 31,
2009
2010
2011
2012
2013
Net cash provided by operating activities.........................
$   453,824
$     997,289
$  1,192,083
$  1,401,215
$  1,744,745
Weighted
average
diluted
shares
outstanding
(1)
..................
100,088
107,846
118,668
119,028
119,588
Cash flow per share.........................................................
$          4.53
$            9.25
$          10.05
$          11.77
$          14.59
(1)
Energy
+
Technology
=
Growth
All share and per share amounts have been retroactively restated for the 2009 and 2010 periods to reflect Whiting’s two –for-one stock split in February 2011.


Reconciliation of Net Income to EBITDAX
EBITDAX
($ in Thousands)
20
EBITDAX Reconciliation:
Year Ended December 31,
2009
2010
2011
2012
2013
Net Income (Loss)………………………………………….
$  (106,882)
$     336,653
$     491,628
$     414,099
$     366,003
Amortization of Deferred  Gain.…………………….
(16,596)
(15,613)
(13,937)
(29,458)
(31,737)
Gain on Sale of Properties......……………………….
(5,947)
(1,388)
(16,313)
(3,423)
(128,648)
Interest Income……………………………………………..
(208)
(343)
(208)
(283)
(1,134)
Depreciation, Depletion & Amortization……….
394,792
393,897
468,203
684,724
891,516
Exploration…………………………………………………….
46,875
32,846
45,861
59,117
94,755
Impairment…………………………………………………...
26,139
26,525
38,783
107,855
358,455
Stock Compensation………………………………………
7,650
8,871
13,509
18,190
22,436
Interest Expense...............................................
64,608
59,078
62,516
75,210
112,936
Change in LT PPP..............................................
3,267
12,091
(865)
13,824
(6,980)
Noncash (Gain) Loss on MTM Derivatives........
218,255
(40,736)
(63,093)
(115,733)
(20,830)
Income Taxes (Benefit).....................................
(55,953)
204,790
288,691
247,912
205,868
EBITDAX Total....................................
$   576,000
$  1,016,671
$  1,314,775
$  1,472,034
$  1,862,640
Energy
+
Technology
=
Growth


Reconciliation of Long-term Debt to Net Debt
Net Debt
($ in Thousands)
21
Year Ended December 31,
2009
2010
2011
2012
2013
Long-term Debt.........
$779,585
$800,000
$1,380,000
$1,800,000
$2,653,834
Less Cash...................
11,960
18,952
15,811
44,800
699,460
Net Debt....................
$767,625
$781,048
$1,364,189
$1,755,200
$1,954,374
Energy
+
Technology
=
Growth


22
Energy
+
Technology
=
Growth
Important Additional Information and Where to Find It
This communication does not constitute an offer to sell or the solicitation of an offer to buy any securities or a
solicitation of a vote or proxy. The proposed Acquisition anticipates that the Whiting shares to be issued pursuant to
the Acquisition will be exempt from registration under the United States Securities Act of 1933, as amended (the
"Securities Act"), pursuant to Section 3(a)(10) of the Securities Act. Consequently, the Whiting shares will not be
registered under the Securities Act or any state securities laws. In connection with the proposed Acquisition,  Whiting
and Kodiak intend to file relevant materials with the SEC and other governmental or regulatory authorities, including a
joint proxy statement and circular. INVESTORS ARE URGED TO READ THE JOINT PROXY STATEMENT AND CIRCULAR
AND ANY OTHER RELEVANT MATERIALS WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN
IMPORTANT
INFORMATION
ABOUT
WHITING,
KODIAK
AND
THE
PROPOSED
ACQUISITION.
The
joint
proxy
statement and circular and certain other relevant materials (when they become available) and other documents filed
by  Whiting or Kodiak with the SEC may be obtained free of charge at the SEC’s website at http://www.sec.gov. In
addition, investors may obtain copies of these documents (when they become available) free of charge by written
request to Whiting Investor Relations, 1700 Broadway, Suite 2300, Denver, CO 80290-2300 or calling (303) 390-4051
or by written request to Kodiak Investor Relations, 1625 Broadway, Suite 250, Denver, CO 80202-4765 or calling (303)
592-8030.
Participants in the Solicitation
Whiting, Kodiak and their respective executive officers and directors may be deemed to be participants in the
solicitation of proxies in connection with the proposed Acquisition. Information about the executive officers and
directors of Whiting and the number of shares of Whiting’s common stock beneficially owned by such persons is set
forth in the proxy statement for Whiting’s 2014 Annual Meeting of Stockholders which was filed with the SEC on
March 23, 2014, and Whiting’s Annual Report on Form 10-K for the period ended December 31, 2013. Information
about the executive officers and directors of Kodiak and the number of Kodiak’s ordinary shares beneficially owned by
such persons is set forth in the proxy statement for Kodiak’s 2014 Annual Meeting of Shareholders which was filed
with the SEC on May 9, 2014, and Kodiak’s Annual Report on Form 10-K for the period ended December 31, 2013.
Investors may obtain additional information regarding the direct
and indirect interests of Whiting, Kodiak and their
respective executive officers and directors in the Acquisition by reading the joint proxy statement and circular
regarding the Acquisition when it becomes available.