Wednesday, July 16, 2014

Seeking Alpha: Whiting's Buy Shows How The Bakken Is Changing

Whiting Petroleum's (NYSE:WLL) announcement that it had reached an agreement to acquire Kodiak Oil & Gas (NYSE:KOG) was surprising on several levels. First, Whiting isn't offering much of a premium to Kodiak's standalone net asset value. Second, a lot of investors have been assuming (or perhaps hoping) that consolidation in the Bakken would take the form of large energy companies coming in to buy large operators like Continental Resources (NYSE:CLR), Whiting, and Oasis (NYSE:OAS), not peer-to-peer consolidation. Third, this is a deal that is more about execution and efficiency than exploration growth, perhaps marking a recognition of real change.

All told, assuming the deal gets done on the announced terms, it's a good deal for Whiting and not a bad deal for Kodiak. Whereas Whiting has generally gotten good marks for its execution and operating performance (albeit with some concerns about capital efficiency), execution has been a recurrent issue and concern for Kodiak. In buying Kodiak, Whiting has an opportunity to address concerns about its drilling inventory, an opportunity to improve Kodiak's costs, and an opportunity to leverage its newly enlarged position to drive further efficiencies and optimization across a large acreage position.

Read the full article here:
Whiting's Buy Shows How The Bakken Is Changing

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