Wheeling, Dealing Energy Stocks to Buy #4 — Whiting Petroleum (WLL)
Everyone knows that the prolific Bakken shale continues to be the hotbed of production activity. Well, it’s also becoming a hotbed of M&A activity as well. Just look at Whiting Petroleum’s (WLL) bid for smaller producer Kodiak Oil & Gas (KOG).
While KOG stock maybe the best energy stock to play the buyout — because more offers could still pour in, possibly bumping the price — there can be something said for buying the larger acquirer WLL.
With the purchase, Whiting will now be the largest firm operating in the Bakken, and it will control a whopping 855,000 net acres. That prime acreage currently produces around 107,000 BoE per day. However, by combing operations and using KOG’s better drilling technology, the new WLL will be able to boost that production to around 152,000 BoE per day in 2015. Again, that production is liquids-rich, high-priced oil production.
Overall, the deal will be almost instantly accreditive to WLL’s earnings and cash flows. Whiting will also have better access to cheaper capital due to its much larger size.
For investors, WLL is quickly becoming the Bakken energy stock du jour, and the recent deal only makes it stronger.
As of this writing, Aaron Levitt did not hold a position in any of the aforementioned securities.