Whiting Petroleum Corporation (ticker: WLL) is an independent oil and gas company that explores for, develops, acquires and produces crude oil, natural gas and natural gas liquids primarily in Williston Basin and Permian Basin regions of the United States. The Company’s largest projects are in the Bakken and Three Forks plays in North Dakota and its Enhanced Oil Recovery field in Texas.
James J. Volker, Whiting’s Chairman and CEO, recently presented at EnerCom’s The Oil & Gas Conference 18® in Denver.
Re-Upping on Williston Basin Properties
WLL announced on August 27, 2013, the acquisition of 17,282 net acres (92% HBP) in Williams and McKenzie counties of North Dakota and Roosevelt and Richland counties of Montana, for $260 million. The deal, expected to close on September 30 with an effective date of August 1, will bring WLL’s total acreage position in the Williston Basin to more than 714,000 net acres.
The acquired properties, located in and around WLL’s Missouri Breaks and Hidden Branch prospects, include 13 operated 1,280-acre Bakken/Three Forks drilling spacing units with an average working interest of 58% and net revenue interest of 48%. Net production and estimated proved reserves from the properties is 2,420 BOEPD and 17.1 MMBOE (85% oil), respectively.
Based on the purchase price, the transaction is valued at $15,044 per acre, $107,438 per flowing BOEPD, or $15.20 per proved BOE. According to EnerCom’s E&P database, as of August 23, 2013, Whiting was trading at an enterprise value to trailing twelve months production and enterprise value to 2012 proved reserves of $94,158 per flowing BOEPD and $21.72 per BOE, respectively. OAG360 notes 76% of the acquired reserves are proved undeveloped compared to the company’s overall PUD percentage of 36% as of year-end 2012.
The company plans to finance the acquisition with borrowings under its existing bank credit facility.
David Tameron, Senior Analyst for Wells Fargo Securities, expects large development in the area. His note on August 27, 2013, explains: “If WLL can place four Bakken wells and three Three Forks wells on each drilling spatial unit, which is consistent with WLL’s recent presentations, the new assets contain 91 potential locations, although we are not sure how many of these remain. WLL has had recent success in their Missouri Breaks asset through new completion designs, and we believe today’s news could be another positive indication of management’s view on the prospects for area as a whole.”
Ryan Oatman, Research Analyst for SunTrust Robinson Humphrey, praised the expansion in his note of August 27, 2013. “Conceptually, using a clean balance sheet to get bigger in the Bakken makes sense for Whiting, regardless of where the stock is trading at,” the note reads. “We also see the deal as slightly attractive based on M&A activity and Bakken equity valuations… In short, we like the deal.”
Executive Team Commentary
James J. Volker, Whiting’s Chairman and CEO, said: “This acreage expands our presence in our Western Williston Basin area where we have seen recent strong production growth primarily as a result of positive drilling results at our Hidden Bench, Tarpon and Missouri Breaks prospects.”
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