Over the past year and a half, the Williston Basin’s Bakken acreage has been the focus of more than 100 publicly announced transactions. From July 2011 through December 2012, Oil & Gas 360® compiled and analyzed Bakken transactions on average deal sizes, acreage values and production values.

A few historic bullet points from past Bakken deals:

  • Since July 2011, each month the average deal flow across the basin averaged $789MM, with an average deal size of $234MM. The largest of transactions during this period was the Statoil (ticker: STO) acquisition of Brigham Exploration for $4.7B, averaged at $8,000 per acre in October 2011.
  • Since July 2011, OAG360 observed an average acreage valuation of $2,868 per acre in the Bakken.

Has the price-paid-per acre crested?  That depends on where acreage is being picked up. Though we note a steady decline in total dollars spent each month along with a decreasing acreage valuation in the deals completed since September 2012, many of these recent deals are focused outside of the Bakken “core”.

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A few current bullet points on the Bakken:

  • Between November 2012 and the beginning of January 2013, transacted acreage values averaged $713 per acre.  We note that the two deals that make up this average were done in Divide and Daniels Counties. Not every deal completed over this time period allowed us to calculate a value per acre due to limited disclosure, however, we note that a total of nine deals were completed at an average value of $92.9MM focused on Daniels, Divide, Stark and Richland Counties.
  • Over the 18-month measurement period, the largest transactions occurred in Williams County, averaging $655.3MM per transaction and an average value of $8,288 per acre.
  • Deals in McKenzie County over the past 18 months received the next highest acreage value at $3,301 per acre.
  • The most active county over the past 18 months was Divide County with 12 transactions averaging $116.0MM in value and $1,769 per acre.
  • Since July 2012, companies have seen a wide range of values for flowing BOEPD: from $28,070 per BOEPD to as high as $159,365 per BOEPD, with an average of just under $80,000 per BOEPD.

These large variations in per acre and per flowing production valuations are easily explained and are all too often replayed in other basins around the world. The core acreage is bought and proved up first and late entrants into the paly will have to pay a premium to gain access to these less risky positions. As companies look to expand a play by looking to acquire acreage on the fringe, companies take on the additional exploration risk but the value of acreage declines. We want to point out that the majority of recent deals have been on the fringe of the play and remind readers that deals targeting Williams and McKenzie Counties, considered by some to be the heart of the play, will demand premium valuation.

Important disclosures: The information provided herein is believed to be reliable; however, EnerCom, Inc. makes no representation or warranty as to its completeness or accuracy. EnerCom’s conclusions are based upon information gathered from sources deemed to be reliable. This note is not intended as an offer or solicitation for the purchase or sale of any security or financial instrument of any company mentioned in this note. This note was prepared for general circulation and does not provide investment recommendations specific to individual investors. All readers of the note must make their own investment decisions based upon their specific investment objectives and financial situation utilizing their own financial advisors as they deem necessary. Investors should consider a company’s entire financial and operational structure in making any investment decisions. Past performance of any company discussed in this note should not be taken as an indication or guarantee of future results. EnerCom is a multi-disciplined management consulting services firm that regularly intends to seek business, or currently may be undertaking business, with companies covered on Oil & Gas 360®, and thereby seeks to receive compensation from these companies for its services. In addition, EnerCom, or its principals or employees, may have an economic interest in any of these companies. As a result, readers of EnerCom’s Oil & Gas 360® should be aware that the firm may have a conflict of interest that could affect the objectivity of this note. The company or companies covered in this note did not review the note prior to publication. EnerCom, or its principals or employees, may have an economic interest in any of the companies covered in this report or on Oil & Gas 360®. As a result, readers of EnerCom’s reports or Oil & Gas 360® should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. As of the report date, neither EnerCom nor any of its employees has a financial interest in any equity or debt of any company mentioned in this report.

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