Current WLL Stock Info

Whiting Petroleum (ticker: WLL) has announced the acquisition of Kodiak Oil & Gas (ticker: KOG), making the company the largest producer in the prolific Bakken/Three Forks area in the Williston Basin.

107,000 BOEPD (Q1 2014) Production
370 MMBOE Reserves
855,000 Net Bakken Acres (strongest acreage position in the Bakken)
3,460 Future Drilling Locations
21 Active Williston Rigs
1,200+ Employees
Economies of Scale: $700,000 Expected Cost Savings per Completed Well
Liquidity ($400 million cash)
Access to Capital ($4...

Analyst Commentary

Stifel Note (7.14.14)

Positive for KOG Despite Discount
While some KOG shareholders may be disappointed with an all-stock deal priced 2% below the previous trading day's close, we believe the transaction is positive for KOG, given the stock's recent outperformance (+14% since 5/1/14 vs our peer group average +3%). Moreover, KOG has long been viewed as a takeover candidate, and management has openly admitted to exploring a potential sale of the company. We doubt KOG management passed on more attractive opportunities than this one, which values the stock only 6% below its all-time high.

Bank of America Merrill Lynch (7.13.14)

With this proposed acquisition, Whiting will have consolidated its position as a premier player in the Bakken shale without having to pay a significant premium. WLL shares remain amongst the cheapest in the sector, and the proposed addition of Kodiak's acreage gives the company top tier acreage and inventory in the Bakken alongside an emerging 123,000 net acre position in the Redtail play in Colorado. We see little read-through to other names, as our view on M&A has been and continues to be that the drivers of any deal are most likely to be company-specific. Whiting remains our top pick in the SMID E&P space.

Wunderlich Securities – (7.14.14)

 WLL is paying just $13.90 per share for KOG in an all-equity deal. You read that right, and frankly its the most interesting part in our view, as KOG's stock closed Friday over 2% higher than that figure and the premium as of now is just 5% above the 60 day average for KOG. In our view, this is a great/accretive price for WLL and its shareholders but for KOG and its shareholders it doesn't seem all that compelling. Granted it's an all equity deal so the upside isn't gone but none is realized today.
 Great buy for WLL in our opinion and it supports our thesis on both names. Obviously given our ratings we like WLL and this deal should show that as we adjust our numbers, adding the high-growth assets of KOG. Honestly though the Street has believed KOG to be for sale for quite some times (years) it surprises us that the price it's finally taking is below the market's valuation of the company.
 Either way, a job well done for KOG and its management. Overall the rise of KOG over the past few years has been fantastic and it has increased the value of its company tremendously alongside the Williston Basin as it became a large oil producer. Combining with WLL could allow investors to keep moving the value higher and given WLL's performance the last few years that end game looks very possible.
 The boards have both approved the deal and it will now go to the shareholders. Based on the price we think WLL shareholders likely overwhelmingly approve the deal but wonder how well received the deal will be to KOG investors. Many investors of KOG have been in the stock for a potential transaction, and here it is, but given the price we wonder if KOG investors will be satisfied.  

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