Friday, March 13, 2015

Whiting: Plan B -- March 13, 2015; Let's Start A Rumor: Would It Make Sense For Exxon To Buy Hess? What About A Hess/ONEOK Merger?


March 14, 2015: Bloomberg is reporting --
Whiting Petroleum Corp., the North Dakota oil explorer, has attracted interest from Exxon Mobil Corp. and Continental Resources Inc. as it explores a sale of the entire company, people with knowledge of the situation said.
Hess Corp. and Statoil ASA are also looking at Denver-based Whiting.
Whiting has set up a data room for potential buyers to evaluate the company’s financial information and asked them to submit bids next week.
The discussions are ongoing and there’s no guarantee a deal will be reached. A potential deal for Whiting, the largest producer in North Dakota’s Bakken shale formation, may be the first in an anticipated pickup of merger activity for U.S. energy producers as they grapple with heavy debt and an oil selloff.
Continental, Exxon, Hess and Statoil are already among the 10 largest holders of acreage in the Bakken, a giant slab of oil-soaked rock that lies beneath Montana, North Dakota and parts of Canada, according to data compiled by Bloomberg.
Later, 11:18 a.m.: With MDU announcing that they are putting their Fidelity sale "on hold" for awhile (PN, January 18, 2015; MDU press release, January 9, 2015); and now with Whiting having to go to Plan B (see below), the obvious question needs to be asked -- if the operators get through the worst of this downtown, might they just decide not to sell at all?

Might MDU reconsider selling Fidelity? When a reader asked me that question, these were my thoughts:
I think everything is on hold across the oil and gas industry, waiting for someone to make the first move.
The operators have just completed their most recent meetings on how simply to survive -- mostly cost cutting --
Their next meeting will be on what assets to sell if necessary ...
The acquirers -- those doing the buying -- can afford to wait -- this is a buyers' market -- it appears that things will only get worse -- I think CLR is down another 7% today ...
And as noted, everyone is waiting for someone else to go first. I think Exxon goes first -- and buys .... cap $19 billion; debt $6 billion; Hess international history goes way back; I think XOM and Hess were originally both New York City/State companies.... XOM likes natural gas and refining as much as oil, it seems; Hess is well known for its natural gas in North Dakota; XOM could use the $8 billion bond sale as a down payment...I will have to dig out my copy of The Prize --- though it might be in San Pedro....
If Exxon waits too long, it could be too late --- why wouldn't a Hess/ONEOK merger be a possibility -- that "new" company might be a bit much for Exxon from a regulator's point of view....
Disclaimer: this is all idle chatter. This is not an investment site. Do not make any investment, financial, or relationship decisions based on what you read here. This is simply my two cents worth. That and $1.79 will get you a Starbucks "tall" outside the DFW airport. See disclaimer for more interesting commentary on why I blog.

Original Post
Reuters is reporting:
YORK/WILLISTON, N.D., March 13 (Reuters) - Whiting Petroleum Corp, North Dakota's largest oil producer, has put Texas acreage and pipeline assets up for sale as an alternative to a sale of the full company, according to sources familiar with the matter.
This strategy could appease investors outraged by the possibility of any outright sale. It would dispose of assets not central to the core shale operations and generate cash for the company's balance sheet, engulfed by more than $3 billion in debt after December's buyout of smaller rival Kodiak Oil & Gas.
JPMorgan has shopped the full company in recent days to select parties, several people said.
However, several potential acquirers' interest in buying all of Whiting was tepid due to concerns about Whiting's $5.63 billion debt load, the sources said. One of the people said a bid deadline has been scheduled for next week.
Just yesterday I wrote:
I believe I have heard through the grapevine that Whiting is offering for sale some non-core assets, or its positions in non-operated wells. I could be wrong on that; I don't know if there has been an official press release or news item to that effect. This is outside the WSJ article that Whiting, the company, is looking to be bought. It's also possible these permits are old KOG permits that are going to be "re-accomplished." The Whiting permits that have been canceled have these key words in their names: Koala (1), Moccasin Creek (1), Skunk Creek (4), Smokey (3), and Nystuen (2). 
By the way, going back to that post reminded me of another story I forgot to post. Remember that story posted earlier today about all the wells -- about 850 -- that are waiting to be fracked. Every last well that came off the confidential list today -- every last one of them, all six -- went to DRL status -- another six that are are joining the queue to be fracked:

Wells coming off the confidential list Friday:
  • 28469, drl, Hess, EN-Rehak-155-93-0718H-8, Alger, no production data,
  • 28664, drl, MRO, Kerkhoff 14-8H, Murphy Creek, no production data,
  • 28886, drl, Zavanna, Gust 2-11 2H,  Long Creek, no production data,
  • 29011, drl, XTO, Nelson 24X-11A, Garden, no production data,
  • 29053, drl, Stephens Production, York 3-9, wildcat, 3-156-82, no production data,
  • 29231, drl, Statoil, Heen 26-35 4TFH, Todd, no production data,

Someone sent me President Obama's agenda for next week/rest of the month now that the heavy work -- vetoing the Keystone XL -- has been accomplished:
  • March Madness/Sweet 16/Final Four bracket-picking; press conference; no questions
  • Christmas vacation planning: Hawaii alone; Michelle on a Caribbean cruise? Fifty degrees of separation
  • start writing speech for Democratic nomination convention; emphasis on bringing country together
  • buy some more red-ink pens: one for vetoes; one for drawing lines on maps in war zones
  • schedule visit to Ferguson, MO, when Supreme Court announces date for ObamaCare decision
There is some question regarding the veracity of this agenda. If this is important for you, go to the source:


  1. Whiting and all of its assets will be snapped up for 75% off by the usual gang of crooks, using 0% money that they got for free from the US govt, while Wall Street banksters collect a generous skim of cream to arrange the deal. All part of a baked in plan to deliver the country's wealth into the hands of a few oligarchs and return the rest of us to feudal times.

  2. Interesting to see this summer if producer will just say screw it and start fracking the backlog of 823 wells, being in the industry here sure see a lot of layoffs, scary times indeed. Side Note: Thank You Bruce for all that you do, very inciteful posting, always look forward to reading everyday.

    1. Thank you for your kind words about the blog.

      I find the fracking backlog story absolutely fascinating on so many levels. First, CNBC talks about contango all the time: folks expect prices to be higher in the future than they are now.

      Second, although it's expensive to drill, it's getting less expensive, but fracking is very, very expensive -- just delaying fracking will save these operators a ton of money -- but, yes, I know they need cash flow to stay alive.

      Third, once the well is drilled, operators are finding it might be worth it to leave the oil "stored" underground in an unfracked well, than pay for storage above ground.

      Fourth, the operators, even in the best of times, knew that at some point, pad dwelling was going to delay production -- 6 wells on a pad -- it could be six months before production beings.

      Fifth, most interesting -- some new lessons may be learned. I'm curious if fracking well #2 that sits between wells #1 and #3 might actually produce some fracking "halo" effect in all three wells.

      Sixth, when the price of oil starts to rise, the fracking operations will begin again -- it will be interesting to see how fast frack spreads can be brought back up.

      If around 200 wells are completed each month (as was the case during the "boom") then 850 wells are approaching inventory for four months. That's a lot of inventory, and of, course, while they are working on the 850 wells, another 200 wells will be drilled each month (that number will drop during the slump in oil prices).