Brigham Exploration has grown very quickly in the past year on the back of higher oil prices, but as commodities start to top out, its future may soon be in question.Market cap and value/Bakken acre:
Brigham holds more than 300,000 acres, and it has ramped up production quickly, leading to outpaced revenue growth in the past year. Moreover, the company plans to double daily production in 2011.
Of course, Brigham has plenty of company in the Bakken. Oasis, after its recent IPO and KOG expanded in the area last year.
Perhaps the obvious exit strategy for shareholders is to hope for a buyout. With Chesapeake Energy and EOG suffering from low natural gas prices, expansion could lead them to acquire smaller players such as Brigham.
- BEXP: 300,000 acres? It has almost 400,000 acres (371,000 according to recent presentation.) Market cap -- $3.4 billion ($9,000/acre); BEXP is not exclusively in the Bakken, so value per acre is actually less
- KOG: 70,000 acres. Market cap -- $1.2 billion ($17,000/acre); as far as I know, pretty much pure-play Bakken
- Oasis: 303,000 acres. Market cap -- $2.7 billion ($9,000/acre); as far as I know, pretty much pure-play Bakken, although they may have acreage elsewhere. Niobrara?
EOG: $28 billion
I assume buying BEXP, KOR, or OAS could require as much as a 50% premium -- thus $2 billion for KOG, $5 billion for OAS, and $7 billion for BEXP. The takeover offer would be much less, but I don't think any of the three are for sale, thus resulting in a bidding war, taking their shares to a 50% premium. Just my 2 cents worth.
