Link here. (The link may or may not work, but googling the subject will bring you to the article. The article has been referenced throughout the day by many outlets; I saw it in the print edition to which I subscribe. The story is a good story;
to see the graphic at the link says it all.)
According to the
WSJ, cash on hand, after subtracting debt, in billions (rounded):
- CVX: $11
- XOM: $2
- OXY: -$3
- EOG: -$5
- Hess: -$7
- CHK: -$14
- COP: -$26
All that cash suggests CVX is getting ready to make an acquisition.
Forbes columnist suggests three possibilities, including CLR (all) and CHK's Permian acreage.
Motley Fool: CHK, Hess.
My take on future acquisitions;
ReplyDeleteContinental: Excellent prospect for anyone. Yet Harold Hamm is the largest CLR shareholder. It can't be acquired without him. Would he sell his "baby" for any price? I doubt he'd abandon this child before seeing it "grow up".
Kodiak: Good pick for existing Bakken players (Hess, Marathon, OXY, EOG ?). Though KOG shares are very expensive compared to other companies. KOG seems too small for the other majors who aren't in the Bakken yet, such as Chevron, BP, Shell. They'll need more economy of scale.
OASIS: Like KOG, Oasis is a good pick up for existing players yet quite small for the other majors. However, if someone wants a small entry in the basin, the OAS share price is far more attractive than KOG's. Geographically they'd fit well with EOG or BEXP's holdings, if either wanted to add to their Bakken play.
Northern Oil & Gas: NOG's future is likely to be either; 1. As an acquisition by one of the existing producers they're partnered with. 2. Or structured into a royalty income play after their acres are drilled.
Whiting: WLL has enough production and undrilled acreage to entice a new major like CVX, BP, Shell or the existing ones such as Exxon, Conoco, MRO, Hess, OXY, Apache, or EOG. Unlike Continental, WLL doesn't have a shareholder with a majority stake. Whiting also has one of the lowest share prices per acre. Looking ahead I see WLL as a certain take over target. I can't say just when, by whom, or for how much. Yet I'm confident WLL won't be here in five years. That is one man's opinion. Don't invest on my opinion but you may want to think about it.
Wow, you expressed your thoughts almost exactly what I am thinking, and very similar to what I sent a friend via e-mail.
DeleteI agree that WLL is the more likely takeover candidate of those considered but I did not put it so direct that in five years WLL would be gone.
Going way out on a limb, I think EOG would be best onshore, US company for a company like CVX. The latter has a mkt cap of $220 billion and WLL et al are single digit; almost pocket change for a major. EOG, at $30 billion market cap would stretch CVX but with $20 billion in cash it would be doable, though the asking price for EOG (and all the rest) has gone up appreciably in light of QEP/Helis.
Thank you for such a great note. It will be fun to follow; see how this plays out.
{I suggest EOG because it is deep into both plays: the Bakken and the Eagle Ford. Over time, I think the Eagle Ford will be much bigger than the Bakken.) No one else has suggested EOG, so I'm probably missing something or not understanding the "game."
Bruce, Must be a case of "Great Minds Think Alike"? :) I also like your call of EOG as a possible target for Chevron. EOG's Bakken & Eagle Ford positions each provide attractive long term domestic growth potential. If Chevron is looking for an acquisition, your EOG call is an excellent choice.
ReplyDeleteConsidering Chevron's size, to be meaningful any acquisition would have to be a mid-majors such as; OXY, MRO, HESS, Apache, Anadarko, EOG, or even Chesapeake. Obviously they could buy smaller companies instead. However if they (CVX) wants a meaningful percentage increase to their production and reserves the list of prospects is really not all that long.
I assume there are a lot of other opportunities I am not aware of, but of the list "we" have to work with, EOG would be the only one to move the needle. I don't know the overseas companies well enough and most of them, I suppose, are state-supported and not likely to let an American company buy them.
DeleteSo, we'll see. We may be surprised. Maybe CVX will buy something completely outside their field. Remember the Mobil Corporation - Montgomery Wards debacle?