Undervalued Bakken Stocks

Disclaimer: this is not an investment site. See disclaimer at welcome post, linked at the sidebar at the right.

I have to chuckle. Just after the announcement of the QEP deal, I said the same thing: undervalued Bakken stocks following the QEP - Helis/Black Hills Corp/Sundance/Unit Corp deal; immediately someone wrote to ask me, "so what is NOG worth now?" You can see that back in the comments. Well, now the answers to that question are coming in from "professional" sources and from investment site links. (Again, this is not an investment site.)

This is a typical column, this one from Reuters:

• DEALTALK: Cheap Bakken shale oil cos ripe for acquisition

Oasis Petroleum's Bakken leasehold is valued at about $3,100 per net acre, while Northern Oil's is just $400, said SunTrust Robinson Humphrey analyst Neal Dingmann.

However that has changed since QEP Resources Inc paid about $50,000 per net acre in a $1.4 billion deal to expand its presence in North Dakota.

Shares of all the Bakken operators have risen since the QEP deal was announced on Thursday.

A big "thank you" to Mike for alerting me to this story.

Mike Filloon also weighs in: says QEP paid a "fair" price for the acreage, at SeekingAlpha.com.

The initial announcement named Unit Corporation and Black Hills Exploration and Production as the non-operated sellers. Unit Corp will reportedly get $268 million and Black Hills $243 million for 85% of its Bakken/Three Forks acreage. The third and most important seller is Helis which operates the acreage. Helis will receive an estimated $869 million for its part of the leasehold. It operates the 73 gross wells and 27,600 net lease acres. At the end of the second quarter, this leasehold produced 149 thousand barrels of oil and 171 thousand Mcf of natural gas.

This purchase looks to have a very large premium to other deals in the Bakken. Much of this price was paid for infrastructure and current production, which makes the deal look larger from an acreage standpoint.

In my opinion, this acreage was by no means cheap, but given its core is prime acreage, it does deserve a premium. There have been several estimates as to the price per acre. This can be difficult to calculate given leasehold infrastructure, but this plus daily production places the core acreage in the $19000/acre range. The non-core acreage sold for roughly $12,000/acre. QEP has been vocal for some time it was interested in adding to its Williston Basin leasehold. 

Much, much more from Mike; visit the link. 

Mike says this could be the beginning of a new Bakken land grab. If I get caught up, I will post some thoughts on that.