The KOG-Liberty Resources Deal -- Mike Filloon At Seeking Alpha

I don't remember posting this one from a few days ago. At SeekingAlpha, Mike Filloon on the KOG-Liberty Resources deal:

Kodiak announced on June 3rd it was acquiring 42,000 net acres in Williams and McKenzie counties. This added production of 5700 boepd. The acquisitions ups Kodiak's Bakken acreage to 196,000 net acres. It will pay $660 million in cash. Kodiak continues to add acreage, and seems willing to pay market value (or a little more). Liberty Resources is a privately held company, and many believed it would be an IPO sometime in the near future. There are no indications Liberty was hurting financially, or was motivated to sell. I would guess Liberty got the deal it wanted, and Kodiak thought there was added value to the purchase.

Given the infrastructure and daily production, Kodiak received a reasonable deal. I also like the transaction, as Liberty is a very good operator and is on acreage I believe to be outside the top tier, but still very good. I do have some issues with respect to timing and leverage as Kodiak continues to add debt and difficulties for management to execute through 2013. Without the deal, Kodiak was well positioned to grow without worries of raising equity. My biggest worry is how it plans to pay for this deal. Kodiak will probably have to go back to its shareholders in the second half of the year. It probably won't be working with in cash flow for another year or two. Managing the new acreage could also be difficult as there have been difficulties with other bolt on acquisitions.

At the sidebar at the right, I have a section where I link to "deals" in the Bakken.

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