Idle Musings On Whiting, KOG, Repsol; Four Companies That Could Buy Whiting -- September 17, 2013

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WLL has been trending higher since May, but in lots of fits and starts. But today, it trades near its 52-week high and is up over 4% without any news.


This is old news now, posted yesterday or the day before (LOL), but the article certainly deserves another look:

A bid from Repsol would give a jolt to the U.S. oil patch, where deal-making has fallen off this year and is on track for its lowest level since 2009, according to data provider Dealogic.

Several U.S. companies around the size that Repsol seeks have recently explored sales without finding buyers, including Whiting Petroleum Corp. and Kodiak Oil & Gas Corp., which have stock-market values of about $6.4 billion and $3 billion, respectively.

It also might be a good day to familiarize oneself with WLL.  WLL is bit more complicated to follow than KOG. At the link you will find WLL's most recent presentation; the last WLL presentation I looked at was back in August.

Although WLL is concentrated on the Bakken right now, KOG is 100% Bakken. WLL can offer Repsol a toehold in the Permian, mid-continent, and the Gulf coast. 

More than half (52%) of CAPEX is budged for the northern Rockies (i.e., the Bakken), but the #2 line item for WLL's CAPEX is .... EOR, at 8% of CAPEX, which is almost three times that budgeted for the Permian (3%).

WLL says it has about 1,250 drilling locations in the Bakken; about 320 drilling locations in the Permian.

But get this: I've never been all that impressed with the Niobrara in the short term, but long term, it could be a surprise. Does WLL have any Niobrara exposure? Note: WLL has about 1,250 drilling locations in the Bakken; it has about 1,215 drilling locations in the Niobrara and with another 650 drilling locations in the central Rockies, WLL has over 1,800 drilling locations in and around the Niobrara. Folks forget about that, so much that WLL finally had to highlight that bit of trivia in yellow (slide 15). 

And even in the Bakken, WLL has, not only more acreage, but more diversified acreage than KOG.

WLL also has midstream assets in the Williston Basin that an acquirer might sell off if the buyer wanted to focus on E&P only.

EOR may or may not be all that exciting right now, but a) it keeps Whiting at the forefront of this technology which will become more important over time; and, b) allows a buyer another non-core asset to be sold off.

KOG $3 billion market cap plus $1.45 billion.

WLL $6.5 billion market cap plus $2.25 billion.

For a company like Repsol, KOG seems "underwhelming." WLL seems just a bit more interesting. But then, that's just me. That and $1.85 will get you a small cup of coffee at Starbucks.

See also "acquisition targets in the North American market" at SeekingAlpha. Another article at SeekingAlpha, suggesting KOG and WLL make the best Bakken targets for Repsol.

Meanwhile, from last Friday: four companies that could buy Whiting: Chevron, OXY, Apache, and Shell.

I was unaware of this: Shell just announced (Wednesday) that it paid $1.9 billion to Chesapeake for some Permian assets.

It is very possible that things could move very, very quickly.