Summary:
- The report in the Wall Street Journal of a strategic sale process at Whiting comes as a surprise.
- Despite the elevated debt level, the company appears to be solidly positioned strategically, with an extensive and economically competitive asset base.
- Waiting out for a cyclical recovery would appear to make more strategic sense.
- Could the process be undertaken in response to an unsolicited offer? A bid at a significant premium, particularly an all-cash bid, can trigger a review of strategic alternatives, or even put the company "in play." I should also note that given the depressed commodity price environment, the Board would likely have a very defensible "just say no" option.
- Is the threshold for the acquisition premium set at a very high level? If indeed the case, the initiative could provide support for the stock price, but would hardly be a responsible course of action.
- Could Wall Street Journal exaggerate the significance of what the publication referred to as an auction process? Nothing can be ruled out.
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