Fanciful Evaluation Of The FANG-QEP Deal -- December 21, 2020

Remember when operators were paying upwards of $20,000 to $40,000 / acre in the Permian?

I was just curious.

The last time I updated QEP --that was years ago -- it appeared QEP had about 120,000 acres in the Bakken. 

So, let's see what $2.2 billion / 100,000 acres is valued at: $22,000. And then getting the QEP Permian for $0. And it's an all-stock deal.

Sources suggest FANG will have 276,000 net surface acres in the Permian:

• following the QEP purchase: and,
• a Guidon Operating purhase announced at the same time

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Back of the Envelope

Bakken:

• 40 wells / 1280  acres
• EUR 750,000 bbls/well
• 40 * 750,000 bbls = 30 million bbls
• 30 million bbls / 1280 acres = 20,000 bbls/acre
• 20,000 bbls / acre * 100,000 acres = 2 billion bbls
• $2.2 billion / 2 billion bbls = about a dollar.