Bakken Buyouts: Kodiak Oil & Gas!

| July 14, 2014 | 0 Comments

oil explorationThings are heating up in the Bakken oil fields of North Dakota and Montana…

Whiting Petroleum (WLL) just announced they’re acquiring Kodiak Oil & Gas (KOG) in a $6 billion deal. Whiting will get access to Kodiak’s 171,000 net acres in the Williston Basin in exchange for $3.8 billion in stock and assumption of $2.2 billion in debt.

By acquiring Kodiak’s acreage, Whiting will become the largest oil producer in the Williston Basin region with 855,000 net acres and 3,460 future drilling locations.

No doubt about it, it’s a good deal for Whiting.

However, I’d be a little upset if I were an investor in Kodiak…

The all stock deal gives investors .177 of a share of Whiting for each share of Kodiak they have in their portfolio. In other words, the deal values Kodiak at $13.90 a share, which is below last Friday’s closing price of $14.23.

Why’s that a bum deal?

Some of you die-hard energy investors may remember when Statoil (STO) bought out Brigham Exploration (another pure play Bakken explorer) in October 2011. That was an all cash deal worth $4.4 billion. With the buyout price coming in at $36.50, Brigham shareholders were immediately rewarded with a 20% premium to the previous day’s closing price.

No such luck for Kodiak investors…

In my opinion, the Kodiak deal price is too low. Whiting is getting access to very promising Bakken acreage. What’s more, the acquisition will make Whiting a premier Williston Basin operator. Such positives imply a higher takeover price than what Kodiak investors received.

But I digress.

Now that Kodiak is going into the dustbin of history, investors will be looking to other small- and mid-cap oil explorers in hopes of catching the next buyout. In fact, Triangle Petroleum (TPLM) and Abraxas Petroleum (AXAS) are seeing gains of 5% and 3% this morning on hopes they’ll be the next Bakken buyout.

Now listen closely…

Subscribers to my Options Profit Pipeline service got word of another oil exploration company that’s been getting plenty of buyout rumors in recent weeks. While I usually treat these rumors as useless market chatter, this oil company is in fact one of the most likely buyouts I see.

It might be why billionaire investor Leon Cooperman holds nearly 48 million shares of the undervalued oil producer.

If you’d like to discover which company it is, and join us is raking in ridiculous profits on commodity producing companies, click here.

Until Next Time,

Justin Bennett

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Category: Energy

About the Author ()

Justin Bennett is the editor of Commodity ETF Alert, an investment advisory focused on profiting from the ebb and flow of important commodities via ETFs. The commodity veteran and options specialist is also a regular contributor to the Dynamic Wealth Report. Every week, Justin shares his thoughts with our readers on a variety of commodity-related topics. Justin is also a frequent contributor to Commodity Trading Research’s free daily e-letter. And he’s the editor of another highly successful and popular investment advisory, the Options Profit Pipeline.