Whiting Petroleum is taking over Kodiak Oil & Gas in an all-stock transaction valued at roughly $6 billion that will leave Whiting as the largest player in the Bakken tight oil play.
Under the terms, Whiting will give each Kodiak shareholder 0.177 shares of Whiting for each share of Kodiak, valuing each Kodiak share $13.90.
The figure is a 5% premium to Kodiak’s 60-day average share price, but it is actually about 2% below its closing price the day before the transaction was announced.
Whiting is also taking on Kodiak’s $2.2 billion debt.
Kodiak holds about 171,000 net acres in the Williston basin, much of it in the heart of the Bakken play in Williams, McKenzie and Dunn counties, with proved reserves of 167.3 million barrels of oil equivalent (83% oil).
The company estimated production this year would grow to between 39,000 and 42,000 boe per day, from a 2013 average of 29,200 boepd.
Once the deal is completed, Whiting will hold a total of 855,000 net acres with as many as 3460 net future drilling locations and the US independent will be producing more than 107,000 boepd.
Whiting hopes to exit 2014 with daily production of more than 150,000 boepd.
“We believe this transaction represents a significant opportunity for both Whiting and Kodiak shareholders to benefit from the strength of our combined company,” Kodiak chief executive James Volker said.
"The addition of Kodiak’s complementary acreage position and substantial inventory of high return drilling locations will provide the opportunity to drive significant value growth for both Whiting and Kodiak shareholders through an acceleration in drilling and increase in operational efficiencies.”
Kodiak chief executive Lynn Peterson and executive vice president James Catlin will join the Whiting board as part of the deal.
The boards of both companies have already recommended that shareholders approve the transaction, which is scheduled to close in the fourth quarter.
JP Morgan Securities advised Whiting on the transaction and Kodiak was advised by Petrie Partners Securities and Credit Suisse.