Whiting and Kodiak Combine

On Sunday, Whiting Petroleum Corporation announced that they would be buying Kodiak Oil & Gas Corporation. This coming from the New York Times.  By doing so they would buy their $3.8 billion in stock and would take on the company’s $2.2 billion in debt as well.  Both companies have a large presence in the Bakken and Three Forks sectors.  Each of them is also known for their exploration and large scale production.

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From Whiting.com

Now combined, they will be the largest producer in their region.  They are expected to produce more than 107,000 barrels of oil per day.  According to chief executive of Whiting, James J. Volker, this was the main reason they came together.  They will no have 3,460 future drilling locations and more than 855,000 net acres to work with.

Each company is based in Denver and for years they were each other’s competition.  Kodiak chief executive, Lynn A. Peterson, even mentioned that they are very similar and that “It was a natural fit.”  By working together, each is looking to find cost savings.

James J. Volker explained that he hopes the savings will reach a billion dollars.  He expects most of the savings to happen in the next five years.  Lynn A. Peterson acknowledged that he agreed with Volker and the thinks it is a good deal for shareholders.  Each man also commented on how much upside they see.  There is so much potential for each company by joining together that they wan the shareholders to be excited.  They also want the share holders to participate in this upside.

With the partnership, Whiting shareholders will now own 71 percent of the combined company.  Kodiak shareholders will own 29 percent.  The Kodiak shareholders will also receive .177 of each Whiting stock for each share they own from Kodiak.  This approximates to $13.90 a share in the current market.