Bakken Weekly Roundup – Acquisitions on the horizon?

Markets have been relatively rangebound over the last month with the Dow staying within the 13000 range and WTI crude also hovering in the mid 90’s.    With the election looming,  and a host of market moving macroeconomics in play such as European debt,  Quantitative Easing and the US Economy  ,  it will be hard to predict where the market goes over the next 2 months.   There continues to be chatter about Bakken oil companies being ripe for acquisition and our weekly roundup below reflects that sentiment

  • Reuters ran an article indicating that there could be an increasing number of potential buyers, mostly Asian companies such as CNOOC Ltd, that could take advantage of the cheap Bakken valuations before planned pipeline and railway projects are completed in the next two years.  The average 12-month forward P/E of Kodiak Oil & Gas Corp (KOG: N/A +0%), Whiting Petroleum Corp (WLL: 5.48 +0.00%), Oasis Petroleum Inc (OAS: 7.87 -0.76%) , Northern Oil and Gas Inc (NOG: 1.45 +3.57%), and Continental Resources Inc (CLR: 30.55 -0.78%) is less than half of those in Eagle Ford, according to Thomson Reuters StarMine data.  The full article can be found here.
  • Bakken crude continues to trade at about $17 per barrel discount to North Sea Brent benchmark. Average drilling and completion costs for wells in Bakken are among the most expensive in the United States, at about $8.5 million per well but could decrease by 30% as pipeline and rail infrastructure is put in place.
  • Shares of QEP Resources Inc. (QEP: 9.88 +1.23%) rose Friday after the company announced it would buy oil- and gas-producing land in North Dakota for $1.38 billion.  The have risen about 7% in the last week to just under $29 per share.   Specifically, QEP Energy unit reached a deal to buy 27,600 acres in North Dakota’s Williston Basin from several sellers.
  • Two big winners in the Bakken region could be  Canadian firms,  TransCanada (TRP: 47.81 +1.30%) and Enbridge (ENB: 40.36 +0.82%).  Enbridge, already one of the largest crude-oil transporters in North America, is competing head-to-head with TransCanada, which is well-known as the backer of the controversial Keystone XL pipeline project.  Enbridge is also aggressively building tank-storage capacity in the Bakken region and increasing its storage capacity by 2 million barrels at its Cushing, Okla., facilities, the community where West Texas Intermediate (WTI) prices are set.
  • A  Facebook page has been set up that chronicles major “Fails” in the Bakken Region.  With great growth comes a number of fails with heavy machinery.    The site has almost 15,000 likes , Visit it here

 

 

Until next time, keep drillin’