11
Does XTO’s purchase signal an M&A boom in Bakken?
Posted by bakkenUPDATE: It was correctly pointed out to me that XTO did get a separate foothold in the Bakken region a week earlier via a huge leasehold purchase as it paid about $1.9 billion to privately held Headington Oil for 352,000 net acres of Bakken Shale leasehold in Montana and North Dakota. The purchase price includes $1.06 billion in cash plus 11.7 million shares of stock.
XTO Energy Inc. said yesterday it will buy privately held Hunt Petroleum Corp. for $4.19 billion (U.S.).
Fort Worth-based XTO Energy said the deal is for $2.6 billion cash and 23.5 million shares of XTO stock, with the stock portion valued at about $1.6 billion, or $67.50 per XTO share. XTO said it would pay $2.6 billion cash from its cash flow and borrowing but gave no breakdown.
There was a lot of chatter on message boards and in the news that this allowed XTO to get a foothold in the Bakken region. This doesn’t make a whole lot of sense to me as the Bakken portion of Hunt’s portfolio is miniscule when compared to the remaining assets (and producing wells). Hunt has 15000 acres of leasehold in the Bakken region but only a few producing wells as indicated in the top right hand corner of the graphic below (pulled from Hunt Petroleum website).
I believe this was a “incremental bonus” for XTO but by no means a deal breaker. The region is hot, but there are plenty of land owners or leaseholders that are still willing to sell their land or sell NRI in their holdings (at a premium of course). We do expect M&A to pick up in the Bakken region making millionaires out of a farmer or two, but it remains to be seen whether this purchase is a trigger in the region in terms of acquisition of smaller oil companies that operate in the area.
Related posts
Tags: bakken hunt petroleum leasehold M&A north dakota XTO
Add A Comment