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After completing the takeover of Kodiak O&G, Whiting Petroleum (NYSE:WLL) is now the largest oil producer in the Bakken/Three Forks shale play. That may not be much of a consolation prize for investors who have seen the value of Whiting's stock drop more than 50% since the Kodiak deal was announced back in July when WTI was trading at $104/bbl. While the timing of the deal was somewhat reminiscent of Exxon's purchase of XTO (that is, at the top of the commodity price cycle), the fact that Whiting structured the deal as an all-stock transaction means that it took advantage of its inflated stock price as well. That said, the deal did require assumption of $2.2 billion in Kodiak debt. But at the end of the day, the sell-off of the US shale producer energy sector combined with end of year tax-loss selling has left Whiting in the bargain bin. Share are undervalued and could easily return 25% over the next 12 months, and still be undervalued based on its proven reserves base.
Source: December Presentation (available here).
Whiting released its 2014 year-end reserves report this week and as expected it revealed impressive growth: proved reserves were up 29% to 780 million boe, 83% oil. Of the total year-end proved reserves, 25% (194 million boe) came from the KOG acquisition. Kodiak shareholders disappointed in the transaction should consider they now own ~29% of the new company while chipping in 25% of proved reserves - and that appears to be equitable. That said, Whiting certainly did not overpay for KOG, paying just 2.2x its 2013 year-end proved reserves value.
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Source : https://seekingalpha.com/article/2781305-whiting-petroleum-sold-off-unloved-and-a-deeply-undervalued-value-play