Over the weekend, Kodiak agreed to a $6 billion (including assumption of debt), all-stock deal deal for acquisition by Whiting Petroleum. The merger of the two companies, who already have their offices located across the street from one another in Denver, will create a new dominant player in the U.S. Bakken shale region.
In a statement, Kodiak explained that stockholders will receive 0.177 of a Whiting share for each Kodiak share they own, or $13.90 based on July 11 prices.
The Bakken shale formation is one of the largest oil developments of the century, and as a result of new horizontal drilling and hydraulic fracturing techniques, has helped to drive the boom in oil production over the past decade.
The U.S. Geological Survey found the Bakken shale formation could yield 4.3 billion barrels of oil and estimates from Continental Resources stretch as high as 40 billion barrels.
The merger between Kodiak and Whiting will allow the newly formed organization to become the top producer in the Bakken, the most prolific U.S. shale region, on a barrels-per-well basis, according to data compiled by Bloomberg.
"This is the right deal, at the right time," James Volker, Whiting's chairman and chief executive officer, told the source. "It massively enhances the scale of the two companies combined."
As as result of the purchase, Whiting has gained access to 855,00 net acres, pushing it above second-largest landholder Exxon Mobil. The resulting organization will also boast an inventory of 3,460 future drilling locations, as well as greater financial flexibility, according to the companies' press release.
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