Whiting, Oasis to Merge as Bakken M&A Warms Up
[Stay on top of transportation news: Get TTNews in your inbox.]
Oasis Petroleum Inc. and Whiting Petroleum Corp. agreed to combine in what they’re calling a “merger of equals,” creating a new oil producer focused on North Dakota’s Bakken shale patch with an enterprise value of about $6 billion.
Whiting shareholders will receive 0.5774 shares of Oasis common stock and $6.25 in cash for each share of Whiting common stock owned, the companies said in a statement March 7. That’s a premium of about 7.5% to Whiting’s closing price on March 4. Oasis shareholders will receive a special dividend of $15 per share.
The deal comes less than two years after both companies filed for bankruptcy in the aftermath of the pandemic-driven crash in oil prices. Since then, both companies doubled down on the Bakken shale in the Williston Basin. Oasis has bulked up by agreeing last year to buy assets in the region from Diamondback Energy Inc. for $745 million. Whiting last month acquired more Bakken assets for $273 million in cash.
Learn about real-world adoption strategies for self-driving trucks with Robert Brown of Spartan Radar and Charlie Jatt of Waymo. Hear a snippet above, and get the full program by going to RoadSigns.TTNews.com.
In contrast to the much larger Permian Basin, where oil production recently eclipsed its pre-pandemic high, the Bakken has seen relatively subdued merger and acquisition activity. The combined company expects to produce the equivalent of 168,000 barrels of oil per day this year, little changed from the final three months of 2021.
Oasis CEO Danny Brown, who will serve as president and CEO of the yet-unnamed company, said in a conference call March 7 that the deal will generate $1.2 billion in free cash flow this year and boost returns on capital. The combined company will pay $25 million per quarter in base dividends, and is considering a variable payout as well as share buybacks.
Whiting shares jumped as much as 7.7% and Oasis climbed 8.3% in New York.
The combination is expected to cut $65 million in annual costs by the second half of 2023.
Kimmeridge Energy Management Co., the fifth-largest Oasis holder with a roughly 5% stake, said it’s “highly supportive” of the transaction.
Want more news? Listen to today's daily briefing above or go here for more info
“We have advocated for industry consolidation as there are too many undersized and irrelevant companies drilling shale wells,” said Mark Viviano, managing partner at Kimmeridge. “This merger of equals amongst offsetting operators will help the combined company gain operational scale, with synergies accruing to both sets of shareholders.”
When the tie-up is completed, Whiting shareholders will own about 53% and Oasis investors will control about 47% of the drillers. Whiting CEO Lynn Peterson will serve as executive chair of the board.
The combined company will trade on Nasdaq under a new ticker. It will be headquartered in Houston but retain a Denver office. The deal is expected to close in the second half of the year.
Citigroup Inc. is serving as financial adviser to Whiting, while RBC Capital Markets is advising Oasis.
