Whiting Petroleum: Is It Up for Sale?

Rumors Swirl About The Fate of Bakken's Largest Producer
Whiting  Petroleum Reportedly Up For Sale

Whiting Petroleum Reportedly Up For Sale

Rumors have been swirling for weeks that Denver-based Whiting Petroleum might be up for sale and some companies may be biting.

Bloomberg reported on Friday that several companies are expressing interest in Whiting including Exxon Mobil Corp., Continental Resources Inc., Hess Corp. and Statoil ASA.

No one is talking openly about a possible deal including Whiting, who has not given any official statement about their intentions. All information has come from anonymous sources and people who are speculating about what the company may do.

Bloomberg quotes Phillip Jungwirth, an analyst with Bank of Montreal, who says that “Whiting is probably exploring a sale along with other strategic alternatives, including selling assets, raising debt and selling shares in order to address investor liquidity concerns.”

Some believe that a full sale is unlikely due to the Whiting’s heavy debt and that it is more probably that the company will sell off large pieces instead.

In early March, Whiting released its 2014 earning results with CEO James J. Volker boasting a strong year with record production and a string 2015 growth plan. A week later,  rumors started to surface the Whiting was looking around for other opportunities.

Whiting was founded in 1980 and became the largest Bakken/Three Forks producer in the Williston Basin after its acquisition of Kodiak Oil & Gas in June of last year.

 


Top 10 Bakken Operators – December 2012

Whiting & Continental Battle It Out For Top Spot In ND
Bakken Shale Operated Production Dec 2012

Bakken Shale Operated Production Dec 2012 | Click to Enlarge

The top ten Bakken operators ranked by gross operated production include the normal list of companies. Whiting Petroleum edged out Continental Resources by a mere 15 b/d to claim top operated in December of 2012:

  1. Whiting Petroleum
  2. Continental Resources
  3. Hess
  4. Statoil
  5. EOG Resources
  6. ExxonMobil (XTO)
  7. Marathon Oil
  8. Petro-Hunt
  9. Slawson Exploration
  10. Kodiak Oil & Gas

 


Statoil Bakken Crude Moving by Rail – Leasing 1,000+ Railroad Cars

Statoil’s crude production from the Bakken is gaining additional capacity out of the region. The company plans to lease 1,000+ railroad cars to help alleviate transportation bottlenecks. The number of railcars leased will give the company capacity to move up to 45,000 b/d. That’s more than Statoil produces, but the railroad cars can act as a form of storage as well. With railroad cars, the company has the option to sell crude in Canada, the East Coast, or the Gulf Coast. With discounts that stretch as high as $20 per barrel locally, it’s easy to rationalize making this investment.

Pipeline capacity constraints plague North Dakota and Montana because local demand is far outstripped by supply. Many operators are finding the Gulf Coast market offers the best price realizations (Louisiana Light Sweet Prices). WTI is largely being bypassed for other demand centers. Cushing, where WTI is priced, is addressing its own problems, so Canada and the coasts are better destinations.

Nowhere is the challenge more apparent than in North Dakota, which this year unseated Alaska as the country’s second-largest oil-producing state. In May the state produced 639,000 barrels per day, or about 10% of the oil produced in the U.S., up from 364,000 barrels per day in May 2011, according to the U.S. Energy Information Administration.

Read the full story at wsj.com


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