Norway’s national oil giant Statoil announced today its acquisition of Brigham Exploration for $4.4 billion. The primary target of Statoil’s interest is Brigham’s strong position in the Bakken Shale [Wikipedia] oil play of North Dakota and Montana. Brigham boasts 375,000 acres in the Williston basin, which includes the Bakken.
Brigham has been very successful in the Bakken, having drilled 88 successful wells in a row, which have come on line at an average 2,800 bpd. The company produces 21,000 bpd currently, with the potential, figures Statoil, to take it to 100,000 bpd within five years. Brigham has 12 rigs in the Williston, on track to drill 140 wells per year.
The deal represents a 36% premium to Brigham’s recent average trading price. It values Brigham at roughly $11,500 per acre, or $6,500 an acre if you exclude the value of the existing production, according to Tudor, Pickering, Holt & Co. Looking at the deal in terms of earnings multiples, Tudor, Pickering says the price assumes an enterprise value 10 times expected 2012 Ebitda. Analyst Kim Fustier of Credit Suisse sees Statoil’s potential proved and unproved reserves from the acquisition as totalling more than 400 million boe (oil and gas equivalents). That would equate to a price of roughly $10 per boe.
The Bakken is one of the oil fields of the future. As I wrote in this recent article, billionaire Harold Hamm ”” whose Continental Resources has the biggest position in the Bakken ”” thinks the area could hold 24 billion barrels of recoverable oil. Hamm and others expect the Bakken to some day produce more than 2 million bpd ”” larger volumes than the Gulf of Mexico.
North Dakota to pass Calif. as oil producer
AP, By James MacPherson, October 17
Bismark, ND ”” North Dakota will likely leapfrog California and may even overtake Alaska in the next year to become one of the nation’s three biggest oil-producing states, a government regulator said.
Not considered a big oil state until recently, North Dakota went from the ninth-biggest producer in 2006 to fourth in 2009, where it currently stands. This boom is thanks to advances in drilling and hydraulic fracturing techniques and a rise in oil prices that made it more profitable for companies to tap into the vast reserves trapped in the Bakken and Three Forks shale formations.
North Dakota’s 5,951 wells produced about 444,000 barrels per day in August, the last month for which figures were available. With nearly 200 wells being drilled and plans for 1,500 to 2,000 new wells over the next year, North Dakota should overtake California as the nation’s third-largest producer sometime in the next 12 months, said Lynn Helms, the director of North Dakota’s Department of Mineral Resources.
”œWe should pass California by the third quarter of next year,” he said.
Today’s Marketplace had a nice piece on the booming boomery boom that’s happening in North Dakota.