Latest Acquisition: Brigham Exploration
Acquisitions are always big news in the market place. There was a recent major acquisition by Statoil, who acquired Brigham Exploration. Brigham Exploration is a major shale player, so this could lead to interesting shale plays in the future. Christopher Helman shows some number break downs in explanation of what this acquisition really means for Statoil.
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 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.
Acquisitions like this one have a major impacts on the stocks involved. As you can see, these two companies experienced major jumps in their market value. Keep a close eye on these stocks, they may see even more growth.
Quotes taken from report by Christopher Helman, Read the entire article here.
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