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Bakken Shale Stocks Likely To Catch Buyout Frenzy $AXAS $CRED $HK $MHR $WLL



October 18, 2012 – Comments (0) | RELATED TICKERS: AXAS , CRED.DL , HK

A great way to play exploration & production plays is to focus on stocks with core assets in plays such as the Bakken Shale or the Eagle Ford Shale that have a high chance of getting acquired or bought out by a larger competitor. 

Earlier this year, Forestar Group made an offer to purchase Credo Petroleum (CRED) for $146 million in cash, which at the time was a 33% premium. Credo has very good Bakken acreage but it is basically a play on its Kansas and Nebraska vertical plays. It has 80,000 net acres of shallow, low-cost wells with IRR better than its Bakken acreage. It also has 15,500 net acres targeting the Mississippian.

Halcon (HK) also purchased a Bakken player in GeoResources. The majority of its acreage was in western Williams County where the middle Bakken is shallow and well costs are lower. Halcon now has 55,000 net acres in North Dakota and Montana. 40,000 net acres is operated. I don’t think investors understood GeoResources and this is why Halcon was able to purchase the company at such a value.

In the first part of this series, I went over my top two Bakken buyout targets. Oasis (OAS) and Kodiak (KOG) would be a great fit for a large number of oil and gas producers. In part three, I covered ConocoPhillips (COP), Chevron (CVX) and Exxon’s (XOM) potential buys of Continental (CLR)and Whiting (WLL). These two companies have a very large acreage in the Williston Basin, and would be a nice addition.

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