Whiting Petroleum and Oasis Petroleum have entered into an agreement to combine in a merger of equals transaction that will result in the combined entity having an enterprise value of around $6 billion. The combined company will have a large Williston Basin position with assets across approximately 972,000 net acres, combined production of 167,800 BOE/D, and enhanced free cash flow generation to return capital to shareholders.
Shareholders in Whiting, which emerged from bankruptcy in September 2020, will receive 0.5774 shares of Oasis common stock and $6.25 in cash for each share of Whiting common stock owned. Oasis shareholders will receive a special dividend of $15.00 per share. Upon completion of the transaction, Whiting shareholders will own approximately 53% and Oasis shareholders will own approximately 47% of the combined company.
The combined company will be headquartered in Houston upon closing but will retain the Denver office for the foreseeable future. The combined company will operate under a new name and is expected to trade on the NASDAQ under a new ticker to be announced prior to closing.
Oasis added to its Williston Basin assets last May via a $745 million acquisition from Diamondback Energy. The cash deal included 17,700 B/D in existing oil production on 95,000 net acres. Shortly thereafter, Oasis divested its entire Permian Basin holdings in an asset sale of up to $481 million with an unnamed buyer. The producer said at the time of the deal that it would receive $406 million at closing
“The [Whiting and Oasis] combination will bring together two excellent operators with complementary and high-quality assets to create a leader in the Williston Basin, poised for significant and resilient cash flow generation,” said Oasis chief executive Danny Brown. “Over the last year, both companies have executed a series of deliberate strategic transactions, reducing costs and establishing a leading framework for ESG and return of capital. The combination of the two companies, together with the ongoing momentum from these strategic actions, will accelerate our efforts and ideally position the combined company to generate strong free cash flow, execute a focused strategy and enhance the return of capital.”
The combined company expects approximately $1.2 billion of free cash flow and a reinvestment rate below 40% in 2022 at $85/bbl WTI and $3.50/MMBtu NYMEX gas.
Additionally, the companies have identified administrative and operational cost synergies of $65 million on an annual basis by the second half of 2023.
Upon closing, Whiting’s President and CEO Lynn Peterson will serve as executive chair of the board of directors of the combined company. Oasis CEO Danny Brown will serve as president and chief executive officer and as a member of the board.
The board of directors of the combined company will comprise 10 directors—four independent directors from the current Whiting board, Peterson, four independent directors from the current Oasis board, and Brown.
The remainder of the company’s leadership team includes Michael Lou, Oasis CFO; Chip Rimer, Whiting COO; and Scott Regan, Whiting’s general counsel, who will serve in their respective capacities in the combined company.
The transaction, which is expected to close in the second half of 2022, has been unanimously approved by the boards of directors of both companies. The closing of the transaction is subject to customary closing conditions, including, among others, approval by Whiting and Oasis shareholders.
