Norwegian heavyweight Statoil ASA, which already holds substantial assets in the Marcellus and Eagle Ford shales, has a deal on the table to acquire Austin, TX-based independent Brigham Exploration Co., which would give it access to the Williston Basin's Bakken and Three Forks oily formations.
The $4.4 billion offer ($36.50/share) is a 36% premium to Brigham's average closing share price over the past month.
Brigham's board of directors has unanimously recommended the merger to shareholders; CEO Ben "Bud" M. Brigham and executive officers, who collectively own 2.5% of the company, have agreed to tender their shares.
"The U.S. unconventional plays hold a substantial resource base and represent an increasingly important part of future energy supplies," said Statoil CEO Helge Lund. "Statoil has step by step developed industrial capabilities through early entrance into Marcellus and Eagle Ford. Entering the Bakken and Three Forks tight oil plays and taking on operatorship represents a new significant step for Statoil.
"We are positioning ourselves as a leading player in the fast growing U.S. onshore oil and gas industry, in line with the strategic direction we have set out."
The transaction would give Statoil access to more than 375,000 net acres in the Williston Basin, which holds potential for oil and gas production from the Bakken and Three Forks formations. Brigham also holds interests in 40,000 net acres in other onshore plays.
"At this early stage of development the risked resource base is estimated at 300-500 million boe equity," Statoil noted. "Current equity production is approximately 21,000 boe/d, and the acreage has potential to ramp up to 60,000-100,000 boe/d equity production over a five-year period."
The Bakken and Three Forks formations are said to be among the largest oil accumulations in the United States. Various sources have estimated the technically recoverable reserves to be in the range of 5 billion boe to 24 billion boe, over a 38,000-square kilometer area.
"A bigger enterprise with a larger balance sheet will be better positioned to take advantage of our large and growing inventory of Williston Basin drilling locations and the associated assets," said Bud Brigham.
According to Statoil, Brigham has drilled 88 consecutive producing North Dakota wells, with an average early 24-hour peak production rate of 2,800 boe/d. The company currently operates 12 rigs in the area and planned to drill about 140 wells per year.
In addition to the production assets, the Brigham transaction also provides Statoil with around 430 miles of oil, natural gas and water transportation systems centrally located in the Williston Basin, which not only secures wastewater offtake but reduces the environmental footprint in production operations.
"We are impressed by the performance and technological prowess demonstrated by the employees of Brigham and look forward to further responsible development of these world class assets," said Statoil's Bill Maloney, executive vice president in North America. "We will build on Brigham's good neighbor program and continue to engage with local authorities and communities in the Williston Basin area."
Statoil said it would continue to build upon Brigham's operational capability and maintain the Austin location. Retention plans for Brigham's 100 employees in Austin and North Dakota are in place.
The cash tender offer is expected to be launched within 10 business days; shareholders would have 20 business days following the launch to tender their shares. The transaction is expected to close by the end of March.