I never thought that KOG had too much debt and I never thought that the debt in any way hindered KOG's operations except in the area of expanding more rapidly into the lower levels of their leasehold while certain large investors were getting impatient.
Now that KOG's properties fit so well into Whiting's acreage and Whiting's low debt/equity ratio, rapidly speeding up the exploitation of KOG's prime real estate will be significantly accelerated.
Add in the combined clout of becoming the Number ONE Bakken player and you get the potential of becoming the natural acquirer of the remaining smaller players.
Unless.............................other players come into the picture, then that 29% would change to something higher.
(That would have to be Hamm's Continental IMO).
If that "other offer" if it comes, should become known in the next few days.
My preference is for Whiting, but if a competing offer would get us a higher percentage of Whiting, so much the better.
35% would be nice.
Have you read the latest on SA?
Here's a quote: "I felt compelled to sell out of my Kodiak stake for Monster because I felt Kodiak's upside was capped due to its buyout offer from Whiting Petroleum."
Doesn't this guy know that KOG is linked at the hip to WLL and WLL to KOG going forward and there's NO CAP??
He must think we're getting $13.90 for our shares....period!
(I wonder if he's shorting KOG down to $13.90 then?)
What a dunce!
He's recommending a beverage company with his KOG proceeds, maybe we should short that one?
I think we need to follow this guy around and put our glasses on upside down so we can make some money.
Absolutely, and they are "tight-lipped" because that's the real elephant in the room here.
What are the odds that the Billionaires entering this picture have consulted with the best and brightest to get their qualified guesses on this subject?
I think you become a billionaire by using other people's money to buy or make things that are not all that speculative if..............................you've done your homework and leave "NOTHING UNDONE"!
KOG, WLL and CLR et al have all driled into the RR and none will talk about it specifically. Hamm comes the closest when he said on one of the business shows that he thinks that the RR holds more oil than the Bakken & Three Forks put together.
Well who knows?
But I think we're going to find out BEFORE the majors can buy into this on a grand scale.
Investors are trying to get into this while some are still short and trying to fill, while some are shorting for the first time, while still others are taking profits.
"Money is on the run" now, but this is getting big now on the side of present and future value of the combination of two smaller parts.
I'll just say that this is getting interesting real quick!
Isn't it interesting to see Paulson & Co. nearly double their position in KOG?
Isn't it interesting to see how much of the other Bakken players are owned by Paulson & Co.?
Does anybody know how many wells have been drilled into the Red River Formation and by whom?
Does anybody know for sure how big the Red River Formation is?
Are there plans for doing a 3D mapping of that formation and by whom?
How long will it take for a consolidation of smaller entities into a bigger or single entity to fetch the best value from the Majors?
Are we looking at the stalking horse that is being created by a hedge fund to accomplish this?
Dramatically INCREASING the drilling rigs from SEVEN to ELEVEN on the KOG side of the ledger is the second phase of this plan.
The merger of KOG & WLL is the first phase!
We await the announcement of a 3D survey...........................
The train is leaving the station!
Discovery Acquisition Concentration SELL IT to a Major!
I really thought KOG was going to go directly to a major oil company like XOM.
Paulson could see more value if KOG was yoked to WLL to magnify the value in the combination.
The market agrees.
Now we'll see if this combination can acquire even more "add-on's" at favorable exchange rates.
I have a good feeling about this as we are just beginning an acquisition binge that will last a year or more once this new company emerges.
Will they change the name?
Certainly the stock will change to something in the $35-50 range.
I agree Lex, they have no "standing" (case), but they can always be a pain in the "patoot" for all parties because they can be!
And sometimes "when they can be", they can enjoy a little "payola" just to leave everybody alone.
So will they figure out a way to move on..........soon?
I suppose that depends on the Judge and whether the parties involved decide to give-in or give them the middle finger salute.
I'm thinking that these guys (many recovering lawyers) thought this through completely before they put this merger together.
Give it another 2-weeks and then we'll know.................(Poof)!
I started at .48, added at .30 and landed 50K at .175 cents in mid-March '09.
No day trading here, just blind luck and very gutsy after two losing "buys".
I've got almost as many Jan '15 $12 Calls as well, at under 50-cents after buying a bunch a couple of years ago that expired worthless. (I waited too long!)
Without constant news coming out near expiration, the brokerage firms tank the stock just prior to expiration to avoid paying on "in the money" CALLS.
Live and learn!
This time there's too much positive news coming on line and they can't fight the tape!
Looks like we'll make some coin on them this time!
We don't disagree at all, Whiting is in charge, but Paulson and his followers certainly played a part in this, or certainly lobbied for it.
How much trouble Paulson could make if it wasn't done is also debatable, but it appears that everybody thinks this deal makes sense for all parties and I certainly agree with that.
With the combination of KOG and WLL the new entity has all of its bases covered and will certainly make a powerful acquirer of smaller players going forward on terms favorable to the new "additions" but certainly even more favorable to the "core" entity (KOG+WLL).
Still, the "parasitic class" is more of a nuisance rather than a factor and could still change the ratio from 29/71% to let's say 30/70% which nobody would argue with going forward.
Actually if we use their net evaluations KOG would get 27.4% of the new entity, but that is a "rubber number" because it assumes that the market has both companies fully valued and KOG was further out of the money than WLL because of its debt-equity ratio and the shear size of WLL.
Bottom line: It would be a steep climb to prove KOG's share is "unfair" but still an olive leaf might might grease the deal to avoid any delays.
(It doesn't hurt that both stocks are UP over 10% either!)
Oil prices will do whatever they do, but what I'll be watching for is whether or not the bigger players (e.g. Paulson) here plan on using the WLL/KOG combination as an acquisition vehicle to consolidate more and more of the Bakken/Three Forks/(Red River?) companies together for a neat package to sell to XOM/BP/COP/STO for a nice premium.
BUT.............if that's the plan, that will take at least another year to put together, so many investors will not want to wait, and will move on.
I may or may not stick around depending on what I think I see from the new management because it won't be who is there now, it will be the hedge funds pulling the strings.
The only way that would change is if KOG wasn't getting a premium for its superior acreage beyond what the market was allowing for it.
Or it might change if one side wanted this merger a little more than the other or if was needed to placate the lawyers.
With the price going up smartly in tandem, the bar will be very high to change the formula already set in place.
Our debt to equity ratio was much higher than Whiting's. If neither company had any debt, we would've had 35% of the new entity.
It doesn't matter, we (KOG) are on the ground floor of what I believe to be the stalking horse of the big money crowd acquiring the smaller players in the Bakken.
I believe they will offer the finished product to the MAJORS.
Previously I thought KOG would be acquired directly by XOM but the Hedge Fund Players beat them to it.
What a surprise huh?
I think that KOG was conflicted between holding the line on CAPEX to have their cash flow catch-up with expenditures (self-funding), with the need to more rapidly develop their prime anticline acreage.
Whiting's more favorable debt to equity ratio would allow for a rapid development of those acres as evidenced by the CC comment that the new entity (KOG+WLL) will INCREASE the number of drilling rigs on KOG's part of the deal to twelve from seven!
I'm wondering how much pressure the largest shareholder(s) put on these guys to merge? (Or else!)
I'm also wondering how much "standing" the lawyers on the KOG shareholders behalf have, if the stock keeps going up?
I'm also wondering if there's any light between the deal that is being proposed and what would be acceptable to WLL if the 2/3 threshold on KOG's side becomes a problem??????
Pretty exciting times ahead, and ALL options appear to be very positive for KOG!
Paul & Co is the largest shareholder in BOTH KOG and Whiting at about 5 & 7%.
All of the Bakken players are wondering if the RED RIVER FORMATION HOLDS MORE THAN BOTH OF THE BAKKEN AND THREE FORKS COMBINED.
KOG has drilled several wells into the RR and I'm sure WLL has too. Continental's HAMM has said on national TV that he believes that the RR holds more than both of what discovered so far in the upper levels.
3D Projections are very expensive and Continental is probably working on it now. WLL in combination with KOG could also do it.
Keeping your fingers crossed doesn't get it done, but it certainly is tantalizing thinking about it. It would also be a real bummer to sell-out to a Major and then they qualified the reservoir!
Maybe it is time for KOG to partner with a big brother as long as its equatable.
I'm thinking there's more to come on this before the vote.
I only worry about the "parasitic class" gumming all of this up. .
Who is the biggest shareholder in KOG?
Who is the biggest shareholder in WLL?
3D Seizmic here we come!
I agree with you Cotton, this is a decent deal as we're not selling out, we're simply trading 100% of one company for 29% of another one that's 141% bigger than the one we own now.
The BIG question is whether the bigger entity will be worth more than the two entities were worth separately.
A lesser question is who really wanted to do this deal the most? (Things are never exactly 50/50!)
We just might find out when the 2/3 vote is needed on KOG's side.
Whether one is for this deal or not, that 2/3 majority could be a huge factor and just might tilt the table a couple of points in our favor. (That would be reality).
If it doesn't happen, really don't think that KOG's longer term debt is a problem going forward in a single as KOG, but maybe our management is getting tired of the rat race.
Catlin has said he wants to retire soon, and Peterson has been with him for many years, so maybe that's the biggest factor?
Meanwhile the ambulance chasers are lining up outside which could be a major distraction or nothing at all.
I'm thinking that we haven't heard the last word on this just yet.
Here's what I got from the CC and what I think I know about the two companies:
1-WLL and KOG are pretty much equal in terms of where they are in the development of their Bakken assets.
2-WLL obviously is bigger than KOG in terms of assets.
3-KOG's Bakken assets are more in the sweet spot of the Bakken and have more high-pressured wells,
hence the need for ceramics versus WLL using more sand than ceramics.
4-WLL has significant assets outside of the Bakken that are in their infancy whereas KOG has negligible assets outside of the Bakken.
5-WLL appears to have substantially more depth in their research and development department.
6-The combination of the two, can certainly be an advantage in dealing with vendors.
7-KOG's shareholders have to reach 2/3 in favor to merge whereas WLL only needs a majority.
This last item just might get us (KOG shareholders) a couple percent more of this deal which would match the actual difference in KOG's price last Friday versus the $13.90 average price used in the release.
I really thought that KOG would be acquired by a major oil company, but now it looks like there will be an interim merger before that happens.
Longer term, we will be acquired eventually by an XOM or BP, etc.
I made a post earlier today about this and Yahoo ate it! So I'll take another stab at it. tonight!!!
1-KOG did not get sold!
2-KOG might get absorbed into another well-run company that can enhance the combination of BOTH shareholder groups as in 1+2=4.........maybe!
3-On the other hand, the market's perception of this deal could easily change the terms or even the parties involved come tomorrow morning.
4-This thing is in a state of flux in my opinion until more is known about how they arrived at the "fairness opinion" and even then will the market change what the "experts" considered "FAIR" before it closes?
Meanwhile I'm thinking that another Bakken "Growth Story" (Whiting), is not going to pay much of a premium for another Bakken company (KOG) if they are both going to benefit pretty much equally by combining themselves together.
(I'm just glad that a raider didn't show-up with $20- bills to buy KOG out for cash!)
I want to see how all of this will affect my $12- Jan '15 CALLS that I bought for .38 over a year ago?
(Probably better than the PUTS that some of our hecklers here on this board bought!)
One thing is for sure, that CC call tomorrow morning just might upset the Apple Cart in our favor before this thing comes together. (It just might help WLL too!)
Now let's hope Yahoo doesn't lose this post.............................
Yes, the FED has been printing (creating) money.
Yes, the FED has been buying US Treasury Bonds.
Yes, that new money has fueled (or supported) a weakened economy caused by DEBT that was BASED on mortgages that were issued (by law) to people that had no probability of paying it back.
Yes, the houses are still there but the DEBT is more that what the houses are worth, so the FEDS have used some of their NEWLY PRINTED MONEY to pay back the savers that provided the money to begin with.
Meanwhile...........somebody is yelling in the background: "Yes but who's going to payback the FEDS for the money that they've printed and "LOANED" to these causes?
OK, let's do it!
Result: The money that the FED CREATED (which is now in our pockets) will have to be paid back to the US TREASURY to pay back the FEDS so they can "UNPRINT IT"?
Yup! That's what paying down the NATIONAL DEBT owned by the FEDS is all about.
This is no different than playing MONOPOLY and changing the rules where you pick-up $200- of "PLAY MONEY" when you pass the BANK SQUARE and suddenly reversing the rules and "PAYING $200- BACK WHEN YOU GO OVER THAT SQUARE!
The problem with this little "money creation process" is that when the politicians get a hold of it, they think they can spend money on anything and it won't cost anybody anything!
Still...................in a perfect world, there has to be a way to increase the money in circulation to match the increase in population and the amount of real stuff to be traded back and forth or you'd have deflation caused by more stuff and no more money for liquidity.
If we paid-off the NATIONAL DEBT,we would "UN-PRINT" (DESTROY) just about every dollar in our system overnight!
Bottomline: We need to create more stuff with what we have WITHOUT ADDING NEW MONEY TO OUR SYSTEM.
INCREASING OUR ENERGY SUPPLIES WILL DO THAT!
THAT'S WHERE GET BACK TO KOG, AND AWAY FROM THIS IDEA OF "INCOME EQUALITY" WHILE IGNORING "THE EQUALITY OF INPUT"!