North Dakota shale producers to merge in $6B deal

Oasis Petroleum Inc. and Whiting Petroleum Corp., two of North Dakota's largest shale producers, will merge in a $6 billion deal, the companies said on Monday.

The deal between the rivals comes amid record high crude prices and will make them a leading player in North Dakota.

Both companies filed for Chapter 11 bankruptcy protection in 2020 after the energy industry reeled under an unprecedented crash in oil prices due to the coronavirus pandemic, with Whiting the first publicly traded shale producer to file for bankruptcy when it did so in April of that year.

Shares in the companies were rising even before the market opened after Reuters and the Wall Street Journal reported Sunday that a merger was pending. Sources told the Journal the combined value of the companies would be $6 billion.

The combined shale oil and natural gas company will be based in Houston and will have a new name that has not yet been chosen, the companies said.

The combined entity will have a premier Williston Basin position in North Dakota and Montana with top-tier assets spread across about 972,000 net acres and a combined production of 167.8 thousand barrels of oil equivalent per day, the companies said.

"We have advocated for industry consolidation as there are too many undersized and irrelevant companies drilling shale wells," Mark Viviano, managing director of Kimmeridge Energy Management Co., which owns a 5% stake in Oasis, told the Wall Street Journal. "This merger of equals amongst offsetting operators will help the combined company gain operational scale, with synergies accruing to both sets of shareholders."

Under the terms of the deal, Whiting shareholders will receive 0.5774 shares of Oasis common stock and $6.25 in cash for each share held, giving the merger an equity value of $3.52 billion.

Upon completion of the deal, which is expected in the second half of 2022, Whiting shareholders will own about 53% and Oasis shareholders will own about 47% of the combined company on a fully diluted basis.

Oasis shareholders will also receive a special dividend of $15 per share once the deal is closed.

Whiting Chief Executive Lynn Peterson will serve as executive chairman of the combined company's board while Oasis CEO Danny Brown will become the top boss.

Brent crude soared to near $130 a barrel on Monday, its highest since 2008, as the United States and European allies mull a Russian oil import ban and delays in the potential return of Iranian crude to global markets fuel tight supply fears.

Oil and gas pipeline operator Crestwood Equity Partners recently bought Oasis Petroleum's midstream unit in a deal worth more than $1 billion.