Whiting Petroleum is the latest victim of the flawed U.S. shale play business model.
The shale and tight oil play
model is based on large-scale acreage acquisition at any price and
massive over-production to satisfy growth targets. In Whiting’s case, it
also involved debt-based acquisition of Kodiak Oil and Gas, another
large Bakken player. The $3.8 billion deal closed in December 2014 when
WTI oil prices averaged $66 per barrel, down from $106 per barrel in
June.
model is based on large-scale acreage acquisition at any price and
massive over-production to satisfy growth targets. In Whiting’s case, it
also involved debt-based acquisition of Kodiak Oil and Gas, another
large Bakken player. The $3.8 billion deal closed in December 2014 when
WTI oil prices averaged $66 per barrel, down from $106 per barrel in
June.
Whiting’s demise shows that
location isn’t everything. The company is looking for a buyer despite
having a premium position in the Bakken Shale play in North Dakota.
location isn’t everything. The company is looking for a buyer despite
having a premium position in the Bakken Shale play in North Dakota.
Read the whole article here: How Debt Has Caught Up With US Shale - Yahoo Finance By Art Berman for Oilprice.com
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