Norway’s Statoil Buys Brigham For Prime Stake In Bakken Oil Play

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To acquire company with 375,000-net-acre stake in Bakken and Three Forks tight oil play in ND & MN, with additional 40,000 acres in onshore Gulf Coast, Anadarko Basin ; Permian Basin, gaining 21,000 BOE/d with potential to escalate up to 100,000 BOE/d, 68 million BOE proved.

Norwegian national oil company Statoil ASA (NYSE: STO; Oslo: STL) is making a move to claim a 375,000-net-acre stake in the Bakken and Three Forks tight oil play in North Dakota and Montana via the acquisition of independent producer Brigham Exploration Co., Austin, Texas, (Nasdaq: BEXP) for a total deal value of $4.7 billion.

Statoil will pay US$36.5 per share in an all-cash deal, a 36% premium over an average of the last 30 trading days and 20% above close of trading Oct. 14. Statoil will also assume approximately $300 million of Brigham debt.

"The U.S. unconventional plays hold a substantial resource base and represent an increasingly important part of future energy supplies," says Statoil president and chief executive Helge Lund. "Entering the Bakken and Three Forks tight oil plays and taking on operatorship represents a new significant step for Statoil."

Brigham currently holds some 375,800 net acres in the Williston Basin with production of 21,000 barrels of oil per day, with the potential to escalate to 60,000 to 100,000 BOE per day within five years, according to Statoil's estimates. With 88 North Dakota wells on production, 24-hour initial production rates have averaged 2,800 BOE per day. Brigham operates 12 rigs in the region with 140 wells planned for 2012. Proved reserves year-end 2010 were 68 million BOE.

Caris & Co. analyst Gabriele Sorbara values the deal at $12,533 per acre ($9,929 per acre when backing out production valued at $80,000 per BOE per day), $70.31 per proved BOE, and $223,810 per flowing BOE.

Statoil estimates the risked resource base at 300- to 500 million BOE. Wells Fargo Securities analyst David Tameron estimates Statoil is paying $9 to $15 per barrel on risked resource potential. The Brigham transaction also includes approximately 430 miles of oil, natural gas and water transportation systems centrally located in the Williston Basin.

Brigham has positions in an additional 40,000 acres in the onshore Gulf Coast, the Anadarko Basin and the Permian Basin.

Bud Brigham, Brigham Exploration chairman, president and CEO, says a bigger enterprise with a larger balance sheet will be better positioned to take advantage of the company's large and growing inventory of Williston Basin drilling locations. "We are excited to see this transaction completed and look forward to having our assets and employees integrate with the Statoil organization and the substantial asset position that they are growing in their U.S. onshore business."

Statoil holds U.S. positions in both the Marcellus and Eagle Ford shales as well, primarily nonoperated. Lund says the company is positioning to be a leading player in the fast-growing U.S. onshore oil and gas industry.

"Brigham has proven itself as a premier operator with a highly attractive position in the Williston Basin," says Lund. "We are a strong strategic fit, as both companies put a premium on technological innovation and advancement."

"The transaction reflects the continued hunger of IOCs (international oil companies) and NOCs for exposure to U.S. shale plays," says Global Hunter Securities analyst Michael Bodino. "This transaction is a big step for Statoil as they enter the Bakken and take on operatorship."

Brigham, based in Austin, Texas, has more than 100 employees in Austin and North Dakota. Statoil plans to maintain the Austin office with a retention plan for current employees.

"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. We will build on Brigham's good-neighbor program and continue to engage with local authorities and communities in the Williston Basin area," says Bill Maloney, executive vice president for Statoil in North America.

Closing is expected by the end of the first quarter 2012.

Tudor, Pickering, Holt & Co. Securities Inc. and Goldman, Sachs & Co. are financial advisors to Statoil. Vinson & Elkins LLP is legal advisor.