For the data junkies at HCS Energy Consulting, there is a lot of data to feast on this time of year. While the drop in oil prices from the recent peak 6 months ago have impacted the Enterprise Value (EV) of producers, it is the difference between values that we find most interesting. In the Bakken, comparing the metrics of Whiting Petroleum (WLL) and Northern Oil and Gas (NOG) offer an interesting glimpse into the value uplift associated with being an operator vs a non-operator even though they are dramatically different sized companies. We like to divide the EV of a company by its trailing 12 months of Earnings Before Interest Tax Depreciation Amortization (EBITDA) to see how the market values companies on a relative basis. At the end of 2018, WLL’s EV/EBITDA metric was 3.64x and NOG’s metric was 3.05x. While WLL went through organization changes in 2018, we think the half turn higher metric reflects the additional value that investors attribute to being an operator and controlling the pace of drilling, fracking and reserve development. What do you think ?
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