Kodiak Oil & Gas (NYSE: KOG) has been one of the most popular oil stocks among investors. As a fast growing pure-play on the Bakken Shale, the company was appealing to investors looking to profit from that oil-rich shale play. However, with Kodiak Oil & Gas being acquired by Whiting Petroleum (WLL), investors seeking that same pure play exposure need to look elsewhere. Those investors, however, won't need to look very far as under-the-radar Bakken Shale pure-play Oasis Petroleum (OAS) might have been the better option all along.

Drilling down into Oasis Petroleum
Oasis Petroleum holds 506,960 net acres in the Williston Basin, which contains 3,590 gross drilling locations as the following slide notes.

Source: Oasis Petroleum Investor Presentation (link opens a PDF) 

Not only does that position make Oasis Petroleum the top pure-play in the Bakken, it dwarfs Kodiak Oil & Gas' current position of 171,000 net acres and 1,300 net drilling locations. While Kodiak Oil & Gas' position is being boosted to 855,000 net acres along with 3,460 net future drilling locations as it combines with Whiting Petroleum to create the Bakken's top producer, it will no longer be a pure-play on the Bakken Shale. That's because 24% of Whiting Petroleum's production and 54% of its proved reserves are outside of the Williston Basin region. Further, a good portion of its future growth will be in the Niobrara.

However, beyond the pure-play on the Bakken Shale, the other compelling reason to look closer at Oasis Petroleum is that investors can have all of that pure-play upside for a better value than Kodiak Oil & Gas. As the following slide points out Kodiak Oil & Gas is being acquired by Whiting Petroleum for an enterprise value of $6 billion.  

Source: Whiting Petroleum Investor Presentation (link opens a PDF) 

However, even with an enterprise value of $7.9 billion Oasis Petroleum looks a bit cheaper. While Kodiak Oil & Gas is valued at 24% less than Oasis Petroleum, its EBITDAX (earnings before interest taxes, depreciation, depletion, amortization and exploration) is 30% less than Oasis Petroleum and its land position is a third of the size of its competitor.

Oasis Petroleum offers investors not only a cheaper Bakken shale pure-play, but one that has larger upside and greater scale.

One of the reasons why Oasis Petroleum is earning more money is because it can drill its wells for around $6 million, substantially less than Kodiak Oil & Gas' $8.7 million per well cost. The company is able to achieve cost savings due to the fact that it owns an oil-field service company, Oasis Well Services, as well as a midstream service provider, Oasis Midstream Services. The well services company is saving Oasis Petroleum $400,000 per well while the midstream services business is reducing Oasis Petroleum's operating costs by disposing of its produced water. These savings are providing an earnings boost that investors aren't appreciating. 

Meanwhile, one of the reasons why Whiting Petroleum thinks it can drive greater value from acquiring Kodiak Oil & Gas is by picking the low hanging fruit and cutting costs. Topping its list is its plan to use its scale to slash about $700,000 from Kodiak Oil & Gas' compelled well costs. However, these cost savings are ones Oasis Petroleum already enjoys as evidenced by its current well costs.

Investor takeaway
Investors are losing a popular Bakken Shale pure-play as Kodiak Oil & Gas joins forces with Whiting Petroleum to create the basin's top producer. That said, the basin's top pure-play really never was Kodiak Oil & Gas - Oasis Petroleum deserves that title.