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

On the surface Whiting Petroleum's (NYSE:WLL) $260 million acquisition of 17,282 net acres in the Bakken looks like nothing more than a small bolt-on acquisition. However, digging a little deeper, the deal is bigger than the numbers indicate. Let's take a closer look.

Setting the stage
What investors need to first realize is this acquisition really follows on the heels of its recent divestment of the Postle assets. In that deal Whiting sold a mature enhanced oil recovery project to Breitburn Energy Partners (OTC:BBEPQ) for about $860 million. It was a great deal for BreitBurn as it was able to acquire a perfect MLP type asset because of its well-developed, oil rich production.

These assets fit much better into BreitBurn's portfolio because its business model is to acquire assets that it can milk for income. Whiting's business model, on the other hand, is more focused on production growth. The capital it freed up from that one deal has given the company the fuel it needed to pursue more growth focused projects.

Reallocating capital
Whiting used the money from the deal to pay down its credit facility. However, it used the flexibility from that facility to increase its capital budget by $300 million to bring it up to $2.5 billion. By adding that small amount of capital Whiting will be able to completely replace the production of the Postle assets that it sold. Now it is using more of its flexibility with an eye to the future.

The $260 million acreage acquisition is important for one big reason: Location. Whiting is picking up acreage in two of the most oil rich counties in the Bakken. These two counties, Williams and McKenzie, produced half of the top ten most recent Bakken Wells as measured by initial production rates. So, while 76% of the acreage Whiting acquired is proved undeveloped, it is likely to turn out to be very solid acreage.

McKenzie County in particular has really been brimming with oil. Norway's Statoil (NYSE:EQNR) drilled the top recent well in the Bakken which was located in McKenzie. The well had an initial production rate of more than 3,000 barrels of oil per day. In addition to that, Statoil also drilled the top well in Williams County.

Meanwhile, ConocoPhillips (NYSE:COP) has really seen the fruits of its McKenzie County acres. The company drilled four of the best recent wells in the region, with three of those located in McKenzie County. Clearly, its a good spot to be in, which is why Whiting is making the right choice to bulk up on its position in the county.

Final Foolish thoughts
Whiting has been making all the right moves this year. It was able to get a very fair price for a mature asset that really didn't have a lot of growth prospects. From there it was able to pay down debt, add slightly to its capital plan to replace the production it sold, and finally, add prime acreage in some of the most oil-rich counties in America. That has really positioned the company to profit as oil prices stay well over $100 per barrel.