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The Bakken Shale formation of North Dakota and Montana was back in focus for investors earlier this week when Whiting Petroleum Corp. (NYSE: WLL) announced plans to purchase Kodiak Oil & Gas Corp. (NYSE: KOG).
Through the deal, WLL will pay $3.8 billion in stock and $2.2 billion in debt. The combined company produced over 107,000 barrels of oil equivalent in the first quarter of 2014.
"The new WLL will be the dominant player in the Williston basin, the prime acreage in the Bakken," Money Morning's Global Energy Strategist Dr. Kent Moors said. "That provides the company will significant leverage right in the middle of America's hottest new crude oil production location."
What makes the merger so important for energy investors is the huge production growth the Bakken is currently experiencing…
The Bakken Shale Is Still Booming
Oil was first discovered in the Bakken formation in 1953, but production truly blossomed in Montana in 2000 and North Dakota in 2005. That's when drillers began using horizontal drilling and hydraulic fracturing (fracking) techniques.
Production in the Bakken Shale fields has since skyrocketed. In April, combined data from North Dakota and Montana showed that more than 1 billion barrels of crude oil had been produced from the field.
According to the U.S. Energy Information Administration (EIA), production from the Bakken Shale will reach approximately 1,112,000 barrels per day in August.
The majority of the Bakken's production comes from North Dakota, and according to another recent EIA report, oil production in that state alone has grown by 19,000 barrels per day on average over the last three years.
That growth has helped the Bakken become one of the largest U.S. oil plays along with the Eagle Ford Shale in Texas. Together, Texas and North Dakota account for roughly 4 million barrels of oil a day. That's nearly half of the 8.4 million barrels of crude oil produced daily in the United States.
Those plays are major reasons why the United States has surpassed Saudi Arabia and Russia to become the world's largest oil producer. The United States became the world's largest natural gas producer in 2010, but the recent growth in shale oil production has helped the country become the biggest producer of oil and natural gas liquids.
"The U.S. increase in supply is a very meaningful chunk of oil," Bank of America's Head of Commodities Research Francisco Blanch told Bloomberg this month. "The shale boom is playing a key role in the U.S. recovery. If the U.S. didn't have this energy supply, prices at the pump would be completely unaffordable."
That astounding production growth is an extremely bullish sign for oil companies operating in the Bakken – like Whiting Petroleum. And while WLL may now be the biggest Bakken Shale player, there are more companies riding the Bakken's momentum.
Here are the biggest Bakken Shale players capitalizing from this explosive growth…