Kodiak Oil & Gas Corp. Reports First Quarter 2011 Financial and Operating Results

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DENVER, May 5, 2011 /CNW/ -- Kodiak Oil & Gas Corp. (NYSE Amex: KOG), an oil and gas exploration and production company with assets in the Williston Basin of North Dakota and Montana and in the Green River Basin of southwest Wyoming and Colorado, today announced its first quarter 2011 financial and operational results. The Company also today provided an interim operations update on its Williston Basin drilling and completion activities.

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    Highlights Include:

    --  Oil & Gas Sales of $13.3 Million, a 133% Increase
    --  Equivalent Sales Volumes 168,000 BOE
    --  Earnings of $2.1 Million Before Non-cash Derivatives Charge
    --  Adjusted EBITDA of $7.4 Million, 125% Growth


    First Quarter 2011 Financial Results
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For the quarter-ended March 31, 2011, the Company reported oil and gas sales of $13.3 million, as compared to approximately $5.7 million during the same period in 2010, a 133% increase and a Company record. Crude oil revenue accounted for approximately 98% of first quarter 2011 oil and gas sales, and crude oil constituted 94% of sales volumes for the quarter. Kodiak posted a 104% increase in oil sales volumes and a 44% increase in gas sales volumes for an overall 99% increase in quarter-over-quarter equivalent sales volumes of 168,000 barrels of oil equivalent.

The Company reported a net loss for the quarter-ended March 31, 2011 of $7.2 million, or $0.04 per basic and diluted share, compared with net income of $981,000, or $0.01 per basic and diluted share, for the same period in 2010. Included in the first quarter 2011 net loss calculation are unrealized derivative losses of $9.3 million attributed to the non-cash change in the value of derivatives utilized for commodity price risk management. Excluding the effect of unrealized derivative losses, a non-cash charge, Kodiak would have reported adjusted net income (a non-GAAP measure) of $2.1 million for the first quarter 2011, or $0.01 per basic and diluted share.

Adjusted EBITDA, a non-GAAP measure, was $7.4 million for the first quarter 2011, as compared to $3.3 million in the same period in 2010, a 125% increase and another Company record. Kodiak defines Adjusted EBITDA as net income before (i) interest expense, (ii) income taxes, (iii) depreciation, depletion and amortization, (iv) impairment, (v) non-cash expenses relating to share based payments recognized under ASC Topic 718, (vi) pre-tax unrealized gains and losses on foreign currency, (vii) accretion of abandonment liability and (viii) pre-tax unrealized gain and losses on commodity risk management activities. A reconciliation of Adjusted EBITDA to net income is included in the financial tables later in this news release.

Kodiak reported record net cash provided by operating activities for the first quarter 2011 of $7.1 million, as compared to net cash used in operating activities in the same period in 2010 of $2.4 million. The Company reported cash used in investing activities of $33.1 million during the first quarter of 2011. During the first quarter 2011, approximately $28.7 million was invested for the drilling and completion of wells in its Williston Basin drilling program. Approximately $4.0 million was invested during the same period as part of the Company's ongoing efforts to secure additional Williston Basin leasehold.

As of March 31, 2011, the Company's total current assets were $112.5 million, its cash and equivalents position was $76.2 million and it had prepaid expenses, consisting of tubular goods and surface equipment, of $21.9 million. As of May 5, 2011, Kodiak had a $200.0 million revolving credit facility with Wells Fargo, of which $75.0 million was available for borrowing. There are currently no borrowings under the facility. Long-term debt as of March 31, 2011 was $40.0 million, all of which consisted of borrowings under the Company's second lien term loan credit facility with Wells Fargo.

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    First Quarter 2011 Expense Analysis
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For the quarter-ended March 31, 2011, general and administrative (G&A) expense was $4.7 million, as compared to $2.1 million for the same period in 2010. The increase in total G&A is attributed primarily to the hiring of new personnel as the Company continues to expand its operations. The Company had 40 employees at March 31, 2011, as compared to 20 employees at March 31, 2010. Included in the first quarter 2011 G&A expense is a non-cash, stock-based compensation charge of $1.5 million, as compared to $850,000 for the same period in 2010.

Kodiak's lease operating expense (LOE) for the first quarter 2011 was $2.6 million, as compared to $1.2 million during the same period in 2010. The increase in LOE is attributed to additional production expense associated with a growing number of producing wells. Severance taxes were also higher due to increased oil and gas revenues during the 2011 period, as compared to the 2010 period.

Depletion, depreciation and amortization (DD&A) expense for the first quarter 2011 was $3.7 million, as compared to $1.3 million for the same period in 2010. The increase is primarily due to the increase in sales volumes and, to a lesser extent, an increase in the per-unit charge.

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         First Quarter Unit Cost Analysis Q111     Q110    % Chg.
         -------------------------------- ----     ----    ------
    Sales Volumes in Barrels of Oil
     Equivalent (BOE)                      167,762  84,385       99%
    -------------------------------        -------  ------      ---
    Average Price Received Oil ($ Bbl)      $82.72  $71.08       16%
    ----------------------------------      ------  ------      ---
    Average Price Received Gas ($ Mcf)       $5.04   $5.41       -7%
    ----------------------------------       -----   -----      ---
    Lease Operating Expense ($ BOE)          $5.97   $6.53       -9%
    -------------------------------          -----   -----      ---
        Production Tax ($ BOE)               $9.05   $7.82       16%
        ----------------------               -----   -----      ---
    DD&A Expense ($ BOE)                    $22.18  $15.65       42%
    --------------------                    ------  ------      ---
    Gathering, Transportation & Marketing
     Expense ($ BOE)                         $0.33   $0.14      136%
    -------------------------------------    -----   -----      ---
    Total G&A Expense ($ BOE)               $28.12  $24.71       14%
    -------------------------               ------  ------      ---
        Non-cash Stock-based Compensation
         Expense ($ BOE)                     $9.17  $10.12       -9%
        ---------------------------------    -----  ------      ---


    First Quarter 2011 Sales Volumes
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The Company also disclosed sales volumes and netback prices received for the quarter ended March 31, 2011, as summarized below:

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     Kodiak Oil & Gas Corp. Net
              Production                 Quarter-over-Quarter Comparison
                                         -------------------------------
        and Sales Comparison           Three Months Ended           % Change
        --------------------           ------------------           --------
                              Product Sales Volumes(1)
                              ------------------------
    Natural Gas (Mcf)              62,203   31,707   43,077       96%      44%
    -----------------              ------   ------   ------      ---      ---
    Oil  (Bbls)                   157,395  147,347   77,205        7%     104%
    -----------                   -------  -------   ------      ---      ---
    Barrels of Oil Equivalent
     (BOE)                        167,762  152,632   84,385       10%      99%
    -------------------------     -------  -------   ------      ---      ---
    Daily Sales (BOE/day)           1,864    1,659      938
    ---------------------           -----    -----      ---
                            Product Price Received
                            ----------------------
    Natural Gas ($/Mcf)             $5.04    $5.82    $5.41      -13%      -7%
    -------------------             -----    -----    -----      ---      ---
    Crude Oil ($/Bbl)              $82.72   $73.63   $71.08       12%      16%
    -----------------              ------   ------   ------      ---      ---
    (1) Note that sales volumes exclude natural gas that is currently
     being flared pending connection to pipelines.
    -----------------------------------------------------------------


    Capital Expenditure Budget

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The Company is currently mobilizing its third operated rig onto its Smokey Project area in McKenzie County where it expects to spud the first well in May 2011. Subsequent to the end of the first quarter 2011, Kodiak entered into a contract for a fourth operated drilling rig which is scheduled to be delivered in late May 2011. The rig is generally built to the same specifications as the Company's other three rigs, except that it does not have a skid package. A skid package may be retrofitted at Kodiak's election. The addition of a fourth operated rig will allow Kodiak to accelerate its drilling program.

Kodiak has increased its capital expenditure budget by a total of $20 million to $220 million due to the addition of the fourth operated drilling rig and its corresponding drilling activity and due to expenditures for acreage acquisition to-date. These increases were partially offset by reduced spending in the first quarter primarily as the result of the delay in taking delivery of the third operated rig. The initial budget captured anticipated cost increases and to date well costs are meeting the Company's expectations. Kodiak has estimated completed well costs of $8.5 million to $9 million, plus additional costs for infrastructure associated with pipeline connections. These estimates are in line with the current cost structure. The Company has experienced higher costs associated with the winter months, but expects these costs to diminish as summer operations begin. Kodiak's 2011 capital expenditure budget is subject to various factors, including market conditions, oilfield services and equipment availability, commodity prices and drilling results. The Company's capital budget for 2011 is now comprised of the following:

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    --  $175 million for the drilling and completion of operated wells and
        related infrastructure
    --  $40 million for non-operated drilling activity
    --  $4.0 million for leasehold expenditures as spent in the first quarter


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Although the 2011 capital expenditure budget does not include additional costs related to lease acquisitions, the Company continues to explore opportunities to expand its acreage position.

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    Operations Update
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As of March 31, 2011, Kodiak operated, or had an interest in, a total of 36 gross (18.0 net) producing wells in the Williston Basin. As of May 5, 2011, Kodiak had three gross (1.6 net) operated wells waiting on completion and three gross (2.0 net) wells where drilling is completed, but the wells are located on a drilling pad where the final well on the pad is drilling ahead. These wells are expected to be completed in the second and third quarters of 2011.

The Company also has two gross (1.0 net) non-operated wells waiting on completion. Completion work for the two-non operated wells should commence in the second quarter. Two additional wells are currently being drilled from a two-well pad in which Kodiak has a 50% and 44% WI (41% and 36% NRI).

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    Dunn County, N.D. (59,000 gross and 34,000 net acres)
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In Dunn County, the Company continues to run one operated drilling rig which is drilling ahead on the TSB#2-24-12-1H3 (50% WI/41% NRI), the fourth well on a four-well pad. Kodiak expects to complete the TSB four-well pad late in the second quarter 2011 and early third quarter 2011. The wells, one Three Forks well and three middle Bakken wells, were designed to further evaluate Three Forks Formation productivity and for continued testing of wellbore density within the middle Bakken Formation to monitor communication between the two separate reservoirs.

Once drilling is completed on the four-well pad, the rig will move to the SC #12-10-11-9H well (Kodiak operated - 97% WI/79% NRI), the first of a two-well pad. The fourth drilling rig, noted earlier, is scheduled to be mobilized to the Charging Eagle 15-22-15-4H location (Kodiak operated - 56% WI/46% NRI), the first of a two-well pad.

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    McKenzie County, N.D. (39,000 gross and 27,000 net acres)
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In McKenzie County in early April 2011, Kodiak completed one middle Bakken and one Three Forks well, the results of which were previously announced and further annotated in the operations table provided below. The Company currently has two wells awaiting completion in the Koala area. These middle Bakken wells¸ the Koala #3-2-11-14H (Kodiak operated - 52% WI/42% NRI) and the Koala #3-2-11-13H wells (Kodiak operated - 53% WI/43% NRI), were drilled on a two-well pad approximately 1,300 feet apart in an effort to test well bore density within the drilling unit. The wells are projected to be completed in the second quarter 2011.

The rig is being mobilized to the Koala 2-25-36-15H location (Kodiak operated - 66% WI/53% NRI), the first of a two-well pad. As indicated above, a third operated rig is being mobilized to the Smokey 15-22-15-2H location (Kodiak operated - 85% WI/69% NRI), the first of a two-well pad, where drilling is expected to commence in May 2011.

For ease of presentation, the Company has provided per-well information in the table below that includes working interest, net revenue interest, lateral length and production rates. Please reference the following table for per-well details.

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      North Dakota (Bakken and Three Forks) Drilling and Completion Activities
    ------------------------------------------------------------------------
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                                                       IP
                                                     24-Hour
                               WI /                   Test
                               NRI    Completion      BOE/D
      Well                    (%)       Date         
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                                                                30 Day
                                                                ------
      Dunn County, ND:  Longer Laterals (Over 5,000')
      -----------------------------------------------
    >>

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     MC #13-34-28-1H       59 / 48    Sep-10         1,906     1,082
      ---------------       -------    ------         -----     -----
      MC #13-34-28-2H       59 / 48    Aug-10         2,055     1,259
      ---------------       -------    ------         -----     -----
      TSB #14-21-33-15H     50 / 41    Dec-10         2,050    877(2)
      -----------------     -------    ------         -----     -----
      TSB #14-21-33-16H3    50 / 41    Dec-10         1,042       603
      ------------------    -------    ------         -----       ---
      TSB #14-21-16-2H      50 / 41     Q2 11            --        --
      ----------------      -------     -----           ---       ---
      TSB #2-24-12-2H       50 / 41   Q2/Q3 11           --        --
      ---------------       -------   --------          ---       ---
      SC #2-24-25-15H       96 / 79   Q2/Q3 11           --        --
      ---------------       -------   --------          ---       ---
      TSB #2-24-12-1H3      50 / 41   Q2/Q3 11           --        --
      ----------------      -------   --------          ---       ---
      SC #2-24-25-16H       96 / 79      --              --        --
      ---------------       -------      ---            ---       ---
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                                           Gas /
                                           Oil    Well
                                          Ratio  Status
      Daily Production (BOE/d)            (GOR)    (3)
      ------------------------
                         60  90  180  360
                        Day Day  Day  Day
                      ------ ------ ------  ---
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Dunn County, ND: Longer Laterals (Over 5,000')

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    MC #13-34-28-1H    1,074 995 723  --  760     FW
    MC #13-34-28-2H    1,073 932 655  --  790     FW
    TSB #14-21-33-15H    790 706  --  --  800     FW
    TSB #14-21-33-16H3   444  --  --  --  530   FW (1)
    TSB #14-21-16-2H      --  --  --  --   --     WOC
    TSB #2-24-12-2H       --  --  --  --   --     WOC
    SC #2-24-25-15H       --  --  --  --   --     WOC
    TSB #2-24-12-1H3      --  --  --  --   --     WOC
    SC #2-24-25-16H       --  --  --  --   --  Drilling
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                                                       IP
                                                     24-Hour
                               WI /                   Test
                               NRI    Completion      BOE/D
      Well                    (%)       Date         
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                                                                30 Day
                                                                ------
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      Dunn County, ND:  Shorter Laterals (Under 5,000')
      -------------------------------------------------
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      MC #16-3-11H          60 / 49     Feb-10         1,419       798
      ------------          -------     ------         -----       ---
      MC #16-3H             60 / 49     Mar-10         1,495       671
      ---------             -------     ------         -----       ---
      MC #13-34-3H          60 / 49     Jun-10         1,517       678
      ------------          -------     ------         -----       ---
      TSB #14-21-4H         50 / 41     Dec-10         1,196    656(2)
      -------------         -------     ------         -----     -----

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                                           Gas /
                                           Oil    Well
                                          Ratio  Status
      Daily Production (BOE/d)            (GOR)    (3)
      ------------------------
                         60  90  180  360
                        Day Day  Day  Day
                      ------ ------ ------  ---
        
                   Dunn County, ND:  Shorter Laterals (Under 5,000')
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    MC #16-3-11H       694 621  496  353  880     FW
    MC #16-3H          537 478  356   --  800     FW
    MC #13-34-3H       580 496  351   --  750     FW
    TSB #14-21-4H      470 397   --   --  750     FW
    >>

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                                                       IP
                                                     24-Hour
                               WI /                   Test
                               NRI    Completion      BOE/D
      Well                    (%)       Date         
    >>

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                                                              30 Day
                                                              ------
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      McKenzie County, ND
      -------------------
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    <<
      Grizzly 13-6H             68 / 56    Feb-11      399     122
      -------------             -------    ------      ---     ---
      Grizzly 1-27H-R           74 / 60    Sep-10      507     210
      ---------------           -------    ------      ---     ---
      Koala 9-5-6-5H            95 / 78    Apr-11    3,042      --
      --------------            -------    ------    -----     ---
      Koala 9-5-6-12H3          95 / 78    Apr-11    2,327      --
      ----------------          -------    ------    -----     ---
      Koala 3-2-11-14H          52 / 42    Q2 11        --      --
      ----------------          -------    -----       ---     ---
      Koala 3-2-11-13H          53 / 43    Q2 11        --      --
      ----------------          -------    -----       ---     ---
      Koala 2-25-36-15H         66 / 53      --         --      --
      -----------------         -------     ---        ---     ---
      Smokey 15-22-15-2H        85 / 69      --         --      --
      ------------------        -------     ---        ---     ---
    >>

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                                               Gas /
                                               Oil   Well
                                              Ratio  Status
      Daily Production (BOE/d)                (GOR)   (3)
      ------------------------
                         60   90    180   360
                       Day    Day   Day   Day
                      ------ ------ ----  ---
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McKenzie County, ND

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    Grizzly 13-6H       120    --    --    --    --   FW
    -------------       ---   ---   ---   ---   ---   ---
    Grizzly 1-27H-R     204   196    --    --   800   PW
    ---------------     ---   ---   ---   ---   ---   ---
    Koala 9-5-6-5H       --    --    --    --    --   FW
    --------------      ---   ---   ---   ---   ---   ---
    Koala 9-5-6-12H3     --    --    --    --    --   FW
    ----------------    ---   ---   ---   ---   ---   ---
    Koala 3-2-11-14H     --    --    --    --    --   WOC
    ----------------    ---   ---   ---   ---   ---   ---
    Koala 3-2-11-13H     --    --    --    --    --   WOC
    ----------------    ---   ---   ---   ---   ---   ---
    Koala 2-25-36-15H    --    --    --    --    --   Mob
    -----------------   ---   ---   ---   ---   ---   ---
    Smokey 15-22-15-2H   --    --    --    --    --   Mob
    ------------------  ---   ---   ---   ---   ---   ---
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     (1) Only 6 out of 22 stages completed and producing FW = Flowing Well
     --------------------------------------------------- -----------------
     (2) Production curtailed due to weather conditions
      and limited crude oil transportation               PW = Pumping Well
     --------------------------------------------------  -----------------
                                                          WOC = Waiting on
     (3) Well Status is as of April 30, 2011                    Completion
     ---------------------------------------             -----------------
                                                           Mob = Rig being
                                                         mobilized to well
                                                         -----------------

    Management Comment
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Commenting on first quarter results, Kodiak's President and CEO Lynn A. Peterson said: "Our results were in line with our reduced expectations due to the inclement weather experienced in North Dakota since December 2010. As we move into the second quarter, the weather should start to abate allowing for our activity to move forward at a normal pace. As we have stated, our drilling program consists of evaluating each of our large acreage blocks with wells in the middle Bakken Formation as well as the Three Forks Formation. Production from our first two Koala wells on the western side of the Nesson Anticline has been very encouraging and we will continue to allocate capital into this project area. We are presently mobilizing a rig onto our Smokey acreage block where we will again test the two formations.

"We are also pleased with the recent addition of the two drilling rigs which will help accelerate our development drilling efforts. Initially, we will be running two rigs in Dunn County and two in McKenzie County. As noted earlier we do not believe the change to our capital expenditure budget will be material with the addition of the fourth rig. We anticipate accommodating the additional capital requirements through existing working capital, operating cash flow and our borrowing base availability. The additional rig will also allow us to work closely with our pressure pumping services as we move toward a full-time dedicated crew.

"We currently expect our production for the year to be near the lower end of our earlier guidance of 5,500 average barrels of oil equivalent per day, subject to the timely completion of the wells scheduled later in 2011. We expect our production to improve as we accelerate our program with the third and fourth operated rigs, as weather conditions continue to improve, as the backlog of wells waiting on completions is reduced, and as we complete wells on our current multi-well pads."

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    Q111 Results Teleconference Call
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In conjunction with Kodiak's release of its financial and operating results, investors, analysts and other interested parties are invited to listen to a conference call with management on Friday, May 6, 2011 at 11:00 a.m. Eastern Daylight Time.

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    <<
           Kodiak Oil & Gas Corp. Q111 Financial and Operating Results
                                 Conference Call
           -----------------------------------------------------------
    Date:      Friday, May 6, 2011
    -----      -------------------
               11:00 a.m. EDT
               --------------
    Time:      10:00 a.m. CDT
               --------------
                 9:00 a.m. MDT
                 -------------
                 8:00 a.m. PDT
                 -------------
                (877) 257-3168 (US/Canada) and (706) 643-3820
    Call:       (International); Passcode: 61113074
    -----      ----------------------------------------------
                Live and rebroadcast over the Internet: http://
    Internet:   www.videonewswire.com/event.asp?id=78780
    ---------  ------------------------------------------------
                Available through Friday, May 13, 2011 at (800) 642-1687
    Replay:     (US/Canada)
    -------     -----------
                and (706) 645-9291 (International) using passcode: 61113074
                and for 30 days at www.kodiakog.com
                -----------------------------------------------------------


    About Kodiak Oil & Gas Corp.
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Denver-based Kodiak Oil & Gas Corp. is an independent energy exploration and development company focused on exploring, developing and producing oil and natural gas in the Williston and Green River Basins in the U.S. Rocky Mountains. For further information, please visit www.kodiakog.com. The Company's common shares are listed for trading on the NYSE Amex exchange under the symbol: "KOG."

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    Forward-Looking Statements
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This press release includes statements that may constitute "forward-looking" statements, usually containing the words "believe," "estimate," "project," "expect" or similar expressions. These statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements inherently involve risks and uncertainties that could cause actual results to differ materially from the forward-looking statements. Forward looking statements are statements that are not historical facts and are generally, but not always, identified by the words "expects," "plans," "anticipates," "believes," "intends," "estimates," projects," "potential" and similar expressions, or that events or conditions "will," "would," "may," "could" or "should" occur. Forward-looking statements in this document include statements regarding the Company's expectations as to: exploration and development plans; drilling plans and expectations, including the timing and pace of our drilling activities, and the manner and stages in which wells are expected to be drilled; the number, mobilization, intended use and current planned future location of our rigs; spudding activities; the number of shorter versus longer laterals to be utilized and the expected benefits associated with each; the amount and allocation of the Company's anticipated capital expenditures and the timing and success of such programs; the estimated costs to drill and complete wells; the sources of funding for our capital budget; expectations concerning weather conditions and the impact of such conditions on our operations; the future performance of our oil & gas properties, including well production, improvements in EURs and reductions in the DDA rate per unit and trends in well performance and internal rates of return; the independent nature of the Three Forks and Middle Bakken reservoirs; the commercial prospects of the Three Forks Formation; and the amount and sufficiency of future cash flows. Factors that could cause or contribute to such differences include, but are not limited to, fluctuations in the prices of oil and gas, uncertainties inherent in estimating quantities of oil and gas reserves and projecting future rates of production and timing of development activities, competition, operating risks, acquisition risks, liquidity and capital requirements, the effects of governmental regulation, adverse changes in the market for the Company's oil and gas production, dependence upon third-party vendors, and other risks detailed in the Company's periodic report filings with the Securities and Exchange Commission.

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    Footnotes to the Financial Statements
    >>

The notes accompanying the financial statements are an integral part of the consolidated financial statements and can be found in Kodiak's filing on Form 10-Q for the period ended March 31, 2011.

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      KODIAK OIL & GAS CORP.
      CONDENSED CONSOLIDATED BALANCE SHEETS
      (In thousands, except share data)
      (Unaudited)
    >>

    <<
                                                   March 31,    December 31,
     ASSETS                                               2011           2010
     ------                                               ----           ----
     Current Assets
       Cash and cash equivalents                       $76,155       $101,198
       Accounts receivable
          Trade                                          9,854         11,328
          Accrued sales revenues                         4,566          4,578
      Inventory, prepaid expenses and
       other                                            21,935         18,212
                                                        ------         ------
    >>

    <<
                Total Current Assets                   112,510        135,316
                                                       -------        -------
    >>

    <<
     Oil and gas properties (full cost
      method), at cost
       Proved oil and gas properties                   213,019        205,360
         Unproved oil and gas properties               112,061        107,254
         Wells in progress                              41,697         21,418
     Equipment and facilities                            2,864          2,429
         Less-accumulated depletion,
          depreciation, amortization,
                 accretion and asset impairment       (107,442)      (103,799)
                                                      --------       --------
        Net oil and gas properties                     262,199        232,662
                                                       -------        -------
     Property and equipment, net of
      accumulated depreciation
                of $409 at March 31, 2011 and $377
                 at December 31, 2010                      517            366
     Deferred financing costs, net of
      amortization
                of $187 at March 31, 2011 and $83
                 at December 31, 2010                    1,423          1,593
     Total Assets                                     $376,649       $369,937
                                                      ========       ========
    >>

    <<
     LIABILITIES AND STOCKHOLDERS'
      EQUITY
     -----------------------------
     Current Liabilities
       Accounts payable and accrued
        liabilities                                    $24,485        $23,179
       Advances from joint interest
        owners                                               -              -
       Commodity price risk management
        liability                                        6,256          2,248
                                                         -----          -----
                Total Current Liabilities               30,741         25,427
    >>

    <<
     Noncurrent Liabilities
       Long term debt                                   40,000         40,000
       Commodity price risk management
        liability                                        8,838          3,495
       Asset retirement obligation                       2,179          1,968
                                                         -----          -----
                Total Noncurrent Liabilities            51,017         45,463
    >>

    <<
              Total Liabilities                         81,758         70,890
                                                        ------         ------
    >>

    <<
     Commitments and Contingencies -
      Note 5
     Stockholders' Equity:
       Common stock -no par value;
        unlimited authorized
       Issued and outstanding:
        179,127,939 shares as of March
        31, 2011
              and 178,168,205 shares as of
               December 31, 2010
       Contributed surplus                             410,391        407,312
       Accumulated deficit                            (115,500)      (108,265)
                                                      --------       --------
    >>

    <<
               Total Stockholders' Equity              294,891        299,047
                                                       -------        -------
    >>

    <<
     Total Liabilities and
      Stockholders' Equity                            $376,649       $369,937
                                                      ========       ========


    >>

    <<
      KODIAK OIL & GAS CORP.
      CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
      (In thousands, except share data)
      (Unaudited)
    >>

    <<
                                                     Three months ended March
                                                                31,
                                                    -------------------------
                                                         2011            2010
                                                         ----            ----
    >>

    <<
     Revenues
        Oil production                                $13,020          $5,488
        Gas production                                    314             233
        Other income                                      103               -
             Total revenues                            13,437           5,721
                                                       ------           -----
    >>

    <<
     Operating expenses
        Oil and gas production                          2,574           1,222
        Depletion, depreciation, amortization and
         accretion                                      3,721           1,321
        Asset impairment                                    -               -
        General and administrative                      4,718           2,085
                                                        -----           -----
             Total expenses                            11,013           4,628
                                                       ------           -----
    >>

    <<
     Operating income                                   2,424           1,093
                                                        -----           -----
    >>

    <<
     Other income (expense)
        Loss on commodity price risk management
         activities                                    (9,692)           (122)
        Interest income (expense), net                     33              10
                                                          ---             ---
             Total financing and other costs           (9,659)           (112)
                                                       ------            ----
    >>

    <<
     Net income (loss)                                $(7,235)           $981
                                                      =======            ====
    >>

    <<
     Earnings per common share:
       Basic                                           $(0.04)          $0.01
                                                       ======           =====
       Diluted                                         $(0.04)          $0.01
                                                       ======           =====
    >>

    <<
     Weighted average common shares outstanding:
       Basic                                      178,451,574     118,931,087
                                                  ===========     ===========
       Diluted                                    178,451,574     120,588,940
                                                  ===========     ===========


    >>

    <<
      KODIAK OIL & GAS CORP.
      CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
      (In thousands)
      (Unaudited)
    >>

    <<
                                             For the three months ended
                                                      March 31,
                                                  2011               2010
                                                  ----               ----
    >>

    <<
     Cash flows from operating
      activities:
        Net income (loss)                      $(7,235)              $981
     Reconciliation of net income
      (loss) to net cash
           provided by operating (used in)
            activities:
          Depletion, depreciation,
           amortization and
              accretion                          3,721              1,321
          Unrealized loss on commodity price
           risk
              management activities, net         9,350                122
          Stock based compensation               1,539                854
       Changes in current assets and
        liabilities:
          Accounts receivable-trade              1,474             (3,033)
          Accounts receivable-accrued sales
           revenue                                  12             (1,698)
          Prepaid expenses and other              (295)              (530)
          Accounts payable and accrued
           liabilities                          (1,414)              (424)
                                                ------               ----
      Net cash provided by (used in)
       operating activities                      7,152             (2,407)
                                                 -----             ------
    >>

    <<
     Cash flows from investing
      activities:
          Oil and gas properties               (22,423)            (7,447)
          Prepaid tubular goods                (10,084)            (4,287)
          Equipment, facilities, & other          (618)               (81)
          Restricted investment                      -               (210)
                                                   ---               ----
     Net cash used in investing
      activities                               (33,125)           (12,025)
                                               -------            -------
    >>

    <<
     Cash flows from financing
      activities:
          Proceeds from the issuance of
           common shares                           947                113
          Debt issuance costs                      (17)                 -
                                                   ---                ---
     Net cash provided by financing
      activities                                   930                113
                                                   ---                ---
    >>

    <<
     Decrease in cash and cash
      equivalents                              (25,043)           (14,319)
    >>

    <<
     Cash and cash equivalents at
      beginning of the period                  101,198             24,886
                                               -------             ------
    >>

    <<
     Cash and cash equivalents at end
      of the period                            $76,155            $10,567
                                               =======            =======
    >>

    <<
     Supplemental cash flow information
       Oil & gas property accrual
        included in
        Accounts payable and accrued
         liabilities                           $11,589             $1,021
                                               =======             ======
    >>

    <<
       Asset retirement obligation                $165               $175
                                                  ====               ====
    >>

    <<
       Cash paid for interest                   $1,124                 $-
                                                ======                ===


    >>

In evaluating its business, Kodiak considers earnings before interest, taxes, depreciation, depletion, amortization, impairment, gains or losses on foreign currency, gains or losses on commodity risk management activities, stockbased compensation expense and accretion of abandonment liability, ("Adjusted EBITDA") as a key indicator of financial operating performance and as a measure of the ability to generate cash for operational activities, future capital expenditures and an indication of our potential borrowing base under our credit facility. Adjusted EBITDA is not a Generally Accepted Accounting Principle ("GAAP") measure of performance. The Company uses this non-GAAP measure to compare its performance with other companies in the industry that make a similar disclosure, as a measure of its current liquidity, in developing our capital expenditure budget, to evaluate our compliance with covenants under our credit facility and as a component of the corporate objectives to which we tie the vesting of equity-based awards made to senior executives. The Company believes that this measure may also be useful to investors for the same purpose and for an indication of the Company's ability to generate cash flow at a level that can sustain or support our operations and capital investment program, and that disclosure of this measure provides investors with visibility as to the corporate objectives that affect our executive compensation program. Investors should not consider this measure, or other non-GAAP measures such as net income excluding the effect of unrealized derivative losses, in isolation or as a substitute for operating income or loss, cash flow from operations determined under GAAP or any other measure for determining the Company's operating performance that is calculated in accordance with GAAP. In addition, because Adjusted EBITDA is not a GAAP measure, it may not necessarily be comparable to similarly titled measures employed by other companies. A reconciliation of Adjusted EBITDA and net income for the three months ended March 31, 2011 is provided in the table below:

    <<
                                    KODIAK OIL & GAS CORP.
                              RECONCILIATION OF ADJUSTED EBITDA
    >>

    <<
                                              Three months   Three months
                                                  ended          ended
                                                March 31,      March 31,
      Reconciliation of Adjusted
      EBITDA:                                          2011           2010
                                                       ----           ----
    >>

    <<
     Net income (loss)                              $(7,235)          $981
       Add back:
          Depreciation, depletion,
           amortization                               3,721          1,321
          and accretion
          (Gain) /loss on foreign
           currency exchange                              -             (1)
          Unrealized (gain) /loss on
           commodity
             price risk management activities         9,350            122
          Stock based compensation expense            1,539            854
     Adjusted EBITDA                                 $7,375         $3,277
                                                     ======         ======





    >>

SOURCE Kodiak Oil

For further information: Mr. Lynn A. Peterson, CEO and President of Kodiak Oil & Gas Corp. +1-303-592-8075; or Mr. David P. Charles, Sierra Partners LLC, +1-303-757-2510, ext. 11, for Kodiak Oil & Gas Corp. Web Site: http://www.kodiakog.com

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Kodiak Oil & Gas Corp.

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