Initial Production Data Provided on Next Two Middle Bakken Producers;
Wells IP at 1,856 BOE/d and 811 BOE/d on 24-hour Production Tests
DENVER, June 24 /PRNewswire-FirstCall/ -- 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 provided an interim update on its
Williston Basin drilling and completion activities.
Williston Basin -- Dunn County, North Dakota
On the Company's core Fort Berthold Indian Reservation (FBIR) leasehold
in Dunn County, N.D., Kodiak targets oil and gas production from the middle
member between the upper and lower Bakken shales, which are the source for
existing hydrocarbons. The Three Forks / Sanish Formation, a commercially
productive interval lying directly below the lower Bakken shale, is also
expected to be a future exploration target.
In early May 2009, Kodiak announced that it had successfully completed
its first two producing oil wells in the middle Bakken Formation on the FBIR.
Since then, the Company has reached total depth on one additional well, is
currently drilling the horizontal leg of its sixth well, and has successfully
completed two more wells as middle Bakken producers. As of June 24, 2009,
Kodiak had four producing wells, one well awaiting completion and is drilling
ahead on the Two Shields Butte (TSB) #14-33-28H.
New Producers Continue to Confirm Geologic Model
The TSB #16-8-7H well (Kodiak operates with 37.5% working interest (WI),
before payout (36% WI after payout) and 30% NRI, before payout (29.5% NRI
after payout)) reached total depth in April 2009. The well, located in the
northwestern portion of Kodiak's FBIR leasehold, was drilled to an approximate
total vertical depth (TVD) of 10,350 feet and a total measured depth (TMD) of
19,743 feet, with an 8,995 foot lateral in the middle Bakken.
Fracture stimulation procedures were completed on the TSB #16-8-7H well
in early June 2009. The well was completed utilizing a combination of sliding
sleeves and plug and perforation completion techniques with a 15-stage
fracture stimulation design in the well bore's 8,995 foot horizontal lateral
section. The well flowed back oil and frac fluid up 4 1/2" frac string to the
tank batteries. Initial 24-hour production rates were 1,626 barrels of oil
per day (BOPD) and 1.38 million cubic feet of natural gas per day (MMcf/d), or
1,856 barrels of oil equivalent per day (BOE/d). Production was curtailed due
to surface facility constraints. During the first seven days of flow-back,
the well produced 8,654 barrels of oil (BO) and 9,145 barrels of frac fluid.
Prior to being shut-in, the well was producing 46 BO and 30 barrels of frac
fluid per-hour on a 20/64 inch choke with an average pressure of 1,875 psi.
The well was shut-in during completion of the TSB #16-8-16H well and will be
put back onto production later this month.
The TSB #16-8-16H well (Kodiak operates with 50% WI and 41% NRI) reached
total depth in March 2009. The well, located on the same drilling pad as the
TSB #16-8-7H well, was drilled on 320-acre spacing to an approximate TVD of
10,350 feet and a TMD of 15,760 feet, with a 4,465 foot lateral in the middle
Fracture stimulation procedures commenced on the TSB #16-8-16H well in
mid-June 2009. The well was completed utilizing plug and perforation
completion techniques with a five-stage fracture stimulation design in the
well bore's 4,465 foot horizontal lateral section. The well is currently
flowing back oil and frac fluid up 4 1/2" frac string to the tank batteries.
Initial 24-hour production rates were 711BOPD and 604 Mcf/d of natural gas, or
Drilling Operations - Two Shields Butte
The TSB #14-33-6H well (Kodiak operates with 50% WI and 41% NRI) reached
total depth in June 2009. The well is located roughly in the middle of the
Company's FBIR acreage block and was drilled to an approximate TVD of 10,560
feet and 15,919 TMD with a 4,163 foot lateral on a 320-acre drilling block.
The well successfully reached TMD and had the liner in the hole in 26 days.
Completion operations are expected to commence in the middle of the third
Upon reaching total depth and running liner on the TSB #14-33-6H, Kodiak
skidded the rig approximately 50 feet and spud the TSB #14-33-28H (Kodiak
operates with 50% WI and 41% NRI) well off of the same drilling pad. This
well is currently being drilled on a 1,280-acre spacing unit with an
approximate 9,000 foot lateral and will be drilled to an approximate TVD of
10,510 feet and a TMD of 19,700 feet. Completion operations are expected to
commence in the middle of the third quarter 2009.
Charging Eagle and Tall Bear Activity Update
Kodiak also announced today that it has entered into an agreement to
acquire an additional 31.25% WI in the Tall Bear prospect area. Terms of this
transaction were not disclosed. Separately and concurrently, the Company
entered into a non-binding letter of intent with a private industry partner
pursuant to which Kodiak intends to convey certain of its leasehold to the
joint venture partner resulting in a net sell-down of 3,300 net acres to
Kodiak's leasehold in the Charging Eagle and Tall Bear prospects, collectively
referred to as the Twin Buttes area. After netting the costs to acquire the
31.25% WI in the Tall Bear prospect area, Kodiak would realize $1.85 million
in cash from the sell-down, and will pay 50% of the first five wells drilled
in the Twin Buttes area for its 60% WI. The 10% promote will apply to the two
Charging Eagle wells discussed below and three additional wells to be drilled
in the future in the Twin Buttes area.
If each of these transactions close, Kodiak will control approximately
54,000 gross and 33,350 net mineral acres on the FBIR. Kodiak operates all of
its leasehold on the FBIR, with the exception of approximately 18,000 gross
and 9,000 net acres that are in a participating area previously established
with another operator. Kodiak currently has 17 approved drilling permits and
an inventory of two drilling pads built and awaiting drilling activities.
Drilling is expected to commence on the CE #1-22-10H (Kodiak operates
with 50% paying interest, 55.78% WI and 45.375% NRI) in July 2009. The well,
located in the southeastern portion of Kodiak's leasehold, will be drilled on
1,280-acre spacing to an approximate proposed TVD of 10,230 feet and a TMD of
19,900 feet, with an approximate 9,000 foot lateral in the middle Bakken.
Immediately following running a liner in the hole of the CE #1-22-10H,
the Company intends to spud the CE #1-22-23H (Kodiak operates 50% paying
interest with 60% WI and 50% NRI) from the same drilling pad. This well will
be drilled to an approximate proposed TVD of 10,230 feet and TMD of 14,430
"Securing an industry partner for the Twin Buttes area is consistent with
our strategy of carrying an approximate 50% to 60% working interest," said
Lynn Peterson, Kodiak's President and CEO. "We feel this is an appropriate
investment size and exposure to risk considering our 2009 capital expenditure
budget. We expect that the proposed sell-down transaction will allow us to
continue our effort to explore, exploit and define our entire leasehold from
northwest to southeast. Through the drill bit, we endeavor to continue
converting limited-risk exploration into development drilling and future
The Company on a going-forward basis provides a tabular presentation of
data pertinent to its middle Bakken wells. Completed wells and wells in
progress (WIP) are discussed:
Kodiak Oil & Gas Corp. Drilling and Completion Activities
WI/NRI Days Completion IP 24-Hour Day Oil
Well (%) to TD* Date Test BOE/D Production Note
MC #16-34-2H 60/49 41 4/23/09 711 8,397 flowing
MC #16-34H 60/49 36 5/4/09 1,394 13,406 flowing
TSB #16-8-7H 37.5/30.5 28 6/7/09 1,856 -- 8,995'
TSB #16-8-16H 50/41 31 6/18/09 811 -- 4,465'
TSB #14-33-6H 50/41 26 July 2009 -- -- 4,163'
TSB #14-33-28H 50/41 WIP Aug. 2009 -- -- 9,000'
CE #1-22-10H 55/45 -- -- -- -- To spud
CE #1-22-23H 60/50 -- -- -- -- Spud
* Includes running liner in the hole
Commenting on the recent activity, Mr. Peterson said: "Kodiak continues
its 2009 drilling and completion program with two more successful producers.
We are fortunate to have completed each of our wells this year into a better
oil price environment. Recent prices around $70 per barrel WTI equate to
around $60 per barrel in the Williston, net of differentials, transportation
and marketing. The hyperbolic decline curve for middle Bakken wells can
provide high initial flush production and improved near-term cash flow for the
Company. Our initial four completed wells utilized a mix of completion
techniques and length of laterals. We will evaluate the results from our
longer laterals compared to the shorter laterals that are being drilled from
the same pad and utilizing similar completion techniques. We expect to have a
better understanding of the per-well economics from the alternative drilling
and completion methods after a few months of production and will use the
production history to provide more reliable projections of estimated ultimate
"Since the fourth quarter of 2008, Kodiak has closed transactions which
have markedly improved our capital structure and liquidity. The transactions
have also helped ensure that we are in line with our $15.3 million preliminary
2009 estimated capital expenditure budget, which we are monitoring carefully
in light of current commodity prices and drilling and completion costs and
other oilfield services costs.
"Specifically in the past eight months we have:
-- Secured through the joint ventures approximately $7 million to $8
million in carried future drilling and completion costs;
-- Closed a non-brokered registered direct offering of approximately
million (net of offering expenses) in equity financing;
-- Entered into a letter of intent that we expect will result in an
increase in our cash position by $1.8 million upon the closing of the
Twin Buttes transaction; and
-- Prepaid a portion of our future drilling costs through the earlier
acquisition of tubular goods and surface equipment, which as of March
31, 2009, stood at $5.8 million in pre-paid tubular goods and surface
equipment and an additional $2.5 million in deposits on tubular goods
to be delivered before year-end.
These various transactions, combined with expected improved cash flow
from operations due to our growing oil production and a debt-free balance
sheet, leave the Company in a decidedly stronger position than it was at the
beginning of 2009."
About Kodiak Oil & Gas Corp.
Kodiak Oil & Gas, Denver-based, 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."
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 exploration, drilling and development plans, the Company's
expectations regarding the timing and success of such programs, the Company's
expectations regarding the completion of the sell-down of a portion of the
Company's leasehold interests in the Twin Buttes area and the proceeds
expected therefrom, the Company's expectations regarding the timing and amount
of future revenues and the Company's expectations regarding the future
production of its oil & gas properties. 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.
For further information:
For further information: Mr. Lynn A. Peterson, CEO and President of
Kodiak Oil & Gas Corp., +1-303-592-8075; or Mr. David P. Charles of Sierra
Partners LLC, +1-303-757-2510, ext. 11, for Kodiak Oil & Gas Corp. Web Site: