Kodiak Oil & Gas Corp. Reports Second Quarter 2007 Financial and Operational Results

    DENVER, Aug. 9 /CNW/ -- Kodiak Oil & Gas Corp. (Amex:   KOG), an oil and
gas exploration and production company with assets in the Green River and
Williston Basins, today reported financial and operating results for the
three-and six-months ended June 30, 2007.
    Second Quarter 2007
    The Company reported a net loss for the second quarter 2007 of $450,000,
or $0.01 per share, as compared to a net loss of $1.0 million, or $0.01 per
share, for the same period in 2006.  All per-share amounts are presented on a
weighted average basis.  Kodiak had 87.6 million shares outstanding at June
30, 2007, as compared to 74.4 million shares outstanding in the year-ago
    For the second quarter 2007, net income before depreciation, depletion
and amortization, stock-based compensation charges, impairment charge and gain
on foreign currency exchange, or what the Company  refers to as adjusted
EBITDA, was $228,000.  This compares to $133,000 of adjusted EBITDA for the
same period in 2006.  Adjusted EBITDA is a non-GAAP measure.  A reconciliation
of adjusted EBITDA to net income is included in this press release and can
also be referenced in the Company's filing on Form 10-Q for the second quarter
of 2007.
    Net cash provided by operating activities was $3.9 million for the second
quarter 2007, as compared to $498,000 in the same period in 2006.  Of the
increase in net cash provided by operating activities in the second quarter
2007, approximately $2.9 million is attributed to changes in working capital
line items as compared to $55,000 in the same period of 2006.
    Oil and gas sales for the second quarter 2007 were $1.9 million versus
$862,000 in the same period in 2006.  Total revenues were $2.3 million versus
$1.1 million in year-ago period.
    First-Half 2007
    The Company reported a net loss for the first half of 2007 of $14.9
million, or $0.17 per share, as compared to a net loss of $1.0 million, or
$0.02 per share, for the same period in 2006.  Included in first half 2007's
operating expense is a non-cash charge of $14 million incurred in the first
quarter of 2007 related to an impairment of the carrying value of oil and gas
properties.  The impairment charge is discussed in detail in Kodiak's filing
on Form 10Q for the first quarter of 2007.
    For the first half of 2007, Kodiak reported adjusted EBITDA of $1.3
million.  This compares to $619,000 of adjusted EBITDA for the same period in
2006.  Net cash provided by operating activities was $797,000 for the first
half of 2007, as compared to $1.7 million in the same period in 2006.
    Oil and gas sales for the first six months of 2007 were $3.4 million
versus $1.8 million in the same period in 2006.  Total revenues were $4.5
million in the first half of 2007 versus $2.1 million in year-ago period.
Included in the six months periods' total revenues is interest income of $1
million in 2007 versus $367,000 in 2006.
    Total assets were $96 million at June 30, 2007 as compared to $113.8
million at December 31, 2006.  The decrease in total assets is due in part to
a non-cash impairment charge of $14 million incurred during the first quarter
of 2007.  The Company had cash and cash equivalents at June 30, 2007 in the
amount of $31.0 million.  Kodiak has no long-term debt, and its only long-term
liability as of June 30, 2007 was an asset retirement obligation in the amount
of $337,000.
    Production and Operations Activity
    For the second quarter 2007, gas and natural gas liquid production
volumes were 52.5 million cubic feet of natural gas (MMcf), as compared to
31.9 MMcf for the same period in 2006.  Oil production volumes were 26,869
barrels for the second quarter 2007, compared to 10,914 barrels during the
same period in 2006.  On a natural gas equivalent basis, Kodiak produced 213.7
million cubic feet of natural gas equivalents (MMcfe) for the second quarter
2007, using a conversion rate of 6 thousand cubic feet (Mcf) of natural gas to
each barrel of oil.  Second quarter 2007 production represents a 119% increase
over the 97.4 MMcfe reported for the same period in 2006.
    The average gas price received for the quarter decreased 25% to $4.29 per
Mcf when compared to the $5.69 per Mcf received in 2006.  Oil price
realizations remained robust quarter-over-quarter.  Average prices were off by
only 2% to $61.21 per barrel for the quarter when compared to the $62.36 per
barrel received in the second quarter of 2006.  Kodiak's oil and gas
production is currently unhedged.
    During the second quarter 2007, Kodiak invested $15 million for
exploration and development of its leasehold, including drilling seven gross
wells (4.15 net) with one gross (0.40 net) dry hole.  The Company completed
two wells in the quarter.  Expenditures in the second quarter were consistent
with the Company's 2007 capital expenditure budget.
    First Half of 2007
    For the first half of 2007, gas and natural gas liquid production volumes
were 98.5 MMcf, as compared to 63.9 MMcf for the same period in 2006.  Oil
production volumes were 52,135 barrels for the first half of 2007, compared to
23,912 barrels during the same period in 2006.  On a natural gas equivalent
basis, Kodiak produced 411.3 MMcfe for the first-half 2007, a 98% increase
over the 207.4 MMcfe reported for the same period in 2006.
    The average gas price received for the first six months of 2007 decreased
18% to $5.32 per Mcf when compared to the $6.49 per Mcf received in the same
six-month period in 2006.  Oil price realizations were $56.04 and $56.88 per
barrel for the 2007 and 2006 six-month periods, respectively.
    During the first half of 2007, Kodiak invested $28.5 million for
exploration and development of its leasehold, including drilling 10 gross
wells (6.12 net) with three gross dry holes (1.22 net).  The Company completed
three wells in the first half of 2007.
    Second Half of 2007
    The Company has budgeted capital expenditures in the Vermillion Basin of
approximately $8.5 million through the fourth quarter of 2007. The Company has
allocated $6 million to additional completion, drilling and acreage work in
the Williston Basin through the year end. Existing working capital,
anticipated cash flow from operations and drilling joint ventures are expected
to be sufficient to fund the Company's operations and its existing capital
commitments.  The actual amount, timing and allocation of the Company's
capital expenditures is dependent on the results of the Company's ongoing
exploration and drilling programs, the evaluation of the technical and
geological data obtained in the course of its operations and certain other
factors, such as the market price for oil and gas and the availability and
costs of oil field services.
    Vermillion Basin-Wyoming
    The Company announces that it has reached total depth of 13,534 feet on
its HB Unit #5-3 well (Kodiak operates with 80% WI).  The well was drilled, as
previously announced, as a vertical test of the Mesaverde, Baxter shale and
the Frontier sandstones.  During drilling, the well encountered numerous gas
shows and significant over-pressuring in the potential productive formations.
The well was the first well drilled to test deep gas potential in Kodiak's
southwestern Horseshoe Basin Unit of the Vermillion Basin leasehold.
Production casing has been set to total depth and completion and fracture
stimulation design is underway. Completion work should be completed in
September, and more will be known about the productive potential of the well
at that time.
    Upon reaching total depth on the HB Unit #5-3, Kodiak returned the rig to
the NT Fed #4-35 (100% WI) well location   The Company originally drilled a
lateral in this well in one of its primary targets within the Baxter shale and
encountered gas shows.  A completion was attempted in the well naturally
without any mechanical stimulation.  Based upon the initial flow rate
analysis, the Company has decided to re-enter the well as a side track and
drill the entire Baxter shale section vertically.  Kodiak intends to acquire
core data and additional log data from the new well bore in order to better
understand the reservoir.
    Williston Basin-Montana and North Dakota
    Mission Canyon/Red River-Sheridan County, Montana and Divide County,
North Dakota
    During the first half of 2007, Kodiak participated in the drilling of
four, 3-D defined prospects to test the Mission Canyon and/or Red River
formations.  The Company completed the Larsh #2-13 (Kodiak operates with 50%
WI) in the Red River Formation during June 2007.  This well averaged
production of 165 barrels of oil per day.  Currently, two additional wells are
being completed, and one well was plugged and abandoned.  Kodiak anticipates
announcing completion results during the third quarter of 2007.
    The Williston drilling rig was released and is drilling for another
operator.  Kodiak fulfilled its contractual obligation for wells drilled by
the rig.  Company engineers are currently evaluating the results of the four
wells.  An important part of the play analysis includes tying well control
data to reprocessed seismic data in an effort to more clearly define potential
structures and stratigraphic traps and high-grading the drilling opportunities
in the Williston.  Upon completion of the well evaluation, a decision will be
made as to continuing with immediate additional drilling activity in the
Mission Canyon / Red River.  Several additional prospects have been identified
on the leasehold and may be drilled subject to results from the aforementioned
    Bakken-McKenzie and Dunn Counties, North Dakota
    Kodiak successfully fracture stimulated its second of three Bakken
Formation producers in McKenzie County, N.D. during the second quarter of
2007.  The well was placed back on production and averaged 185 barrels of oil
per day over the last 17 days of July.
    Tall Bear Project
    Kodiak continues to acquire acreage prospective for oil production from
the Bakken shale in its Tall Bear Project in Dunn County, N.D.  To date, the
Company has acquired approximately 17,500 gross and 15,000 net acres in a
trend bordered by producing wells drilled by other Bakken operators to the
north, west and south of its acreage position.  The closest producing well to
Kodiak leasehold is located approximately 15 miles away.  Management believes
that the leasehold is on trend with Bakken production in this part of the
Williston Basin.  The first location on the acreage has been surveyed and
permitting procedures are underway.  Drilling activity will commence when the
permits are approved, which is expected to occur in the fourth quarter of
    Management Comments
    Lynn Peterson, Kodiak's CEO and President said: "In the Vermillion, we
are pleased to report the gas shows and over-pressuring in the HB Unit #5-3. 
It is particularly significant because we have extended the deep gas over-
pressuring to the southwestern most part of our 29,000 net acre leasehold in
the Vermillion Basin.  While we await the successful completion of this well
    to determine its ultimate productive potential, the early signs appear to
be encouraging based on open-hole log analysis.
    "With respect to the re-entry activity on the NT Fed #4-35, we originally
drilled a lateral in a zone that had not been tested horizontally by any other
operators in the area.  Based upon the work our technical team has completed
on the Baxter shale, we believe that evaluating deeper zones within the Baxter
makes economic sense and allows us to gain valuable data without the cost of a
new vertical well.   We believe the deeper targeted intervals hold significant
potential and merit further evaluation.
    "Finally, we have put together a meaningful acreage position in the
Bakken shale play in North Dakota.  Given competitor success and well-control
analysis, we believe we are in a part of an emerging Bakken play that is
yielding attractive economic returns.  Only the drill bit can confirm our
hypothesis, so we plan to spud a first well in this part of our leasehold in
early fourth quarter of 2007.  We look forward to updating investors as we
learn more about the play."
    Conference Call
    In conjunction with Kodiak's release of its second quarter 2007 results,
you are invited to listen to a conference call with management on Friday,
August 10, 2007 at 11:00 a.m. Eastern daylight time.

    Date:     Friday, August 10, 2007

    Time:     11:00 a.m. EDT
              10:00 a.m. CDT
               9:00 a.m. MDT
               8:00 a.m. PDT

    Call:     (866) 322-9730 (US/Canada) and (706) 679-6054 (International)
              Passcode 11539715

    Internet: Live and rebroadcast over the Internet:  log on to

    Replay:   Available through Sunday, August 12, 2007 at (800) 642-1687
              (US/Canada) and (706) 645-9291 (International) using passcode
              11539715 and for 30 days at http://www.kodiakog.com
    Use of Non-GAAP Financial Measures
    This press release includes non-GAAP financial measures entitled
"Adjusted EBITDA."  For a reconciliation of this non-GAAP financial measures
to its most comparable financial measure under GGAO, as well as for a
description as to why management believes that this measure is useful for
investors, see the footnotes following the tables at the end of this press
    About Kodiak Oil & Gas Corp.
    Kodiak Oil & Gas, headquartered in Denver, 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
http://www.kodiakog.com.  The common shares of the Company are listed for
trading on the American Stock Exchange under the symbol "KOG."
    Forward-Looking Statements
    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. Information inferred from the
interpretation of drilling results may also be deemed to be forward-looking
statements, as it constitutes a prediction of what might be found to be
present when and if a well is actually developed. 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, and the Company's expectations regarding
production from its Williston property. 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.
    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 June 30, 2007.

                            KODIAK OIL & GAS CORP.
                         CONSOLIDATED BALANCE SHEETS

                                               (UNAUDITED)         (AUDITED)
                                                 June 30,        December 31,
                                 ASSETS            2007               2006
    Current Assets:
      Cash and cash equivalents                $30,948,752        $58,469,263
      Accounts receivable
        Trade                                    1,835,536          1,877,185
          Accrued sales revenues                   889,269            666,990
      Prepaid expenses and other                   205,366            103,707

    Total Current Assets             33,878,923         61,117,145

    Property and equipment (full cost
     method), at cost:
      Proved oil and gas properties             49,498,817         27,167,338
      Unproved oil and gas properties           19,790,518         19,607,474
      Wells in progress                         10,464,876          7,700,415
      Less-accumulated depletion,
       depreciation, amortization,
       accretion and asset impairment          (18,192,615)        (2,224,962)
      Net oil and gas properties                61,561,596         52,250,265
      Other property and equipment, net
       of accumulated depreciation
       of $124,535 in 2007 and $102,231
       in 2006                                     261,616            181,752
    Restricted Investments                         295,739            224,452

    Total Assets                               $95,997,874       $113,773,614

                               LIABILITIES AND
                             STOCKHOLDERS' EQUITY
    Current Liabilities:
      Accounts payable and accrued
       liabilities                              $5,982,065         $9,879,104

    Noncurrent Liabilities:
      Asset retirement obligation                  337,480            249,695
             Total Liabilities                   6,319,545         10,128,799

    Commitments and Contingenicies - Note 4
    Stockholders' Equity:
      Common stock, $0.01 par value:
      Issued:  87,748,426 shares in 2007
       and 87,548,426 shares in 2006               877,484            875,484
      Additional paid-in capital               112,320,591        111,384,998
      Accumulated deficit                      (23,519,746)        (8,615,667)

    Total Stockholders' Equity        89,678,329        103,644,815

    Total Liabilities and Stockholders'
     Equity                                    $95,997,874       $113,773,614


                              Three months ended           Six months ended
                                   June 30,                   June 30,
                               2007        2006           2007         2006

       Gas production        $224,977     $181,499      $524,474     $415,264
       Oil production       1,644,625      680,600     2,921,945    1,355,414
       Interest               454,528      263,167     1,018,238      366,839
            Total revenue   2,324,130    1,125,266     4,464,657    2,137,517

    Cost and expenses:
       Oil and gas
        production            345,998      236,746       736,773      349,660
        and abandonment
        liability accretion   986,767      491,674     2,026,013      879,190
       Asset impairment             -            -    14,000,000            -
       General and
        administrative      2,026,443    1,825,632     3,289,403    2,290,434
       (Gain) on currency
        exchange             (585,832)    (420,676)     (683,453)    (368,143)

            Total costs
             and expenses   2,773,376    2,133,376    19,368,736    3,151,141

    Net loss                $(449,246) $(1,008,110) $(14,904,079)

    Basic & diluted
     common shares
     outstanding           87,623,975   74,398,514    87,587,100   67,045,923

    Basic & diluted net
     loss per common share    $(0.005)     $(0.014)      $(0.170)     $(0.015)


                                                  Six Months Ended June 30,
                                                    2007             2006

    Cash flows from operating activities:
       Net loss                                $(14,904,079)      $(1,013,624)
    Reconciliation of net loss to net
     cash provided by operating activities:
         Depletion, depreciation,
          amortization and abandonment
          liability accretion                     2,026,013           879,190
         Asset impairment                        14,000,000                 -
         Stock based compensation                   702,594         1,121,093
      Changes in currrent assets and
         Accounts receivable-trade                   41,649          (279,689)
         Accounts receivable-accrued
          sales                                    (222,279)         (111,653)
         Prepaid expenses and other                (101,659)         (148,645)
         Accounts payable                          (432,454)        1,267,791
         Accrued expenses                          (312,789)          (32,619)

     Net cash provided by operating
      activities                                    796,996         1,681,844

    Cash flows from investing activities:
         Oil and gas properties                 (28,354,334)      (18,029,171)
         Equipment                                 (126,886)          (14,860)
         Restricted investment                      (71,287)          (75,000)

    Net cash (used in) investing
     activities                                 (28,552,507)      (18,119,031)

    Cash flows from financing activity:
         Proceeds from the issuance of
          shares                                    235,000        39,555,900
         Stock issuance costs                             -        (2,909,299)

    Net cash provided by financing
     activities                                     235,000        36,646,601

    Net change in cash and cash
     equivalents                                (27,520,511)       20,209,414

    Cash and cash equivalents at
     beginning of the period                     58,469,263         7,285,548

    Cash and cash equivalents at end of
     the period                                 $30,948,752       $27,494,962

    Non-cash Items
      Oil & gas property accrual included
       in Accounts payable                       $1,453,600        $1,417,236

      Asset retirement obligation                   $76,447           $68,615
    Use of Non-GAAP Financial Matters
    We use EBITDA, as adjusted as described below, and referred to as
Adjusted EBITDA, as a supplemental measure of our performance that is not
required by, or presented in accordance with, GAAP.  We define Adjusted EBITDA
as net income before (i) interest expense, (ii) income taxes, (iii)
depreciation, depletion and amortization, (iv) non-cash expenses relating to
share based payments under FAS 123Rm (v) pre-tax unrealized gains and losses
on foreign currency and (vi) accretion of abandonment liability.  We present
Adjusted EBITDA because we consider it an important supplemental measure of
our performance, in particular because it excludes amounts, such as expenses
relating to share-based payments and unrealized gains and losses on foreign
currency, that do not relate directly to our operating performance on a more
consistent basis, we use this measure for business planning and analysis
purposes and in assessing acquisition opportunities and overall rates of
return.  Adjusted EBITDA is not a measurement of our financial performance
under GAAP and should not be considered as an alternative to net income,
operating income or another performance measure derived in accordance with
GAAP, as an alternative to cash flow from operating activities or as a measure
of our liquidity.  You should not assume that the Adjusted EBITDA amounts
shown in the prospectus are comparable to Adjusted EBITDA amounts disclosed by
other companies.  In evaluating Adjusted EBITDA, you would be aware that it
excluded expenses that we will incur in the future on a recurring basis.
Adjusted EBITDA has limitations as an analytical tool, and you should not
consider it in isolation.  Some of its limitations are:  it does not reflect
non-cash costs of our stock incentive plans, which are an ongoing component of
our employee compensation program; and although depletion, depreciation and
amortization are non-cash charges, the assets being depleted, depreciated and
amortized will often have to be replaced in the future, and Adjusted EBITDA
does not reflect the cost or cash requirements for such replacements.  We
compensate for these limitations by relying primarily on our GAAP results and
using Adjusted EBITDA only supplementally.
    Reconciliation between Adjusted EBITDA and net income is provided in the
table below for the three- and six-month periods ended June 30.


                                 Six Months ending      Three Months ending
                                      June 30,                June 30,
    Reconciliation of
     Adjusted EBITDA:            2007         2006       2007         2006

    Net Loss                $(14,904,079) $(1,013,624) $(449,246) $(1,008,110)
      Add back:
          depletion &
          expense              2,026,013      879,190    986,767      491,674
         Asset impairment     14,000,000            -          -            -
         (Gain) on foreign
          currency exhange      (683,453)    (368,143)  (585,832)    (420,676)
         Stock based
          expense                827,794    1,121,093    276,634    1,069,850

    Adjusted EBITDA           $1,266,275     $618,516   $228,323     $132,738

For further information:

For further information: Mr. Lynn A. Peterson, President, Kodiak Oil &
Gas  Corp., +1-303-592-8075; or Mr. David Charles, EnerCom, Inc.
+1-303-296-8834 Web Site: http://www.kodiakog.com

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