DENVER, Nov. 5 /PRNewswire-FirstCall/ -- Kodiak Oil & Gas Corp.
(NYSE Alternext US: KOG), an oil and gas exploration and production
company with assets in the Green River Basin of southwest Wyoming
and Colorado and the Williston Basin of North Dakota and Montana,
today reported financial and operating results for the third
quarter 2008. Please reference Kodiak's simultaneously issued news
release entitled "Kodiak Oil & Gas Corp. Announces Preliminary
2009 CAPEX, Exploration Joint Venture and Updates Operations" for
further discussion of events subsequent to the third quarter 2008.
Third Quarter Financial Results The Company reported a net loss for
the quarter-ended September 30, 2008, of $18.0 million, or $0.20
per basic and diluted share, compared with a net loss of $22.0
million, or $0.25 per basic and diluted share, for the same period
in 2007. The 2008 and 2007 periods' net loss include $15.5 million
and $20.0 million, respectively, in non-cash charges related to an
impairment of the carrying value of oil and gas properties. As of
September 30, 2008, based on oil and gas prices of $87.81 per
barrel of crude oil and $4.69 per Mcf of natural gas, the value of
Kodiak's proved reserves as calculated under SEC guidelines did not
support the costs included in the full cost pool. Consequently, the
Company recorded an asset impairment of $15.5 million during the
three month period ended September 30, 2008. The impairment
primarily relates to falling commodity prices and a revision of our
previously recorded proved undeveloped locations (PUD). In
comparison to prices at September 30, 2008 noted above, average
prices received during the third quarter were $107.47 per barrel of
crude oil and $3.57 per Mcf of natural gas and average prices
received during October 2008 prices were $62.56 per barrel of crude
oil and $3.59 per Mcf of natural gas. As a result of the
deteriorating commodity prices and the Company's strategy to focus
its capital expenditures on the Bakken oil play in North Dakota, we
reassessed all of our PUDs. Based on the uncertain timing of any
potential drilling program on these PUDs and the current
environment of lower commodity prices, the present value of these
PUDs was deemed non-commercial. Accordingly, we recorded an
impairment charge for a significant portion of our previous PUDs.
"The ceiling test and resultant non-cash impairment charge
essentially cleans the slate for our oil and gas properties base as
we focus Kodiak- operated capital expenditures on the Bakken oil
play in North Dakota," said Kodiak's President and CEO Lynn A.
Peterson. "We are fortunate to have a blend of oil and gas
opportunities providing flexibility in allocating investment
dollars to the highest-return plays in our inventory." Total
revenues for the third quarter 2008 were $1.8 million, versus $2.5
million for the same period in 2007. Oil and gas sales were $1.7
million for the third quarter 2008, as compared to $2.2 million in
2007. Crude oil revenue accounted for approximately 91% of third
quarter 2008 oil and gas sales, as compared to 90% in the same
period in 2007. For the third quarter 2008, Adjusted EBITDA was
approximately negative $462,000 as compared to $816,000 for the
same period in 2007. The negative third quarter Adjusted EBITDA is
attributed in part to decreased oil production as a result of
workovers on producing wells, discussed below, as well as the
increase in workover expense incurred during the third quarter.
Kodiak defines Adjusted EBITDA as net income (loss) before
interest, income taxes, depreciation, depletion, amortization and
accretion, non-cash stock- based compensation expense, impairment
expense and gains or losses on foreign currency exchange.
Reconciliations of Adjusted EBITDA, a non-GAAP measure, to net loss
are included in this news release and in the Company's Form 10-Q
for the quarter ended September 30, 2008. Additional disclosure
regarding the Company's use of Adjusted EBITDA is also included in
the Company's Form 10-Q for the quarter ended September 30, 2008.
General and administrative (G&A) expense was $2.2 million for
the third quarter 2008, as compared to $2.1 million for the same
period in 2007. Included in the G&A expense for the 2008 period
is a stock-based compensation charge of $775,000 for options issued
to officers, directors and employees, as compared to $862,000 for
the same period in 2007. Nine-month Period For the nine months
ended September 30, 2008, Kodiak reported a net loss of $22.5
million, or $0.25 per basic and diluted share, compared with a net
loss of $36.9 million, or $0.42 per basic and diluted share, for
the same period in 2007. The 2008 and 2007 period's net loss
include $15.5 million and $34.0 million respectively in non-cash
charges related to an impairment of the carrying value of oil and
gas properties. Total revenues for the nine-month period of 2008
were $5.7 million, versus $7.0 million for the same period in 2007.
Oil and gas sales were $5.6 million for the first nine months of
2008, as compared to $5.6 million in 2007. Crude oil revenue
accounted for approximately 80% of 2008 oil and gas sales, as
compared to 87% in the same nine month period in 2007. For the
nine-month period of 2008, Adjusted EBITDA was approximately
negative $1.1 million, as compared to $2.1 million for the same
period in 2007. Included in the G&A expense for the 2008 period
is stock-based compensation charge of $2.7 million for options
issued to officers, directors and employees, as compared to $1.7
million for the same period in 2007. Total assets were $69.4
million at September 30, 2008, as compared to $74.3 million at
December 31, 2007. Stockholders' equity was $66.2 million at
September 30, 2008, as compared to $68.3 million at year-end 2007.
Oil and Gas Sales Kodiak's third quarter 2008 oil and gas sales
volumes were 21,800 barrels of oil equivalent (BOE) as compared to
36,400 BOE in the same period in 2007. Oil sales volumes were
14,800 barrels for the third quarter 2008, as compared to 27,600
barrels in the same period in 2007. By commodity in the third
quarter of 2008, crude oil constituted 68% of the production base,
as compared to 76% in the third quarter of 2007. For the third
quarter 2008, the average gas price received decreased 16.5% to
$3.57 per thousand cubic feet of natural gas (Mcf), as compared to
the $4.28 per Mcf received in 2007. The average price received for
crude oil increased 50%. The Company sold its oil for $107.47 per
barrel during the third quarter 2008, as compared to the $71.65 per
barrel received during the prior-year period. Kodiak currently does
not hedge any of its oil and gas production volumes. During the
first nine months of 2008, Kodiak invested $9.5 million, of which
$2.8 million was invested during the third quarter 2008, primarily
for acreage acquisition, seismic and for the Williston Basin oil
well workover program discussed below. Capital expenditures are net
of $2.4 million of proceeds from divestitures. The Company now has
working interests in 23 gross (13.5 net) wells, of which 14 gross
(11.2 net) are Kodiak-operated wells. For the nine-month period of
2008, oil and gas sales volumes were 67,800 BOE, as compared to
104,900 BOE in the same period in 2007. Oil sales volumes were
43,700 barrels for the nine-month period of 2008, as compared to
79,700 barrels in the same period in 2007. The decline in oil
production was caused by the shutting in of three wells in the
Mon-Dak Field producing from the Bakken Formation. The wells
underwent workovers and recompletions during the second and third
quarters of 2008 while being returned to production in the third
quarter. By commodity in the first nine-months of 2008, crude oil
constituted 64% of the production base, as compared to 76% in the
prior-year period. For the nine-month period of 2008, the average
gas price received increased 50% to $7.45 per Mcf, as compared to
the $4.97 per Mcf received in 2007. Compared to the nine-month
period of 2007, the average price received for crude oil increased
68% in the same period in 2008. The Company sold its crude oil for
$103.18 per barrel during the nine-month period of 2008, as
compared to the $61.44 per barrel received during the prior-year
period. Kodiak currently does not hedge any of its oil and gas
production volumes. Liquidity The Company's cash and cash
equivalents position at September 30, 2008, was $11.2 million. Its
prepaid expenses position was approximately $7.0 million, of which
$6.9 million consists of tubular goods and surface equipment
necessary for Bakken shale oil well drilling and completion
activities. The Company recently executed a $20 million Senior
Secured Revolving Credit Facility with The Bank of the West. The
borrowing base, reflecting the maximum amount that may be
outstanding under the Senior Secured Revolving Credit Facility at
any time, is currently $5 million. The borrowing base will be
re-determined on May 1, 2009 and thereafter semi-annually each May
1 and November 1. Currently the facility is undrawn, and the
Company has no long- term debt. Kodiak's ability to fund operations
in future periods will depend upon our future operating
performance, and more broadly, on the availability of equity and
debt financing, which will be affected by prevailing economic
conditions in our industry and financial, business and other
factors, some of which are beyond the Company's control. Kodiak
cannot be certain that additional funding will be available on
acceptable terms, or at all. If the Company is unable to raise
additional capital when required or on acceptable terms, it may
have to significantly delay, scale back or discontinue its drilling
or exploration program, seek to enter into additional joint venture
arrangements with third parties, or seek to sell one or more of its
properties. A significant delay in obtaining additional financing
would have a material adverse effect on the Company's business.
Teleconference Call In conjunction with Kodiak's release of its
results, investors, analysts and other interested parties are
invited to listen to a conference call with management on Thursday,
November 6, 2008 at 11:00 a.m. Eastern Standard Time. Date:
Thursday, November 6, 2008 Time: 11:00 a.m. EST 10:00 a.m. CST 9:00
a.m. MST 8:00 a.m. PST Call: (877) 257-3168 (US/Canada) and (706)
643-3820 (International) Passcode: 67927093 Internet: Live and
rebroadcast over the Internet
http://www.videonewswire.com/event.asp?id=52046 or at:
http://www.kodiakog.com/ Replay: Available through Tuesday,
November 11, 2008 at (800) 642-1687 (US/Canada) and (706) 645-9291
(International) using passcode 67927093 and for 30 days at
http://www.kodiakog.com/ About Kodiak Oil & Gas Corp.
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 http://www.kodiakog.com/. The Company's
common shares are listed for trading on the NYSE Alternext US
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. Forward-looking statements in this document include
statements regarding the Company's exploration, drilling and
development programs, the Company's expectations regarding the
timing and success of such programs and the timing and availability
of financing to satisfy the capital requirements, 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, uncertainties regarding the
Company's liquidity and capital requirements and the availability
and cost of capital necessary to fund the Company's current plan of
operations, 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. [Financial and Operational Tables accompany this News
Release] 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
September 30, 2008. KODIAK OIL & GAS CORP. CONDENSED
CONSOLIDATED BALANCE SHEETS (UNAUDITED) (AUDITED) September 30,
December 31, ASSETS 2008 2007 Current Assets: Cash and cash
equivalents $11,191,928 $13,015,318 Accounts receivable Trade
2,110,594 1,373,843 Accrued sales revenues 762,080 789,652 Prepaid
expenses and other 7,052,389 198,996 Total Current Assets
21,116,991 15,377,809 Oil and gas properties (full cost method), at
cost: Proved oil and gas properties 80,266,344 77,272,437 Unproved
oil and gas properties 27,220,726 21,904,737 Wells in progress
33,905 414,074 Less-accumulated depletion, depreciation,
amortization, accretion and asset impairment (59,779,671)
(41,204,821) Net oil and gas properties 47,741,304 58,386,427 Other
property and equipment, net of accumulated depreciation of $243,009
in 2008 of $176,458 in 2007 265,312 312,017 Restricted investments
244,740 255,068 Total Assets $69,368,347 $74,331,321 LIABILITIES
AND STOCKHOLDERS' EQUITY Current Liabilities: Accounts payable and
accrued liabilities $2,399,055 $5,163,457 Noncurrent Liabilities:
Asset retirement obligation 772,252 874,498 Total Liabilities
3,171,307 6,037,955 Commitments and Contingencies - Note 6
Stockholders' Equity: Common stock - no par value; unlimited
authorized Issued and outstanding: 95,129,431 shares in 2008 and
87,992,926 shares in 2007 Contributed surplus 135,488,723
115,094,923 Accumulated deficit (69,291,683) (46,801,557) Total
Stockholders' Equity 66,197,040 68,293,366 Total Liabilities and
Stockholders' Equity $69,368,347 $74,331,321 KODIAK OIL & GAS
CORP. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
Three months ended Nine months ended September 30, September 30,
2008 2007 2008 2007 Revenues: Gas production $149,804 $226,116
$1,077,887 $750,591 Oil production 1,594,080 1,974,133 4,507,974
4,896,077 Interest 38,467 305,749 158,717 1,323,987 Total revenue
1,782,351 2,505,998 5,744,578 6,970,655 Cost and expenses: Oil and
gas production 856,398 460,867 3,121,967 1,197,639 Depletion,
depreciation, amortization and accretion 1,220,222 2,036,384
3,104,298 4,062,397 Asset impairment 15,500,000 20,000,000
15,500,000 34,000,000 General and administrative 2,162,388
2,091,145 6,488,938 5,380,549 (Gain)/loss on currency exchange
2,992 (97,523) 19,501 (780,976) Total costs and expenses 19,742,000
24,490,873 28,234,704 43,859,609 Net loss $(17,959,649)
$(21,984,875) $(22,490,126) $(36,888,954) Basic & diluted
weighted-average common shares outstanding 91,742,529 87,799,774
89,265,263 87,658,770 Basic & diluted net loss per common share
$(0.20) $(0.25) $(0.25) $(0.42) KODIAK OIL & GAS CORP.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) Nine
Months Ended September 30, 2008 2007 Cash flows from operating
activities: Net loss $(22,490,126) $(36,888,954) Reconciliation of
net loss to net cash (used in) provided by operating activities:
Depletion, depreciation, amortization and accretion 3,104,298
4,062,397 Asset impairment 15,500,000 34,000,000 Stock based
compensation 2,742,312 1,689,377 Changes in current assets and
liabilities: Accounts receivable-trade (736,751) (27,555) Accounts
receivable-accrued sales revenue 27,572 (89,616) Prepaid expenses
and other 6,524 (59,636) Accounts payable and accrued liabilities
(1,267,033) (2,069,346) Net cash (used in)/provided by operating
activities (3,113,204) 616,667 Cash flows from investing
activities: Oil and gas properties (11,930,131) (39,855,687) Sale
of oil and gas properties 2,437,892 - Equipment (19,846) (218,820)
Restricted investments 10,329 (28,887) Net cash (used in) investing
activities (9,501,756) (40,103,394) Cash flows from financing
activity: Proceeds from the issuance of shares 18,935,000 382,150
Issuance costs (1,283,512) - Prepaid tubular goods (6,859,918) -
Net cash provided by financing activities 10,791,570 382,150 Net
change in cash and cash equivalents (1,823,390) (39,104,577) Cash
and cash equivalents at beginning of the period 13,015,318
58,469,263 Cash and cash equivalents at end of the period
$11,191,928 $19,364,686 Supplemental cash flow information Oil
& gas property accrual included in Accounts payable and accrued
liabilities $47,500 $375,100 Asset retirement obligation $(65,143)
$100,379 KODIAK OIL & GAS CORP. Use of Non-GAAP Financial
Matters In evaluating its business, Kodiak considers earnings
before interest, taxes, depreciation, depletion, amortization, gain
on foreign currency, stock-based compensation expense, accretion or
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 and future capital
expenditures. Adjusted EBITDA is not a Generally Accepted
Accounting Principle ("GAAP") measure of performance. The Company
uses this non-GAAP measure primarily to compare its performance
with other companies in the industry that make a similar disclosure
and as a measure of its current liquidity. 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. Investors should not consider this
measure 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 EBITDA is
not a GAAP measure, it may not necessarily be comparable to
similarly titled measures employed by other companies.
Reconciliation between Adjusted EBITDA and net income is provided
in the table below for the three- and nine-month periods ended
September 30. ADJUSTED EBITDA Three months ended Three months ended
September 30, September 30, Reconciliation of Adjusted EBITDA: 2008
2007 Net Loss $(17,959,649) $(21,984,875) Add back: Depreciation,
depletion, amortization and accretion 1,220,222 2,036,384 Asset
impairment 15,500,000 20,000,000 (Gain) / loss on foreign currency
exchange 2,992 (97,523) Stock based compensation expense 774,800
861,583 Adjusted EBITDA $(461,635) $815,569 Nine months ended Nine
months ended September 30, September 30, Reconciliation of Adjusted
EBITDA: 2008 2007 Net Loss $(22,490,126) $(36,888,954) Add back:
Depreciation, depletion, amortization and accretion 3,104,298
4,062,397 Asset impairment 15,500,000 34,000,000 (Gain) / loss on
foreign currency exchange 19,501 (780,976) Stock based compensation
expense 2,742,312 1,689,377 Adjusted EBITDA $(1,124,015) $2,081,844
DATASOURCE: Kodiak Oil & Gas Corp. CONTACT: 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 x11, for Kodiak Oil & Gas Corp. Web site:
http://www.kodiakog.com/
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