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 Bakken. 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 811 BOE/d. 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 quarter 2009. 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
feet. "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 growth." 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 First 30 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 well MC #16-34H 60/49 36 5/4/09 1,394
13,406 flowing well TSB #16-8-7H 37.5/30.5 28 6/7/09 1,856 --
8,995' lateral TSB #16-8-16H 50/41 31 6/18/09 811 -- 4,465' lateral
TSB #14-33-6H 50/41 26 July 2009 -- -- 4,163' lateral TSB
#14-33-28H 50/41 WIP Aug. 2009 -- -- 9,000' lateral CE #1-22-10H
55/45 -- -- -- -- To spud July 2009 CE #1-22-23H 60/50 -- -- -- --
Spud After CE#1- 22-10H * Includes running liner in the hole
Management Comment 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 recoveries. "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 $7.15 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
http://www.kodiakog.com/. The Company's common shares are listed
for trading on the NYSE Amex 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 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. 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, ext. 11, for Kodiak Oil & Gas
Corp. Web Site: http://www.kodiakog.com/
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