Kodiak Oil & Gas Corp.’s new full-year 2013 production forecast, if it holds, means company production will rocket an astounding 670-772 percent since 2011.
The Williston Basin producer expects output to average 30,000-34,000 barrels of oil equivalent per day in 2013, compared to 3,900 boe per day in 2011, for an average production increase of more than 200 percent per year over the three-year period.
Denver, Colo.-based Kodiak said it arrived at its 2013 full-year forecast, released July 23, after assessing volumes for the first half of the year and completion activity planned for the balance of the year, along with its latest acquisition combined with potential associated trades, divestitures of non-operated properties, and acquisition of additional interests in existing drilling units.
Earlier in July Kodiak closed a multimillion-dollar transaction to acquire core Bakken and Three Forks producing properties in the Williston Basin from Liberty Resources, a Denver-based private oil and gas company.
Kodiak’s current net production is about 34,000 boe per day, consisting of roughly 28,500 boe per day from legacy production and 5,500 boe per day from the Liberty Resources properties. The deal also included about 42,000 net leasehold acres in North Dakota’s McKenzie and Williams counties.
For the second quarter of the year, Kodiak reported average daily sales volumes of 23,000 boe per day, representing an 83 percent increases over sales volumes of 12,700 boe per day for the second quarter of 2012, and an 8 percent increase over the first quarter 2013 sales volumes of 21,700 boe per day. Crude oil accounted for 87 percent of second quarter 2013 sales volumes.
Proved reserves of 144 million boe
As of June 30, including the recent acquisition, Kodiak had estimated proved reserves of 123.9 million barrels of oil and 120.7 billion cubic feet of natural gas, or 144 million boe. The estimated present value is $3.2 billion, before income tax. The company’s reserves consist of 86 percent oil and 14 percent gas. Proved reserves excluding the Liberty Resources property acquisition reflect a 28 percent increase over year-end 2012 proved reserves of 94.8 boe.
During the second quarter of 2013, Kodiak said it completed 25 gross (21.5 net) operated wells and participated in the completion of 23 gross (2.5 net) non-operated wells.
Beginning in late May, Kodiak operated with two full-time, 24-hour completion crews, the company said, adding that it intends to maintain the second crew through most of the remaining months of the year, as well as utilize a third crew on a temporary basis on the recently acquired land. Kodiak said it expects to complete 30 gross (25 net) operated wells during the third quarter.
Kodiak said it released one drilling rig in June, leaving it with six operated rigs prior to the July acquisition. Upon closing of the deal, the company assumed the seller’s contract on an additional drilling rig, for a current total of seven rigs. Currently, three rigs are operating in the Polar project area in southern Williams County, two rigs in the Smokey project area, one rig in the Koala project area in McKenzie County, and one rig in Dun County.
Meanwhile, Kodiak said the company’s program to test 12 wells within a 1,280-acre drilling spacing unit continues on schedule in the Polar and Smokey operating areas.
All wells in the Polar project area have been completed with eight of the wells on production, while the remaining four wells are currently undergoing drill out procedures on the flow through plugs, the company said.
In the Smokey project area, the company added, five wells have been completed and are on production and three wells are currently undergoing fracture stimulation procedures. The remaining four wells are on a separate pad and drilling operations are nearly complete.
Infrastructure build out has been completed in both the Polar and Smokey areas, Kodiak added.
In conjunction with anticipated drilling and completion schedules in the second half of the year, the recent acquisition, combined with contemplated transactions affecting the company’s working interest in its operating units, Kodiak said the company is increasing its estimated full-year capital budget to a range of $950 million to $1 billion. This budget should cover the completion of about 100 net wells in 2013, Kodiak said.
—Ray Tyson
