3Q10 Earnings Report
1Q10 Earnings Report
NEWS
July 10, 2011: KOG -- one of six oil and gas companies with best price appreciation (publicly traded shares).
April 25, 2011: Motley Fool on KOG.
February 12, 2011: Michael Filloon/SeekingAlpha on KOG (February 11, 2011).
January 5, 2011: KOG bows says it partners with XOM. I was originally concerned with KOG due to need for capital to finance it's drilling program. With XOM as a partner, and KOG located in some of the best Bakken/Three Forks, there is no question any more that KOG is a great holding in the Williston Basin. One could put this among the top five drillers in North Dakota and a great stock to accumulate.
January 4, 2011: Investopedia on KOG.
November 5, 2010: Comments on KOG's 3Q10 earnings.
October 19, 2010: KOG increases acreage base by 25%! Huge deal. Worth $1.6 billion? Paid $88 million in cash.
May 4, 2010: Three wells on one pad!
- 18987, KOG, Two Shields Butte 14-21-16-2H, SESW 21-149N-92W
- 18988, KOG, Two Shields Butte 14-21-33-15H, SESW 21-149N-92W
- 18989, KOG, Two Shields Butte 14-21-33-16H3, SESW 21-149N-92W
February 21, 2010: Hypothetical investment results with dollar-cost averaging since KOG announced the results of its first wells back in 2007.
February 16, 2010: KOG provides interim update on operations, including announcement that recent short lateral had an IP of 1,419. The report also notes that a) KOG has some 3-well pads; and, b) they are moving to long laterals (like everyone else, it seems).
From the report: "Kodiak focuses its well-performance analysis on longer-term production rates and also looks to ensure that it invests its capital for the most efficient development of our reserves. Based upon our production data, the recovery rates per-foot of horizontal lateral appear to be greater in the shorter laterals; however our analysis indicates that we achieve a stronger rate of return with the longer laterals as additional reserves are obtained with marginal incremental investment. Therefore our 2010 development program will be geared to longer laterals as opposed to the shorter laterals."December 18, 2009: KOG announces $60 million 2010 CAPEX program ($21 million CAPEX in 2009). KOG will take delivery of a second rig in February 2010 for the Bakken. KOG commits to 12 gross (9.5 net) wells in 2010; this compares to 9 wells in 2009.
COMMENTARY
This is a most interesting play. It's one of the smaller companies in the Bakken by market capitalization.
KOG was one of the first to be active in the Fort Berthold Indian Reservation. The reservation has part of the prolific Parshall oil field as well as the developing Van Hook and Big Bend fields.
It appears one can divide the FBIR in quarters. I don't know much about the SW or the SE quarter yet. The NE quarter is "owned" by EOG. The rest of the productive FBIR is split among several companies notably Slawson and KOG. (I am not aware that Slawson is publicly traded; I could be wrong. Slawson partners with several other producers, most notably NOG.)
KOG has a number of wells on the FBIR, and there's a lot of discussion on the message boards about how well KOG might do. I can't argue. KOG might do quite well.
In the summer of 2009, I was negative to neutral on KOG; with KOG adding a second rig in the Bakken, one can argue KOG is stepping into the "big leagues" in the Bakken -- maybe not quite there but heading in that direction.
KOG share price has lagged NOG significantly (January, 2010). Earnings soon to be reported. Although KOG states it has $50 million in assets, most of that is in property plant and equipment ($35 million); it has only $1.75 million cash on hand (according to Yahoo!Financial and KOG's current presentation, based on 3rd quarter data). And yet KOG says it has committed to a $60 million 2010 CAPEX program: where do they get that cash, $60 million? They state, in their current presentation, that in early 2010 they will have established necessary credit lines. "Kodiak expects to substantially fund the budget primarily from cash on hand ($1.75 million vs $60 million CAPEX), cash flow from operations (negative cash flow?), and potential borrowings under a new reserve-based revolving line of credit that it expects to put into place in early 2010." To me, it looks like they will need to a) borrow significantly, b) issue more stock, or c) hit some huge wells. Dunn County, where most of their activity is, is a good location, but it's not the Parshall oil field. KOG has been as high as $6/share; around $1 last March, 2009, and now back up to $2.50 (January, 2010). Speculative to say the least.
Updated: April 25, 2011.
