Independent energy company, Kodiak Oil & Gas Corp. (KOG) reported good numbers in its preliminary 2013 operational and financial update, prior to releasing its fourth quarter results after the closing bell on Feb 27. Kodiak shares went up post announcement and settled at $11.35 on Feb 11, up 5.1% from the previous close.
As of Dec 31, 2013, Kodiak’s total estimated proved reserves jumped 77% year over year to about 167.3 million barrels of oil equivalent (MMBoe). Total reserve comprises 138.2 million barrels of crude oil (83%) and 174.0 billion cubic feet (Bcf) natural gas (17%). Of the total estimated proved reserves, about 46% are developed and under production, whereas the remaining 54% of undeveloped reserve offers drilling potential of around 2.5 years.
For fourth quarter 2013, Kodiak’s average daily sales volumes nearly doubled to 36,100 barrels of oil equivalent per day (BOE/d) from 18,200 BOE/d in the prior-year quarter. The results also reflect a 2% sequential rise from 35,400 BOE/d. In this output, about 89% contribution came from crude oil.
For 2013, average daily sales volumes went up 103.0% year over year to 29,200 BOE/d from 14,400 BOE/d.
For first quarter 2014, the company expects average sales volume of 36,000–38,000 BOE/d which falls in line with the company’s target of 42,000–44,000 BOE/d for full-year 2014.
Kodiak spent about $210 million in the fourth quarter, of which $204 million was spent on drilling and completion activities and the remaining on leasehold and infrastructure development. For 2013, drilling and completion capital spending was in line with Kodiak’s previous guidance of $1.0 billion.
After adjusting proceeds from divestments, Kodiak spent an additional $672 million on acquisitions in 2013.
Kodiak successfully drilled 99.6 net operated and non-operated wells in 2013, out of which 21.9 net operated wells and 4.0 net non-operated wells were completed in the fourth quarter. The company currently has 7 operated rigs and plans to keep that number in 2014. Additionally, Kodiak’s intends to continue its presence in non-operated drilling ventures.
The downspacing pilot programs in Kodiak’s Polar and Smokey prospects are still under evaluation and have a 120-day average production of 618 BOE/d and 461 BOE/d, respectively.
Kodiak currently holds a Zacks Rank #4 (Sell). Meanwhile one can consider better-ranked energy sector stocks such as Athlon Energy Inc. (ATHL), Cabot Oil & Gas Corporation (COG) and Clayton Williams Energy, Inc. (CWEI). All these stocks currently sport a Zacks Rank #1 (Strong Buy).
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