Kodiak Oil & Gas 2013 Bakken Sales Volumes Up 103% in 2013 from 2012

February 12, 2014 Kirk Eggleston

Kodiak's average daily sales volume in the Bakken went up 98% to 36,100 boe/d in the fourth-quarter of 2013 from 18,200 boe/d in the fourth-quarter of 2012. Crude oil made up most of the company's sales volume at 89% in the fourth-quarter.

Average daily sales volumes increased 103% for the year to 29,200 boe/d in 2013 from 14,400 boe/d in 2012.

Kodiak Bakken Acquisitions and Drilling Operations in 2013

In 2013, Kodiak invested approximately $672 million on acquisitions net of divestitures in the Bakken. In June 2013, Kodiak Oil & Gas signed a purchase and sale agreement with Liberty Resources for 42,000 net acres in the Williston Basin for $660 million.

The acquisition included acreage prospective for the Bakken and Three Forks formations in McKenzie and Williams counties.

For the full year 2013, Kodiak invested ~ $1.0 billion in capital expenditures for drilling and completing new wells, including surface facilities and pipeline connections in the Bakken. In the fourth-quarter of 2013, the company completed 29 gross (21.9 net) operated wells and 40 gross (4.0 net) non-operated wells. Currently, Kodiak has 7 operated rigs in the Williston Basin.

Kodiak Bakken Reserves

Kodiak estimates the value of its proved total reserves increased from $1.9 billion in 2012 to $3.5 billion at the end of the year in 2013. That's an 81% increase.

The company's estimated proved reserves increased 77% to 167.3 million boe from 94.7 million boe in 2012. Total proved crude oil reserves are 138.2 million bbl crude oil and total natural gas reserves of 174 bcf natural gas.

“Lynn Peterson, Chairman and CEO said: “Last year was another exciting year for Kodiak and its shareholders. Our team did a tremendous job of delivering outstanding operating results and reserve growth while, at the same time, we materially expanded our future drilling inventory through downspacing work and an acquisition. In 2014, our focus continues to be on determining the optimum development blueprint for our leasehold while delivering operational excellence.”

Make-up of Kodiak's Proved Reserves at the end of year 2013:

138.2 million bbl crude oil (83%)
174 bcf natural gas (17%)
46% of 2013 proved reserves are developed and producing
54% of 2013 proved reserves are undeveloped

Of the 54% of proved reserves that are undeveloped, Kodiak estimates those properties are a 2.5 year drilling inventory.

SM Energy Grew Bakken Production 9% in the Third Quarter

October 31, 2013 R.T. Dukes

SM Energy grew Bakken production volumes from 13,700 boe/d in the second quarter to 14,900 boe/d in the third quarter.

The company completed 13 gross wells and is producing 35% more than it did at this time last year.

SM has three rigs running, with a focus in the Gooseneck, and Raven/Bear Den areas. SM Energy has 162,000 net acres prospective for the Bakken and Three Forks, but is focused on development of 81,000 net acres.

The company made two comments related to testing in the play:

Downspacing results will be considered in planning at year-end
Evaluating alternate completion designs being used in the play - Current design utilizes a 26-stage sliding sleeve completion and 80,000 barrels of fluid.

Read the company's full third quarter press release at sm-energy.com

Magnum Hunter Resources Provides Second Quarter Bakken Update

July 18, 2013 R.T. Dukes

Mangnum Hunter Resources participated in bringing on 19 gross (5.5 net) Bakken wells in the second quarter of 2013. At the end of the quarter 20.4 gross (11.4 net) wells were in some stage of drilling or being completed.

Magnum Hunter also noted midstream delays brought on by wet weather. A Oneok gathering system expected to be online in April did not accept gas until the last week of June. The gas gathering system is being built in an effort to conserve natural gas production in the area. In total, the project will connect ~300 wells in the area over the next year.

Bakken & Three Forks Well Highlights

Border Farms 3130-5TFH - (28.3% interest) Drilled to a measured depth of 14,300 ft (lateral length of 6,075 ft), fraced with 26 stages. The 24-hour flowing initial production (IP) rate was 626 boe/d
Montclair 0112-2TFH - (16.7% interest) Drilled to a measured depth of 17,710 ft (lateral length of 9,572 ft), fraced with 40 stages and placed. The 24-hour flowing IP rate was 683 boe/d
J. Olson 22-15-162-98H 2DM - (36.25% interest) Drilled to a measured depth of 18,215 ft (lateral length of 9,455 ft), fraced with 36 stages. The 24-hour flowing IP rate was 872 boe/d
J. Olson 27-34-162-98H 2XM - (35.7% interest) Drilled to a measured depth of 18,842 ft (length of 10,096 ft), fraced with 36 stages. The 24-hour flowing IP rate was 820 boe/d
Baja 2215-2H - (30.4% interest) Drilled to a measured depth of 18,155 ft (lateral length of 9,568 ft), fraced with 25 stages. The 24-hour flowing IP rate was 813 boe/d
Baja 2215-3H - (30.4% interest) Drilled to a measured depth of 18,280 ft (lateral length of 9,820 ft), fraced with 25 stages. The 24-hour flowing IP rate was 1,076 boe/d
Baja 2215-1H - (30.4% interest) Drilled to a measured depth of 17,977 ft (lateral length of 9,545 ft), fraced with 25 stages. The 24-hour flowing IP rate was 913 boe/d

Magnum Hunter controls 190,000 net acres in the Williston Basin. 140,000 acres are located in North Dakota and ~50,000 acres are located in Canada.

Hess's Bakken Drilling Days & Well Costs Down

July 2, 2013 R.T. Dukes

Hess is spending less in 2013, but it might simply be spending it smarter. The company only spent $535 million developing its Bakken acreage in the first quarter. Honestly, it's still a big investment, but down over $300 million from the first quarter of 2012 when Hess spent $852 million in the area.

The main reason for lower investment levels is improving costs. Hess can drill the average well in just 26 days compared to 32 days in the second quarter of 2012. That along with other costs savings measures has driven Bakken drilling & completion costs down from $13.4 million to $8.6 million over the past year.

Hess has also let a significant amount of acreage go over the past year. The company has an interest in 665,000 net acres compared to 833,000 net acres in Q1 2012.

Hess produced 65,000 boe/d in the first quarter of 2013 and just 11% of the company's production is operated by other companies. Hess has an average working interest of 84% in operated wells and 12% in non-operated wells.

With many corporate changes underway at Hess, it will be interesting to see if the company's strategy changes over the coming months. I can't imagine a scenario where the Bakken isn't core to the company's development plans.

Kodiak Nearing Completion Of Two 12 Well Pads

May 22, 2013 R.T. Dukes

Kodiak Oil & Gas Bakken Three Forks Well Placement

Kodiak Oil & Gas is nearing completion of two well pads that will test six wells in the Bakken and six wells in the Three Forks. If successful, you might see a lot of development across the area shift to this strategy.

The Bakken and Three Forks wells are spaced approximately 800-850 ft apart. The wells in the Bakken and Three Forks are not stacked, but offset from each other to minimize interference. Not all six wells in the Three Forks are being drilled in the same zone either. Three are targeting the Upper Three Forks and three are targeting the middle Three Forks.

On one pad in the Polar area, 10 of the planned 12 wells had been drilled and on the other pad in the Smokey area 8 of the 12 planned wells had been drilled as of the beginning of May. The Polar area pad is expected to be completed and producing by late July.

“Kodiak had a solid first quarter and we are making progress towards the milestones that we set out for the year.”

— James Catlin, EVP

Other highlights from the first quarter included:

Kodiak dropped one completion crew in March & April, but plans to add them back in May
Production Averaged 21,700 boe/d in the first quarter
Spending 20 days from spud to total depth
Oil & gas infrastructure and salt water disposal infrastructure near 12-well pads is nearly complete
Running seven rigs currently with plans to drop one later in the month