KOG: Bakken Reserves.. Lots of growth.. just getting started?
· 2010 PROVED RESERVES 11.5 MMBOE,REPRESENTING 158% GROWTH
· $161 MM PV-10 VALUE, 312% INCREASE
· ANNUAL PRODUCTION 573 MBOE, 144% INCREASE
DENVER — February23, 2011 — 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, todayannounced record year-end 2010 proved reserves quantities and reported record production and sales volumes for the quarter and year ended December 31, 2010.
Kodiak’s estimated total proved reserves at December 31, 2010 were approximately 11.5 million barrels of oil equivalent (MMBoe), as compared to 4.5 MMBoe at December 31, 2009. The 2010 total represents a 158% increase from 2009’sestimated proved reserves on an equivalent basis, and is comprised of 10.0 million barrels of crude oil and 9.0 billion cubic feet (Bcf) of natural gas. The 2010 reserve mix is 87% crude oil and 13% natural gas, as compared to 86% crude oil and 14% natural gas for 2009. Approximately 37% of the 2010 total proved reserves are categorized as proved developed producing and approximately 62% are classified as proved undeveloped, as compared to 32% proved developed producing and 68% proved undeveloped for 2009.
For 2010 reserve quantities, Kodiak’s estimated future cash flows, discounted at an annual rate of 10 percent before giving effect to income taxes (commonly known as PV-10 value), for proved reserves at year-end was $161.1 million, as compared to $39.1 million in 2009, a 312% increase. Please see below for further disclosure regarding the PV-10 value and the Company’s belief in its usefulness in evaluating its reserves. Approximately $109.1 million of the PV-10 value is attributed to the proved developed producing reserves. The Williston Basin constitutes approximately 99% of Kodiak’s proved reserves.
When booking proved undeveloped locations, Kodiak considered its 2011-2012 drilling program and the sources and amounts of capital available to complete the program. All of the wells to be drilled in the middle Bakken Formation in the upcoming drilling program were classified as proved undeveloped as of December 31, 2010. As the wells are successfully drilled and completed, they will be converted to proved developed producing reserves during 2011. Given the short production history,as of December 31, 2010, from Kodiak’s operated wells drilled in the Three Forks Formation, the Company has booked only limited proved reserves from that formation. As more production data is obtained from the Three Forks Formation,Kodiak anticipates booking additional reserves in 2011.
As of year-end 2009,the Securities and Exchange Commission (“SEC”) instituted certain guidelineswhich limit proved undeveloped reserves to those expected to be developed within five years. By comparison, Kodiak booked its 2010 proved undeveloped reserves based on only a two-year development program, a methodology consistent with the Company’s previous two years’ proved undeveloped reserves bookings.The Company’s 2010 reserve estimates do not include any probable or possible reserves which may exist for Kodiak’s properties.
Kodiak Oil & Gas Corp. Proved Reserves Summary at December 31, 2010
