Kodiak Oil & Gas Increasing Williston Basin Resources
Jun 3rd 2013 1:03PM
Updated Jun 3rd 2013 2:25PM
The Bakken is still rockin' for Kodiak Oil & Gas , which today announced it plans to spend $660 million cash to acquire additional core producing properties and undeveloped leaseholds in the Williston Basin of North Dakota. The property includes Bakken and Three Forks properties.
Kodiak entered into a definitive purchase and sale agreement with privately held Liberty Resources to acquire approximately 42,000 net acres in McKenzie and southern Williams Counties, N.D., bringing Kodiak's pro forma total lease holdings in the Williston Basin to almost 196,000 net acres. It will also assume Denver-based Liberty's contract for one drilling rig, which has 14 months remaining on its term.
Kodiak Chairman and CEO Lynn Peterson said: "The increase to our inventory of future drilling locations provides the company with a longer runway of sustainable growth. As we continue our down-spacing work in our Koala and Smokey areas, we would expect the number of locations to increase significantly. We also benefit from the addition of the production and its cash flow, as well as proved reserves included in the deal."
According to the company, the southern Williams County lands, approximating 14,000 net acres, are adjacent to Kodiak's core Polar area. An additional 25,000 net acres are in McKenzie County, west of its Koala and Smokey areas.
Net oil and gas production from the property in the pending acquisition is currently approximately 5,700 barrels of oil equivalent per day, the average net production for May. "Production is expected to increase before closing as completion operations are currently under way," said the company in its press release.
Kodiak expects to fund the acquisition through borrowing under a revolving credit facility. Based on the additional capital expenditures for the acquisition net of cash flow from those assets, Kodiak anticipates investment and projected cash flow to be "more or less equal for the remaining periods of 2013." The acquisition is expected to close in July.
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