Press release from PR Newswire
Kodiak Oil & Gas Corp. Announces 2012 Financial & Operational Results
Thursday, February 28, 2013
Kodiak Oil & Gas Corp. Announces 2012 Financial & Operational Results16:01 EST Thursday, February 28, 2013Highlights Include: - 2012 Oil & Gas Sales of $409 Million, a 241% Increase from 2011 - Q4-12 Oil & Gas Sales of $131 Million, 138% Increase from Q4-11 and 17% Increase from Q3-12 - 2012 Adjusted EBITDA of $317 Million, 315% Growth from 2011 - Q4-12 Adjusted EBITDA of $107 Million, 205% Growth from Q4-11 and 20% Increase from Q3-12DENVER, Feb. 28, 2013 /PRNewswire/ -- Kodiak Oil & Gas Corp. (NYSE: KOG), an oil and gas exploration and production company with primary assets in the Williston Basin of North Dakota, today announced financial results for the three and 12-month periods ended December 31, 2012. The Company furnished a comprehensive operations update and reported 2012 estimated proved reserves and production and sales volumes in a news release on February 20, 2013. Financial ResultsFor the fourth quarter-ended December 31, 2012, the Company reported oil and gas sales of $130.8 million, as compared to $55.0 million during the same period in 2011, an increase of 138%. Kodiak reported an overall 153% increase in quarter-over-quarter equivalent sales volumes with 1.7 million barrels of oil equivalent (MMBOE) sold or an average of 18,200 BOE per day (BOE/d) during the fourth quarter 2012, as compared to 662 thousand BOE, or an average of 7,200 BOE/d in the same period in 2011. Oil and gas sales were $408.7 million for the year ended December 31, 2012, as compared to $120.0 million for 2011, representing a 241% increase. For 2012, Kodiak reported a 250% increase in oil sales volumes and a 532% increase in gas sales volumes, reflecting an overall 267% increase in equivalent sales volumes, compared to 2011. The Company reported sales volumes for 2012 of 5.3 MMBOE, as compared to 1.4 MMBOE during 2011. Crude oil revenue accounted for approximately 96% of oil and gas sales recorded during the fourth quarter and year ended December 31, 2012.Adjusted EBITDA, a non-GAAP measure, was $106.6 million for the fourth quarter 2012, as compared to $35.0 million in the same period in 2011, reflecting a 205% increase. Kodiak defines Adjusted EBITDA as net income before (i) interest expense, (ii) income taxes, (iii) depletion, depreciation, amortization, and accretion (iv) amortization of deferred financing costs and debt premium, (v) impairment, (vi) non-cash expenses relating to share based payments recognized under ASC Topic 718, (vii) pre-tax unrealized gains and losses on foreign currency, and (viii) pre-tax unrealized gain and losses on commodity price risk management activities. Kodiak reported net cash provided by operating activities during the fourth quarter 2012 of $69.4 million, as compared to $10.8 million during the same period in 2011. For the full year ended December 31, 2012, Adjusted EBITDA was $317.1 million, as compared to $76.4 million for 2011, representing 315% growth. Kodiak reported net cash provided by operating activities during 2012 of $272.7 million, as compared to $53.9 million in 2011. For the fourth quarter 2012, the Company reported net income of $33.3 million, or $0.12 per diluted share, compared to a net loss of $33.8 million, or $0.15 per diluted share, for the same period in 2011. Net income for the fourth quarter 2012 includes an unrealized loss of $5.3 million related to the mark-to-market of derivative instruments used for commodity hedging and $4.9 million in deferred income tax expense. The net effect of the non-cash hedging activities and non-cash deferred income tax expense decreased Kodiak's reported net income for the fourth quarter 2012 by $0.04 per diluted share. Detailed disclosure of the Company's derivative contracts is available in its filing on Form 10-K for the year-ended December 31, 2012. By way of comparison, the net loss for the fourth quarter 2011 included unrealized derivative losses of $31.7 million attributed to the non-cash change in the value of derivatives utilized for commodity price risk management, which decreased Kodiak's reported net income for the quarter by $0.14 per basic and diluted share. Also included in the fourth-quarter 2011 net loss is $18.3 million in interest expense, of which $11.5 million was attributed to costs related to a stand-by bridge financing facility that the Company had obtained (but did not use) in conjunction with an asset acquisition transaction. Kodiak reported record net income for the full year 2012 of $131.6 million, or $0.49 per diluted share, compared to net income of $3.9 million, or $0.02 per diluted share, for 2011. Included in the 2012 net income are unrealized derivative gains of $31.1 million attributed to the non-cash change in the value of derivatives utilized for commodity price risk management and $26.8 million in deferred income tax expense. The net effect of the non-cash hedging activities credit and non-cash deferred income tax expense increased Kodiak's reported net income for 2012 by $0.02 per diluted share. By way of comparison, net income for 2011 includes an unrealized loss of $16.2 million on mark-to-market derivative instruments, which reduced reported net income for 2011 by $0.08 per diluted share. General and administrative expenses (G&A) for the fourth quarter of 2012 totaled $9.4 million, or $5.58 per BOE, compared to $6.4 million, or $9.71 per BOE, in the fourth quarter of 2011. G&A expenses for the full year 2012 totaled $34.5 million, or $6.57 per BOE, as compared to $19.5 million, or $13.62 per BOE, for the full year 2011. The increase in total G&A expense for the fourth quarter and full year 2012, as compared to the same periods in 2011, is attributed primarily to the hiring of new personnel as the Company continues to expand its oil and gas operations. As of December 31, 2012, Kodiak had 102 employees, as compared to 74 employees as of December 31, 2011. Lease operating expenses (LOE) for the fourth quarter of 2012 totaled $10.1 million, or $6.00 per BOE, a 40% decrease per BOE over the fourth quarter of 2011 of $10.08 per BOE. Lease operating expenses for the full year 2012 totaled $31.7 million, or $6.04 per BOE, a 30% decrease per BOE over the full year 2011 of $12.4 million, or $8.67 per BOE. Water disposal costs, along with workovers, are the largest component of lease operating expense. To reduce water disposal costs, Kodiak drilled four water disposal wells during the year on several of its producing areas and is currently constructing water gathering systems in these areas. Drilling of additional water disposal wells is included in the 2013 capital expenditure budget. Availability of both trucking and third party disposal facilities has also improved, which has helped decrease LOE on a per unit basis. While Kodiak's workover activity and thus expenditures increased in 2012 compared to 2011, such increased activity has resulted in reduced downtime of Kodiak's wells and improvements in the Company's operational performance. During the three and 12 months ended December 31, 2012, Kodiak recognized total interest expense related to its outstanding senior notes and credit facility of approximately $8.4 million and $22.9 million, respectively. The Company capitalized interest costs of $10.3 million for the fourth quarter of 2012 and $46.0 million for the full-year 2012. The following table summarizes the Company's costs on a per-unit basis for the periods shown: Kodiak Oil & Gas Corp.Q4-12Q3-12Q4-1120122011% ChangeUnit Cost AnalysisSequentialQ-o-QY-o-YSales Volumes in Barrels of Oil Equivalent (MBOE)1,6781,4596625,2541,43215%153%267%Average Price Received Oil ($ Bbl)$ 83.27$ 82.96$ 83.35$ 83.00$ 86.050%0%-4%Average Price Received Gas ($ Mcf)5.835.208.005.538.2212%-27%-33%Lease Operating Expense ($ BOE)6.005.7710.086.048.674%-40%-30%Production Tax ($ BOE)8.568.198.698.349.044%-2%-8%DD&A Expense ($ BOE)30.6529.9725.7129.6222.402%19%32%Gathering, Transportation & Marketing Expense ($ BOE)2.151.771.431.891.0722%51%77%Total G&A Expense ($ BOE)5.586.269.716.5713.62-11%-43%-52%Non-cash Stock-based Compensation Expense ($ BOE)$ 1.97$ 1.90$ 2.55$ 2.12$ 3.634%-23%-42%Q4-12 Results Teleconference CallIn conjunction with Kodiak's release of its financial and operating results, investors, analysts and other interested parties are invited to participate in a conference call with management on Friday, March 1, 2013 at 11:00 a.m. Eastern Standard Time.Kodiak Oil & Gas Corp. Q4-12 Financial and Operating Results Conference CallDate:Friday, March 1, 2013Time:11:00 a.m. EST10:00 a.m. CST 9:00 a.m. MST 8:00 a.m. PSTCall:(888) 647-1602 (US/Canada) and (706) 902-2175 (International); Passcode: 96325533Internet:Live and rebroadcast over the Internet: http://us.meeting-stream.com/kodiakoilgascorp_030113 Replay:Available through Friday, March 15, 2013 at (855) 859-2056 (US/Canada)and (404) 537-3406 (International) using passcode: 96325533 and for 30 days at http://us.meeting-stream.com/kodiakoilgascorp_030113 Upcoming Investor ConferencesKodiak also today announced management's participation in upcoming investor conferences. ConferenceCityDateTimeWebcast Link Wells Fargo Securities 4th Annual Exploration & Production ForumBostonMarch 7, 20131x1 FormatWebcasting UnavailableHoward Weil 41st Annual Energy ConferenceNew OrleansMarch 20, 20131:15 PM CDTWebcasting UnavailablePresentation times and webcasting are subject to change at the discretion of the conference organizer. Please reference Kodiak's Presentations & Events page for further details regarding conferences and other events in which the Company may elect to participate.About Kodiak Oil & Gas Corp.Denver-based Kodiak Oil & Gas Corp. is an independent energy exploration and development company focused on exploring, developing and producing oil and natural gas primarily in the Williston Basin in the U.S. Rocky Mountains. For further information, please visit www.kodiakog.com. The Company's common shares are listed for trading on the New York Stock Exchange under the symbol: "KOG."Forward-Looking StatementsThis press release includes statements that may constitute "forward-looking" statements, usually containing the words "believe," "estimate," "project," "expect" or similar expressions. These statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements inherently involve risks and uncertainties that could cause actual results to differ materially from the forward-looking statements. Forward looking statements are statements that are not historical facts and are generally, but not always, identified by the words "expects," "plans," "anticipates," "believes," "intends," "estimates," projects," "potential" and similar expressions, or that events or conditions "will," "would," "may," "could" or "should" occur. Forward-looking statements in this document include statements regarding the Company's expectations as to its growth and development. Factors that could cause or contribute to such differences include, but are not limited to, fluctuations in the prices of oil and gas, uncertainties inherent in estimating quantities of oil and gas reserves and projecting future rates of production and timing of development activities, competition, operating risks, acquisition risks, liquidity and capital requirements, the effects of governmental regulation, adverse changes in the market for the Company's oil and gas production, dependence upon third-party vendors, and other risks detailed in the Company's periodic report filings with the Securities and Exchange Commission. For further information, please contact:Mr. Lynn A. Peterson, Chairman and CEO, Kodiak Oil & Gas Corp. +1-303-592-8075Mr. David P. Charles, Sierra Partners LLC +1-303-757-2510 x11Footnotes to the Financial StatementsThe notes accompanying the financial statements are an integral part of the consolidated financial statements and can be found in Kodiak's filing on Form 10-K for the year-ended December 31, 2012. KODIAK OIL & GAS CORP.CONSOLIDATED BALANCE SHEETS(In thousands, except share data)December 31,December 31,ASSETS20122011Current Assets Cash and cash equivalents$ 24,060$ 81,604 Cash held in escrow-12,194 Accounts receivable Trade35,56528,835 Accrued sales revenues59,87521,974 Commodity price risk management asset10,864- Inventory, prepaid expenses and other17,21024,294 Total Current Assets147,574168,901Oil and gas properties (full cost method), at cost Proved oil and gas properties2,007,442641,532 Unproved oil and gas properties 457,888298,500Equipment and facilities20,95411,186 Less-accumulated depletion, depreciation, amortization, and accretion(290,094)(135,586) Net oil and gas properties2,196,190815,632Cash held in escrow-691,764Commodity price risk management asset2,850- Property and equipment, net of accumulated depreciation of $1,113 at December 31, 2012 and $618 at December 31, 20111,8461,276Deferred financing costs, net of amortization of $17,995 at December 31, 2012 and $15,029 at December 31, 201125,17621,904Total Assets$ 2,373,636$ 1,699,477LIABILITIES AND STOCKHOLDERS' EQUITYCurrent Liabilities Accounts payable and accrued liabilities $ 190,596$ 78,402 Accrued interest payable6,0905,808 Commodity price risk management liability30411,925 Total Current Liabilities196,99096,135Noncurrent Liabilities Credit facilities295,000100,000Senior notes, net of accumulated amortization of bond premium of $378 at December 31, 2012 and $0 at December 31, 2011805,622650,000 Commodity price risk management liability4,28810,035 Deferred tax liability, net26,800- Asset retirement obligations9,0643,627 Total Noncurrent Liabilities1,140,774763,662 Total Liabilities 1,337,764859,797Stockholders' Equity: Common stock - no par value; unlimited authorized Issued and outstanding: 265,273,314 shares as of December 31, 2012 and 257,987,413 shares as of December 31, 20111,008,678944,070 Retained earnings (accumulated deficit)27,194(104,390) Total Stockholders' Equity1,035,872839,680Total Liabilities and Stockholders' Equity$ 2,373,636$ 1,699,477 KODIAK OIL & GAS CORP.CONSOLIDATED STATEMENTS OF OPERATIONS(In thousands, except share data) For the Years Ended December 31, 201220112010Revenues: Oil sales$ 390,425$ 115,692$ 30,212 Gas sales18,2654,294783 Total revenues408,690119,98630,995Operating expenses: Oil and gas production85,49826,8856,795 Depletion, depreciation, amortization and accretion155,63432,0688,234 General and administrative34,52819,49512,190 Total operating expenses275,66078,44827,219Operating income133,03041,5383,776Other income (expense) Gain (loss) on commodity price risk management activities44,602(20,114)(6,146) Interest income (expense), net(22,911)(18,887)(39) Other income 3,6631,3387 Total other income (expense)25,354(37,663)(6,178)Income (loss) before income taxes158,3843,875(2,402)Income tax expense26,800--Net income (loss)$ 131,584$ 3,875$ (2,402)Net income (loss) per common share: Basic $ 0.50$ 0.02$ (0.02) Diluted$ 0.49$ 0.02$ (0.02)Weighted average common shares outstanding: Basic 263,531,408197,579,298131,444,440 Diluted267,671,296200,551,992131,444,440 KODIAK OIL & GAS CORP.CONSOLIDATED STATEMENTS OF CASH FLOWS(In thousands) For the Years Ended December 31, 201220112010Cash flows from operating activities: Net income (loss)$ 131,584$ 3,875$ (2,402)Reconciliation of net income (loss) to net cash provided by operating activities: Depletion, depreciation, amortization and accretion155,63432,0688,234 Amortization of deferred financing costs and debt premium2,58815,02983 Unrealized (gain) loss on commodity price risk management activities, net(31,082)16,2175,743 Stock-based compensation11,1565,2004,456 Deferred income taxes26,800-- Changes in current assets and liabilities: Accounts receivable-trade(5,540)(17,507)(8,765) Accounts receivable-accrued sales revenue(37,901)(17,396)(2,668) Prepaid expenses and other6,465(2,082)(544) Accounts payable and accrued liabilities9,35013,0755,804 Accrued interest payable2825,434374 Cash held in escrow3,343-- Net cash provided by operating activities272,67953,91310,315Cash flows from investing activities: Acquired oil and gas properties and facilities(588,420)(311,405)(108,649) Oil and gas properties(753,609)(232,360)(69,891) Sale of oil and gas properties2,7523,264- Equipment, facilities and other(10,176)(4,758)(2,691) Tubular goods(28,625)(15,490)(18,778) Cash held in escrow30,000(30,000)-Net cash used in investing activities(1,348,078)(590,749)(200,009)Cash flows from financing activities: Borrowings under credit facilities380,000350,80897,308 Repayments under credit facilities(185,000)(290,808)(57,308) Proceeds from the issuance of senior notes156,000650,000- Proceeds from the issuance of common shares2,609543,990240,424 Cash held in escrow670,615(673,958)- Debt and share issuance costs(6,369)(62,790)(14,417)Net cash provided by financing activities1,017,855517,242266,007Increase (decrease) in cash and cash equivalents(57,544)(19,594)76,313Cash and cash equivalents at beginning of the period81,604101,19824,885Cash and cash equivalents at end of the period$ 24,060$ 81,604$ 101,198Supplemental cash flow information Oil & gas property accrual included in accounts payable and accrued liabilities$ 155,385$ 52,541$ 9,426 Oil & gas property acquired through common stock$ 49,798$ 14,425$ - Cash paid for interest$ 66,095$ 6,898$ 176 Cash paid for income taxes$ -$ -$ - KODIAK OIL & GAS CORP.CONSOLIDATED STATEMENTS OF OPERATIONS(In thousands, except share data)(Unaudited) Three Months Ended December 31, 20122011Revenues: Oil sales$ 124,423$ 53,104 Gas sales6,4231,907 Total revenues130,84655,011Operating expenses: Oil and gas production28,04813,373 Depletion, depreciation, amortization and accretion51,43017,014 General and administrative9,3626,426 Total operating expenses88,84036,813Operating income42,00618,198Other income (expense) Gain (loss) on commodity price risk management activities4,022(34,082) Interest income (expense), net(8,353)(18,289) Other income 477418 Total other income (expense)(3,854)(51,953)Income (loss) before income taxes38,152(33,755)Income tax expense4,860-Net income (loss)$ 33,292$ (33,755)Net income (loss) per common share: Basic $ 0.13$ (0.15) Diluted$ 0.12$ (0.15)Weighted average common shares outstanding: Basic 264,123,021229,294,591 Diluted267,887,351229,294,591 KODIAK OIL & GAS CORP.CONSOLIDATED STATEMENTS OF CASH FLOWS(In thousands)(Unaudited) Three Months Ended December 31, 20122011Cash flows from operating activities: Net income (loss)$ 33,292$ (33,755)Reconciliation of net income (loss) to net cash provided by operating activities: Depletion, depreciation, amortization and accretion51,43017,014 Amortization of deferred financing costs and debt premium68814,352 Unrealized loss on commodity price risk management activities, net5,30631,726 Stock-based compensation3,3011,686 Deferred income taxes4,860- Changes in current assets and liabilities:- Accounts receivable-trade4,550(10,786) Accounts receivable-accrued sales revenue(11,787)(10,022) Prepaid expenses and other(1,395)(8,751) Accounts payable and accrued liabilities(5,063)3,986 Accrued interest payable(15,758)5,326 Net cash provided by operating activities69,42410,776Cash flows from investing activities: Acquired oil and gas properties and facilities-(239,899) Oil and gas properties(226,590)(93,341) Sale of oil and gas properties-1,132 Equipment, facilities and other(2,016)(7,091) Tubular goods1,295359 Cash held in escrow-(12,329)Net cash used in investing activities(227,311)(351,169)Cash flows from financing activities: Borrowings under credit facilities180,000261,000 Repayments under credit facilities-(216,000) Proceeds from the issuance of senior notes-650,000 Proceeds from the issuance of common shares739374,433 Cash held in escrow-(673,958) Debt and share issuance costs(542)(52,119)Net cash provided by financing activities180,197343,356Increase in cash and cash equivalents22,3102,963Cash and cash equivalents at beginning of the period1,75078,641Cash and cash equivalents at end of the period$ 24,060$ 81,604Supplemental cash flow information Oil & gas property accrual included in accounts payable and accrued liabilities$ 155,385$ 52,541 Cash paid for interest$ 33,741$ 6,898 Cash paid for income taxes$ -$ - In evaluating its business, Kodiak considers earnings before interest, income taxes, depletion, depreciation, amortization, and accretion, amortization of deferred financing costs and debt premium, impairment, gains or losses on foreign currency, gains or losses on commodity price risk management activities, and stock?based compensation expense, ("Adjusted EBITDA") as a key indicator of financial operating performance and as a measure of the ability to generate cash for operational activities, future capital expenditures and an indication of our potential borrowing base under our credit facility. Adjusted EBITDA is not a Generally Accepted Accounting Principle ("GAAP") measure of performance. The Company uses this non-GAAP measure to compare its performance with other companies in the industry that make a similar disclosure, as a measure of its current liquidity, in developing our capital expenditure budget, to evaluate our compliance with covenants under our credit facility and as a component of the corporate objectives to which we tie the vesting of equity-based awards made to senior executives. The Company believes that this measure may also be useful to investors for the same purpose and for an indication of the Company's ability to generate cash flow at a level that can sustain or support our operations and capital investment program, and that disclosure of this measure provides investors with visibility as to the corporate objectives that affect our executive compensation program. Investors should not consider this measure, or other non-GAAP measures such as net income excluding the effect of unrealized derivative losses, in isolation or as a substitute for operating income or loss, cash flow from operations determined under GAAP or any other measure for determining the Company's operating performance that is calculated in accordance with GAAP. In addition, because Adjusted EBITDA is not a GAAP measure, it may not necessarily be comparable to similarly titled measures employed by other companies. A reconciliation of Adjusted EBITDA and net income for the three and 12 months ended December 31, 2012 and 2011 is provided in the table below: KODIAK OIL & GAS CORP.RECONCILIATION OF ADJUSTED EBITDA(Unaudited)For the Three Months Ended December 31,Reconciliation of Adjusted EBITDA:20122011Net income (loss)$ 33,292$ (33,755) Add back:Depreciation, depletion, amortization and accretion51,43017,014Amortization of deferred financing costs and debt premium68814,352Unrealized loss on commodity price risk management activities 5,306 31,726Stock based compensation expense3,3011,686Income tax expense4,860-Interest expense7,6803,961Adjusted EBITDA$ 106,557$ 34,984For the Years Ended December 31,Reconciliation of Adjusted EBITDA:201220112010Net income (loss)$ 131,584$ 3,875$ (2,402) Add back:Depreciation, depletion, amortization and accretion155,63432,0688,234Amortization of deferred financing costs and debt premium2,58815,02983Gain on foreign currency exchange--(1)Unrealized (gain) loss on commodity price risk management activities (31,082) 16,217 5,743Stock based compensation expense11,1565,2004,456Income tax expense26,800--Interest expense20,3743,96179Adjusted EBITDA$ 317,054$ 76,350$ 16,192 SOURCE Kodiak Oil & Gas Corp.