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Press release from PR Newswire

Kodiak Oil & Gas Corp. Announces First Quarter 2013 Results

Thursday, May 02, 2013

Kodiak Oil & Gas Corp. Announces First Quarter 2013 Results

16:05 EDT Thursday, May 02, 2013

Highlights Include:
- Q1-13 Oil & Gas Sales of $165 Million, 107% Increase from Q1-12 and a 26% Increase from Q4-12
- Q1-13 Adjusted EBITDA of $124 Million, 131% Growth from Q1-12 and a 17% Increase from Q4-12

DENVER, May 2, 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 reported financial results for the first quarter 2013 ended March 31, 2013.  The Company furnished an operations update and reported sales volumes in a news release on April 15, 2013. 

Financial Results

For the first quarter-ended March 31, 2013, the Company reported oil and gas sales of $165.1 million, as compared to $79.9 million during the same period in 2012 and $130.8 million in the fourth quarter 2012, representing increases of 107%, and 26% respectively.  Kodiak reported an overall 103% increase in quarter-over-quarter equivalent sales volumes with 1.95 million barrels of oil equivalent (MMBOE) sold, or an average of 21,700 BOE per day (BOE/d) during the first quarter 2013, as compared to 963 thousand BOE, or an average of 10,578 BOE/d in the same period in 2012.  Crude oil revenue accounted for approximately 94% of oil and gas sales recorded during the first quarter 2013. 

Adjusted EBITDA, a non-GAAP measure, was $124.4 million for the first quarter 2013, as compared to $53.7 million in the same period in 2012, reflecting a 131% 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, and (vii) pre-tax unrealized gains and losses on commodity price risk management activities. 

Kodiak reported net cash provided by operating activities during the first quarter 2013 of $114.6 million, as compared to $69.1 million during the same period in 2012, an increase of 66%.

For the first quarter 2013, the Company reported net income of $19.4 million, or $0.07 per diluted share, compared to net income of $1.7 million, or $0.01 per diluted share, for the same period in 2012.  Net income for the first quarter 2013 includes an unrealized loss of $17.2 million related to the mark-to-market of derivative instruments used for commodity hedging.  The net effect, after-tax, of the non-cash hedging activities decreased Kodiak's reported net income for the first quarter 2013 by $0.04 per basic and diluted share.  Detailed disclosure of the Company's derivative contracts is available in its filing on Form 10-Q for the first quarter ended March 31, 2013. 

By way of comparison, the net income for the first quarter 2012 included unrealized derivative losses of $18.6 million attributed to the mark-to-market of derivative instruments, which decreased Kodiak's reported net income for the quarter by $0.07 per basic and diluted share. 

General and administrative expenses (G&A) for the first quarter 2013 totaled $10.3 million, or $5.28 per BOE, compared to $7.9 million, or $8.20 per BOE, in the first quarter 2012.  The increase in total G&A expense for the first quarter 2013, as compared to the same period in 2012, is attributed primarily to the hiring of new personnel as the Company continues to expand its oil and gas operations.  As of March 31, 2013, Kodiak had 116 employees, as compared to 74 employees as of March 31, 2012. 

Lease operating expenses (LOE) for the first quarter 2013 totaled $13.5 million, or $6.90 per BOE, a 2% decrease per BOE over the first quarter 2012 and an increase of 15% over the fourth quarter of 2012.  Kodiak attributes the increase in LOE for the sequential quarters to higher well maintenance expense and normal winter operations.  The Company continued its efforts to decrease operating costs by addressing its water disposal costs, the largest component of LOE by drilling three water disposal wells during the first quarter 2013 on several of its producing areas, and it is currently constructing water gathering systems in these same areas.  These projects will reduce the Company's dependence on third-party services and minimize trucking requirements. 

During the first quarter ended March 31, 2013, Kodiak incurred total interest expense related to its outstanding senior notes and credit facility of approximately $21.4 million.  The Company capitalized interest costs of $8.5 million for the first quarter 2013.

The following table summarizes the Company's costs on a per-unit basis for the periods shown:

Kodiak Oil & Gas Corp.

Q1-13

Q4-12

Q1-12

% Change

Unit Cost Analysis

Sequential

Q-o-Q

Sales Volumes in Barrels of Oil Equivalent (MBOE)

1,953

1,678

963

16%

103%

Average Price Received Oil ($ / Bbl)

$ 90.80

$ 83.27

$ 87.43

9%

4%

Average Price Received Gas ($ / Mcf)

6.48

5.83

6.19

11%

5%

Average Price Received BOE ($ / BOE)

84.51

77.99

83.04

8%

2%

Lease Operating Expense ($ / BOE)

6.90

6.00

7.05

15%

-2%

Production Tax ($ / BOE)

9.08

8.56

8.83

6%

3%

DD&A Expense ($ / BOE)

29.38

30.65

27.32

-4%

8%

Gathering, Transportation & Marketing Expense ($ / BOE)

2.45

2.15

2.09

14%

17%

Total G&A Expense ($ / BOE)

5.28

5.58

8.20

-5%

-36%

Non-cash Stock-based Compensation Expense ($ / BOE)

$ 1.91

$ 1.97

$ 2.53

-3%

-25%

First Quarter 2013 Capital Expenditures

During the first quarter 2013, Kodiak invested approximately $256.1 million related to its oilfield operations and leasehold acquisitions.  The Company expended $210.5 million on its operated properties, $38.5 million on non-operated wells and $7.1 million was invested in infrastructure and acreage acquisitions. 

Kodiak continues to operate seven rigs and is experiencing increased efficiencies resulting in a corresponding increase in the number of wells drilled.  Over the past year, Kodiak has reduced spud to completion days (including running and cementing the liner) from an average of 30 days in the early part of 2012 to a current average of 20 days.

The Company's cumulative spending on wells in progress increased by approximately $46.0 million from December 31, 2012 to March 31, 2013 as a result of scheduling drilling rigs on four well pads during the winter months, combined with a completion schedule that was designed to anticipate inclement winter weather.  Furthermore, Kodiak incurred pre-drill costs, such as site preparation, infrastructure, and pre-setting surface casing, during the first quarter of 2013 related to wells that will be drilled during the remaining quarters of 2013.  These pre-drill activities are expected to reduce the capital expenditures budgeted in subsequent quarters. 

Kodiak intends to release one drilling rig in the second quarter 2013, leaving six operated rigs.  The Company is currently ahead of the drilling pace set forth in its full-year capital expenditures guidance as a result of operating a seventh rig longer than expected and continued efficiency gains in the field.  Kodiak will continue to monitor the timing of its drilling and completion activities as it moves through 2013 and intends to adjust plans accordingly based on crude oil pricing and service costs.  The Company has a staggered rig termination schedule with multiple rigs terminating in 2013, allowing for an adjustment to the rig count to align with future cash-flow and capital expenditure projections.

Of further benefit to Kodiak's per well economics, is a significant increase in availability of third-party oilfield services that the industry has experienced over the past 12 months.  Kodiak's completed well costs trended downward from approximately $11 million at year-end 2012 to approximately $10.5 million during the first quarter of 2013.  In early 2013, Kodiak was able to renegotiate agreements with certain suppliers, the result of which is an expectation for further per-well cost reductions. 

Q1-13 Results Teleconference Call

In 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, May 3, 2013 at 11:00 a.m. Eastern Daylight Time.

Kodiak Oil & Gas Corp. Q1-13 Financial and Operating Results Conference Call

Date:

Friday, May 3, 2013

Time:

11:00 a.m. EDT

10:00 a.m. CDT

  9:00 a.m. MDT

  8:00 a.m. PDT

Call:

(888) 647-1602 (US/Canada) and (706) 902-2175 (International); Passcode: 35298530

Internet:

Live and rebroadcast over the Internet: https://us.reg.meeting-stream.com/kodiakoilgascorp_050313/  

Replay:

Available through Friday, May 17, 2013 at (855) 859-2056 (US/Canada) and (404) 537-3406 (International) using passcode: 35298530 and for 30 days at https://us.reg.meeting-stream.com/kodiakoilgascorp_050313/

Upcoming Investor Conferences

Kodiak also today announced management's participation in upcoming investor conferences. 

Conference

City

Date

Time

Webcast Link

Baird

2013 Growth Stock Conference

Chicago

May 8, 2013

1:35 PM CDT

No Webcasting

BAML

2013 Global Energy and Power Leveraged Finance Conference

New York

May 14, 2013

11:50 AM EDT

BAML Webcast

UBS

Global Oil & Gas Conference

Austin

May 22, 2013

12:30 PM CDT

Presentations & Events

SunTrust Robinson Humphrey

Play-by-Play Oil & Gas Conference

New York

May 29, 2013

TBD

Presentations & Events

RBC Capital Markets

2013 Energy and Power Conference

New York

June 3, 2013

TBD

No Webcasting

Independent Petroleum Association of America

OGIS Toronto

Toronto

June 11, 2013

TBD

Presentations & Events

Global Hunter Securities

GHS 100 Energy Conference

Chicago

June 25, 2013

TBD

GHS 100 Webcast

Presentation 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, the Company's expectations regarding potential improvements in LOE, the Company's drilling and completion program, including timing and improvements in per-well costs, and trends in the availability and cost of oil field services.  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 x11

Footnotes 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-Q for the quarter-ended March 31, 2013.

 

KODIAK OIL & GAS CORP.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share data)

(Unaudited)

March 31,

December 31,

ASSETS

2013

2012

Current Assets

   Cash and cash equivalents

$               6,585

$             24,060

   Accounts receivable

       Trade

50,578

35,565

       Accrued sales revenues

69,314

59,875

   Commodity price risk management asset

1,327

10,864

   Inventory, prepaid expenses and other

19,726

17,210

          Total Current Assets

147,530

147,574

Oil and gas properties (full cost method), at cost

Proved oil and gas properties

2,255,624

2,007,442

    Unproved oil and gas properties 

474,802

457,888

Equipment and facilities

24,780

20,954

    Less-accumulated depletion, depreciation, amortization, and accretion

(347,108)

(290,094)

    Net oil and gas properties

2,408,098

2,196,190

Commodity price risk management asset

2,615

2,850

Property and equipment, net of accumulated depreciation 

           of $1,275 at March 31, 2013 and of $1,113 at December 31, 2012 

1,923

1,846

Deferred financing costs, net of amortization

           of $19,071 at March 31, 2013 and $17,995 at December 31, 2012

31,020

25,176

Total Assets

$        2,591,186

$        2,373,636

LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities

   Accounts payable and accrued liabilities 

$           189,543

$           190,596

   Accrued interest payable

26,035

6,090

   Commodity price risk management liability

8,793

304

           Total Current Liabilities

224,371

196,990

Noncurrent Liabilities

   Credit facilities

100,000

295,000

   Senior notes, net of accumulated amortization of bond premium

           of $536 at March 31, 2013 and $378 at December 31, 2012

1,155,464

805,622

   Commodity price risk management liability

3,209

4,288

   Deferred tax liability, net

39,600

26,800

   Asset retirement obligations

9,760

9,064

          Total Noncurrent Liabilities

1,308,033

1,140,774

          Total Liabilities 

1,532,404

1,337,764

Stockholders' Equity:

   Common stock - no par value; unlimited authorized

   Issued and outstanding: 265,404,865 shares as of March 31, 2013

         and 265,273,314 shares as of December 31, 2012

1,012,144

1,008,678

   Retained earnings

46,638

27,194

          Total Stockholders' Equity

1,058,782

1,035,872

Total Liabilities and Stockholders' Equity

$        2,591,186

$        2,373,636

 

KODIAK OIL & GAS CORP.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except share data)

(Unaudited)

 For the Three Months Ended March 31, 

2013

2012

Revenues:

   Oil sales

$               155,843

$                 76,814

   Gas sales

9,207

3,122

        Total revenues

165,050

79,936

Operating expenses:

   Oil and gas production

35,991

17,300

   Depletion, depreciation, amortization and accretion

57,385

26,295

   General and administrative

10,302

7,898

        Total operating expenses

103,678

51,493

Operating income

61,372

28,443

Other income (expense)

   Loss on commodity price risk management activities

(15,744)

(23,340)

   Interest income (expense), net

(13,810)

(4,627)

   Other income 

426

1,268

        Total other income (expense)

(29,128)

(26,699)

Income before income taxes

32,244

1,744

Income tax expense

12,800

-

Net income

$                 19,444

$                   1,744

Earnings per common share:

     Basic 

$                     0.07

$                     0.01

     Diluted

$                     0.07

$                     0.01

Weighted average common shares outstanding:

     Basic 

265,328,392

262,660,642

     Diluted

267,969,663

266,586,016

 

 

KODIAK OIL & GAS CORP.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

 For the Three Months Ended March 31, 

2013

2012

Cash flows from operating activities:

   Net income

$                 19,444

$                   1,744

Reconciliation of net income to net cash provided by operating activities:

     Depletion, depreciation, amortization and accretion

57,385

26,295

     Amortization of deferred financing costs and debt premium

918

640

     Unrealized loss on commodity price risk management activities, net

17,182

18,616

     Stock-based compensation

3,724

2,435

     Deferred income taxes

12,800

-

  Changes in current assets and liabilities:

     Accounts receivable-trade

(15,013)

(8,513)

     Accounts receivable-accrued sales revenue

(9,439)

(16,209)

     Prepaid expenses and other

134

(924)

     Accounts payable and accrued liabilities

7,493

28,657

     Accrued interest payable

19,945

12,967

     Cash held in escrow

-

3,343

 Net cash provided by operating activities

114,573

69,051

Cash flows from investing activities:

     Acquired oil and gas properties and facilities

-

(588,420)

     Oil and gas properties

(275,142)

(128,424)

     Equipment, facilities and other

(4,065)

(10,329)

     Tubular goods

(663)

-

     Cash held in escrow

-

30,000

Net cash used in investing activities

(279,870)

(697,173)

Cash flows from financing activities:

     Borrowings under credit facilities

163,875

-

     Repayments under credit facilities

(358,875)

(100,000)

     Proceeds from the issuance of senior notes

350,000

-

     Proceeds from the issuance of common shares

260

1,108

     Purchase of common shares

(518)

-

     Cash held in escrow

-

670,615

     Debt and share issuance costs

(6,920)

(300)

Net cash provided by financing activities

147,822

571,423

Decrease in cash and cash equivalents

(17,475)

(56,699)

Cash and cash equivalents at beginning of the period

24,060

81,604

Cash and cash equivalents at end of the period

$                   6,585

$                 24,905

Supplemental cash flow information

  Oil & gas property accrual included in accounts payable and accrued liabilities

$               146,840

$                 84,452

  Oil & gas property acquired through common stock

$                           -

$                 49,798

  Cash paid for interest

$                   1,458

$                   3,536

  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 months ended March 31, 2013 and 2012 is provided in the table below:

KODIAK OIL & GAS CORP.

RECONCILIATION OF ADJUSTED EBITDA

(Unaudited)

For the Three Months Ended March 31,

Reconciliation of Adjusted EBITDA:

2013

2012

Net income

$                 19,444

$                   1,744

  Add back:

Depreciation, depletion, amortization and accretion

57,385

26,295

Amortization of deferred financing costs and debt premium

918

640

Unrealized loss on commodity price risk management activities

17,182

18,616

Stock based compensation expense

3,724

2,435

Income tax expense

12,800

-

Interest expense

12,902

4,001

Adjusted EBITDA

$               124,355

$                 53,731

 

SOURCE Kodiak Oil & Gas Corp.

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