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Kodiak Oil & Gas - Bakken Shale

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Kodiak Oil & Gas (KOG) is one of the leading growth companies in the Bakken Shale.  Since 2009, KOG stock has jumped from $0.16 to $10.41.  Kodiak Oil & Gas (KOG) has quickly become one the hot new companies in the Bakken Shale due to the fact that they've acquired more and more mineral rights leases which adds to their acreage count.  While Kodiak Oil & Gas (KOG) stock is only trading at $10 today, I have a $20-$30 price target on KOG for 2013/2014.  Based on earnings and production growth, I feel the stock is set for a 100-200% gain.  However, there are certain risks to this thesis.  If the price of oil would drop for a long period of time or if there was a drilling moratorium in the Bakken Formation, this would have a lasting effect of the share price.  Right now, the chance of this happening is low but it is still a risk.

Kodiak Oil & Gas (KOG) has 155,000 Net Acres in the Bakken Shale

All of Kodiak’s operated drilling rigs are presently drilling ahead on wells in North Dakota, with one rig in Dunn County, two rigs in southern Williams County and three rigs in McKenzie County. Furthermore, the Company has an approximate 50% working interest in lands being drilled by two non-operated drilling rigs as part of its Dunn County Area of Mutual Interest (AMI). The Company has entered into a contract for a seventh operated rig, a new build rig, which is scheduled for second quarter 2012 delivery. As the year progresses, Kodiak plans to operate one to three rigs in Dunn County, two to three rigs in McKenzie County and three to four rigs in Williams County. The 2012 to 2013 drilling program is designed so that Kodiak is positioned to have nearly all of its acreage held by production by mid-2013, eliminating leasehold expiry across much of its 155,000 net acre position in the Williston Basin.

Kodiak Oil & Gas Corp. Announces Year-end 2011 Proved Reserves and Provides Quarterly and Annual Sales Volumes

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 preliminary unaudited financial and operational results for the fiscal year 2011. Kodiak has prepared the preliminary information based on the most current information available to management. Its normal closing and financial reporting processes with respect to the preliminary financial information have not been fully completed. As a result, its actual financial and operational results could be different from this summary preliminary data, and any differences could be material. Kodiak reported average daily sales volumes of 7,195 barrels of oil equivalent per day (BOE/d) for the fourth quarter 2011. This represents a 422% increase over sales volumes of 1,783 BOE/d for the fourth quarter 2010 and an 82% increase over third quarter 2011 sales volumes of 3,953 BOE/d. Crude oil accounted for 94% of fourth quarter sales volumes. Kodiak reported average daily sales volumes of 3,922 BOE/d for the year-ended December 31, 2011, representing a 204% increase over average daily sales volumes of 1,290 BOE/d during 2010. As of December 31, 2011 the Company was producing an average of approximately 10,100 BOE/d from its legacy properties, including the wells acquired in the previously announced October 2011 acquisition. Upon closing the recently announced January 2012 acquisition, the Company's total production was approximately 13,150 BOE/d. Kodiak is currently producing approximately 15,000 BOE/d as it exits January 2012 and completion operations are ongoing.

During fourth quarter 2011 completion operations, Kodiak incurred mechanical issues with liners in the horizontal leg of six separate wells. As a result, remediation work is underway to patch the liners and, once remediated, completion operations will continue. The delay will have the effect of causing production from these six wells to come on line during the first half of 2012, as opposed to the fourth quarter 2011 as projected. To expedite the completion work, the Company has secured additional completion days from its pressure pumping company, beginning February 2012. The Company also experienced delays in returning wells to production after routine maintenance work due to industry-wide difficulties in securing workover rigs. The majority of the wells acquired in October 2011 were down for workover operations during November and December of 2011.

Upon closing the acquisition, it was determined that many of the acquired wells required pumping units and other routine maintenance. The limited availability of workover rigs needed to facilitate such work hampered the timeliness of the operations. Kodiak currently has secured a total of six workover rigs, up from three at year-end, and efforts are ongoing to return each of the affected wells to production. The Company anticipates that the current number of workover rigs will be adequate to stay ahead of its ongoing completion activity, while allowing the rigs to efficiently complete continued routine well maintenance.