Kodiak Begins CBM Development Program at Pacific Isle

Kodiak Oil & Gas has commenced operations on the first development well at the Pacific Isle CBM Project. On-site inspections with the Bureau of Land Management (BLM) have been completed for 13 locations, including a second water re-injection well. Nine applications to drill have been submitted to the BLM and the operator has received five approved drilling permits. Two of these wells will be drilled immediately and then the rig will be released for other drilling obligations of the contractor. It is anticipated that the drilling rig will be available after approximately 30 days at which time up to 10 locations at Pacific Isle will be drilled, including those noted above. The development wells will be connected to the existing production and disposal facilities without additional infrastructure.

The Company also announces that construction of the sales pipeline has commenced to connect the Chicken Springs Prospect exploratory test well to existing production facilities. Completion work on the PRFed 14100 SW29 well will commence later this week to test the Almond coals and the Almond sands. It is the Company's intention that the well would be connected to the sales line immediately after the well is completed. Completion work is expected to take three weeks as the coals and the sands will be tested individually.

Additional drilling permits have been submitted to the BLM and based upon production results from the initial well, development drilling could commence by early fourth quarter.

"We are pleased to enter this stage of development of our CBM project," said Kodiak President Lynn Peterson. "We have seen some strong encouragement from our initial nine well "pod" at Pacific Isle. These additional wells can be added to our production base without the need to expand our current production facilities. We are quite excited about completing our initial Chicken Springs well and look forward to the Company's first cash flow."

Kodiak is an independent energy exploration and development company with its primary focus on exploring, developing and producing hydrocarbons from shallow gas projects, primarily coalbed methane, in the Rocky Mountain Region of Wyoming. The Company is headquartered in Denver, Colorado and its stock trades on the TSX Venture Exchange under the symbol "KOG".

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