The $6.9 million acquisition was from a private party, Chicken Creek LLC, and includes the undeveloped acreage as well as working interest (ranging from 33% to 90%) in four wells that have been drilled during the past two years to evaluate the natural gas potential of the Almond and Ericson formations. One well is producing from the Almond Formation and the remaining three wells are in various stages of completion in the Almond and Ericson. Further completion activity in the area will resume in the second quarter of 2006 when annual wildlife stipulations on federal lands are lifted.
After the acquisition, Kodiak has 45,137 gross (28,337 net) acres adjacent to the developing Vermillion Basin deep-gas play. The Company's working interest in the properties range from approximately 45% under 4,600 net acres to 90% under 12,000 net acres. Most of the Company's Vermillion Basin acreage position is on federal lands.
The Company also announced its 2006 capital expenditure budget of
US $30 million, not including the above announced Vermillion acquisition. By
comparison, Kodiak's 2005 CAPEX was $14 million. Kodiak plans to fund the
2006 CAPEX from the proceeds of its recently announced private placement.
Kodiak currently plans to participate in the drilling of 31 wells (15.24 net)
in 2006. Approximately $16 million of the 2006 capital budget will fund
drilling expenditures, gathering and processing infrastructure and certain
acreage acquisitions in southwestern Wyoming. The balance of $14 million is
allocated to Williston Basin, drilling and completion operations and
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