The CAPEX budget includes the proposed drilling and completion of approximately 20 gross wells (13.38 net wells) in the Greater Green River and Williston Basins. By comparison, Kodiak invested approximately $33 million in 2006 to develop its oil and gas properties, drilling 10 gross wells (6.13 net wells).
The $60 million CAPEX, the largest in Kodiak's history, includes $31.5 million for seven gross (100% working interest) proposed wells in the emerging Vermillion Basin deep-gas play targeting the Baxter Shale and Dakota and Frontier sands. Additionally, Kodiak intends to participate in two non-operated wells (25% WI, $2.25 million CAPEX) testing the same deep-gas productive intervals. Approximately $5 million is allocated for seismic and leasehold acquisitions in the Vermillion and other Green River Basin projects, with $2.5 million designated for two wells classified as other projects (50% WI). In total, $41.25 million, or 69% of the 2007 CAPEX, will be invested in Vermillion Basin projects. This compares to $22 million invested in the area in 2006 to drill six gross wells (3.75 net wells).
For 2007, Kodiak has allocated $18.75 million for the drilling of nine gross wells (4.88 net wells) in the Williston Basin. The budget includes three proposed Bakken Shale oil wells (62.5% WI, $9.75 million CAPEX) and six proposed Mission Canyon / Red River oil wells (50% WI, $6 million CAPEX). Approximately $3 million is allocated for seismic and leasehold acquisitions in the Williston Basin. Kodiak invested approximately $11 million in 2006 to drill four gross wells (2.38 net wells) in the Williston.
The 2007 CAPEX may be revised and is subject to rig availability, access to oilfield services, drilling results, operational developments, market conditions, commodity prices and industry partner timing on non-operated wells.
Commenting on the Company's progress, Lynn Peterson, Kodiak's President and CEO said:
"Kodiak is fortunate in many ways as we enter 2007. We control a large leasehold position in a successful, emerging deep-gas play in the Rocky Mountains where we possess a growing inventory of highly prospective Baxter/Frontier/Dakota locations. Currently we are production testing our first Baxter/Frontier well.
"We are also fortunate to have successfully raised $47 million in a late-2006 equity offering. Through a combination of cash flow from existing and future wells in both our basins, access to a reserve-based revolving credit facility and cash on hand, our 2007 CAPEX is fully funded.
"We now have the technical talent, a very attractive set of oil and gas assets and the capital necessary to allow us to define the potential of our projects. We begin 2007 in the strongest position in the Company's history and intend to improve upon that strength through success with the drill bit this year."
Kodiak Oil & Gas, headquartered in Denver, is an independent energy exploration and development company focused on exploring, developing and producing oil and natural gas in the Williston and Greater Green River Basins in the U.S. Rocky Mountains.
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