Kodiak Oil & Gas Corp., an oil and gas exploration and production company with assets in the Green River Basin of southwest Wyoming and Colorado and the Williston Basin of North Dakota and Montana, provided an interim operations update.
Vermillion Basin - Sweetwater County, Wyoming
Drilling activities commenced in late August in the Vermillion Basin to further evaluate the Baxter shale at an approximate depth of 10,000 feet to 13,000 feet. Devon Energy operates the wells which are being drilled pursuant to the Vermillion Basin Exploration Agreement entered into with Devon during the first quarter of 2008.
Initial exploration efforts are focused on two specific areas: the Horseshoe Basin Unit (HBU) located on the western edge of Kodiak's acreage and the Coyote Flats Federal Unit (CFU) located on the northern edge. The CFU #1-8 well has been drilled to an approximate depth of 12,750 feet in the Baxter Shale and log analysis is underway. This rig will move to the HBU and drill the HBU #1-4 as a vertical well.
A second rig is drilling ahead on the HBU #13-36 well, which is being contemplated as a horizontal completion. Upon drilling and logging, the rig is scheduled to move to the CFU and drill the CFU #14-36, which is an offset to Kodiak's North Trail State #4-36 well. The CFU #14-36 well is contemplated to be drilled horizontally.
Completion work will begin once all of the 2008 drilling is completed, all data is evaluated, and work can be completed in compliance with all lease stipulations.
Kodiak has an approximate 50% working interest in each of these wells. The well costs are being funded under the Vermillion Basin Exploration Agreement; therefore Kodiak's 2008 capital expenditures in this area should be minimal, if any.
Williston Basin - Dunn County, North Dakota
Kodiak's exploration team continues its efforts to assemble an inventory of drilling permits in the prolific Bakken shale oil play. Kodiak owns an approximate 38,000 net acres under 54,000 gross leasehold acres on the Fort Berthold Indian Reservation (FBIR) in Dunn County, N.D. The Company has three approved drilling permits and recently completed construction of a drilling pad on one of these permits.
Kodiak recently received a Finding of no Significant Impact (FONSI) approval on two additional drilling permits encompassing four locations. The associated Environmental Assessments (EA) are currently undergoing the customary 30-day comment period with anticipated approval in October. Surveying has been completed and the scoping period is underway on six additional drill pads, with EA's to follow.
Kodiak's drilling contractor recently informed the Company that the expected delivery of the new-build rig is now late October. Drilling on Kodiak's leasehold within the FBIR will commence immediately upon rig delivery. While part of the delay can be attributed to construction delays, to the timing of delivery was also impacted by the unavailability of an experienced drilling crew for Kodiak's contracted rig. The Company has been assured by the contractor that the new-build rig should be completed and experienced crews will be available to meet this latest time guideline as set forth by the drilling contractor.
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