Kodiak has closed on two separate definitive purchase and sale agreements to acquire an additional Williston Basin leasehold.
In the first transaction, Kodiak acquired 5,680 gross mineral acres (4,531 net) in McKenzie County, N.D. The lands are located on the border of McKenzie and Williams Counties west of the Nesson Anticline, and offset existing Bakken and Three Forks producing wells successfully drilled and completed by other operators such as Newfield Exploration, Continental Resources and Brigham Exploration.
Application has been made to the North Dakota Industrial Commission to include the lands in six 1,280-acre drilling units. Kodiak intends to operate each of these drilling units. Assuming two to three well bores per 1,280-acre drilling unit, Kodiak anticipates that the acquisition could yield approximately 12 to 18 gross Bakken locations. The lands also have potential for Three Forks production. The Company intends to drill at least one Bakken test on the newly acquired lands in 2010.
The contiguous leasehold position was acquired from an undisclosed private party. Also included in the acquisition are certain surface facilities and equipment associated with a temporarily abandoned well and pipeline infrastructure that ties into a regional natural gas pipeline controlled by a third-party. The purchase price was not disclosed due to the highly competitive nature of Williston Basin leasing activities. The acquisition, which closed on April 2, 2010, was funded through the Company's available cash balances.
Grizzly Project Increases in Size
In the second transaction, the Company increased its working interest by 25% in existing properties in its Grizzly Project area in the Mondak Field located on the southeastern end of the Elm Coulee Field on the Montana/North Dakota boundary in McKenzie County. Included in the acquisition is the additional working interest in the Company's existing lands that are prospective for Bakken and Three Forks production, producing properties, and production facilities. Kodiak anticipates drilling two wells in the Grizzly Project area with operations commencing in the second quarter 2010.
The Grizzly Project acquisition increases Kodiak's ownership in this project to 87.5% working interest in 3,907 gross acres (3,419 net), two gross producing well bores (1.75 net), surface facilities and pipeline infrastructure. The interests were acquired from an undisclosed private party, pursuant to undisclosed terms. The acquisition, which closed on April 5, 2010, was funded through the Company's available cash balances.
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