Kodiak Oil & Gas Increases Acreage in Williston & Green River Basins
Kodiak Oil & Gas has increased its acreage position in the Williston and Green River Basins and has begun completion operations on several wells in the area.
Williston Basin - Montana and North Dakota
Effective November 1, Kodiak acquired an additional 25% working interest (WI) in the Company's Wrangler Project (Lowell and Wrangler Prospects) in Sheridan County, Montana, bringing the Company's WI to 50%. The acquisition includes: the producing State No. 8-16 and State No. 6-16 wells; the State No. 10-16 well which is awaiting completion; and a 25% WI in the remaining 7,788 gross undeveloped acreage within the Project area.
Kodiak acquired an additional 12.5% WI under approximately 18,600 gross acres in its Great Bear Project in Divide County, North Dakota, bringing the Company's WI to 50%. The Company completed a 25-square-mile 3-D seismic program over the prospect lands earlier this year. Total consideration for the combined acquisition was $2.1 million dollars, which will be paid out of current working capital.
Production casing was set on the State No. 10-16 well (50% WI; operated by Kodiak) as part of the Company's development of its Lowell Prospect. A drill stem test was run over the top two feet of the producing interval. The test resulted in gas to surface and pipe recovery of 700 feet of gas and mud cut oil. Completion work will commence this week. Pipelines and storage tanks are being installed to combine production from the State No. 8-16 well, the State No. 6-16 well and the State No. 10-16 well into a central production facility.
In an effort to further develop the Lowell Prospect, the Christensen Trust No. 15-9 well (50% WI; operated by Kodiak) commenced drilling operations on November 24 and will be drilled to an estimated total depth of 7,700 feet to evaluate the potential of the Mission Canyon Formation. This location is one half mile north of the Company's producing State No. 8-16 and State No. 6-16 wells.
Drilling operations commenced on Kodiak's Great Bear Project on November 26 with the Pederson No. 14-9H well (43.75% WI; operated by Kodiak) in Divide County, North Dakota. The well will evaluate the Red River C Formation at an approximate vertical depth of 10,600 feet and a total measured depth of 14,600 feet (a 4,000-foot horizontal leg). Estimated drilling time is 40 days. The well is a direct offset to a vertical well drilled in 1984 that has cumulative production of 173,000 barrels of oil from the Red River C Formation and is still producing approximately 17 barrels of oil per day. Horizontal drilling technology should improve the recovery efficiency of the productive interval. Approximately three miles east of the current location, the Company has built location for the Nielsen No. 14-12 well which will be drilled to a vertical depth of 10,750 feet to evaluate the Red River C Formation.
Green River Basin - Wyoming
The Company has acquired an additional 30% WI in the Masterson No. 24-11 well in Sweetwater County, Wyoming, increasing its total interest to 70% WI. The well, which was put on production in August 2005, averaged 307 thousand cubic feet (Mcf) gas per day into the sales line in October 2005. Kodiak also acquired an undivided 4,700 net acres in the area of the producing well. The Company anticipates drilling on these properties in 2006. Total acquisition cost for the well and other undeveloped properties was $1.45 million dollars.
As part of the Company's development work on its Chicken Springs Prospect, the CSFED 14100 4-32 and the CSFED 14100 4-29 wells (50% WI; non- operator), in Sweetwater County, Wyoming have been fracture stimulated. The wells are currently flowing back frac fluid and completion work will continue over the next few weeks. The wells were drilled to test natural gas potential in the Almond sands and coals and are offsets to the Company's CSFED 14100 SW29 producing well. Gathering lines and production facilities are being installed and the new wells will be tied into the facilities immediately. Compression facilities are currently being installed and should be completed in December.
Meanwhile, one mile to the west the Company is currently participating in the drilling of the CSFED 14100 2-31H well (50% WI; non-operator). Horizontal drilling technology is being used to evaluate the potential of the thick Almond coal. This 16-foot bench of coal is present in the surrounding wells and was tested for gas content in the CSFED 14100 SW29 well. The gas content of the coals was nearly 500 standard cubic feet per ton based upon side wall cores taken from the well. The well has reached the target coals and casing has been set just above the coals at approximately 6,200 feet. The well is currently drilling in the coals in the horizontal portion of the first lateral. Plans are to drill two laterals out of the well bore extending 3,500 feet each.
Approximately four miles north, the 8-9 Chicken Ranch Unit well (33.33% WI; non-operator) has reached total depth of 8,684 feet. The well was designed to test the natural gas potential in the Almond and Ericson Formations. Based upon gas shows recovered during drilling operations and the electric logs, production casing was set to total depth. The well has been fracture stimulated in the Blair Formation, the deepest potential productive zone in the well and gas is currently being flared from that zone and will be evaluated over the next several days. Additional completion work will take place in two weeks when several sands higher in the well bore are treated. The well is a one mile offset to a well drilled in 1982 that was completed in the Ericson sands and tested at a rate of 750 Mcf gas per day, but was plugged and abandoned due to the lack of pipeline infrastructure and low natural gas prices at the time. Installation of gas gathering lines will begin immediately.
Lynn Peterson, Kodiak President and Chief Executive Officer said: "Our progress is on target for our 2005 drilling program. With these transactions, Kodiak today owns an average 59% WI on 102,827 acres. We have added to our daily production with the acquired working interests. We are optimistic we will see an additional increase in our daily production rate during the coming weeks due to our present drilling and completion work. The increase in our working interest will have a positive effect on our year-end reserves, while the added acreage positions provide a strong indication of our long-term belief of the future potential our core properties."
About Kodiak Oil & Gas Corp.
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. The common shares of the Company are listed for trading on the TSX Venture Exchange under the symbol "KOG" and the U.S. symbol "KOGGF."
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