Kodiak Reports Losses for Q4, Full Year
Kodiak Oil & Gas Corp. on Monday reported financial and operating results for the three months and 12 months ended December 31, 2006.
The Company reported a net loss for the 12 months ended December 31, 2006 of $2.8 million, or $0.04 per share, compared with a net loss of $2.0 million, or $0.05 per share, for the same period in 2005. All per share amounts are presented on a weighted average basis. Kodiak had 87.5 million shares outstanding at year-end 2006 as compared to 54.5 million shares outstanding at year-end 2005. Net income before depreciation, depletion and amortization and stock-based compensation charges ("Adjusted EBITDA") was $947,000 for the year-ended December 31, 2006 as compared to a loss of $1.2 million for the same period in 2005.
Oil and gas sales for the full-year 2006 were $4.2 million versus $365,000 in the same period in 2005. Total revenues were $5 million versus $453,000 in the same period a year ago. For the full-year 2006, Kodiak posted operating cash flow of $3.1 million as compared to cash used by operations in 2005 of $1.2 million.
Total assets were $113.8 million at year-end 2006, up from $25.8 million in the same period in 2005. Stockholders' equity grew to $103.6 million December 31, 2006 from $21.3 million at year-end 2005. The Company's cash position at year-end is $61.1 million, and it currently has no long-term debt.
Fourth Quarter 2006
The Company reported a net loss for the three months ended December 31, 2006, of $2.2 million, or $0.02 per share, compared with a net loss of $1.1 million, or $0.02 per share, for the same period in 2005. Net loss before depreciation, depletion and amortization and stock-based compensation charges ("Adjusted EBITDA") was $21,000 for the quarter-ended December 31, 2006, as compared to a loss of $361,000 for the same period in 2005.
Oil and gas sales for the fourth quarter were $1.3 million versus $264,000 in the same period in 2005. Total revenues were $1.6 million versus $280,000 in the same period a year ago. For the fourth quarter 2006, Kodiak posted operating cash flow of $3.5 million as compared to $337,000 in the same period in 2005.
For the full-year 2006, gas and natural gas liquid production volumes were 117.3 MMcf, as compared to 31.8 MMcf for the same period in 2005. Oil production volumes were 62,000 barrels for 2006, compared to 2,700 barrels during the same period in 2005. For full-year 2006, Kodiak produced 489.1 MMcfe using a conversion rate of 6 Mcf gas to each barrel of oil. This compares to 47.9 MMcfe in all of 2005.
Gas price realizations decreased 22% to $5.56 per Mcf for the full-year 2006, compared to the same period in 2005. Oil price realizations improved by 7% to $55.52 per barrel for the period-ended December 31, 2006. Kodiak's production is currently unhedged.
During 2006, Kodiak invested $36.7 million for exploration and development of its leasehold, including drilling nine gross wells (5.88 net) with one gross dry hole (0.5 net) for an 89% success rate for the 2006 program. Also included in the year's CAPEX was $13.3 million for leasehold and seismic acquisition.
For the fourth quarter 2006, gas production volumes were 27.3 MMcf, as compared to 29.2 MMcf for the same period in 2005. Oil production volumes were 24,000 barrels for the fourth quarter 2006, compared to 2,600 barrels during the same period in 2005. On an equivalent basis for the quarter, Kodiak produced 169.7 MMcfe, versus 44.9 MMcfe in the fourth quarter 2005.
For the fourth quarter, gas price realizations decreased 22% to $4.55 per Mcf, as compared to the same period in 2005. Oil price realizations decreased by 6% to $55.52 per barrel for the period-ended December 31, 2006. Kodiak's production is currently unhedged.
Kodiak's year-end, estimated total proved reserves were approximately 5.6 billion cubic feet of natural gas equivalent (Bcfe), comprised of 2.4 billion cubic feet of natural gas (Bcf) of natural gas and 532,900 barrels of crude oil. The current reserve mix is 57% crude oil and 43% natural gas.
Approximately 96% of total reserves are categorized as proved developed and 4% were proved undeveloped (PUD). Year-end prices used to determine reserves were $4.53 per Mcf of natural gas and $50.37 per barrel of oil for 2006, versus $8.11 per Mcf and $57.57 per barrel in 2005.
By comparison, at year-end 2005, Kodiak's proved reserves were 5.96 Bcfe, of which 52.4% was oil and 62% were proved developed and 38% were classified as PUDs. The sharp drop in commodity prices used to determine reserves, especially the decline in natural gas prices year-over-year, resulted in the reduction in PUD locations given to the Company by its independent reservoir engineering firm, Netherland Sewell & Associates, Inc. (NSAI).
For 2006 reserve quantities, Kodiak's standardized measure of discounted future net cash flows (commonly known as the SEC PV-10 figure) for proved reserves at year end was $19.7 million as compared to $18.2 million in 2005. Reserves for 2006 were estimates by independent reservoir engineering consultants, NSAI and conform to the definition as set forth in the SEC Regulation S-X Part 210.4-10 (a) as clarified by subsequent Commission Staff Accounting bulletins. The proved reserves are also in accordance with Financial Accounting Standards Board Statement No. 69 requirements. Sproule Associates, Inc. estimated quantities for 2005.
Lynn Peterson, Kodiak's President and CEO said:
"Continued growths in production, oil and gas sales and in shareholders' equity are a few of the accomplishments I can point to for 2006. Like other Rockies' operators, the December 31, 2006 gas prices effected booking our PUDs. More important is our early results in the Vermillion Basin which is bolstered by continued cash flow from our Williston Basin oil production. That production affords us the opportunity to leverage G&G talent to maximizing the potential that we believe exists in the Vermillion Basin, a play that we believe is in its nascent days. We are fortunate to have completed a capital raise at the end of 2006, which has left Kodiak well-positioned to fund its $60 million capital budget through a combination of cash on hand, cash flow and an anticipated reserve-based revolving line of credit. The hard work completed in 2005 and 2006 is essential in providing a platform as we seek to grow our production and reserves. We expect our performance in these important measures to be scrutinized much more carefully as production history becomes available and additional Vermillion Basin wells are drilled and turned to sales in 2007."
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 Green River Basins in the U.S. Rocky Mountains.
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