Kodiak O&G Cites 2 More Successful Bakken Completions

Kodiak Oil & Gas has provided an interim update on its Williston Basin drilling and completion activities.

Williston Basin Completion Activities -- Dunn County, North Dakota

Kodiak recently completed two additional Bakken oil wells on its Fort Berthold Indian Reservation (FBIR) acreage block in Dunn County, N.D. These are the fifth and sixth producers completed by Kodiak since the beginning of the year. Information relevant to per-well performance and completions can be found in the tabular section of this operations update.

Bakken producer with 8,313 foot lateral has initial production rate of 1,492 BOE/D

The TSB #14-33-28H, an 8,313 foot horizontal lateral, was successfully completed in 15 stages. The well recorded initial 24-hour production rates of 1,309 barrels of oil per day (BOPD) and 1.1 million cubic feet of natural gas per day (MMcf/d), or 1,492 barrels of oil equivalent per day (BOE/d). During the first seven days of flow-back, the well produced 6,857 barrels of oil (BO) 5.8 MMcf, or 7,828 BOE. Kodiak operates the TSB #14-33-28H with a 50% working interest (WI) and 41% net revenue interest (NRI).

Bakken producer with 4,163 foot lateral has initial production rate of 978 BOE/D

The TSB #14-33-6H well, a shorter 4,163 foot horizontal lateral, was completed in six stages. The well recorded initial 24-hour production rates of 903 BOPD and 453 Mcf/d, or 978 BOE/d. Kodiak operates the TSB #14-33-6H with a 50% WI, and 41% NRI.

Drilling Operations -- Twin Buttes Federal Unit (Charging Eagle and Tall Bear Areas)

Kodiak is currently testing the productive potential of the middle member of the Bakken shale in the southeastern-most portion of the Company's FBIR acreage block which is also part of the newly formed Twin Buttes Federal Unit (TBFU). Within the TBFU, the Company intends to drill three wells. If successful, the wells would indicate the potential for Bakken shale oil production across the entirety of the Company's approximately 58,000 gross and 35,000 net acres under lease as of August 31, 2009.

The first of the anticipated three wells, the CE #1-22-10H well (Kodiak operates with 55% WI and 45% NRI), reached total depth in August 2009 and is a longer 9,950 foot horizontal lateral well design.

Kodiak skid the rig approximately 50 feet and successfully reached total depth on the CE #1-22-23H well (Kodiak operates with 60% WI and 50% NRI) off of the same drilling pad. This well was drilled on a 640-acre spacing unit with a 6,621 foot lateral. The Charging Eagle wells are the seventh and eighth wells drilled by Kodiak on the FBIR.

Kodiak plans to move its drilling rig to the Tall Bear prospect area where it will next spud the proposed TB #16-15-16H well (Kodiak operates with 60% WI and 50% NRI) which is anticipated to be a longer estimated 10,000 foot horizontal lateral well design.

Management Comment

Commenting on operations, Lynn Peterson Kodiak's President and CEO said: "We are very pleased with the initial production rates from both wells. More useful for analysis than the IPs are the seven-day cumulative production numbers from the TSB #14-33-28H well, the longer lateral. We believe that the longer-term production volumes are more indicative of the actual well performance and estimated ultimate reserves.

"Since Kodiak began operations on the FBIR in late 2008, we have utilized pad drilling, whereby we have drilled two wells off of the same drilling pad in opposite directions. On three pads drilled to date, one well is a longer 8,000 foot to 10,000 foot lateral, with the second well being a shorter 4,000 foot to 5,000 foot lateral. We have planned our 2009 drilling program to facilitate both longer and shorter laterals for a variety of reasons; in particular, it allows us to evaluate the per-well economics between the lateral length designs. In addition, this pattern fits our acreage position and allows the rig to quickly skid to the next location saving considerably on the mobilization and demobilization costs involved in rig moves.

"Currently our costs to drill and complete middle Bakken wells are $4.0 million to $4.5 million for the shorter laterals and $5.5 million to $6.0 million for the longer laterals. Drilling costs for the shorter laterals are approximately $2.8 million and up to $3.2 million for the longer laterals, with the balance constituting completion costs which can vary by well as frac designs are modified. Drilling efficiencies are an important component of costs within our control and every effort is being made at the field level to continue to reduce the time and cost to total depth. We believe our current efficiencies are upper quartile, but continue to strive to improve them wherever possible.

"We are also closely monitoring the development of the Three Forks Formation on the FBIR and on the areas immediately surrounding our acreage. We are certainly encouraged by the results from other operators as well as from the production of a Three Forks well that is in the middle of our acreage block. We continue to track the increased Three Forks drilling and completion efforts in our FBIR area and are considering drilling a Three Forks test in the first half of 2010 based in part upon the well control derived from other operators and our receiving the necessary joint venture partner approval."