Kodiak Updates Ops in Williston Basin

Kodiak provided an interim update on its Williston Basin oilfield activities.

Kodiak currently operates a two-drilling-rig program in the Williston Basin, with one rig running in Dunn County, N.D. and the second rig drilling ahead in the Company's Koala Project area in McKenzie County, N.D. In addition, Kodiak anticipates that its joint venture partner will mobilize one non-operated drilling rig to its Dunn County Area of Mutual Interest during the fourth quarter of 2010, where the Company holds a 50% working interest in the first well to be drilled.

Basin-wide, Kodiak currently has five operated wells awaiting completion. Completion operations are underway on one well which is expected to be fully completed by the end of September. A second well is scheduled to be completed in mid-October 2010. Once these wells are completed, the Company will be current on all completion operations, as the remaining three wells awaiting completion are part of a four-well pad currently drilling in Dunn County. When pad drilling is completed, the four wells will commence fracture stimulation in the fourth quarter 2010. Additionally, Kodiak expects to complete two wells in the fourth quarter 2010 that are currently drilling from a two-well pad in its Koala Project area in McKenzie County.

Of the six wells projected for fourth quarter completions, five will have lateral lengths of approximately 9,500-feet and will be completed with stage intervals of approximately 400 feet, resulting in a 24-stage completion design. The sixth well is a 4,500-foot lateral length and will be completed in 12 stages. All completion activity discussed above is targeting the Bakken Formation (four wells) and the Three Forks Formation (two wells).

Since commencing its Williston Basin drilling activities in November 2008, the Company has drilled 19 Bakken and Three Forks wells, has completed 14 wells, and is currently drilling ahead on two wells.

Bakken/Three Forks Development: Dunn County, N.D. (55,775 gross and 34,635 net acres) - Longer lateral Bakken producer records initial production (IP) rate of 1,906 BOE/d

The Moccasin Creek (MC) #13-34-28-1H well [Kodiak operated - 59% working interest (WI) / 48% net revenue interest (NRI)], a 9,769-foot horizontal lateral, was successfully completed in 22 stages in September 2010. The well was completed over two different time intervals due to a minor mechanical issue. Initially, nine stages were completed and the well flowed 11,896 barrels of oil (BO) and 8.35 million cubic feet of natural gas (MMcf) of gas over a nine-day period from the initial nine stages. The final 13 stages were fracture stimulated when completion activities resumed. After flowing back the well with all 22 stages open, the well recorded 24-hour initial production rates of 1,713 barrels of oil per day (BOPD) and 1.16 MMcf, or 1,906 barrels of oil equivalent per day (BOE/d). Kodiak completed the 24-hour production test utilizing a 30/64" choke with flowing casing pressure of 1,100 psi. Since coming online in mid-September 2010, the well had cumulative production of 17,023 BO and 19,160 BOE in the first 19 days of production, including the production flowing from only the initial nine stages.

The MC #13-34-28-1H well is a 1,700-foot offset to the previously announced MC #13-34-28-2H well (Kodiak-operated 59% WI / 48% NRI). In this 6,200-foot lateral well, Kodiak recorded its strongest 30-day production number from any well since it commenced drilling activities in November 2008. The MC #13-34-28-2H well recorded 24-hour initial production rates of 2,055 BOE/d from 15 fracture stimulation stages in early August 2010. The well continued its robust performance during the first 30 days of production, producing 37,770 BOE (33,391 BO), or an average of 1,259 BOE/d.

Updating development drilling activity in Dunn County, the Two Shields Butte (TSB)#14-21-33-15H (Kodiak operated 50% WI / 41% NRI) reached total depth of 9,441 feet in the horizontal leg of the Bakken Formation in early September 2010. This was the third well drilled from the current four-well pad that has successfully reached total depth and is awaiting completion. The fourth and final well to be drilled from the TSB pad, the TSB #14-21-16-2H (Kodiak-operated 50% WI / 41% NRI), is drilling ahead with a projected 9,000-foot horizontal Bakken leg.

The wells drilled from the TSB pad are significant in that one of the Bakken lateral wells was drilled within 1,350 feet of an existing Bakken producer as part of Kodiak's continued evaluation of the optimal well bore density within 1,280-acre drilling units. Importantly for future delineation of Kodiak's leasehold, one of the wells drilled from the TSB pad was drilled to test the productive potential of the Three Forks Formation. The well is structurally about 65 feet lower than the Bakken wells and the lateral section is separated from one of the Bakken wells by 700 feet. As noted previously, all four of the TSB wells are expected to be completed during the fourth quarter of 2010.

McKenzie County, N.D. (13,430 gross and 9,565 net acres)

In the Grizzly project area, located on the southeastern Elm Coulee trend in western North Dakota, Kodiak successfully reached total depth on the Grizzly Federal #1-27H-R well (Kodiak-operated 74% WI / 60% NRI), a 9,546-foot horizontal lateral test of the Bakken Formation. This well, with a 24-stage fracture stimulation design, is currently undergoing completion operations.

The Grizzly #13-6-RH (Kodiak-operated - 68% WI / 56% NRI) was re-entered and a 3,082-foot lateral was drilled horizontally in the Middle Bakken Formation. The well is expected to be completed in mid-October.

In early September, Kodiak spud the Koala #9-5-6-5H well (Kodiak-operated 86% WI / 71% NRI) which is a proposed 9,000-foot horizontal test of the Middle Bakken Formation. The well is the first well drilled by Kodiak in its Koala Project area and will be followed by the Koala #9-5-6-5H3 (Kodiak operated 86% WI / 71% NRI), which is a proposed 9,000-foot horizontal well to test the productive potential of the Three Forks Formation. Completion of these wells is projected for the fourth quarter 2010.

Management Comment

Commenting on Dunn County, N.D. drilling and completion activities, Kodiak's President and CEO Lynn A. Peterson said, "Our current frac design, which combines increased stages with higher volumes of ceramic proppants, is resulting in continued strong well results. Importantly, our pressure pumping provider is working closely with our team to provide availability for services that meets our completion schedule. The remaining inventory of wells awaiting completion discussed in today's operations update should provide a boost in production and cash flow through the remainder of 2010 and into next year as we control high working and revenue interests in each of the wells. Despite the record Williston Basin rig count which continues to stress service availability, our team continues to successfully execute our development drilling program which we announced earlier in the year. We have been fortunate in getting our wells completed within reasonable time, the production from which is an important component of our growing cash flow."