Kodiak Oil & Gas Corp. Announces Third Quarter 2013 Results

Highlights Include:
- Q3-13 Oil & Gas Sales of $300 million, 167% Increase from Q3-12 and a 73% Increase from Q2-13
- Q3-13 Adjusted EBITDA of $214 million, 140% Growth from Q3-12 and a 63% Increase from Q2-13

PR Newswire

DENVER, Oct. 31, 2013 /PRNewswire/ -- Kodiak Oil & Gas Corp. (KOG), an oil and gas exploration and production company with primary assets in the Williston Basin of North Dakota, today reported financial results for the third quarter ended September 30, 2013.  The Company previously furnished an operations update and reported sales volumes in a news release on October 22, 2013. 

(Logo: http://photos.prnewswire.com/prnh/20131007/LA93138LOGO)

Financial Results

For the third quarter-ended September 30, 2013, the Company reported oil and gas sales of $299.6 million, as compared to $112.1 million during the same period in 2012 and $173.5 million in the second quarter 2013, representing increases of 167% and 73%, respectively. For the nine-month period ended September 30, 2013 Kodiak reported oil and gas sales of $638.1 million, as compared to $277.8 million for the same period in 2012.  Kodiak reported an overall 54% increase in sequential equivalent sales volumes with 3.3 million barrels of oil equivalent (MMBOE) sold, or an average of 35,400 BOE per day (BOE/d) during the third quarter of 2013, as compared to 2.1 million BOE, or an average of 23,200 BOE/d in the second quarter of 2013.   Crude oil revenue accounted for approximately 96% of oil and gas sales recorded during the third quarter 2013. 

Adjusted EBITDA was $214.1 million for the third quarter 2013, as compared to $89.1 million in the same period in 2012.  For the nine-month period ended September 30, 2013 Kodiak reported adjusted EBITDA of $469.6 million, as compared to $210.5 million in 2012.  Adjusted EBITDA is a non-GAAP financial measure.  For additional information please refer to the reconciliation of this measure at the end of this news release.

For the third quarter 2013, the Company reported net income of $31.2 million, or $0.12 per diluted share, compared to net income of $3.5 million, or $0.01 per diluted share, for the same period in 2012.  Kodiak reported net income during the nine-month period ended September 30, 2013 of $94.8 million, as compared to $98.3 million for the same period in 2012. 

Kodiak reported net cash provided by operating activities during the third quarter 2013 of $152.6 million, as compared to $89.2 million during the same period in 2012, an increase of 71%.  Kodiak reported net cash provided by operating activities during the nine-month period ended September 30, 2013 of $385.5 million, as compared to $203.3 million for the same period in 2012.  

General and administrative expenses (G&A) for the third quarter 2013 totaled $12.6 million, or $3.86 per BOE, compared to $9.1 million, or $6.26 per BOE, in the third quarter 2012.  The increase in total G&A expense for the third quarter 2013, as compared to the same period in 2012, is attributed primarily to the hiring of new personnel as the Company continues to expand its oil and gas operations. G&A expense on a per unit basis improved sequentially from $4.89 per BOE in the second quarter of 2013 to $3.86 per BOE in the third quarter primarily attributable to increased production.  As of September 30, 2013, Kodiak had 172 employees, as compared to 104 employees as of September 30, 2012.

Lease operating expenses (LOE) for the third quarter 2013 totaled $20.4 million or $6.28 per BOE, a 9% increase per BOE over the third quarter 2012 and a decrease of 1% over the second quarter of 2013.  The Company continues efforts to decrease operating costs primarily by addressing water disposal costs, the largest component of LOE.  Gathering and connection work continues on water disposal wells which helps to reduce the Company's dependence on third-party services and minimize trucking requirements.  

During the third quarter ended September 30, 2013, Kodiak recognized total interest expense related to its outstanding senior notes and credit facility of approximately $21.0 million.  The Company capitalized interest costs of $9.7 million for the third quarter 2013.

The following table summarizes the Company's costs on a per-unit basis for the periods shown:

Kodiak Oil & Gas Corp.





% Change

Unit Cost Analysis

Q3-13

Q2-13

Q3-12


Sequential

Q-o-Q

Sales Volumes in Barrels of Oil Equivalent (MBOE)

3,257

2,112

1,459


54%

123%

Average Price Received Oil ($/Bbl)

$98.19

$88.88

$82.96


10%

18%

Average Price Received Gas ($/Mcf)

6.32

6.16

5.20


3%

22%

Average Price Received BOE ($/BOE)

$91.97

$82.15

$76.88


12%

20%








Expenses







Lease Operating Expense ($/BOE)

$6.28

$6.33

$5.77


(1)%

9%

Production Tax ($/BOE)

10.00

8.77

8.19


14%

22%

DD&A Expense ($/BOE)

29.81

29.56

29.97


1%

(1)%

Gathering, Transportation & Marketing Expense ($/BOE)

1.87

2.67

1.77


(30)%

6%

Total G&A Expense ($/BOE)

3.86

4.89

6.26


(21)%

(38)%

Non-cash Stock-based Compensation Expense ($/BOE)

$1.19

$1.66

$1.90


(28)%

(37)%

 

2013 Capital Expenditures

Year to date, Kodiak has invested approximately $809.8 million related to its oilfield operations and leasehold acquisitions compared to its full year capital expenditure guidance of approximately $1 billion.  The Company expects its fourth quarter capital spend to be less than that of the third quarter due to lower well costs on a quarter over quarter basis and fewer net wells completed in the fourth quarter as compared to the third quarter.  This is mainly attributable to one less non-operated rig drilling in Dunn County and lower working interest spacing units being drilled in the fourth quarter.





Nine Months


Full Year

Kodiak Oil & Gas Corp.

Quarter Ended


Ended


2013

Capital Expenditures ($MM)

Sept 30, 2013

June 30, 2013


Sept 30, 2013


Budget

Drilling and completion costs

$

302.0


$

239.4



$

790.4



$

965.0


Salt water disposal wells and facilities

0.3


7.6



13.1



23.0


Leasehold acquisitions

2.7


1.7



6.3



12.0


Total Capital Expenditures

$

305.0


$

248.7



$

809.8



$

1,000.0









Asset retirement obligations

$

2.6


$

1.1



$

4.2




Capitalized interest

9.7


7.4



25.6




Total Capitalized Costs

$

317.3


$

257.2



$

839.6




 

Q3-13 Results Teleconference Call

In conjunction with Kodiak's release of its financial and operating results, investors, analysts and other interested parties are invited to participate in a conference call with management on Friday, November 1, 2013 at 11:00 a.m. Eastern Daylight Time.

Kodiak Oil & Gas Corp. Q3-13 Financial and Operating Results Conference Call

Date:

November 1, 2013

Time:

11:00 a.m. EDT

10:00 a.m. CDT

9:00 a.m. MDT

8:00 a.m. PDT

Call:

(877) 870-4263 (US/Canada) and (412) 317-0790 (International)

Internet:

Live and rebroadcast over the Internet: http://www.videonewswire.com/event.asp?id=96331

Replay:

Available for 30 days at http://www.kodiakog.com or http://www.videonewswire.com/event.asp?id=96331

 

Upcoming Investor Conferences

Kodiak also today announced management's participation in upcoming investor conferences. If a webcast is available, links can be found on the Company's website at www.kodiakog.com.

Conference

City

Date

Time

Jefferies Global Energy Conference

Houston, TX

Nov. 12, 2013

2:00 PM ET

Stephens Fall Investment Conference

New York, NY

Nov. 12, 2013

11:00 AM ET

UBS Mini Energy Conference

Boston, MA

Nov. 13, 2013

None

Goldman Sachs Emerging Growth Conference

New York, NY

Nov. 14, 2013

9:20 AM ET

Deutsche Bank's SMID One on One Conference

Coral Gables, FL

Nov. 20, 2013

None

Bank of America Merrill Lynch Global Energy Conference

Miami, FL

Nov. 22, 2013

8:15 AM ET

Wells Fargo Energy Symposium

New York, NY

Dec. 11, 2013

TBD

Capital One Southcoast Energy Conference

New Orleans, LA

Dec. 12, 2013

10:00 AM ET

 

Presentation times and webcasting are subject to change at the discretion of the conference organizer.  Please reference Kodiak's Presentations & Events page for further details regarding conferences and other events in which the Company may elect to participate.

About Kodiak Oil & Gas Corp.
Denver-based Kodiak Oil & Gas Corp. is an independent energy exploration and development company focused on exploring, developing and producing oil and natural gas primarily in the Williston Basin in the U.S. Rocky Mountains.  For further information, please visit www.kodiakog.com.  The Company's common shares are listed for trading on the New York Stock Exchange under the symbol: "KOG."

Forward-Looking Statements
This press release includes statements that may constitute "forward-looking" statements, usually containing the words "believe," "estimate," "project," "expect" or similar expressions. These statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements inherently involve risks and uncertainties that could cause actual results to differ materially from the forward-looking statements.  Forward looking statements are statements that are not historical facts and are generally, but not always, identified by the words "expects," "plans," "anticipates," "believes," "intends," "estimates," projects," "potential" and similar expressions, or that events or conditions "will," "would," "may," "could" or "should" occur. Forward-looking statements in this document include statements regarding the Company's expectations as to its growth and development including trends in production, cash flow and reserves, the Company's expectations regarding potential improvements in LOE, the Company's drilling and completion program, including timing and improvements in per-well costs, and trends in the availability and cost of oil field services.  Factors that could cause or contribute to such differences include, but are not limited to, fluctuations in the prices of oil and gas, uncertainties inherent in estimating quantities of oil and gas reserves and projecting future rates of production and timing of development activities, competition, operating risks, acquisition risks, liquidity and capital requirements, the effects of governmental regulation, adverse changes in the market for the Company's oil and gas production, dependence upon third-party vendors, and other risks detailed in the Company's periodic report filings with the Securities and Exchange Commission.

For further information, please contact:

Mr. Lynn A. Peterson, CEO and President, Kodiak Oil & Gas Corp. +1-303-592-8075
Mr. Trevor P. Seelye, CFA, Director of Financial Planning & Investor Relations +1-720-399-3282

Footnotes to the Financial Statements
The notes accompanying the financial statements are an integral part of the consolidated financial statements and can be found in Kodiak's filing on Form 10-Q for the quarter-ended September 30, 2013.

 

KODIAK OIL & GAS CORP.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share data)

(Unaudited)




September 30, 2013


December 31, 2012

ASSETS





Current Assets:





Cash and cash equivalents


$

18,318


$

24,060

Accounts receivable





Trade


94,791


35,565

Accrued sales revenues


118,240


59,875

Commodity price risk management asset



10,864

Inventory, prepaid expenses and other


13,906


17,210

Total Current Assets


245,255


147,574






Oil and gas properties (full cost method), at cost:





Proved oil and gas properties


3,284,226


2,007,442

Unproved oil and gas properties


692,380


457,888

Equipment and facilities


27,580


20,954

Less-accumulated depletion, depreciation, amortization, and accretion


(505,758)


(290,094)

Net oil and gas properties


3,498,428


2,196,190






Commodity price risk management asset


1,475


2,850

Property and equipment, net of accumulated depreciation of $1,687 at September 30, 2013 and $1,113 at December 31, 2012


3,085


1,846

Deferred financing costs, net of amortization of $21,461 at September 30, 2013 and $17,995 at December 31, 2012


42,071


25,176






Total Assets


$

3,790,314


$

2,373,636






LIABILITIES AND STOCKHOLDERS' EQUITY





Current Liabilities:





Accounts payable and accrued liabilities


$

294,623


$

190,596

Accrued interest payable


30,473


6,090

Commodity price risk management liability


29,005


304

Total Current Liabilities


354,101


196,990






Noncurrent Liabilities:





Credit facility


638,000


295,000

Senior notes, net of accumulated amortization of bond premium of $858 at September 30, 2013 and $378 at December 31, 2012


1,555,142


805,622

Commodity price risk management liability


1,054


4,288

Deferred tax liability, net


85,200


26,800

Asset retirement obligations


13,927


9,064

Total Noncurrent Liabilities


2,293,323


1,140,774






Total Liabilities


2,647,424


1,337,764






Stockholders' Equity:





Common stock—no par value; unlimited authorized





Issued and outstanding:  266,026,558 shares as of September 30, 2013 and 265,273,314 shares as of December 31, 2012


1,020,852


1,008,678

Retained earnings


122,038


27,194

Total Stockholders' Equity


1,142,890


1,035,872






Total Liabilities and Stockholders' Equity


$

3,790,314


$

2,373,636

 

KODIAK OIL & GAS CORP.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except share data)

(Unaudited)




For the Three Months Ended September 30,


For the Nine Months Ended September 30,



2013


2012


2013


2012

Revenues:








Oil sales


$

286,832


$

106,798


$

606,044


$

266,002

Gas sales


12,760


5,342


32,076


11,842

Total revenues


299,592


112,140


638,120


277,844











Operating expenses:










Oil and gas production


59,132


22,950


132,654


57,450

Depletion, depreciation, amortization and accretion


97,094


43,720


216,888


104,204

General and administrative


12,560


9,126


33,188


25,166

Total operating expenses


168,786


75,796


382,730


186,820









Operating income


130,806


36,344


255,390


91,024











Other income (expense):










Gain (loss) on commodity price risk management activities, net


(60,108)


(31,652)


(53,185)


40,580

Interest income (expense), net


(21,049)


(6,390)


(50,644)


(14,558)

Other income


1,001


1,194


1,683


3,186

Total other income (expense)


(80,156)


(36,848)


(102,146)


29,208











Income (loss) before income taxes


50,650


(504)


153,244


120,232











Income tax expense (benefit)


19,500


(3,980)


58,400


21,940









Net income


$

31,150


$

3,476


$

94,844


$

98,292











Earnings per common share:










Basic


$

0.12


$

0.01


$

0.36


$

0.37

Diluted


$

0.12


$

0.01


$

0.35


$

0.37











Weighted average common shares outstanding:










Basic


265,733,881


263,756,896


265,500,414


263,332,764

Diluted


268,566,065


267,403,802


267,992,098


267,532,393

 

KODIAK OIL & GAS CORP.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)



For the Three Months Ended September 30,


For the Nine Months Ended September 30,


2013


2012


2013


2012

Cash flows from operating activities:








Net income

$

31,150


$

3,476


$

94,844


$

98,292

Reconciliation of net income to net cash provided by operating activities:








Depletion, depreciation, amortization and accretion

97,094


43,720


216,888


104,204

Amortization of deferred financing costs and debt premium

1,239


643


2,985


1,900

(Gain) loss on commodity price risk management activities, net

60,108


31,652


53,185


(40,580)

Settlements on commodity derivative instruments

(18,674)


5,044


(15,479)


4,192

Stock‑based compensation

3,880


2,765


11,105


7,855

Deferred income taxes

19,500


(3,980)


58,400


21,940

Changes in current assets and liabilities:








Accounts receivable‑trade

(57,072)


(10,671)


(59,226)


(10,090)

Accounts receivable‑accrued sales revenue

(51,330)


(9,118)


(58,365)


(26,114)

Prepaid expenses and other

(973)


5,776


(1,159)


7,860

Accounts payable and accrued liabilities

51,906


3,403


57,974


14,413

Accrued interest payable

15,803


16,520


24,383


16,040

Cash held in escrow




3,343

Net cash provided by operating activities

152,631


89,230


385,535


203,255









Cash flows from investing activities:








Acquired oil and gas properties and facilities

(759,025)



(759,025)


(588,420)

Oil and gas properties

(247,502)


(194,446)


(767,814)


(527,019)

Sale of oil and gas properties

87,370


2,752


87,370


2,752

Equipment, facilities and other

(1,318)


(1,386)


(8,338)


(8,160)

Well equipment inventory

(14,881)


(22,344)


(17,179)


(29,920)

Cash held in escrow

51,000




30,000

Net cash used in investing activities

(884,356)


(215,424)


(1,464,986)


(1,120,767)









Cash flows from financing activities:








Borrowings under credit facility

840,000


115,000


1,194,875


200,000

Repayments under credit facility

(493,000)



(851,875)


(185,000)

Proceeds from the issuance of senior notes

400,000



750,000


156,000

Proceeds from the issuance of common shares

1,793


625


2,283


1,870

Purchase of common shares

(696)



(1,214)


Cash held in escrow




670,615

Debt and share issuance costs

(12,126)


(1,177)


(20,360)


(5,827)

Net cash provided by financing activities

735,971


114,448


1,073,709


837,658









Increase (decrease) in cash and cash equivalents

4,246


(11,746)


(5,742)


(79,854)








Cash and cash equivalents at beginning of the period

14,072


13,496


24,060


81,604









Cash and cash equivalents at end of the period

$

18,318


$

1,750


$

18,318


$

1,750









Supplemental cash flow information:








Oil & gas property included in accounts payable and accrued liabilities

$

201,438


$

124,155


$

201,438


$

124,155

Oil & gas property acquired through common stock




$

49,798

Cash paid for interest

$

13,722


$

434


$

48,912


$

32,354

 

KODIAK OIL & GAS CORP.

RECONCILIATION OF ADJUSTED EBITDA

(In thousands)




For the Three Months Ended September 30,


For the Nine Months Ended September 30,

Reconciliation of Adjusted EBITDA:


2013


2012


2013


2012










Net income


$

31,150


$

3,476


$

94,844


$

98,292

Add back:









Depreciation, depletion, amortization and accretion


97,094


43,720


216,888


104,204

Amortization of deferred financing costs and debt premium


1,239


643


2,985


1,900










(Gain) loss on commodity price risk management activities, net


60,108


31,652


53,185


(40,580)

Settlements on commodity derivative instruments


(18,674)


5,044


(15,479)


4,192

Stock based compensation expense


3,880


2,765


11,105


7,855

Income tax expense (benefit)


19,500


(3,980)


58,400


21,940

Interest expense


19,824


5,755


47,696


12,693

Adjusted EBITDA


$

214,121


$

89,075


$

469,624


$

210,496

 

In evaluating its business, Kodiak considers earnings before interest, income taxes, depletion, depreciation, amortization, and accretion, amortization of deferred financing costs and debt premium, impairment, gains or losses on foreign currency, the net (gain) loss on commodity price risk management activities less settlements on commodity derivative instruments, and stock‑based compensation expense, ("Adjusted EBITDA") as a key indicator of financial operating performance and as a measure of the ability to generate cash for operational activities, future capital expenditures and an indication of our potential borrowing base under our credit facility.  Adjusted EBITDA is not a Generally Accepted Accounting Principle ("GAAP") measure of performance. The Company uses this non-GAAP measure to compare its performance with other companies in the industry that make a similar disclosure, as a measure of its current liquidity, in developing our capital expenditure budget, to evaluate our compliance with covenants under our credit facility and as a component of the corporate objectives to which we tie the vesting of equity-based awards made to senior executives. The Company believes that this measure may also be useful to investors for the same purpose and for an indication of the Company's ability to generate cash flow at a level that can sustain or support our operations and capital investment program, and that disclosure of this measure provides investors with visibility as to the corporate objectives that affect our executive compensation program. Investors should not consider this measure, or other non-GAAP measures such as adjusted net income, in isolation or as a substitute for operating income or loss, cash flow from operations determined under GAAP or any other measure for determining the Company's operating performance that is calculated in accordance with GAAP. In addition, because Adjusted EBITDA is not a GAAP measure, it may not necessarily be comparable to similarly titled measures employed by other companies.  A reconciliation of Adjusted EBITDA and net income for the three and nine months ended September 30, 2013 and 2012 is provided in the table above.

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