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Kodiak: '14 Capex & Production Outlook

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Independent energy company, Kodiak Oil & Gas Corp. (KOG) provided a sneak-peak into its 2014 capex and operational activities. The company announced a capital budget of $940 million for 2014 against the $1.0 billion capital expenditure in 2013. The 2014 capex budget is dedicated wholly to the Williston Basin oil and gas acreage.  

Of the total budget, $890 million is allocated for drilling activities, with the expectation of completing about 100 net wells. The remaining $50 million is reserved for infrastructure development and minor acquisitions.

The 2014 capital budget will be financed by the current working capital, operating cash flows and the company’s revolving credit facility. However, Kodiak believes that the 2014 operating cash flow should reach close to the capex budget level.

The company anticipates that the budget will lead to a 45% year-over-year increase in production volumes, reaching about 42,000 to 44,000 barrels of oil equivalent per day (Boe/d) in full-year 2014. Kodiak expects full-year 2013 production around 29,200 Boe/d, keeping in view the severe winter conditions that hurt production.  

The company also provided an update on its downspacing activities which seem on track. The 12 wells in each of the Polar and Smokey areas meet Kodiak’s expectations. Kodiak is in the process of completing the first of the four, four-well pads in a drilling and spacing unit to the east of the downspacing pilot program in the Polar area. The company expects all four pads to be online in summer 2014.

Earlier in the month, the company increased its borrowing base from $1.1 billion to $1.35 billion. Under the revolving credit facility, the company’s current borrowing stands at around $700 million.

Headquartered in Denver, the oil and gas exploration and production company currently carries a Zacks Rank #3 (Hold), implying that it is expected to perform in line with the broader U.S. equity market over the next one to three months.

Meanwhile one can consider better-ranked energy sector stocks such as Abraxas Petroleum Corp. (AXAS), Harvest Natural Resources Inc. (HNR) and Clayton Williams Energy, Inc. (CWEI). All these currently sport a Zacks Rank #1 (Strong Buy).

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Read the Full Research Report on CWEI
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Read the Full Research Report on AXAS

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