DENVER, March 16 /CNW/ - Kodiak Oil & Gas Corp. (TSX Venture: KOG;
GGF.PK) today announced the acquisition of 10,629 gross (9,566 net) acres of
mineral leasehold in Sweetwater County, Wyoming. The acreage, adjacent and
contiguous to current Kodiak lands, is located in the Company's Pacific Rim
project area and is part of the Vermillion Basin deep-gas play that Company
geologists believe is prospective for the Baxter shale and Frontier and Dakota
sandstones. Kodiak operates the properties.
The $6.9 million acquisition was from a private party, Chicken Creek LLC,
and includes the undeveloped acreage as well as working interest (ranging from
33% to 90%) in four wells that have been drilled during the past two years to
evaluate the natural gas potential of the Almond and Ericson formations. One
well is producing from the Almond Formation and the remaining three wells are
in various stages of completion in the Almond and Ericson. Further completion
activity in the area will resume in the second quarter of 2006 when annual
wildlife stipulations on federal lands are lifted.
After the acquisition, Kodiak has 45,137 gross (28,337 net) acres
adjacent to the developing Vermillion Basin deep-gas play. The Company's
working interest in the properties range from approximately 45% under
4,600 net acres to 90% under 12,000 net acres. Most of the Company's
Vermillion Basin acreage position is on federal lands.
$30 Million 2006 Capital Expenditure Budget
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The Company also today announced its 2006 capital expenditure budget of
US $30 million, not including the above announced Vermillion acquisition. By
comparison, Kodiak's 2005 CAPEX was $14 million. Kodiak plans to fund the
2006 CAPEX from the proceeds of its recently announced private placement.
Kodiak currently plans to participate in the drilling of 31 wells (15.24 net)
in 2006. Approximately $16 million of the 2006 capital budget will fund
drilling expenditures, gathering and processing infrastructure and certain
acreage acquisitions in southwestern Wyoming. The balance of $14 million is
allocated to Williston Basin, drilling and completion operations and
infrastructure.
The amount and allocation of actual capital expenditures will depend upon
a number of factors, including the impact of commodity prices, rig
availability, variances in contract drilling and service costs, and changes in
forecasted production. Potential producing property or acreage acquisitions
are not included in the 2006 budget.
Management Comment
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Lynn Peterson, President and CEO of Kodiak Oil & Gas commented: "Kodiak
is in the best position in its history. We have the capital to invest, the
projects to drill and the technical talent necessary to actively explore and
exploit our leasehold as we seek to establish reserves and grow production."
He added: "Our exploration program has a meaningful inventory of
promising gas and oil projects in both of our core basins. One such project is
the 2006 drilling of one or two wells to evaluate the potential of the
deeper Baxter shale and Frontier sands. Our strategy combines exploration
opportunities with a growing cash flow from development drilling in Wyoming.
In North Dakota, we anticipate spudding a well on our Bakken acreage early in
the second quarter. We expect to drill at least two wells here in 2006. Going
forward, our large acreage positions in our core areas include projects of
varying risk profile that we believe present attractive opportunities for
Kodiak and its shareholders. I invite you to monitor our progress during what
we expect to be a truly pivotal year for Kodiak."
About Kodiak Oil & Gas Corp.
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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 Greater Green River Basins
in the U.S. Rocky Mountains. The common shares of the Company are listed for
trading on the TSX Venture Exchange under the symbol "KOG" and the U.S. symbol
"KOGGF."
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, including the
Company's expectations regarding the amount of capital resources available to
the Company to fund its planned capital expenditures and the application of
such capital resources; and the Company's expectations regarding the nature,
timing and success of its exploration and drilling programs. 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. Factors that could cause or contribute to
such differences include, but are not limited to, fluctuations in the prices
of oil and gas; risks inherent in the oil & gas industry, such as operational
risks in exploring for, developing and producing oil and natural gas;
uncertainties inherent in estimating quantities of oil and gas reserves and
projecting future rates of production and the timing and cost of exploration
and 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.
The TSX Venture Exchange does not accept responsibility for the adequacy
or accuracy of this release.
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