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Kodiak Oil & Gas' Year in Review

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At the end of 2010, Kodiak Oil & Gas (NYSE: KOG  ) put forth its 2011 capital spending plan for the coming year. At $200 million, it was the largest projected investment in the company's history. Kodiak planned to drill 28 gross wells and complete 26 gross wells in the Bakken and Three Forks oil plays in North Dakota. The company expected to average 5,000 to 6,500 barrels of oil equivalent per day, finishing the year at a production rate of 9,000 BOE/D. Let's see how things shaped up.

North Dakota winter
Despite inclement weather, road closures, and flooding, Kodiak charged out of the gate in the first quarter, posting sales 133% higher than the same quarter the year before. It reported a net loss, however, because of $9.3 million in derivatives losses.

Kodiak also increased its capital expenditure budget to $220 million to compensate for adding another drilling rig into the field and for acreage acquisition.

Mother Nature's reckoning
Halfway through the year, Kodiak announced that it no longer expected to average 5,000 to 6,500 BOE/D because of a tough winter in the Bakken. The company reduced its outlook to 4,500 to 5,000 BOE/D, but maintained its goal of achieving 9,000 BOE/D by the end of the year. Its capital expenditure budget was bumped to $230 million. Expected well counts also rose to 42 gross wells.

The acquisition
At the end of June, Kodiak announced it had closed on an $85.5 million leasehold and assets acquisition in the Williston Basin of the Bakken play. Funding the purchase through cash and borrowings, the company boosted its total Bakken acreage to 100,000 net acres.

As a result of the acquisition -- and with sales from the second quarter coming in higher than expected -- the company opted to increase its borrowing power, from $75 million to $110 million for its first lien senior secured revolving credit facility, and from $40 million to $55 million for its second lien term loan. It takes money to make money.

It was a very good year
By the middle of 2011, it was clear that Kodiak was having a strong year. Oil and gas sales broke company records, net income was up -- even in the face of derivatives losses -- and production was on pace to meet the company's end-of-year goals. Specifically, the company was operating five rigs and production was humming right along, reaching 7,500 to 8,000 BOE per day, and positioning the company well to hit its target of 9,000 BOE/D.

Sky's the limit
Apparently, merely achieving its goals were not enough. The company raised $650 million in a private offering and picked up 50,000 more acres in the Bakken, bringing its total to more than 150,000 net acres and completely changing future production outlooks. Kodiak now expects to finish the year at 17,000 BOE/D, with numbers expected to hit 30,000 BOE/D by the end of next year.

2011 was a year of tremendous growth for Kodiak. The company tripled in size, added acreage, and managed to post excellent results despite dealing with some unpredictable hardships of the Bakken climate for much of the beginning of the year.

Kodiak isn't the only great oil play for next year, either -- check out three more ideas from Motley Fool analysts.

Fool contributor Aimee Duffy doesn't own shares of the companies mentioned in this article. If you have the energy, check out what she's keeping an eye on by following her on Twitter, where she goes by @TMFDuffy.

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12/31/1969 7:00 PM
KOG.DL $0.00 Down +0.00 +0.00%
Kodiak Oil and Gas CAPS Rating: *****