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Kodiak Oil & Gas Earnings: An Early Look

Earnings season is now starting to wind down, with most companies already having reported their quarterly results. But there are still some companies left to report, and Kodiak Oil & Gas (UNKNOWN: KOG.DL  ) is about to release its quarterly earnings report. The key to making smart investment decisions with stocks releasing their quarter reports is to anticipate how they'll do before they announce results, leaving you fully prepared to respond quickly to whatever inevitable surprises arise. That way, you'll be less likely to make an uninformed knee-jerk reaction to news that turns out to be exactly the wrong move.

Even though it's a relatively small player in the oil and gas industry, Kodiak has made a big splash in the Bakken shale play. But will its high-growth plans pan out? Let's take an early look at what's been happening with Kodiak Oil & Gas over the past quarter and what we're likely to see in its quarterly report on Thursday.

Stats on Kodiak Oil & Gas

Analyst EPS Estimate


Year-Ago EPS


Revenue Estimate

$140.5 million

Change From Year-Ago Revenue


Earnings Beats in Past 4 Quarters


Source: Yahoo! Finance.

Will Kodiak Oil & Gas pump out the profits this quarter?
Analysts have been cautious about Kodiak's earnings prospects, cutting their earnings-per-share estimates for the previous quarter by $0.02 in the past couple of months. The shares have essentially gone nowhere recently, with about a 2% drop since late November.

The Bakken has been a game-changer in the oil and gas industry, with companies both big and small flooding into the North Dakota-centered region. Kodiak is far smaller than Bakken leader Continental Resources (NYSE: CLR  ) , which has more production than any other player in the play, but like Continental, Kodiak is experiencing huge growth there. Kodiak roughly tripled its production in the past year and expects it to double again this year.

But longer term, Kodiak faces a challenge. The company believes that by 2015, some of its wells will see production levels drop by 85%. That forced Continental to find new assets and double its reserves in the Bakken, and Kodiak will need to consider similar moves if it wants to sustain its growth.

On the cost side, Kodiak is in better position to seek to ramp up growth. With improvements in the way it performs hydraulic fracturing, Kodiak has cut its expenses and is drilling wells faster, which could lead to faster growth. It could also end up borrowing a page from Bakken competitor Whiting Petroleum (NYSE: WLL  ) , which has used multi-pad drilling to drill more wells without increasing rig counts.

In its upcoming quarterly report, watch for Kodiak's numbers not just for total production but also for operational efficiency. To maintain its upward trajectory, Kodiak must demonstrate that it can survive the inevitable decline of its existing wells by bringing in new production without paying too much.

Learn more about Kodiak's long-term growth strategy by reading our premium research report on the stock. Inside, you'll get our top energy analyst's views on whether to buy or sell Kodiak, with an in-depth look at the company's prospects and a year's worth of free updates. Check it out now by clicking here.

Click here to add Kodiak Oil & Gas to My Watchlist, which can find all of our Foolish analysis on it and all your other stocks.

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Related Tickers

12/31/1969 7:00 PM
KOG.DL $0.00 Down +0.00 +0.00%
Kodiak Oil and Gas CAPS Rating: *****
CLR $46.72 Up +0.59 +1.28%
Continental Resour… CAPS Rating: **
WLL $7.61 Up +0.12 +1.54%
Whiting Petroleum CAPS Rating: ***