The Bakken Shale Fueled a Great Year for Kodiak Oil & Gas

Average daily production more than doubled in 2013 for Kodiak Oil & Gas.

Feb 11, 2014 at 2:00PM

Bakken shale-focused Kodiak Oil & Gas (NYSE:KOG) continued its torrid growth pace last year, increasing oil production by 103% to an average of 29,200 barrels of oil equivalent per day, or BOE/d. On top of that the company grew its proved reserves by 77%. Let's take a closer look what those numbers mean for investors 

Stunning production growth
Kodiak Oil & Gas actually ended the year with a fourth-quarter average daily sales volume of 36,100 BOE/d, which was well above its average full-year rate of 29,200 BOE/d. Both of those rates were a huge increase from the year-ago periods. The year-end exit rate represented a 98% jump from the 2012 exit rate, while the full-year average daily rate was up 103%. As the following slide shows, Kodiak Oil & Gas has enjoyed a big run-up in production over the past few years.

Kodiak Oil Gas Production Growth

Source: Kodiak Oil & Gas Investor Presentation (link opens a PDF).

The Bakken shale is also fueling growth for companies beyond Kodiak Oil & Gas. In a recent update, Northern Oil & Gas (NYSEMKT:NOG) noted that its production increased 28% over its prior fourth quarter. Its total production increased 19% from the previous year. While Northern's growth rate isn't as robust as the rate enjoyed by Kodiak Oil & Gas, that's partly because Kodiak simply spent more aggressively than its peer.

Kodiak will actually tone down its aggressiveness in 2014, so it won't see triple-digit production growth for the year. Investors intent on triple-digit, Bakken shale-fueled growth can look at Triangle Petroleum (NYSEMKT:TPLM), where production will jump by 98% next year. In fact, Triangle Petroleum expects production in the second half of the year  to increase by 118% from the same period as last year. Triangle Petroleum will grow at that pace by tapping the debt market to fund expansion, while Kodiak Oil & Gas plans on funding its growth solely through cash flow.

Excellent increase in proved reserves
In addition to surging production, Kodiak is also enjoying a nice boost to its proved reserves which jumped to 167.3 million, an increase of 77%. As the following chart shows, the company's reserves have surged over the past few years.

Kodiak Oil Gas Reserve Growth

Source: Kodiak Oil & Gas Investor Presentation (link opens a PDF).

While the reserves growth rate was down last year, there's still a lot to like in the numbers. Topping the list is the fact that 83% of the company's reserves are oil. The company also saw reserve discoveries, extensions, and upward revisions that were more than four times the amount of oil it produced this year. That impressive organic reserve replacement ratio of 486% shows the company's drilling program is working and that it can continue producing for a long time.

Investor takeaway
Kodiak Oil & Gas had a solid year in 2013. While the company's growth rate will slow this year, that's because it is taking a less risky approach by investing within its cash flow rather than adding more debt. That maturity is exactly what investors want to see, as it should begin to fuel a boost to the company's bottom line.

Does this make Kodiak Oil & Gas a top stock for 2014?
There's a huge difference between a good stock and a stock that can make you rich. The Motley Fool's chief investment officer has selected his No. 1 stock for 2014, and it's one of those stocks that could make you rich. You can find out which stock it is in the special free report "The Motley Fool's Top Stock for 2014." Just click here to access the report and find out the name of this under-the-radar company.


Matt DiLallo has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Money to your ears - A great FREE investing resource for you

The best way to get your regular dose of market and money insights is our suite of free podcasts ... what we like to think of as “binge-worthy finance.”

Feb 1, 2016 at 5:03PM

Whether we're in the midst of earnings season or riding out the market's lulls, you want to know the best strategies for your money.

And you'll want to go beyond the hype of screaming TV personalities, fear-mongering ads, and "analysis" from people who might have your email address ... but no track record of success.

In short, you want a voice of reason you can count on.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich," rated The Motley Fool as the #1 place online to get smarter about investing.

And one of the easiest, most enjoyable, most valuable ways to get your regular dose of market and money insights is our suite of free podcasts ... what we like to think of as "binge-worthy finance."

Whether you make it part of your daily commute or you save up and listen to a handful of episodes for your 50-mile bike rides or long soaks in a bubble bath (or both!), the podcasts make sense of your money.

And unlike so many who want to make the subjects of personal finance and investing complicated and scary, our podcasts are clear, insightful, and (yes, it's true) fun.

Our free suite of podcasts

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. The show is also heard weekly on dozens of radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable. Rule Breaker Investing and Answers are timeless, so it's worth going back to and listening from the very start; the other three are focused more on today's events, so listen to the most recent first.

All are available for free at

If you're looking for a friendly voice ... with great advice on how to make the most of your money ... from a business with a lengthy track record of success ... in clear, compelling language ... I encourage you to give a listen to our free podcasts.

Head to, give them a spin, and you can subscribe there (at iTunes, Stitcher, or our other partners) if you want to receive them regularly.

It's money to your ears.


Compare Brokers