Talk about your fast growth rates. Kodiak Oil & Gas (NYSE: KOG) generated 10 times the revenue in 2011 that it did just two years ago, buoyed by rising oil prices and a hard-charging expansion strategy that's starting to pay off. Although it missed analyst estimates, Kodiak has been growing so quickly that it should be expected to keep smashing through prior high-water marks throughout 2012 and beyond.
Let's look at the reported numbers, including future estimates, to figure out just how much potential is left for a stock that's jumped more than 3,000% since the end of 2008.
Tale of the tape
Kodiak's grown tremendously since those dark days, and a lot of it's been fueled by stock issuance, as shares outstanding almost have doubled over that time frame. That's something to keep an eye on as the company continues to drill new wells in the Bakken, but growth has a great way of making dilutive offerings seem less important. Here are some key figures from the company's latest report, and how they track its growth over the past three years:
|
Statistic |
2011 Annual Result |
Annualized Growth Rate From 2009 (Two Years) |
|---|---|---|
| Revenue | $120 million | 226% |
| Operating Income | $42 million | NM* |
| Net Income | $4 million | NM* |
| Oil Production | 1,343,761 barrels | 171% |
| Total Costs Incurred | $606,000 | 370% |
Source: Kodiak Oil & Gas Annual Report.
*NM = not meaningful; Kodiak posted a loss in 2009.
Other notable gains include increasing proven oil reserves 255% in the latest year to 35.6 million barrels, drilling 25 net new wells and completing 16, and an acquisition of 88,000 new acres that included 25 net productive wells and six more awaiting completion. Kodiak plans to double total costs incurred in 2012, which includes capital expenditures as well as acquisitions.
Kodiak is still a small player in the Bakken compared with early entrant Continental Resources (NYSE: CLR), which claims 1,578 net productive wells, although its oil production is now ahead of Samson Oil & Gas (AMEX: SSN), which managed to produce only 64,000 barrels of oil in its last fiscal year. Both companies also have significant natural gas assets, which Kodiak's largely ignored or flared off as it ramps up oil production.
Kodiak's plans for the upcoming year may very well result in double the oil extracted, if not more. That should be music to shareholders' ears, and with such sky-high growth rates, Kodiak could be a worthwhile buy for new investors as well.
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