The Bakken is so big that it can sometimes hide great investment opportunities, and Kodiak Oil & Gas (UNKNOWN:KOG.DL) is a perfect example of that. Kodiak Oil & Gas just reported great earnings that investors shouldn't miss.

Can't stop
Kodiak posted 123% oil and gas output growth year over year and a 54% quarter-on-quarter increase. The company grew average production during the third quarter to 35,400 boe/d, with plans for an exit rate of 42,000-46,000 boe/d for 2013. Factoring out the acquisition, organic growth was 7,500 boe/d quarter over quarter.

Kodiak's output growth is being achieved through more well completions. Kodiak completed 18, 24, and 31 net wells through September and has guided for 25 net wells to be completed in the fourth quarter.

This allowed Kodiak to grow its EBITDA to $240 million, which was up 140% year over year and 63% sequentially. With the EBITDA growth and its acreage acquisition, Kodiak decided to increase its capital expenditure budget to $1 billion in 2013 versus ~$600 million as previously guided.

Kodiak plans to maximize its new acreage and reduce the need to divert cash for acquisitions by expanding its downspacing projects.

Kodiak is currently drilling eight wells per unit, with plans to ramp that up through 2014 to 12 per unit. This could increase its potential drilling locations by ~50% and boost recovery rates.

One of Kodiak's downspacing pilot projects, the Smokey project, posted impressive results. The average initial production rate from each well was 2,000 boe/d, with 30 day production levels averaging out at ~800 boe/d. This is consistent with other wells Kodiak operates in the area and points toward the effectiveness of downspacing.

As Kodiak is able to drill more wells in the same amount of space with similar results, it can grow its growth runway. Kodiak will be able to make better use of its acreage and drill into each of the Bakken's benches.

Kodiak isn't betting on just one pilot project for downspacing potential; the 12-well Polar pilot project posted results that matched Smokey's. In the second half of 2014, Kodiak plans on testing out 16 wells per unit. If this pilot project works out just like the Polar and Smokey tests, then Kodiak will have doubled the number of potential drilling locations organically in just one year.

On top of that, Kodiak will be drilling into each part of the Middle Bakken and Three-Forks benches. This will boost the total amount of recoverable oil on its land through higher recovery rates.

A sharp drop
Kodiak forecast well completion costs to be at $9.5 million-$10.7 million, but by the third quarter Kodiak changed that to $9.7 million. Kodiak currently is drilling wells with costs ranging from $9.2 million-$9.7 million.

Going forward, Kodiak plans on bringing well-completion costs down to $9 million. Well-completion costs are down significantly from 2012 levels, which averaged out at $12 million. This means that Kodiak can drill 25% more wells for the same price.

Kodiak will be able to direct more capex to drilling completions as downspacing reduces the need to purchase more land to drill on. Kodiak's production and income growth is still up in the triple-digits, which is why I would recommend this as a great growth play. 

In order for Kodiak's growth story to pan out, it needs to have an end buyer for its crude oil. Energy Transfer Partners (NYSE:ETP) and Carlyle Group (NASDAQ:CG) have teamed up to help Kodiak's dream come true.

It's always sunny
In Philadelphia, Energy Transfer Partners and Carlyle Group have a joint venture called Philadelphia Energy Solutions. PES owns a refinery in Philadelphia that has a processing capacity of 350,000 barrels per day, and is able to maximize its crack spread through plenty of Bakken crude.

Previously, Energy Transfer Partners and Carlyle Group saw the refinery taking in 140,000 bpd by rail from the Bakken, but currently 160,000 bpd is being shipped to PES' refinery from the Bakken via rail. Another 30,000 bpd is being transported through pipelines and barges.

Looking ahead Energy Transfer Partners and Carlyle Group plan on taking in 240,000 bpd of crude from the Bakken to increase margins.

Bakken crude trades at less than WTI, which enables refiners to increase their margins. This is why a private equity company decided to invest in a refinery, so Carlyle could play the Bakken boom as well. Energy Transfer Partners already has infrastructure in place to capitalize on the Bakken, but this refiner will allow it to expand beyond storage and transportation.

Foolish final thoughts
Why is PES such a big deal? Because it is shipping in one-fifth of one of America's biggest oil play's outputs. Ambitious plans, led by companies like Carlyle and Energy Transfer Partners, are being put into place to absorb the additional Bakken output being brought online by Kodiak Oil & Gas.

Kodiak's image is a little bear mascot, but this is definitely a raging bull in an iconic American oil play. In the years to come, Kodiak will become a formidable exploration and production player and is a good growth stock to look into.