Kodiak Oil & Gas Sales Jump 73% for 2Q 2014

Kodiak Oil & Gas Corp, an oil and gas exploration and production company with primary assets in the Williston Basin of North Dakota, today reported financial results for the second quarter ended June 30, 2014 and provided a Williston Basin operations update.

For the second quarter-ended June 30, 2014, the Company reported oil and gas sales of $300.0 million, as compared to $173.5 million during the same period in 2013, representing an increase of 73%. Kodiak reported an overall 65% increase in quarter-over-quarter equivalent sales volumes with 3.5 million barrels of oil equivalent (MMBOE) sold, or an average of 38,271 BOE per day (BOE/d) during the second quarter 2014, as compared to 2.1 million BOE, or an average of 23,205 BOE/d in the second quarter of 2013. Crude oil revenue accounted for approximately 93% of oil and gas sales recorded during the second quarter 2014.

Adjusted EBITDA was $196.9 million for the second quarter 2014, as compared to $131.1 million in the same period in 2013, reflecting a 50% increase. Adjusted EBITDA is a non-GAAP financial measure. For additional information please refer to the reconciliation of this measure at the end of this news release.

Kodiak reported net cash provided by operating activities during the second quarter 2014 of $183.1 million, as compared to $118.3 million during the same period in 2013, an increase of 55%. Kodiak reported net cash provided by operating activities during the six-month period ended June 30, 2014 of $346.6 million, as compared to $232.9 million in 2013.

For the second quarter 2014, the Company reported net income of $21.2 million, or $0.08 per diluted share, compared to net income of $44.3 million, or $0.17 per diluted share, for the same period in 2013.

General and administrative expenses (G&A) for the second quarter 2014 totaled $12.8 million, or $3.68 per BOE, compared to $10.3 million, or $4.89 per BOE, in the second quarter 2013. The decrease in G&A expense per BOE for the second quarter 2014, as compared to the same period in 2013, is attributed primarily to increased production which offset an overall increase in G&A as the Company has expanded operations.

As of June 30, 2014, Kodiak had 226 employees, as compared to 134 employees as of June 30, 2013.

Lease operating expenses (LOE) for the second quarter 2014 totaled $32.4 million or $9.29 per BOE, an increase over the second quarter 2013. The Company has continued to experience an incremental increase in LOE. The increase is primarily a result of continuing costs for winterization work and increased workover expenses, including but not limited to the installation of new, more effective pumps.

Additionally, as the portfolio of producing wells age, LOE per barrel sold has increased as the production on older wells has declined, yet the Company continues to incur ongoing fixed costs to operate these wells. Kodiak has experienced an even larger incremental per barrel increase in LOE from non-operated properties.

During the second quarter ended June 30, 2014, Kodiak recognized total interest expense related to its outstanding senior notes and credit facility of approximately $31.8 million. The Company capitalized interest costs of $7.6 million for the second quarter 2014.