Kodiak Oil Misses Street 3Q forecasts

Highlights include:

* Q3-14 Average Daily Sales Volumes of 40,485 BOE/d, 14% Growth from Q3-13

* Q3-14 Net Income of $92 million, 196% Increase from Q3-13

Kodiak Oil & Gas Corp. today reported financial results for the third quarter ended September 30, 2014 and provided a Williston Basin operations update.

Financial Results

Kodiak reported an overall 14% increase in quarter-over-quarter equivalent sales volumes with 3.7 million barrels of oil equivalent (MMBOE) sold, or an average of 40,485 BOE per day (BOE/d) during the third quarter 2014, as compared to 3.3 million BOE, or an average of 35,406 BOE/d in the third quarter of 2013. Crude oil revenue accounted for approximately 93% of oil and gas sales recorded during the third quarter 2014.

For the third quarter ended September 30, 2014, the Company reported oil and gas sales of $292.2 million, as compared to $299.6 million during the same period in 2013, representing a decrease of 2%.   The decline in revenue is attributed to a 13% decrease in average crude oil price from $98.19 per barrel in the third quarter of 2013 to $85.35 per barrel in the third quarter of 2014.

For the third quarter 2014, the Company reported net income of $92.2 million, or $0.34 per diluted share, compared to net income of $31.2 million, or $0.12 per diluted share, for the same period in 2013.
 

Kodiak reported net cash provided by operating activities during the third quarter 2014 of $143.7 million, as compared to $152.6 million during the same period in 2013, a decrease of  6%. Kodiak reported net cash provided by operating activities during the nine-month period ended September 30, 2014 of $490.3 million, a 27% increase, as compared to $385.5 million during the nine-month period ended September 30, 2013.

Adjusted EBITDA was $189.9 million for the third quarter 2014, as compared to $214.1 million in the same period in 2013, reflecting an 11% decrease. 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.

General and administrative expenses (G&A) for the third quarter 2014 totaled $18.8 million, or $5.06 per BOE, compared to $12.6 million, or $3.86 per BOE, in the third quarter 2013. The increase in G&A expense per BOE for the third quarter 2014, as compared to the same period in 2013, is attributed primarily to transaction charges related to Kodiak's previously announced merger with Whiting Petroleum Corporation (Whiting).

On a per unit basis, lease operating expense (LOE) increased from $6.28 per barrel sold in the third quarter of 2013 to $10.50 per barrel sold in the third quarter of 2014.  The increase in LOE per barrel is partially a result of the normal decline in production, as the Company's portfolio of producing wells ages, without a corresponding decrease in the ongoing fixed costs to operate these wells. 

Kodiak's LOE during the third quarter was also impacted by an increase in oil field service costs, particularly with respect to workover operations, and costs associated with winterization.  As well spacing declines, Kodiak's LOE per barrel will also be negatively impacted by frac protection work, due to the need to shut in wells to avoid damage caused by completion work on adjacent wells.  As a result of these protective measures, the Company temporarily reduces production from shut-in wells and then incurs additional costs to bring the wells back onto production.  As a result of these factors, LOE fluctuates between quarters as a result of the timing of expenses and realization of the corresponding production and as such full year LOE per BOE is a better gauge of the costs going forward.