Kodiak Drills Ahead in Williston Basin

- Kodiak Drills Ahead in Williston Basin

Thursday, August 04, 2011
Kodiak O&G Corp.

Kodiak O&G announced its second quarter 2011 financial and operational results. The Company also provided an interim operations update on its Williston Basin drilling and completion activities.

Highlights Include:

• 2Q 2011 Earnings of $8.2 Million, Before Unrealized Derivatives Gain
• Oil & Gas Sales of $22.1 Million, a 261% Increase
• Equivalent Sales Volumes 238,000 BOE, a 149% Increase
• Adjusted EBITDA of $13.7 Million, 377% Growth
• Two New Bakken Well Completions in McKenzie County, N.D.

Second Quarter 2011 Financial Results

The Company reported net income for the second quarter 2011 of $14.0 million, or $0.08 per basic and diluted share, compared with net income of $621,000, or $0.01 per basic and diluted share, for the same period in 2010. Included in the second quarter 2011 net income calculation are unrealized derivative gains of $5.8 million attributed to the non-cash change in the value of derivatives utilized for commodity price risk management. Excluding the effect of unrealized derivative gains, a non-cash credit, Kodiak would have reported adjusted net income (a non-GAAP measure) of $8.2 million for the second quarter 2011, or $0.05 per basic share and $0.04 per diluted share.

For the quarter-ended June 30, 2011, the Company reported oil and gas sales of $22.1 million, as compared to approximately $6.1 million during the same period in 2010, a 261% increase and a Company record. Crude oil revenue accounted for approximately 97% of second quarter 2011 oil and gas sales, and crude oil constituted 94% of sales volumes for the quarter. Kodiak posted a 157% increase in oil sales volumes and a 72% increase in gas sales volumes for an overall 149% increase in quarter-over-quarter equivalent sales volumes of 238,000 barrels of oil equivalent (BOE).

Adjusted EBITDA, a non-GAAP measure, was $13.7 million for the second quarter 2011, as compared to $2.9 million in the same period in 2010, a 377% increase and another Company record. Kodiak defines Adjusted EBITDA as net income before (i) interest expense, (ii) income taxes, (iii) depletion, depreciation, amortization, and accretion (iv) impairment, (v) non-cash expenses relating to share based payments recognized under ASC Topic 718, (vi) pre-tax unrealized gains and losses on foreign currency, and (vii) pre-tax unrealized gain and losses on commodity price risk management activities. A reconciliation of Adjusted EBITDA to net income is included in the financial tables later in this earnings release.

Kodiak reported record net cash provided by operating activities for the second quarter 2011 of $16.3 million, as compared to $7.2 million in the same period in 2010. The Company reported cash used in investing activities of $116.8 million during the second quarter of 2011, of which approximately $30.6 million was invested for the drilling and completion of wells and for infrastructure in its Williston Basin drilling program. The Company also invested $85.8 million during the second quarter 2011 to acquire an additional 25,000 net acres and producing properties in the Williston Basin which closed on June 30, 2011.

Second Quarter 2011 Expense Analysis

For the quarter-ended June 30, 2011, general and administrative (G&A) expense was $4.2 million, as compared to $2.6 million for the same period in 2010. The increase in total G&A is attributed primarily to the hiring of new personnel as the Company continues to expand its operations. The Company had 52 employees at June 30, 2011, as compared to 27 employees at June 30, 2010. Included in the second quarter 2011 G&A expense is a non-cash, stock-based compensation charge of $947,000 million, as compared to $866,000 for the same period in 2010.

Kodiak's lease operating expense (LOE) for the second quarter 2011 was $4.4 million, as compared to $1.5 million during the same period in 2010. The increase in LOE is attributed to additional production expense associated with a growing number of producing wells. Severance taxes were also higher due to increased oil and gas revenues during the 2011 period, as compared to the 2010 period.

Depletion, depreciation, amortization, and accretion (DD&A) expense for the second quarter 2011 was $4.5 million, as compared to $1.5 million for the same period in 2010. The increase is primarily due to the increase in sales volumes and, to a lesser extent, an increase in the per-unit charge.

Williston Basin Operations Update

Kodiak's four operated drilling rigs are presently drilling ahead on multi-well drilling pads. Two rigs are drilling in McKenzie County, and two rigs are drilling in Dunn County. The Company anticipates that the fifth operated drilling rig will be mobilized to McKenzie County when construction of the rig is completed in the fourth quarter of 2011.

As previously announced, the Company's completion activities are progressing according to schedule, and Kodiak expects to complete or commence completion operations on 10 gross and 7.5 net operated wells in the Williston Basin during the third quarter of 2011, including the Koala wells. In addition, the Company expects to participate in the completion of four gross (2.0 net) non-operated wells in the third quarter of 2011.

Management Comment

Commenting on second quarter 2011 results, Kodiak's Chairman and CEO Lynn A. Peterson said, "Kodiak's second quarter results were the strongest in Company history. We reported robust growth in several of the metrics that we monitor to assess our progress and performance. The results from our Koala project area wells are very encouraging and further demonstrate the productive potential in this prolific area of the Williston Basin. The four Koala wells that we have completed to date are all very strong wells with production established from middle Bakken as well as the Three Forks. The wells were drilled in a manner which continues to test the density of well bores and the communication between reservoirs. Well performance will be monitored over the coming quarters.

"As we look at the anticipated ramp-up in our production, combined with the $160 million of cash obtained from the public offering of common stock, the Company is in its strongest financial position ever. We announced the expansion of our borrowing revolver recently and we anticipate that the facility will continue to expand as we bring additional wells on during the remaining months of 2011 and beyond. We expect to selectively add to our Williston Basin acreage position and expect increased drilling and completion activity in the upcoming quarters. We believe we now have ample liquidity through our cash balances, operating cash flow and access to our credit facilities to fund our expanding drilling program."

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Kodiak to Offer Shares to Fund Bakken Activity

- Kodiak to Offer Shares to Fund Bakken Activity

Monday, July 18, 2011
Kodiak Oil & Gas Corp.

Kodiak Oil & Gas Corp. today announced that it is commencing an offering of 20,000,000 shares of its common stock in an underwritten public offering. Kodiak expects to grant the underwriters a 30-day over allotment option to purchase up to an additional 3,000,000 shares of Kodiak's common stock.

Kodiak intends to use the net proceeds of the offering to repay debt outstanding under its revolving credit facility, to fund capital expenditures related to drilling, development and infrastructure, principally in the Bakken play located in North Dakota, and for general corporate purposes, including financing the potential acquisition of oil and gas properties in certain core areas, such as the Bakken play.

In connection with the offering, Credit Suisse Securities (USA) LLC, KeyBanc Capital Markets Inc. and Wells Fargo Securities, LLC are acting as joint book-running managers. Copies of the preliminary prospectus supplement and the accompanying prospectus may be obtained by contacting: Credit Suisse Securities (USA) LLC, Prospectus Department, One Madison Avenue, New York, NY 10010, 1-800-221-1037.

The offering is being made pursuant to an effective shelf registration statement filed with the U.S. Securities & Exchange Commission (SEC). A prospectus supplement and accompanying prospectus describing the terms of the offering will be filed with the SEC and available on its website at http://www.sec.gov.

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Kodiak Completes Williston Basin Acquisition

- Kodiak Completes Williston Basin Acquisition

Thursday, June 30, 2011
Kodiak Oil and Gas Corp.

Kodiak Oil & Gas Corp. today announces the June 30, 2011 closing of the previously announced acquisition of Williston Basin oil and gas producing properties and undeveloped leasehold.

Included in the transaction are approximately 25,000 net mineral acres and production of approximately 200 net barrels of oil equivalent per day (BOE/d). The total purchase price for the leasehold interests and associated assets is $85.5 million and is comprised of $71.5 million in cash and the issuance to the Seller of 2.5 million shares of Kodiak common stock. Kodiak funded the transaction through cash balances and borrowings under credit facilities including its reserve-based revolving line of credit.

As part of the transaction, Kodiak entered into a contract for a new build drilling rig that was previously contracted to the Seller. The new build drilling rig is scheduled for completion in September 2011.

Including today's acquisition, Kodiak's acreage position in the Williston Basin now approximates 100,000 net acres.

The shares of common stock of Kodiak issuable under the acquisition agreement with the Seller have not been registered under the U.S. Securities Act of 1933, as amended, or any state securities laws and may not be offered or sold in the United States absent registration thereunder or an applicable exemption from such registration requirements. This press release shall not constitute an offer to sell or the solicitation of an offer to buy any securities.

Operations Update

Kodiak has begun completion operations on its two-well pad in the Koala project area in McKenzie County, N.D. The Company anticipates completing both wells during early July 2011 and plans to simultaneously flow back the wells and turn them to production facilities and gas pipeline infrastructure which services the area. Kodiak operates the two-well pad with a 52.5% working interest and a 42.5% net revenue interest.

Following this two well pad, completions operations will move to Dunn County, N.D. where a four-well pad is being prepared for fracture stimulation operations in late July and early August. Oil, gas and water disposal pipelines have been constructed to these wells. In addition, four gross (2 net) wells have been drilled on Kodiak's non-operated lands in Dunn County and completion operations are underway of the first of those wells. Operated and non-operated completion procedures are expected to be continuous through the third quarter.

Kodiak is currently drilling ahead on four wells with two rigs running in McKenzie County, N.D. and two rigs running in Dunn County, N.D. Each of these rigs is drilling on multi-well pads.


"We are pleased to have closed on another high-quality Williston Basin acquisition," said Kodiak's Chairman and CEO Lynn A. Peterson. "The new assets provide Kodiak and its shareholders a meaningful inventory of largely de-risked additional drillable locations for future growth. By expanding our presence in the Basin, we can further improve our field-level efficiencies as we continue to work to improve per-well economics and reduced lease operating expense.

"Vastly improved weather and much better surface conditions are returning to the Williston Basin. Our fracture stimulation operations are underway at Koala without weather or road condition impediments. Our 2011 program is largely on schedule and we expect to see significant changes in our production volumes as we complete several wells in the coming weeks. "

About Kodiak Oil & Gas Corp.

Denver-based Kodiak Oil & Gas Corp. is an independent energy exploration and development company focused on exploring for, developing and producing oil and natural gas in the Williston and Green River Basins in the U.S. Rocky Mountains. For further information, please visit www.kodiakog.com. The Company's common shares are listed for trading on the NYSE Amex exchange under the symbol: "KOG."

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Kodiak Says Hello to New Board Members

- Kodiak Says Hello to New Board Members

Tuesday, June 21, 2011
Kodiak O&G Corp.

Kodiak has approved the appointment of three of its executives to new positions with the Company. Effective immediately, James P. Henderson, currently Chief Financial Officer, will serve as Executive Vice-President, Finance and Chief Financial Officer, Russ D. Cunningham, currently Vice-President of Exploration, will serve as Executive Vice-President, Exploration, and Russell A. Branting, currently Vice-President of Engineering, will serve as Executive Vice-President, Operations.

The Board also announced that James Catlin, the Company's Chief Operating Officer, has informed the Company that for personal reasons, effective December 31, 2011, he intends to step down from that position. Mr. Catlin has agreed to begin a new role at Kodiak as Executive Vice-President of Business Development. The Board also appointed the Company's President and CEO Lynn A. Peterson to serve as Chairman of the Board, effective immediately. Mr. Catlin will remain a Director of the Company.

Mr. Henderson most recently joined Kodiak in April 2010 as Chief Financial Officer and has over 20 years of oil and gas industry financial and reporting experience, the majority of which was spent with public companies. He will remain the Company's principal financial officer.

Mr. Cunningham joined Kodiak in September 2004 as Northern Rockies Exploration Manager and has over 30 years of experience in oil and gas exploration, primarily in the Rocky Mountain Region and the Mid-Continent Region.

Dr. Branting joined the Company in June 2007 as Kodiak's Operations Manager. He has more than 20 years of Rockies oil and gas experience, with extensive experience in the Williston and Green River Basins.

"We are pleased to name Russ, Russell and Jimmy as executive officers of Kodiak," said Mr. Peterson. "Each has shown tremendous dedication to the Company in their geologic, engineering and operations and financial and capital markets functions. Their diligent work is evidenced by Kodiak's continued success in the Williston Basin. These gentlemen are instrumental in our efforts to improve field-level efficiencies and financial reporting functions. We appreciate Jim's leadership as COO and Chairman over the years, and we look forward to his contributions in his new role. While Jim's new position is intended to lessen the extraordinary time commitment that his prior position demanded, the Company will continue to have the benefit of his experience and strategic vision."

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Kodiak Reports Weather Impact on 2011 Production

- Kodiak Reports Weather Impact on 2011 Production

Monday, June 13, 2011
Kodiak O&G Corp.

Kodiak updated its operations in the Williston Basin and discussed the first-half 2011 impact of weather conditions on Kodiak operations across the Basin.

The Company's operations were adversely impacted by breakup from a record winter snowfall, sustained heavy rainfall, and periods of flooding throughout the second quarter. Certain state highways and counties have imposed intermittent road restrictions on heavy trucks, causing limited trucking, which has resulted in some of the Company's wells being shut-in due to the inability to transport oil. While there has been some relief from the weather, current conditions continue to make operations challenging. The ultimate impact on Kodiak's second quarter 2011 production is not yet fully known. However, despite the difficult weather conditions, Kodiak estimates that its second quarter 2011 sales volumes should represent an approximate 35% increase over the Company's first quarter 2011 sales volumes.

Revised Full-Year 2011 Production Guidance and Reaffirmation of Year-End Exit Rate

Due to the protracted adverse inclement weather conditions in the Williston Basin, the Company has revised its production outlook for the full-year 2011. Previously, the Company had expected net 2011 production to average near the lower-end of the range of 5,500 barrels of oil equivalent per day (BOE/d) to 6,500 BOE/d. The Company now expects that its annual production will average in the range of 4,500 BOE/d to 5,000 BOE/d.

Despite the inclement weather, road closures, flooding and other impediments to normal oilfield operations in North Dakota endured by industry during the first half of 2011, Kodiak continues to expect a December 31, 2011 production exit rate of 9,000 BOE/d. The Company's 2011 estimated capital expenditure budget of $230 million also remains unchanged. The 2011 drilling program contemplates the drilling of 42 gross wells, 26 of which are net to the Company's interest. This estimate has been upwardly revised from previous estimates of 38 gross and 23.4 net wells.

Operations Update

Kodiak currently operates a three-rig drilling program in the Williston Basin, with the rigs drilling on multi-well pads in three of the Company's core projects areas: Dunn County, N.D., and Koala and Smokey in McKenzie County, N.D. The Company expects to take delivery of a fourth operated rig this week and a fifth operated rig in the fourth quarter 2011.

Kodiak currently has six gross (four net) operated wells waiting on completion. The wells are comprised of a two-well pad on the Koala block which is scheduled for completions from late June and into July 2011 and a four-well pad in Dunn County where completions are expected to commence during July and into August 2011. Drilling rigs were moved off of these pads in May 2011 and work is being completed to build-out the production facilities.

Kodiak has also participated in the drilling of four gross (two net) non-operated wells that are awaiting completions in its Dunn County core operating area. These completions are anticipated for the late second quarter and early third quarter of 2011. Drilling operations continue on this non-operated block of acreage where Kodiak controls a 40% to 50% working interest in the wells being drilled. Kodiak expects that this drilling and completion pace will continue through at least the end of 2011.

Kodiak achieved 30-day production rates on the Koala #9-5-6-5H well [95% working interest (WI); 78% net revenue interest (NRI)] of 35,042 barrels of oil and 50.2 million cubic feet of natural gas (MMcf) for 43,408 barrels of oil equivalent (BOE). The well was drilled in the middle Bakken member. The Company also drilled a well, the Koala #9-5-6-12H3 (95% WI; 78% NRI), in the Three Forks Formation from the same pad. The well achieved 30-day production numbers of 25,495 barrels of oil and 36.1 MMcf of gas or 31,512 BOE.

Management Comment

Commenting on ongoing operations, Kodiak's President and CEO Lynn A. Peterson said, "We have certainly been hampered by the elements during the first half of 2011. The roads conditions have been challenging and from time to time were impassable, causing difficulty in crude hauling and in moving equipment. However, we have continued to move forward with our capital program, and while we have had some delays moving equipment and building facilities, we do not expect these conditions to carry over to our drilling and completion activities during the second half of the year.

"Our drilling operations did not suffer any material adverse weather impact which can be largely attributed to our pad drilling, eliminating the need to constantly move rigs. All of Kodiak's rigs are currently on two well pads and we continue to efficiently drill ahead. We are making progress in connecting our wells into pipelines; however, that work has also experienced weather-related delays. With many of our wells projected to be producing into pipelines by year-end, future crude hauling disruptions should be mitigated and future winter production should improve.

"When we have been able to produce our wells, the results continue to be very encouraging. Producing a combined total of 60,500 barrels of oil and 86 MMCF of gas during the first 30 days of production from our first two wells completed on our Koala block in McKenzie County is a strong indicator of the productive potential of this block. Lastly, we continue discussions with our pumping service provider to add days to our dedicated frac crew and believe that we will have an adequate number of days to accommodate our accelerated completion schedule."

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Kodiak to Acquire Assets in Williston Basin

- Kodiak to Acquire Assets in Williston Basin

Monday, May 23, 2011
Kodiak O&G Corp.

Kodiak O&G has entered into a definitive purchase and sale agreement with a private oil and gas company ("Seller") to acquire Bakken/Three Forks leasehold and producing properties in the Williston Basin. The purchase price for the leasehold interests and associated assets is approximately $85.5 million, which will be paid through the issuance of 2.5 million common shares of Kodiak and cash. Kodiak will also assume the Seller's contract for a new build drilling rig and will reimburse the Seller for Seller's $2.5 million cash deposit on the rig. Kodiak expects to fund the cash portion of the of the purchase price with available cash balances and borrowings under its credit facilities.

Upon completion of the transaction, Kodiak would acquire approximately 25,000 net mineral acres in McKenzie County, N.D., adjacent to and proximate to the Company's core Koala, Smokey and Grizzly Project areas. The privately negotiated transaction will expand Kodiak's acreage position in the Williston Basin to approximately 95,000 net acres.

The transaction includes operated working interest in two producing wells currently producing approximately 200 net barrels of oil equivalent per day. Also included in the acquisition are certain surface equipment and pipeline connection facilities that tie into a regional third-party natural gas gathering system.

Kodiak will have operatorship of a majority of the drilling units on the leasehold to be acquired. Including the acquisition, the Company will have over 400 net, largely de-risked, undrilled locations in the Bakken and Three Forks Formations across all of its Williston Basin leasehold.

The drilling rig contract included in the transaction is for a new-build rig that is scheduled for completion in late 2011. The rig is being built to specifications similar to the Company's existing rigs and will include a skid package to facilitate pad drilling. With the addition of this rig, the Company will be operating five drilling rigs, as well as participating as a non-operating partner under leasehold in Dunn County where one rig is presently drilling.

With the expected delivery date of the fifth rig in the fourth quarter 2011, the Company anticipates approximately $10 million of additional CAPEX related to the rig, bringing estimated 2011 capital expenditure guidance for drilling, completions and infrastructure to $230 million.

The acquisition is expected to close on or before July 1, 2011 and is subject to the completion of customary due diligence and closing conditions, including the approval of the NYSE Amex LLC. The effective date for the transaction is April 1, 2011, with any purchase price adjustments to be calculated as of June 30, 2011.

Commenting on the transaction, Kodiak's President and CEO Lynn Peterson said, "Growth through acquisition of contiguous, operated leasehold in the heart of the Bakken play is an important strategy that we have articulated to our shareholders. Today's transaction, when closed, will add significantly to our leasehold and bolster our core operating area in McKenzie County. The acquired lands, which we believe have been substantially de-risked by analog production from other operators, have the advantage of being readily accessible to existing midstream infrastructure which will help in our development plans.

"The addition of a fifth operated rig will not only provide us the opportunity to accelerate our drilling program, but also continue our efforts to gain field-level operational efficiencies. We continue to work closely with our pressure pumping services provider and are comfortable that we can achieve a timely completion schedule as we move towards a full-time dedicated frac team."

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Kodiak Charges Ahead in Three Forks, Bakken Development

Kodiak Charges Ahead in Three Forks, Bakken Development

Tuesday, April 19, 2011
Kodiak O&G Corp.

Kodiak O&G provided an interim corporate update.

Interim Operations Update

Kodiak currently operates a two-rig-drilling program in the Williston Basin and anticipates taking delivery of a third rig within the next two weeks. The Company is currently negotiating to contract a fourth rig for delivery in the fourth quarter of 2011. Additionally, Kodiak controls a 40% to 50% working interest in wells being drilled by a non-operated drilling rig as part of its Dunn County, N.D. area of mutual interest with ExxonMobil.

Bakken/Three Forks Development: McKenzie County, N.D. (37,000 gross and 27,000 net acres) - Bakken producer records initial production (IP) rate of 3,042 BOE/d

The Koala #9-5-6-5H well [Kodiak operated – 95% working interest (WI) /78% net revenue interest (NRI)], an 8,967-foot horizontal lateral, was successfully completed in 24 stages in the middle Bakken Formation. During a 24-hour period, the well recorded production of 2,526 barrels of oil (BO) and 3.10 million cubic feet of natural gas (MMcf), or 3,042 barrels of oil equivalent (BOE). Kodiak completed the 24-hour production test utilizing an average 38/64" choke with average flowing casing pressure of 1,800 psi. Since coming online, the well had cumulative production of 7,340 BO and 7.5 MMcf, or 8,590 BOE in the first five days of production while continuing to recover frac load during well flowback.

Three Forks producer records IP rate of 2,327 BOE/d

The first well completed on the pad, the Koala #9-5-6-12H3 [Kodiak operated – 95% WI/78% NRI], a 9,171-foot horizontal lateral, was successfully completed in 22 stages in the Three Forks Formation. During a 24-hour period, the well recorded production of 1,919 BO and 2.45 MMcf, or 2,327 BOE. Kodiak completed the 24-hour production test utilizing a 36/64" choke with average flowing casing pressure of 1,400 psi. Since coming online, the well had cumulative production of 8,251 BO and 10.57 MMcf, or 10,012 BOE in the first nine days of production while recovering the frac load during well flowback. Koala #9-5-6-12H3 production was temporarily curtailed due to surface facility constraints while completion work on the second well on the pad, the Koala #9-5-6-5H, was completed.

The Three Forks well, the Koala #9-5-6-12H3, was drilled 700 feet from the Bakken well, the Koala #9-5-6-5H, in an ongoing effort to evaluate communication between the middle Bakken and the Three Forks Formation. By successfully completing the Koala #9-5-6-12H3 well, Kodiak now demonstrates the productive potential of the Three Forks Formation as an oil-prone reservoir system on this part of its McKenzie County core operating area.

The Company currently has one well, the Koala #3-2-11-14H, awaiting completion in McKenzie County as part of a two-well pad, and is drilling ahead on the Koala #3-2-11-13H well [both Kodiak operated – 50% WI/41% NRI]. These two well bores are being drilled approximately 1,300 feet apart in the middle Bakken in an effort to test well bore density within the drilling unit. These wells are projected to be completed in the second quarter 2011. Once the well is down, the rig will be moved to drill the Koala #2-25-36-15H [Kodiak operated – 66% WI/53% NRI], the first well of a two-well pad.

Bakken/Three Forks Development: Dunn County, N.D. (56,000 gross and 34,000 net acres) - Drilling and Completion Activity

Kodiak currently has two gross wells (1.0 net) which are expected to be completed in the second quarter 2011. Additionally, Kodiak has drilled and is awaiting completion of three gross wells (1.95 net wells) off of an existing four-well pad, and is currently drilling the final well from the pad, the Skunk Creek (SC) #2-24-25-16H [Kodiak operated – 97% WI/79% NRI]. Completion operations are projected to commence on this four-well pad in the third quarter 2011. Once drilling is completed on the four-well pad, the rig will move to the SC #12-10-11-9H well [Kodiak operated – 97% WI/79% NRI], the first of a two-well pad.

On its non-operated portion of lands in Dunn County, Kodiak has participated in the drilling of two gross wells (1.0 net well) that are currently waiting on completion. Two additional wells are currently being drilled from a two-well pad in which Kodiak has a 50% and 44% WI (41% and 36% NRI).

In conjunction with its first quarter 2011 operational and financial results news release expected to be issued after the close of trading on May 5, 2011, the Company intends to furnish a comprehensive operations update, including its per-well tabular data that includes working interest, net revenue interest, lateral length and 30/60/90/180 and 360-day production rates.

Dedicated Fracture Stimulation Team

The Company has formally executed a two-year agreement with its pressure-pumping service company whereby Kodiak will have a dedicated crew for 14 days per month, reconciled on a quarterly basis, commencing in the third quarter 2011.

Management Comment

Commenting on ongoing operations, Kodiak's President and CEO Lynn A. Peterson said, "Our drilling and completion operations in both McKenzie and Dunn counties continue to move forward. We are very pleased with the results from the two-well pad in McKenzie County, our first two operated wells in this area. The well results are important in that we have now demonstrated the productive potential in the Koala project area for both the middle Bakken and Three Forks Formations. Equally important is that we have drilled these high-working-interest wells in a manner that will allow us to evaluate communication between the two formations, as we obtain additional production history.

"The execution of a formal agreement with our pumping service company should provide continued improvement in the timing of our well completions. Utilization of pad drilling allows for successive completions improving our efficiencies through reduced time for equipment mobilization and demobilization between wells. We look forward to expanding this agreement to include more days as we move into the second half of the year and bring our fourth drilling rig under contract."

Borrowing Base Re-determined at $75 Million

Kodiak also announced that is has completed its semi-annual re-determination of its borrowing base under its $200 million senior secured revolving line of credit facility with Wells Fargo Bank, N.A. As a result, the Company's borrowing base has been increased to $75 million from the previously available $50 million. There are currently no borrowings under the facility and Kodiak is in compliance with the financial covenants under the credit facility.

"The increase in our borrowing base is reflective of our continued success in the Williston Basin," said James Henderson, Kodiak's Chief Financial Officer. "Our cash balances, operating cash flow and expanded revolving line of credit provide the Company with liquidity and balance sheet flexibility as we execute on growth-oriented development drilling in 2011 and into 2012."