KOG Q1 results come in below forecast

[dan_s]

I will be updating my forecast model tomorrow morning, but here are my initial comments. - Dan

For the first quarter-ended March 31, 2014, the Company reported oil and gas sales of $257.0 million, as compared to $165.1 million during the same period in 2013, representing an increase of 56%. Kodiak reported an overall 57% increase in quarter-over-quarter equivalent sales volumes with 3.1 million barrels of oil equivalent (MMBOE) sold, or an average of 34.0 MBOE per day (MBOE/d) during the first quarter of 2014, as compared to 2.0 MMBOE, or an average of 21.7 MBOE/d in the first quarter of 2013. Crude oil revenue accounted for approximately 92% of oil and gas sales recorded during the first quarter 2014.

> Oil & Gas sales were $18.4 million below my forecast
> Production was 3,500 boepd below my forecast (weather related completion delays)

Adjusted EBITDA was $179.9 million for the first quarter 2014, as compared to $124.4 million in the same period in 2013. 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.

For the first quarter 2014, the Company reported net income of $29.1 million, or $0.11 per diluted share, compared to net income of $19.4 million, or $0.07 per diluted share, for the same period in 2013.

> My forecast was net income per share of $0.18

Kodiak reported net cash provided by operating activities during the first quarter 2014 of $163.5 million, as compared to $114.6 million during the same period in 2013, an increase of 43%.

> Cash flow from operations was $19.4 million below my forecast.

"In late November 2013 and continuing through February 2014, North Dakota experienced colder than normal weather. Due to these conditions, completion and workover activities on both operated and non-operated properties were slowed, resulting in lower than expected first quarter production. As conditions improved in March and continued through April, the activity and production levels have returned to the expected levels. After assessing first quarter production, the impact of asset divestitures, and an update to our non-operated completion schedule for the remainder of 2014, Kodiak is revising its average 2014 full-year production guidance to a range of 39,000 to 42,000 BOE/d, or 35% to 45% year-over-year sales volume growth."

Keep in mind that it was still a very good quarter. To get to the midpoint of the guidance, their exit rate needs to be approaching 55,000 boepd. I will be happy with that.

[dan_s]

Kodiak Oil & Gas (KOG): An updated Net Income & Cash Flow Forecast model has been posted under the Sweet 16 Tab.

My Fair Value Estimate is now $14.80/share.

The company lowered their production guidance to 39,000 to 42,000 boepd for 2014. Even at the low end of guidance that is a 35% year-over-year increase in production. Still a very good year by any standard.

My forecast model assumes 39,500 boepd full year and I lowered my multiple to 5X CFPS.

My guess is that Q2 production will be up slightly, then production should ramp up sharply in Q3 and Q4. They are going to complete a lot more wells in their Tier One acreage during the 2nd half.