KOG earnings

[prince_jake_33]

DENVER, Aug. 1, 2013 /PRNewswire/ -- Kodiak Oil & Gas Corp. (NYSE: KOG), 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, 2013. The Company furnished an operations update and reported sales volumes in a news release on July 23, 2013.

Financial Results

For the second quarter-ended June 30, 2013, the Company reported oil and gas sales of $173.5 million, as compared to $85.8 million during the same period in 2012 and $165.1 million in the first quarter 2013, representing increases of 102% and 5%, respectively. Kodiak reported an overall 8% increase in quarter-over-quarter equivalent sales volumes with 2.1 million barrels of oil equivalent (MMBOE) sold, or an average of 23,200 BOE per day (BOE/d) during the second quarter 2013, as compared to 1.9 million BOE, or an average of 21,700 BOE/d in the first quarter of 2013. Crude oil revenue accounted for approximately 94% of oil and gas sales recorded during the second quarter 2013.

Adjusted EBITDA, a non-GAAP measure, was $131.1 million for the second quarter 2013, as compared to $67.7 million in the same period in 2012, reflecting a 94% increase. Kodiak defines Adjusted EBITDA as net income before (i) interest expense, (ii) income taxes, (iii) depletion, depreciation, amortization, and accretion, (iv) amortization of deferred financing costs and debt premium, (v) impairment, (vi) non-cash expenses relating to share based payments recognized under ASC Topic 718, and (vii) pre-tax unrealized gains and losses on commodity price risk management activities.

Kodiak reported net cash provided by operating activities during the second quarter 2013 of $118.3 million, as compared to $44.7 million during the same period in 2012, an increase of 165%. Kodiak reported net cash provided by operating activities during the six-month period ended June 30, 2013 of $232.9 million, as compared to $113.8 million in 2012.

For the second quarter 2013, the Company reported net income of $44.3 million, or $0.17 per diluted share, compared to net income of $93.1 million, or $0.35 per diluted share, for the same period in 2012. Net income for the second quarter 2013 includes an unrealized gain of $20.9 million related to the mark-to-market of derivative instruments used for commodity hedging. The net effect, after-tax, of the non-cash hedging activities increased Kodiak's reported net income for the second quarter 2013 by $0.05 per basic and diluted share. Detailed disclosure of the Company's derivative contracts is available in its filing on Form 10-Q for the second quarter ended June 30, 2013. By way of comparison, the net income for the second quarter 2012 included unrealized derivative gains of $91.7 million attributed to the mark-to-market of derivative instruments, which increased Kodiak's reported net income for the quarter by $0.25 per basic and diluted share.

General and administrative expenses (G&A) for the second quarter 2013 totaled $10.3 million, or $4.89 per BOE, compared to $8.1 million, or $7.05 per BOE, in the second quarter 2012. The increase in total G&A expense for the second quarter 2013, as compared to

[dan_s]

Production volumes, top line revenues and cash flows all came in below my forecast.

The company is doing well with solid production growth, but this management team continues to "over-promise and under-deliver". My forecast was built on the low end of their guidance.

Increasing WTI crude oil prices are very big for all the Bakken companies, so higher wellhead prices should offset lower than expected production in Q3.

I will take a hard look at KOG tomorrow morning.

[dan_s]

Lower LOE and DD&A definitely helped EPS. Better weather and the Liberty Resources acquisition should push production over 30,000 boepd in Q3 (87% crude oil selling at higher price in Q3).

[dan_s]

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

Since Q2 production came in lower than my forecast, my Fair Value Estimate has been lowered to $13.00/share.

With the Liberty Resources acquisition (~5,700 boepd) closing in July and several high rate wells being completed this quarter, daily production should jump from 23,300 boepd in Q2 to over 30,000 boepd in Q3. In order to reach the low end of Kodiak's production guidance for 2013, Q4 daily production needs to exceed 40,000 boepd.

If the company can achieve the production targets above, it should get a lot of attention. Keep in mind that this management team has a long history of "over-promising and under-delivering" on production. Therefore, my forecast model is based on average daily production more than 1,000 boepd below the low end of their guidance.

[dan_s]

Good article on KOG below. The Liberty acquisition will have a significant impact on Q3 results. The new producing assets plus a lot of HZ well completions in Q3 should push average daily production over 30,000 boepd.

http://seekingalpha.com/article/1602452 ... urce=yahoo