Kodiak Oil & Gas Corp CEO Presents at Bank of America Merrill Lynch Global Energy Conference - Transcript
November 14, 2012 6:27 PM ET
Kodiak Oil & Gas Corp (KOG)
Bank of America Merrill Lynch Global Energy Conference
November 14, 2012 08:00 AM ET
Lynn Peterson - President and CEO
Thanks for coming. We have Kodiak Oil & Gas today really kick starting the day on this track. Kodiak as we all know, it’s been a well-established pure play Bakken player, being there for long and doing a lot of good things, including de-risking parts of the play that haven’t been done by some of the larger operators. Without wasting any more time, Lynn Peterson, the CEO of Kodiak. Lynn?
Good morning everyone. Thank you to the whole Bank of America team Merrill Lynch group for bringing us here today. We appreciate the invitation. Kodiak is a pretty simple story. We’re one base and play. We’re in the Bakken. Everything we’re doing is in the Bakken. We’ll kind of walk through this then we’ll have a Q&A session at the end of it. Just forward-looking statements, I think you’ve all seen enough of those and we can slide over that.
We’re about a $2.5 billion company. We’re very clean on the financial side as well. The only things we have on our balance sheet is $800 million in bonds due in 2019 and then our revolver, currently at $450 million and that is a situation we will continue to grow as we bring wells on to production and we’ve chosen to leave our borrowing base $375 million just because we don’t need it at this point.
This is the slide that always bring all the attention to Kodiak and what we’re doing and it has been a growth story. There are no questions. This year has been a year of execution, what we’re trying to accomplish. You’ll see our growth on the far right side. We’ve taken the company basically from 10,000 barrels a day as we entered the year and we hope to exit somewhere close to 27,000 to 30,000 barrels a day. We started the year a little bit slow. We had some acquisitions work that we brought in late 2011-early 2012, integrated that into our company during the first quarter. I think the second and third quarter has been a lot of fun.
We’re all of a sudden rocking on all cylinders here. We’re completing somewhere in the neighborhood of five to six wells with each of our fractures every month now. So we’ve got a busy fourth quarter scheduled, about 26 net wells that we anticipate completing, that’s comprised 23 that we operate ourselves approximately three not operated. So people ask how we’re going to get from our current 16 range that we exited Q3 with to 27 as pretty simple. The wells are there, we’ve got hold if the weather cooperates a little bit with us. We have two crews that are completing wells right now. So, on an average we’re getting 10 wells done each month.
I think as we looked at October, I think we completed 11 wells in October and we have got the balance to get here in the year and I’ll through all of these wells and really down through the core of our areas. We know what kind of numbers we are going to get. We don’t anticipate any surprises here.
I will call your attention to our appendix. We will go through these today but we have all of our production numbers in the back of our presentation on the 30-60-90 day basis at the 360 days. So you can look at the numbers, they are pretty consistent throughout blocks of acreage.
As we look at our plays that exist today, on the left hand side we try to demonstrate kind of where the margin on a barrel of oil is. You can see basically it’s is this $55 to $60 of barrel. It’s pretty consistent. We have driving our LOE cost down. We believe that that number should be in 500 to 550 range as we go through Q4 and into next year, driven primarily by our water handling as we give more and more of our wells tied into our gathering system and directly into our disposal wells, we should be able to drive that cost down a little bit more.
As far CapEx, we set it at about $750 million here as we left the third quarter. That’s an up size from where we started the year and it’s primarily just for drilling more wells. I will talk a little bit our efficiencies beyond, from drilling standpoint. I think if we look back a year ago, first part of this year, we were taking 35 days to 38 days on average to drill these wells. Today, that average is down between 20 to 25 days. We’re getting a lot of wells under 20 days as we speak.
So, we have just been able to drill a whole lot more wells with the rigs that we have. As a result, we have already dropped one rig and gone to seven rigs. We will probably drop one more here as we exit 2012 and go to six rigs for 2013. Again, we have begun looking at drilling about 10 wells per year per rig. Today, we think we are in that 12 to 13 range. So I would just speak to the efficiencies have been driven out of this play.
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