Kodiak Oil & Gas Corp (KOG) is a small Bakken oil producer that is growing exponentially. In the past five quarters, production has grown from under 2,000 BOE/day in the first quarter of 2011 to almost 13,000 BOE/day in the second quarter of 2012. In the company's August presentation, management forecasts a 2012 exit rate of 27,000 BOE/day.
As with all small independent oil and gas producers, this growth has been funded with secondary share offerings and borrowings against proved reserves. Sometimes the share dilution does not pay off for the shareholder. At the end of 2010, Kodiak had 178.2M shares outstanding. Currently, there are 263.7M shares outstanding. When you ratio the production quantities against shares outstanding over the last five quarters, the ratio has gone from 10.4 BOE/day per 1 million shares to 48.2 BOE/day per 1 million shares in the recently completed June quarter.
But, in this case, it has paid off for Kodiak's shareholders.
Data from the company's August Presentation:
- Kodiak's acreage is in the oil-levered Williston Basin, with acreage growing from 55,400 in Aug 2010 to 155,000 in June 2012
- $585M 2012 Estimated Capex
- Total liquidity of approximately $400M as of 6/30/2012
- Total proved reserves of 70,093 Mboe as of 6/30/2012
- PV-10 of 1,382 ($MM) as of 6/30/2012
Kodiak has a forward PE (fye Dec. 31st, 2013) of 11.3, cash of $13.5M, and debt of $805.9M (Data from Capital IQ).
Kodiak is an impressive growth story in the oil-levered Williston basin. Although another secondary may be coming, investors should not shy away from this stock because, as history has shown, management has been able to grow production per outstanding share at an impressive rate.
Data from company's August presentation, earning's releases, 10Qs and 10Ks.
Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in KOG over the next 72 hours.