2011-06-15-2011-05-23-2011-06-30

Acquired Bakken/Three Forks leasehold and producing properties in ND Williston Basin & Green River Basin of WY & CO, gaining 200 BOE/d.

Kodiak Oil & Gas Corp., Denver, (NYSE Amex: KOG) has closed its acquisition of Bakken/Three Forks leasehold and producing properties in the North Dakota Williston Basin and the Green River Basin of Wyoming and Colorado from an undisclosed private seller for approximately US$85.5 million in cash and stock.

Kodiak issued 2.5 million shares valued at approximately US$15.5 million.

The assets include operating working interest in two producing wells and approximately 25,000 net mineral acres in McKenzie County, adjacent to and proximate to Kodiak's core Koala, Smokey and Grizzly project areas. Kodiak's acreage position in the Williston Basin is now approximately 95,000 net acres.

Also included are certain surface equipment and pipeline connection facilities that tie into a regional third-party gas-gathering system.

Production is approximately 200 net barrels of oil equivalent per day.

Kodiak now has operatorship of a majority of the drilling units on the leasehold to be acquired. Upside includes more than 400 net undrilled locations in the Bakken and Three Forks formations across all of its Williston Basin leasehold.

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. The drilling rig is scheduled for completion in late 2011. The rig will include a skid package to facilitate pad drilling.

Kodiak president and chief executive Lynn Peterson says, "We are pleased to have closed on another high-quality Williston Basin acquisition. 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."

The acquisition values the properties at $3,420 per net acre according to a May 23 energy note by KeyBanc Capital Markets senior managing director Jack Aydin. This compares to an average of $8,994 per net acre for seven other recent transactions.

"This transaction appears to be accretive to KOG, and we think it is a positive for the company," says Aydin, who has reaffirmed the Buy rating for Kodiak.