Kodiak Closes On Williston Purchase

Transaction Type
Sellers
Buyers
Announce Date
Post Date
Close Date
Estimated Price
732MM
Description

Closed the sale of 42,000 net acres in the Williston Basin.

Kodiak Oil & Gas (NYSE: KOG) has closed on its purchase of 42,000 net acres in the Williston Basin from Liberty Resources for about $732 million.

The announced purchase price for the asset package was $660 million. Post-closing adjustments were $52 million, including $31 million in working capital items and $21 million of cash flow adjustments to reflect the March 1, 2013 effective date. The company paid an additional $20 million for acquisition costs associated with increased working interests acquired by Liberty subsequent to the effective date.

Kodiak now has about 196,000 net acres in the Williston and continues to actively develop its leases with an aggressive drilling program. The deal was funded by the company’s recently expanded $1.1 billion credit facility. The additional acreage expands the company’s current production by about 5,600 barrels of oil equivalent (BOE) per day to more than 30,000 BOE per day.

The acquisition was applauded by independent analysts who said the deal gives Kodiak’s current production an important boost.

“This level is a notable milestone as it is the level at which we believe Kodiak becomes essentially cash flow neutral at its current CapEx pace using current commodity prices. Most impressive might be that Kodiak was producing just a few thousand barrels a day in 2011,” a report from Wunderlich Securities states.

In addition, Wunderlich said it expected Kodiak’s production to continue to grow by 10 to 20% per quarter as additional wells come online.

Kodiak’s additional 42,000 net acres are in McKenzie and southern Williams counties, N.D. The acquired leasehold includes 35 controlled drilling spacing units, based upon 1,280-acre units, and is 90% held by production.

The southern Williams County lands, approximating 14,000 net acres, are adjacent to Kodiak's core Polar area. An additional 25,000 net acres are located in McKenzie County to the west of the company's Koala and Smokey areas. Kodiak will also assume Liberty's contract for one drilling rig, which has 14 months remaining on its term.

Kodiak is an upstream independent oil and gas company based in Denver. Liberty Resources is a privately-held oil and gas company based in Denver.