Denver-based oil and gas exploration and production company Kodiak Oil & Gas Corp, is extending its assets in the Williston Basin of North Dakota.
The company has announced a definitive purchase and sale agreement with a private oil and gas company to acquire high-working-interest, contiguous Bakken/Three Forks Williston Basin leasehold and producing properties for $99 million in cash and the direct issuance of 2.75 million shares of common stock to the seller at a price of $4.00 per share.
Kodiak expects to fund the cash portion of the transaction through available cash balances and through borrowings under credit facilities which would include an expanded reserve-based, revolving line of credit and a second-lien term loan.
Upon completion of the transaction, Kodiak will acquire 19,016 gross mineral acres in McKenzie County, North Dakota, located midway between the company's core Dunn County operating area and its Koala Project area.
Additionally, Kodiak will acquire 4,117 gross mineral acres in northern Williams County and southern Divide County, North Dakota, located just north of Brigham Exploration's Rough Rider area. The transaction, a negotiated deal, will expand Kodiak's acreage position in the Williston Basin to over 72,000 net acres.
The McKenzie County acreage includes four producing well bores which currently produce approximately 500 net barrels of oil equivalent (BOE) per day. Based upon Kodiak's internal evaluation, the company projects estimated ultimate recoveries of 500,000 BOE per well.
Also included in the acquisition are some surface facilities and equipment and pipeline infrastructure that ties into a regional natural gas pipeline controlled by a third party.
The new location inventory will substantially increase Kodiak's footprint in the Williston Basin, and establish another core area that provides for expansion of its multi-year drilling program. Including the acquisition, the company will have over 200 net undrilled locations in the Bakken and Three Forks Formations.
Commenting on the transaction, Kodiak's President and CEO Lynn Peterson said: "While we continue to grow our production organically, acquiring de-risked, contiguous leasehold in the heart of the Bakken play is another way we can deliver meaningful upside to our shareholders.”
