Kodiak Oil & Gas planning to cover 2011 capex with cash, borrowings

By Jennifer Lanning Drey

Savannah, Ga., March 4 - Kodiak Oil & Gas Corp. plans to fund an increased capital expenditures budget in 2011 using cash on hand, available borrowings and an expected increase in cash flows, James P. Henderson, its chief financial officer, said Friday during the company's fourth-quarter and year-end earnings conference call.

"We are in excellent shape as we put our plans in motion in 2011," Henderson said.

Kodiak had $101.2 million of cash and equivalents and zero borrowings outstanding on its revolving credit facility at Dec. 31. At year-end, the company had a $200 million credit facility with Wells Fargo, of which $50 million was available for borrowing, according to its earnings release.

The company is working through the re-determination process with its bank related to the revolving credit facility and expects to see the borrowing base continue to increase as it completes wells and gets additional production online in 2011, Henderson said.

The CFO also noted that in 2010, Kodiak completed two public equity placements that together provided a net $225 million for the company to grow its Williston Basin asset base.

"From a financial perspective, 2010 was a huge step forward in Kodiak's efforts to establish production and cash flows and to position the company for the future by obtaining capital resources and building a strong balance sheet to support the drilling activities," he said.

Record cash from operations

Kodiak reported record net cash provided by operating activities for 2010 of $10.3 million, a 10% increase as compared to operating cash flow in 2009 of $9.4 million. Kodiak will remain focused on cash flow, production and reserves in 2011, Lynn Peterson, its chief executive officer, said during the call.

The company will also continue to look for niche acquisitions that add to its core operating position, he said.

For the year ended Dec. 31, Kodiak reported oil and gas sales of $31.0 million, as compared to oil and gas sales of $11.3 million during the same period in 2009.

Adjusted EBITDA was $16.1 million for 2010 versus adjusted EBITDA of $4.0 million in 2009.

Kodiak reported a net loss for 2010 of $2.4 million, compared with a net loss of $2.6 million for 2009.

The company had long-term debt of $40 million at Dec. 31.

Kodiak is a Denver-based oil and gas exploration and production company.

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