Within the natural resources marketplace, timing is everything. Experience, leases, rising prices and equipment are all key ingredients to success. If an investor can find all four elements to form a perfect storm, profit will happen.
Kodiak Oil and Gas Corp., an oil and gas exploration company, works to find, exploit and develop oil and natural gas deposits primarily in Montana, North Dakota and Wyoming. The company also controls leases in Colorado. At the end of 2008, the company estimated its reserves at approximately 1.2 billion cubic feet of natural gas and 344,000 barrels of oil.
From the company’s recently released capital expenditure report for 2010 it appears that it is moving aggressively within its Montana and North Dakota leases. Fifteen primary drill sites and several more in conjuncture with others have been planned for the coming year. The company also states that this particular allocation is one of the largest in company history. Among the allocation is the addition of a second drilling rig similar to one that has performed well in the past. In a general sense, having these drilling rigs, although at expense, will make the company quite a bit more efficient and cost effective as it goes about adding drill sites and capacity on its leases.
One can very easily notice that the company is expanding production and bringing it on-line as quickly as possible, while reducing costs effectively. Oil has been the primary revenue source for the company of late with natural gas likely being a larger contributor in coming quarters. Overall this is largely due to weather and price movement as far as natural gas is concerned (currently one can see a solid move in the price of natural gas.)
2010 appears to be one of moving forward for the company with the capital to make it happen allocated. As natural gas and oil prices are not likely to move below extraction costs any time soon, Kodiak Oil & Gas looks to be in a fairly solid place to profit for the immediate future.