Under the purchase and sale agreement, Kodiak will acquire 13,500 net mineral acres and will expand Kodiak’s acreage position in the basin to 110,000 net acres.
The transaction includes a working interest in six gross (4.6 net) operated producing wells, currently producing approximately 3000 net barrels of oil equivalent per day.
Kodiak will assume the seller’s term-contract for a drilling rig, which is currently drilling the last of the four wells under the primary contract, is subject to the rig owner’s consent.
Once drilling is complete on four wells, the entire leasehold will commence production by early 2012.
The company will also assume operatorship of 15 drilling units on the contiguous leasehold to be acquired.
Also included in the transaction are certain surface equipment and pipeline connection facilities that tie into a regional third-party natural gas gathering system.
The acquisition is expected to close in late October 2011 and is subject to customary closing conditions.
Kodiak expects to fund the transaction through available cash balances and loans.
