Canaccord Genuity Energy Analyst Marcus Talbert is reiterating his bullish rating on Kodiak Oil & Gas but is decreasing his price target following Kodiak’s operational update ahead of Q1/12 results. Despite exiting January at ~15,000 boepd, Kodiak reported average Q1/12 volumes of ~10,600 boepd. In Talbert’s view, the disappointing quarterly result is a function of several issues (asset integration, mechanical delays and delineation drilling).
Moving forward, he believes the majority of these items have been addressed and Kodiak will transition into developing their most productive leasehold. While KOG reaffirmed the annual/exit rate guidance, Talbert notes this will require near flawless execution in H2/12. Despite this ambitious target, he believes Kodiak shares continue to offer unparalleled oily growth potential compared with the SMID cap peer group.
In addition, the company disclosed three recent completions within its core operating areas, including one Grizzly well that exceeded Talbert’s expectations. The wells came online at an average of ~1,880 boepd and supports his thesis on the productivity of KOG’s core asset base.
Kodiak Oil & Gas (KOG : NYSE : US$9.05), Net Change: -0.06, % Change: -0.66%, Volume: 14,178,972