Kodiak Oil & Gas Corp (USA) (KOG): Can The Boom Continue?

Kodiak’s operational characteristics give investors a good idea of both its strengths and its weaknesses. It drills wells very quickly but without the same regard for cost that Continental Resources, Inc. (NYSE:CLR) and Whiting Petroleum Corp (NYSE:WLL) have. If Kodiak could cut its costs by 20% to get into the same $8 million per well league as Continental Resources, Inc. (NYSE:CLR) and Whiting, it could cut $150 million of its capital expenditures for drilling activity in 2013 alone.

One smart move that Kodiak Oil & Gas Corp (USA) (NYSE:KOG) has pursued is making improvements to its wastewater treatment infrastructure, especially by adding saltwater disposal injection wells of its own. Heckmann Corporation (NYSE:HEK) and other outside providers have had great success providing water services to drilling companies, but by moving more of those services in-house, Kodiak has the potential to produce substantial savings.

In Kodiak’s report, pay close attention to any hints the company gives about potential merger and acquisition activity. Whether Kodiak is a buyer or a target, consolidation in the Bakken seems inevitable and could have a big impact on your investment returns.

The article Can the Boom Continue for Kodiak Oil & Gas? originally appeared on Fool.com and is written by Dan Caplinger.

Motley Fool contributor Dan Caplinger has no position in any stocks mentioned. You can follow him on Twitter @DanCaplinger. The Motley Fool owns shares of Heckmann and has the following options: Long Jan 2014 $4 Calls on Heckmann and Short Jan 2014 $3 Puts on Heckmann.

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