KOG » Topics » Capital Expenditures

These excerpts taken from the KOG 10-K filed Mar 12, 2009.

Capital Expenditures

        Our original net capital expenditures were planned to be $15.3 million in 2009 compared to approximately $11.0 million incurred in 2008. We continue to evaluate and monitor our capital expenditures in relation to commodity prices. We anticipate that our expenditures could be less than $15.3 million if current economic conditions continue throughout 2009.

        We had working capital of $15.4 million inclusive of cash and cash equivalents of $7.6 million as of December 31, 2008. Our working capital included $6.5 million of prepaid tubular goods for the first six wells of our 2009 drilling program, which have been reported as prepaid expenses as we have not taken physical delivery of the goods as of December 31, 2008. These costs will be applied to our share of the drilling costs for the first six wells, or will be recovered from our drilling partners. Based on our original 2009 drilling and exploration program, the Company anticipated that our 2009 capital expenditures in the Williston Basin would be approximately $11.3 million. While we cannot fully assess our capital expenditures or the timing of expenditures in the Vermillion Basin as we do not operate the properties, we anticipate that two of the wells that were horizontally drilled during 2008 could be completed during 2009. These costs cannot be determined at this time due to the uncertainty of commodity prices and expenditures. We estimated that our share of the completion costs would not exceed $4.0 million.

        Due to current capital and credit market conditions, we cannot be certain that funding will be available to us in amounts or on terms acceptable to the Company. Our current cash balances and cash flow from operations will not alone be sufficient to provide working capital to fully fund our original 2009 plan of operations. Accordingly, we intend to pursue alternatives, such as joint ventures with third parties or sales of interest in one or more of our properties. Such transactions may result in a reduction in our operating interests or require us to relinquish the right to operate the property. There can be no assurance that any such transactions can be completed or that such transactions will satisfy our operating capital requirements. If we are not successful in obtaining sufficient funding or completing an alternative transaction on a timely basis on terms acceptable to us, we would be required to curtail our expenditures or restructure our operations, and we would be unable to implement our

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original exploration and drilling program, either of which would have a material adverse effect on our business, financial condition and results of operations.

        The following tables set forth our capital expenditures for the year ended December 31, 2008 and, subject to the availability of capital, our maximum capital expenditures for our principal properties in 2009. Net capital expenditures include both cash expenditures and accrued expenditures and are net of proceeds from divestitures.

Project Location
  2008 Net
Capital
Expenditures
($000)
  2009 Estimated
Net Capital
Expenditures
($000)
 

Wyoming

             

Vermillion Basin wells and related infrastructure

  $ 517   $ 4,000  
 

Other Wyoming wells and related infrastructure

    67      

Acreage/Seismic

    401      
           

Total Wyoming

  $ 985   $ 4,000  
           

Williston Basin

             

Mission Canyon/Red River wells and related infrastructure

    168     700  

Bakken wells and related infrastructure

    2,397     10,055  

Acreage/Seismic

    7,506     500  
           

Total Williston Basin

  $ 10,071   $ 11,255  
           

Total All Areas

  $ 11,056   $ 15,255  
           

Capital Expenditures

        Our original net capital expenditures were planned to be $15.3 million in 2009 compared to approximately $11.0 million incurred in 2008. We continue to evaluate and monitor our capital expenditures in relation to commodity prices. We anticipate that our expenditures could be less than $15.3 million if current economic conditions continue throughout 2009.

        We had working capital of $15.4 million inclusive of cash and cash equivalents of $7.6 million as of December 31, 2008. Our working capital included $6.5 million of prepaid tubular goods for the first six wells of our 2009 drilling program, which have been reported as prepaid expenses as we have not taken physical delivery of the goods as of December 31, 2008. These costs will be applied to our share of the drilling costs for the first six wells, or will be recovered from our drilling partners. Based on our original 2009 drilling and exploration program, the Company anticipated that our 2009 capital expenditures in the Williston Basin would be approximately $11.3 million. While we cannot fully assess our capital expenditures or the timing of expenditures in the Vermillion Basin as we do not operate the properties, we anticipate that two of the wells that were horizontally drilled during 2008 could be completed during 2009. These costs cannot be determined at this time due to the uncertainty of commodity prices and expenditures. We estimated that our share of the completion costs would not exceed $4.0 million.

        Due to current capital and credit market conditions, we cannot be certain that funding will be available to us in amounts or on terms acceptable to the Company. Our current cash balances and cash flow from operations will not alone be sufficient to provide working capital to fully fund our original 2009 plan of operations. Accordingly, we intend to pursue alternatives, such as joint ventures with third parties or sales of interest in one or more of our properties. Such transactions may result in a reduction in our operating interests or require us to relinquish the right to operate the property. There can be no assurance that any such transactions can be completed or that such transactions will satisfy our operating capital requirements. If we are not successful in obtaining sufficient funding or completing an alternative transaction on a timely basis on terms acceptable to us, we would be required to curtail our expenditures or restructure our operations, and we would be unable to implement our

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original exploration and drilling program, either of which would have a material adverse effect on our business, financial condition and results of operations.

        The following tables set forth our capital expenditures for the year ended December 31, 2008 and, subject to the availability of capital, our maximum capital expenditures for our principal properties in 2009. Net capital expenditures include both cash expenditures and accrued expenditures and are net of proceeds from divestitures.

Project Location
  2008 Net
Capital
Expenditures
($000)
  2009 Estimated
Net Capital
Expenditures
($000)
 

Wyoming

             

Vermillion Basin wells and related infrastructure

  $ 517   $ 4,000  
 

Other Wyoming wells and related infrastructure

    67      

Acreage/Seismic

    401      
           

Total Wyoming

  $ 985   $ 4,000  
           

Williston Basin

             

Mission Canyon/Red River wells and related infrastructure

    168     700  

Bakken wells and related infrastructure

    2,397     10,055  

Acreage/Seismic

    7,506     500  
           

Total Williston Basin

  $ 10,071   $ 11,255  
           

Total All Areas

  $ 11,056   $ 15,255  
           

Capital Expenditures

        Our original net capital expenditures were planned to be $15.3 million in 2009 compared to approximately $11.0 million incurred in 2008. We continue to evaluate and monitor our capital expenditures in relation to commodity prices. We anticipate that our expenditures could be less than $15.3 million if current economic conditions continue throughout 2009.

        We had working capital of $15.4 million inclusive of cash and cash equivalents of $7.6 million as of December 31, 2008. Our working capital included $6.5 million of prepaid tubular goods for the first six wells of our 2009 drilling program, which have been reported as prepaid expenses as we have not taken physical delivery of the goods as of December 31, 2008. These costs will be applied to our share of the drilling costs for the first six wells, or will be recovered from our drilling partners. Based on our original 2009 drilling and exploration program, the Company anticipated that our 2009 capital expenditures in the Williston Basin would be approximately $11.3 million. While we cannot fully assess our capital expenditures or the timing of expenditures in the Vermillion Basin as we do not operate the properties, we anticipate that two of the wells that were horizontally drilled during 2008 could be completed during 2009. These costs cannot be determined at this time due to the uncertainty of commodity prices and expenditures. We estimated that our share of the completion costs would not exceed $4.0 million.

        Due to current capital and credit market conditions, we cannot be certain that funding will be available to us in amounts or on terms acceptable to the Company. Our current cash balances and cash flow from operations will not alone be sufficient to provide working capital to fully fund our original 2009 plan of operations. Accordingly, we intend to pursue alternatives, such as joint ventures with third parties or sales of interest in one or more of our properties. Such transactions may result in a reduction in our operating interests or require us to relinquish the right to operate the property. There can be no assurance that any such transactions can be completed or that such transactions will satisfy our operating capital requirements. If we are not successful in obtaining sufficient funding or completing an alternative transaction on a timely basis on terms acceptable to us, we would be required to curtail our expenditures or restructure our operations, and we would be unable to implement our

7


Table of Contents


original exploration and drilling program, either of which would have a material adverse effect on our business, financial condition and results of operations.

        The following tables set forth our capital expenditures for the year ended December 31, 2008 and, subject to the availability of capital, our maximum capital expenditures for our principal properties in 2009. Net capital expenditures include both cash expenditures and accrued expenditures and are net of proceeds from divestitures.

Project Location
  2008 Net
Capital
Expenditures
($000)
  2009 Estimated
Net Capital
Expenditures
($000)
 

Wyoming

             

Vermillion Basin wells and related infrastructure

  $ 517   $ 4,000  
 

Other Wyoming wells and related infrastructure

    67      

Acreage/Seismic

    401      
           

Total Wyoming

  $ 985   $ 4,000  
           

Williston Basin

             

Mission Canyon/Red River wells and related infrastructure

    168     700  

Bakken wells and related infrastructure

    2,397     10,055  

Acreage/Seismic

    7,506     500  
           

Total Williston Basin

  $ 10,071   $ 11,255  
           

Total All Areas

  $ 11,056   $ 15,255  
           

Capital Expenditures



        Our original net capital expenditures were planned to be $15.3 million in 2009 compared to approximately $11.0 million
incurred in 2008. We continue to evaluate and monitor our capital expenditures in relation to commodity prices. We anticipate that our expenditures could be less than $15.3 million if current
economic conditions continue throughout 2009.



        We
had working capital of $15.4 million inclusive of cash and cash equivalents of $7.6 million as of December 31, 2008. Our working capital included
$6.5 million of prepaid tubular goods for the first six wells of our 2009 drilling program, which have been reported as prepaid expenses as we have not taken physical delivery of the goods as
of December 31, 2008. These costs will be applied to our share of the drilling costs for the first six wells, or will be recovered from our drilling partners. Based on our original 2009
drilling and exploration program, the Company anticipated that our 2009 capital expenditures in the Williston Basin would be approximately $11.3 million. While we cannot fully assess our
capital expenditures or the timing of expenditures in the Vermillion Basin as we do not operate the properties, we anticipate that two of the wells that were horizontally drilled during 2008 could be
completed during 2009. These costs cannot be determined at this time due to the uncertainty of commodity prices and expenditures. We estimated that our share of the completion costs would not exceed
$4.0 million.



        Due
to current capital and credit market conditions, we cannot be certain that funding will be available to us in amounts or on terms acceptable to the Company. Our current cash balances
and cash flow from operations will not alone be sufficient to provide working capital to fully fund our original 2009 plan of operations. Accordingly, we intend to pursue alternatives, such as joint
ventures with third parties or sales of interest in one or more of our properties. Such transactions may result in a reduction in our operating interests or require us to relinquish the right to
operate the property. There can be no assurance that any such transactions can be completed or that such transactions will satisfy our operating capital requirements. If we are not successful in
obtaining sufficient funding or completing an alternative transaction on a timely basis on terms acceptable to us, we would be required to curtail our expenditures or restructure our operations, and
we would be unable to implement our



7









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original
exploration and drilling program, either of which would have a material adverse effect on our business, financial condition and results of operations.




        The
following tables set forth our capital expenditures for the year ended December 31, 2008 and, subject to the availability of capital, our maximum capital expenditures for our
principal properties in 2009. Net capital expenditures include both cash expenditures and accrued expenditures and are net of proceeds from divestitures.
















































































































































































Project Location



 2008 Net

Capital

Expenditures

($000)
 2009 Estimated

Net Capital

Expenditures

($000)
 

Wyoming

       

Vermillion Basin wells and related infrastructure

 $517 $4,000 
 

Other Wyoming wells and related infrastructure

  67   

Acreage/Seismic

  401   
      

Total Wyoming

 $985 $4,000 
      

Williston Basin

       

Mission Canyon/Red River wells and related infrastructure

  168  700 

Bakken wells and related infrastructure

  2,397  10,055 

Acreage/Seismic

  7,506  500 
      

Total Williston Basin

 $10,071 $11,255 
      

Total All Areas

 $11,056 $15,255 
      




Capital Expenditures



        Our original net capital expenditures were planned to be $15.3 million in 2009 compared to approximately $11.0 million
incurred in 2008. We continue to evaluate and monitor our capital expenditures in relation to commodity prices. We anticipate that our expenditures could be less than $15.3 million if current
economic conditions continue throughout 2009.



        We
had working capital of $15.4 million inclusive of cash and cash equivalents of $7.6 million as of December 31, 2008. Our working capital included
$6.5 million of prepaid tubular goods for the first six wells of our 2009 drilling program, which have been reported as prepaid expenses as we have not taken physical delivery of the goods as
of December 31, 2008. These costs will be applied to our share of the drilling costs for the first six wells, or will be recovered from our drilling partners. Based on our original 2009
drilling and exploration program, the Company anticipated that our 2009 capital expenditures in the Williston Basin would be approximately $11.3 million. While we cannot fully assess our
capital expenditures or the timing of expenditures in the Vermillion Basin as we do not operate the properties, we anticipate that two of the wells that were horizontally drilled during 2008 could be
completed during 2009. These costs cannot be determined at this time due to the uncertainty of commodity prices and expenditures. We estimated that our share of the completion costs would not exceed
$4.0 million.



        Due
to current capital and credit market conditions, we cannot be certain that funding will be available to us in amounts or on terms acceptable to the Company. Our current cash balances
and cash flow from operations will not alone be sufficient to provide working capital to fully fund our original 2009 plan of operations. Accordingly, we intend to pursue alternatives, such as joint
ventures with third parties or sales of interest in one or more of our properties. Such transactions may result in a reduction in our operating interests or require us to relinquish the right to
operate the property. There can be no assurance that any such transactions can be completed or that such transactions will satisfy our operating capital requirements. If we are not successful in
obtaining sufficient funding or completing an alternative transaction on a timely basis on terms acceptable to us, we would be required to curtail our expenditures or restructure our operations, and
we would be unable to implement our



7









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original
exploration and drilling program, either of which would have a material adverse effect on our business, financial condition and results of operations.




        The
following tables set forth our capital expenditures for the year ended December 31, 2008 and, subject to the availability of capital, our maximum capital expenditures for our
principal properties in 2009. Net capital expenditures include both cash expenditures and accrued expenditures and are net of proceeds from divestitures.
















































































































































































Project Location



 2008 Net

Capital

Expenditures

($000)
 2009 Estimated

Net Capital

Expenditures

($000)
 

Wyoming

       

Vermillion Basin wells and related infrastructure

 $517 $4,000 
 

Other Wyoming wells and related infrastructure

  67   

Acreage/Seismic

  401   
      

Total Wyoming

 $985 $4,000 
      

Williston Basin

       

Mission Canyon/Red River wells and related infrastructure

  168  700 

Bakken wells and related infrastructure

  2,397  10,055 

Acreage/Seismic

  7,506  500 
      

Total Williston Basin

 $10,071 $11,255 
      

Total All Areas

 $11,056 $15,255 
      




This excerpt taken from the KOG 10-Q filed Nov 6, 2008.

Capital Expenditures

        Our revised budgeted net capital expenditures are expected to be between $22 million and $23 million in 2008. The following table sets forth our capital expenditures for the nine months ended September 30, 2008 and our planned capital expenditures for our principal properties in 2008. Net capital expenditures include both cash and accrued expenditures and are net of proceeds from divestitures. The 2008 estimated expenditures do not include the costs to drill additional wells that could help further evaluate our properties in the Vermillion Basin. These wells are to be drilled at the sole cost of Devon under the Devon Agreement, with such drilling commencing in the third quarter of 2008.

 
  Net Capital Expenditures
for the Nine Months
ended September 30,
2008 ($000)(1)
  Total 2008
Revised Estimated Net
Capital Expenditures
($000)(1)
 

Project Location

             

Wyoming

             

Vermillion Basin wells and related infrastructure

  $ 102   $ 743  
 

Other Wyoming wells and related infrastructure

    79     (845 )

Acreage/Seismic

    257     1,350  
           

Total Wyoming

  $ 438   $ 1,248  
           

Williston Basin

             

Mission Canyon/Red River wells and related infrastructure

    169     1,127  

Bakken wells and related infrastructure

    2,425     19,696  

Acreage/Seismic

    4,898     621  
           

Total Williston Basin

  $ 7,492   $ 21,444  
           

Total All Areas

  $ 7,930   $ 22,692  
           

(1)
Net Capital Expenditures include accruals and are net of proceeds from divestitures.

        As is described elsewhere, we believe proceeds from our common stock offering provides sufficient capital to complete our 2008 capital expenditure program, however, we do not currently have sufficient working capital to continue projected capital expenditures expected for our 2009 capital expenditure program and to provide for our continuing negative cash flow from operating activities. We anticipate that we would seek to obtain additional funding either by means of debt or equity financings which, because of the current volatility of the capital and debt markets and the low price of our common stock, may not be available on reasonable terms, if at all. Alternatively, we will consider entering into additional joint venture agreements with other companies to enable us to continue our exploration drilling activities although reducing our working interest in those prospects. We cannot offer any assurance that we will be able to complete our anticipated 2009 capital obligations unless we are able to achieve one of the foregoing methods of financing those obligations, the availability of which cannot be assured.

This excerpt taken from the KOG 10-Q filed Aug 5, 2008.

Capital Expenditures

        Our revised budgeted net capital expenditures are expected to be $22.7 million in 2008. The following table sets forth our capital expenditures for the six months ended June 30, 2008 and our planned capital expenditures for our principal properties in 2008. Net capital expenditures include both cash and accrued expenditures and are net of proceeds from divestitures. The 2008 estimated expenditures do not include the costs to drill additional wells that could help further evaluate our properties in the Vermillion Basin. These wells are to be drilled at the sole cost of Devon under the Devon Agreement, with such drilling expected to commence in the third quarter of 2008.

Project Location
  Net Capital Expenditures
for the Six Months ended
June 30, 2008 ($000)(1)
  Total 2008
Revised Estimated Net
Capital Expenditures
($000)(1)
 

Wyoming

             

Vermillion Basin wells and related infrastructure

  $ 48   $ 743  
 

Other Wyoming wells and related infrastructure

    26     (845 )

Acreage/Seismic

    908     1,350  
           

Total Wyoming

  $ 982   $ 1,248  
           

Williston Basin

             

Mission Canyon/Red River wells and related infrastructure

    22     1,127  

Bakken wells and related infrastructure

    1,567     19,696  

Acreage/Seismic

    3,714     621  
           

Total Williston Basin

  $ 5,303   $ 21,444  
           

Total All Areas

  $ 6,285   $ 22,692  
           

(1)
Net Capital Expenditures include accruals and are net of proceeds from divestitures.

        As is described elsewhere, we do not currently have sufficient working capital to complete our capital expenditure program and to provide for our continuing negative cash flow from operating

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activities. In order to complete our capital budget, we will be dependent on additional debt or equity financing, which may not be available on acceptable terms, if at all.

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