Investment bank Raymond James stated on September 28 that it was maintaining its Outperform rating for exploration and production company Kodiak Oil and Gas (KOG:NYSE). The investment bank justified its rosy view of Kodiak's future on strong expectations for growth in both the Bakken formation and the Williston Basin which are both in the Midwest.
Kodiak recently declared that it was spending $235 million on 13,500 net acres in North Dakota on the same day that Raymond James released its guidance. After this acquisition, the company will own around 100,000 net acres in total. The land included in the transaction is expected to generate 3,000 barrels of oil per day and all of the property is expected to be in the production stage by the beginning of 2012.
Raymond James calculates that Kodiak paid around C$740 an acre, which the investment bank describes as a "very attractive" price.
Raymond James provided a target share price of C$7.00, which is based on a NAV for the company of around $7 per share at $90 per barrel of oil. Kodiak Oil and Gas's stock opened at C$5.26 on September 30 and hit 52-week high/low of C$7.70 and C$3.32, respectively.