Continental Resources Reports Third Quarter 2014 Results
> Third Quarter 2014 EBITDAX of $948 Million; Adjusted Net Income Totaled $301 Million, or $0.81 per Diluted Share [My forecast was $0.80 Adj EPS]
> Production Increased 14,382 Boe per Day to Average 182,335 Boe per Day, a 9% Increase Compared to Second Quarter 2014 [My forecast was 182,000 boepd]
> Recently Monetized Substantially All Outstanding Crude Oil Hedges for Proceeds of $433 Million [Interesting move!]
> 2015 Capital Expenditure Budget Reduced to $4.6 Billion, Adjusted 2015 Production Growth Guidance Now 23% to 29% [My forecast was 27% growth in 2015]
I will have my forecast model updated this evening.
Continental Resources (CLR)
Continental Resources (CLR)
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: Continental Resources (CLR)
Mr. Hamm added, "We view the recent downdraft in oil prices as unsustainable given the lack of fundamental change in supply and demand. Accordingly, we have elected to monetize nearly all of our outstanding oil hedges, allowing us to fully participate in what we anticipate will be an oil price recovery. While awaiting this recovery, we have elected to maintain our current level of activity and plan to defer adding rigs in 2015. This translates to a $600 million reduction in our 2015 capex budget, resulting in a revised 2015 capex budget of $4.6 billion, with 23% to 29% production growth."
What do you think if this BOLD move?
What do you think if this BOLD move?
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: Continental Resources (CLR)
shrewd move, imo. 
Re: Continental Resources (CLR)
An updated Net Income & Cash Flow Forecast model for CLR has been posted under the Sweet 16 Tab.
My Fair Value Estimate has increased by $5.55 to $82.30/share, primarily because I now have a much higher level of confidence in my forecast for 2015.
My valuation compares to First Call's Price target of $73.24.
I urge all of you to listen to their conference call and what they are now saying about the potential in their Oklahoma SCOOP play. This is going to be a HUGE boom for the economy of Oklahoma.
My Fair Value Estimate has increased by $5.55 to $82.30/share, primarily because I now have a much higher level of confidence in my forecast for 2015.
My valuation compares to First Call's Price target of $73.24.
I urge all of you to listen to their conference call and what they are now saying about the potential in their Oklahoma SCOOP play. This is going to be a HUGE boom for the economy of Oklahoma.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: Continental Resources (CLR)
Comments from this morning's Stifel report:
Where Are Crude Prices Headed? We Know What Harold Hamm Thinks...
In a move that some investors are sure to balk at, management elected to
monetize essentially its entire oil hedge portfolio, which was projected to hedge
55% of 4Q14-2015 oil production at an average floor price of approximately $95/bl,
for proceeds totaling $433 million. CEO Harold Hamm views the downdraft in oil as
unsustainable.
Analyzing The Upside/Downside Of Going Hedge-Less
We project that if WTI holds steady at $80/bl through 2015, CLR will have forfeited
2% of its projected 4Q14-4Q15 EBITDA (assuming the current WTI-Brent
differential is static). If 2015 oil prices rise/fall to $90/$70, we estimate CLR's
EBITDA would increase/decrease 5%/-4%. Approximately 85% of the company's
2015 hedges were tied to Brent, therefore if the WTI-Brent spread had widened,
CLR's protection would have been reduced.
Balance Sheet Positioned To Withstand Downturn in Prices
CLR has no borrowings on its $1.75 billion revolver, $520 million cash, and a YE14
Debt/TTM EBITDA of 1.4x, well below its peer group average of 2.1x. If oil prices
remain at $70/bl in 2015, we estimate CLR's YE15 Debt/TTM EBITDA would
increase to 2.2x, still below its projected peer group average of average 2.3x.
Assets Generating Solid Returns
At $80 WTI, we estimate CLR's portfolio will generate a weighted average 2015
IRR and PVI 10 of 48% and 1.9x at $80 oil. At $70 and $60 oil, we estimate the IRR
and PVI 10 would remain solid at 38%/1.7x and 29%/1.5x, respectively (Exhibit 3).
Reiterate Buy, Lowering Target Price
Due to the heightened downside risk, we are lowering our target price 13% to
$65/share, which assumes shares trade at an implied EV/2015E EBITDA of 7.7x
and 88% of our total NAV estimate, which equally weighted is a 5%
premium to our projected peer group average.
Where Are Crude Prices Headed? We Know What Harold Hamm Thinks...
In a move that some investors are sure to balk at, management elected to
monetize essentially its entire oil hedge portfolio, which was projected to hedge
55% of 4Q14-2015 oil production at an average floor price of approximately $95/bl,
for proceeds totaling $433 million. CEO Harold Hamm views the downdraft in oil as
unsustainable.
Analyzing The Upside/Downside Of Going Hedge-Less
We project that if WTI holds steady at $80/bl through 2015, CLR will have forfeited
2% of its projected 4Q14-4Q15 EBITDA (assuming the current WTI-Brent
differential is static). If 2015 oil prices rise/fall to $90/$70, we estimate CLR's
EBITDA would increase/decrease 5%/-4%. Approximately 85% of the company's
2015 hedges were tied to Brent, therefore if the WTI-Brent spread had widened,
CLR's protection would have been reduced.
Balance Sheet Positioned To Withstand Downturn in Prices
CLR has no borrowings on its $1.75 billion revolver, $520 million cash, and a YE14
Debt/TTM EBITDA of 1.4x, well below its peer group average of 2.1x. If oil prices
remain at $70/bl in 2015, we estimate CLR's YE15 Debt/TTM EBITDA would
increase to 2.2x, still below its projected peer group average of average 2.3x.
Assets Generating Solid Returns
At $80 WTI, we estimate CLR's portfolio will generate a weighted average 2015
IRR and PVI 10 of 48% and 1.9x at $80 oil. At $70 and $60 oil, we estimate the IRR
and PVI 10 would remain solid at 38%/1.7x and 29%/1.5x, respectively (Exhibit 3).
Reiterate Buy, Lowering Target Price
Due to the heightened downside risk, we are lowering our target price 13% to
$65/share, which assumes shares trade at an implied EV/2015E EBITDA of 7.7x
and 88% of our total NAV estimate, which equally weighted is a 5%
premium to our projected peer group average.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: Continental Resources (CLR)
Going out on a limb, North Dakota oil titan scraps hedges
WILLISTON N.D. (Reuters) - Harold Hamm, chief executive of Continental Resources Inc , stunned a bearish crude market by scrapping all of the North Dakota energy producer's oil hedges, betting that prices will recover soon after sinking 25 percent in recent months.
With the move, Hamm, who last month called OPEC a "toothless tiger," appears to be heading into a price war with Saudi Arabia, the world's biggest oil exporter, without any protection from a prolonged downturn that some analysts say is looming.
Saudi Arabia and 14 other OPEC members have shown no sign yet of moving to cut production, a step that would lift prices.
The conventional wisdom is that the country, frustrated by a global supply glut caused by soaring United States output, is prepared to let prices fall to squeeze U.S. shale oil producers out of the market.
But Hamm, striking a defiant tone, told investors Thursday the U.S. shale boom won't end any time soon.
"We see OPEC worried about that and want to slow down what we're doing," he said.
Indeed, North Dakota considers OPEC its "chief competitor," Lynn Helms, head of the state's Department of Mineral Resources, said last month.
continued.......
http://finance.yahoo.com/news/u-oil-ceo ... nance.html
WILLISTON N.D. (Reuters) - Harold Hamm, chief executive of Continental Resources Inc , stunned a bearish crude market by scrapping all of the North Dakota energy producer's oil hedges, betting that prices will recover soon after sinking 25 percent in recent months.
With the move, Hamm, who last month called OPEC a "toothless tiger," appears to be heading into a price war with Saudi Arabia, the world's biggest oil exporter, without any protection from a prolonged downturn that some analysts say is looming.
Saudi Arabia and 14 other OPEC members have shown no sign yet of moving to cut production, a step that would lift prices.
The conventional wisdom is that the country, frustrated by a global supply glut caused by soaring United States output, is prepared to let prices fall to squeeze U.S. shale oil producers out of the market.
But Hamm, striking a defiant tone, told investors Thursday the U.S. shale boom won't end any time soon.
"We see OPEC worried about that and want to slow down what we're doing," he said.
Indeed, North Dakota considers OPEC its "chief competitor," Lynn Helms, head of the state's Department of Mineral Resources, said last month.
continued.......
http://finance.yahoo.com/news/u-oil-ceo ... nance.html
Re: Continental Resources (CLR)
Read my post about Saudi Arabia under the Other Topics and you will understand why I agree with Harold. I think the oil price will get a nice boost on November 27th. Plus, the fundamentals have not changed that much. Demand for oil more relentlessly higher year-after-year. We had a short period where supply exceeded demand by a bit. Supply and demand are tightening as you read this post. Old Man Winter is heading to America.
See: http://theweathercentre.blogspot.com/
See: http://theweathercentre.blogspot.com/
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group