Continental Resources (CLR) Q3 Results - Oct 31

[dan_s]

3rd Quarter Highlights:

$158.2 Million in Net Income in 3Q19, or $0.43 per Diluted Share

- $199.4 Million Adjusted Net Income in 3Q19, or $0.54 per Diluted Share (Non-GAAP) < Compares to my forecast of $173 million net income or $0.46/share.

198,074 Average Daily 3Q19 Oil Production up 20% over 3Q18 < Compares to my forecast of 195,000 BOPD.

- 332,315 Boepd Average Daily 3Q19 Production up 12% over 3Q18 < Compares to my forecast of 335,000 Boepd. Less gas and more oil is a good thing.

Bakken: 145,436 Average Daily 3Q19 Oil Production up 13% over 3Q18

- 57 Gross Operated Wells Deliver 2,313 Boepd Average/Well Initial Rate

South: 44,854 Average Daily 3Q19 Oil Production up 62% over 3Q18

- SpringBoard Exceeded 3Q19 Target by 31%: 23,641 Bopd; 4Q19 Target Raised to ~24,000 Bopd

- CLR STACK: Two, 7-Well Oil Units Deliver Exceptional Results: 38,320 Bopd Combined Initial Rate

$187 Million of Share Repurchases Executed through October 29, 2019

Quarterly Dividend of $0.05 per Share in November 2019

[dan_s]

I have updated my forecast/valuation model for CLR and it will be posted to the EPG website this afternoon.

CLR confirmed production growth of 12.5% for 2019 and they are on-track to beat that number. Their goal is 12.5% annual production growth through 2023.
They are on-track to generate over $500 million of free cash flow from operations this year and over $1 Billion in 2020.
Debt is going down and production + proven reserves are going up.
None of their oil is hedged, but they'd still generate lots of free cash flow in 2020 if WTI averaged $50/bbl.
First Call's target price of $44/share seems way too low to me for a company with double digit annual production growth locked in and fully funded by cash flow from operations.

Wall Street seems to have a negative opinion about SCOOP+STACK, but CLR is getting outstanding well results and they keep increasing their production guidance for Oklahoma.