Continental Resources (CLR) Update - Oct 18

[dan_s]

I am updating my forecast/valuation model for CLR today.

Per CLR on 8/3/2020: "Forecasting Approx. $1.3 Billion Annual Cash Flow from Operations and $200 Million Annual Free Cash Flow (FCF) (Non-GAAP) in 2020 at $40 WTI with $615 Million Cash Flow from Operations and $500 Million FCF in 2H20" < Their forecast was based on the assumption that WTI would average $40/bbl in 2H2020 and natural gas prices would be near strip prices, which on August 3rd were much lower than they are today.

CLR's production forecast on 8/3/2020: "2020 Full-Year Average Production of 155,000 to 165,000 Bopd & 800,000 to 820,000 Mcfpd"
< The Company reports natural gas and NGLs on a combined basis, so they should get a realized gas price of over $3.00/mcfe in 2021, when I expect their ngas production to average 930,000 mcfe per day. 930,000 X $3 X 365 days = $1,018,350,000. < This is triple what I am forecasting for ngas + NGL revenues in 2020; production mix makes a difference!

None of CLR's production is hedged, so if natural gas prices average $3.00 and WTI gets back to $60/bbl in 2H 2021 this stock should be setting a new 52-week high a year from now.

CLR closed at $13.16 on October 16.
Since they released Q2 2020 results on August 3rd six analysts have updated their price targets to: 4 at $18.00, 1 at $20.00 and 1 at $23.00
CLR's 52-week trading range is $6.90 - $36.20

My updated forecast/valuation model will be posted to the EPG website later today.