I will be going over my forecast/valuation model line-by-line and posting my updated forecast and valuation to the EPG website this evening. On the surface the Q2 results are outstanding.
OKLAHOMA CITY, Aug. 2, 2021 /PRNewswire/ --
• $289.3 Million Net Income; $0.79 per Diluted Share ($332.8 Million Adjusted Net Income; $0.91 per Adjusted Share (Non-GAAP)) in 2Q21 < Compares to my forecast of $0.44 EPS.
• $673 Million Cash Flow from Operations & $634 Million Free Cash Flow (FCF) (Non-GAAP) in 2Q21
• $3.8 Billion Projected Full-Year 2021 Cash Flow from Operations & $2.4 Billion Projected Full-Year 2021 FCF (Non-GAAP) at Current Strip Prices1 (~19% FCF Yield2) (Non-GAAP)
• Enhanced Shareholder Capital Returns
> $0.15 per Share Quarterly Dividend; $0.04 Increase Supported by Strong Cash Flow & Interest Savings
> $1.0 Billion Share Repurchase Program Resumed ($317 Million Previously Executed)
> Continued Debt Reduction: $4.74 Billion Total Debt & $4.59 Billion Net Debt (non-GAAP) as of 6/30/21
• 18% Projected Return on Capital Employed (ROCE) in 2021
• Improving Various 2021 Guidance Metrics & Differentials
"Continental is delivering strong asset performance in addition to capital and operational efficiency gains that are driving robust cash flow generation and exceptional shareholder value. The $0.04 increase to our quarterly fixed dividend and resumption of our $1.0 billion share repurchase program underscores our commitment to delivering peer leading shareholder capital return," said Bill Berry, Chief Executive Officer.
The Company reported net income of $289.3 million, or $0.79 per diluted share, for the quarter ended June 30, 2021. In second quarter 2021, typically excluded items in aggregate represented $43.4 million, or $0.12 per diluted share, of Continental's reported net income. Adjusted net income for second quarter 2021 was $332.8 million, or $0.91 per diluted share (non-GAAP). Net cash provided by operating activities for second quarter 2021 was $672.8 million and EBITDAX was $990.9 million (non-GAAP).
Continental Resources (CLR) Q2 Results - Aug 2
Continental Resources (CLR) Q2 Results - Aug 2
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: Continental Resources (CLR) Q2 Results - Aug 2
CLR closed at $33.68. My valuation increases by $2.50 to $53.50/share.
None of their oil is hedged and their natural gas hedges won't have much impact.
My updated forecast/valuation model will be posted to the EPG website by 8PM.
None of their oil is hedged and their natural gas hedges won't have much impact.
My updated forecast/valuation model will be posted to the EPG website by 8PM.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: Continental Resources (CLR) Q2 Results - Aug 2
I can't wait to review it... Do you think Harold Hamm wants to take the company private?
Re: Continental Resources (CLR) Q2 Results - Aug 2
Stifel's take
Continental Resources, Inc. (CLR, $33.68, Buy; Target $45.00)
Announces strong quarter, resumes buyback and raises dividend - Derrick Whitfield, the best upstream analyst at Stifel
We view this release as positive. The positives include: i) a total equivalent and oil production beat (6.3% and 2.0% above consensus) on lower than expected capex (19.3% below), ii) an adjusted EBITDA beat (16.6% above) driven by higher volumes and stronger than expected oil/gas realizations, iii) resumption of the share repurchase program (capacity remaining represents 5.6% of current market cap) along with a 36% increase to the quarterly base dividend announced on July 30, and iv) strong initial results from the first 11 wells in the company's Long Creek package (+15% versus prior Bakken vintages through ~80 days). If we reach, the only potential negatives are lower implied 2H21 oil volumes (1.2% below consensus) and higher than expected 2H21 capex (9.5% above consensus). Net-net, Continental is a FCF generating machine (~19% yield in 2021) and using multiple vehicles to return value to shareholders (increasing dividend, debt reduction, resuming buyback).
Derrick Whitfield is an OUTSTANDING energy sector analyst. He is a great asset for EPG because he sends me all of their daily updates.
Continental Resources, Inc. (CLR, $33.68, Buy; Target $45.00)
Announces strong quarter, resumes buyback and raises dividend - Derrick Whitfield, the best upstream analyst at Stifel
We view this release as positive. The positives include: i) a total equivalent and oil production beat (6.3% and 2.0% above consensus) on lower than expected capex (19.3% below), ii) an adjusted EBITDA beat (16.6% above) driven by higher volumes and stronger than expected oil/gas realizations, iii) resumption of the share repurchase program (capacity remaining represents 5.6% of current market cap) along with a 36% increase to the quarterly base dividend announced on July 30, and iv) strong initial results from the first 11 wells in the company's Long Creek package (+15% versus prior Bakken vintages through ~80 days). If we reach, the only potential negatives are lower implied 2H21 oil volumes (1.2% below consensus) and higher than expected 2H21 capex (9.5% above consensus). Net-net, Continental is a FCF generating machine (~19% yield in 2021) and using multiple vehicles to return value to shareholders (increasing dividend, debt reduction, resuming buyback).
Derrick Whitfield is an OUTSTANDING energy sector analyst. He is a great asset for EPG because he sends me all of their daily updates.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: Continental Resources (CLR) Q2 Results - Aug 2
Call going on right now
https://investors.clr.com/event-calendar
Slide deck here
https://investors.clr.com/presentations
Analyst picked on same comment I had, buyback of 20 m shares and only 50 m float
Hamm , "Hopefully we wont have to do it."
Derrick on call : "Economics on Springboard 3 & 4 , slide 4" Returns similar to Anadarko, early stages developing area , early performance excellent they have 360 sq miles they understand the area control 75 % control the best areas
https://investors.clr.com/event-calendar
Slide deck here
https://investors.clr.com/presentations
Analyst picked on same comment I had, buyback of 20 m shares and only 50 m float
Hamm , "Hopefully we wont have to do it."
Derrick on call : "Economics on Springboard 3 & 4 , slide 4" Returns similar to Anadarko, early stages developing area , early performance excellent they have 360 sq miles they understand the area control 75 % control the best areas
Re: Continental Resources (CLR) Q2 Results - Aug 2
Dumb question of the day from an analyst:
"Obviously, you increased the dividend, but I wanted to get your perspective on why you went with buybacks versus variable dividends and love to hear what kind of feedback you're getting from investors"
The answer I would of given.....
Um Harold says BUY BUY BUY , thats the feedback we got
The answer they gave
we feel that the buybacks are – that's a good thing to do at this time.
Another guy commented
it seems to us that the free cash flow you're generating as a proportion of your free float is extraordinary, frankly, given you've only got a 15% free float. So my question is, how far can you take the buyback because it seems the scale of free cash flow in the next two or three years could be very significant compared to what the market is pricing you are based on the strip.
You see my point though, fellows, you're buying back is essentially about 40% of your feet float. Now it's going to be tough to sustain at that rate without the inevitable happening, which is the free float doesn't stick around for too much longer. I just wonder if I'm thinking about it the right way.
Harold Hamm
Well, obviously, we don't have hope continue doing that. We hope that next three quarters we’ll see things change.
Bill Berry
Yes. We hope that people see it the same way you do and start buying the stock and then that that drives it to the position that we don't think we're needing to buy it.
============================================================
>> in other words, if the price doesnt move they will be nice and take it off our hands
"Obviously, you increased the dividend, but I wanted to get your perspective on why you went with buybacks versus variable dividends and love to hear what kind of feedback you're getting from investors"
The answer I would of given.....
Um Harold says BUY BUY BUY , thats the feedback we got
The answer they gave
we feel that the buybacks are – that's a good thing to do at this time.
Another guy commented
it seems to us that the free cash flow you're generating as a proportion of your free float is extraordinary, frankly, given you've only got a 15% free float. So my question is, how far can you take the buyback because it seems the scale of free cash flow in the next two or three years could be very significant compared to what the market is pricing you are based on the strip.
You see my point though, fellows, you're buying back is essentially about 40% of your feet float. Now it's going to be tough to sustain at that rate without the inevitable happening, which is the free float doesn't stick around for too much longer. I just wonder if I'm thinking about it the right way.
Harold Hamm
Well, obviously, we don't have hope continue doing that. We hope that next three quarters we’ll see things change.
Bill Berry
Yes. We hope that people see it the same way you do and start buying the stock and then that that drives it to the position that we don't think we're needing to buy it.
============================================================
>> in other words, if the price doesnt move they will be nice and take it off our hands
Re: Continental Resources (CLR) Q2 Results - Aug 2
Monday 8/9 11:23 am .
Oil off lows, currently 66.40, with low of 65.15
Many names are off their lows...
CLR unchanged at 35.00 low of 33.74, Harold must be buying
Unhedged
CLR
MGY
SD >> name is soaring up 40 % since mid July they havent reported yet
No one time non cash losses
Oil off lows, currently 66.40, with low of 65.15
Many names are off their lows...
CLR unchanged at 35.00 low of 33.74, Harold must be buying
Unhedged
CLR
MGY
SD >> name is soaring up 40 % since mid July they havent reported yet
No one time non cash losses