Continental Resources (CLR) Valuation Update - May 5

[dan_s]

I have updated my forecast/valuation model for CLR's Q1 actual results and their updated guidance for 2022. My valuation increases $21 to $110.
Why?
> I have increased my valuation multiple from 5.5 to 6.0 X annualized operating cash flow. Significant balance sheet improvement combined with rising natural gas and NGL prices definitely deserves a higher multiple. If WTI stays over $100/bbl through 2023, an appropriate valuation multiple should be 8X CFPS.
> CLR is now on pace for more than 21% YOY production grow in 2022.
> Free cash flow from operations should be $4.5 to $5.0 billion this year.
> Debt reduction and stock repurchase program will be the primary focus of FCF. Harold doesn't need any more taxable dividends.
> There is a perception that CLR has limited development drilling inventory, but I think the acquisition from PXD that closed in December solved that issue.

[Fraser921]

Hamm doesn't need anymore taxable divys...lol
Nice forecast!

I prefer cap gains myself, I'm amazed how much attention dividends get