Energy Prospectus

Company Raises 2017 Production Guidance and Lowers Costs While Targeting Cash Neutrality for the Year:

-- Exit rate raised to 260,000 to 275,000 barrels of oil equivalent (Boe) per day, up 24% to 31% over 4Q 2016

-- Annual production raised to 230,000 to 240,000 Boe per day

-- Oil differential improved by $1.00 per barrel and operating costs lowered

-- Capital expenditures adjusted to a range of $1.75 billion to $1.95 billion, targeting cash neutrality at $45 to $51 WTI

Company Delivers Solid Second Quarter Production and Cost Performance:

-- Production averaged 226,213 Boe per day, up 6% from 1Q 2017 < Compares to my forecast of 225,000 BOEPD

-- Oil differential dropped 11% to $6.31 per barrel from $7.09 per barrel in 1Q 2017

-- Total G&A declined to $1.89 per Boe, compared with $2.45 per Boe in 1Q 2017

Optimized Completions Increase Both Estimated Ultimate Recoveries (EUR) and Rates of Return (ROR): < This is really good news

-- Bakken ROR uplifted to 82%, based on new 1,100 MBoe type curve EUR

-- STACK Condensate type curve announced at 80% ROR, based on 2,400 MBoe EUR

-- SCOOP Springer Cash 1-26H well yields over 100% ROR, 25% higher EUR

Company Announces New Record STACK Well in Condensate Window of the Play

Company Agrees to Sell Non-Strategic Leasehold and Property for $147.5 Million, with Proceeds Targeted to Reduce Debt

I have updated my forecast model for CLR and it will be posted to the EPG website later today.

CLR is now generating enough cash flow from operations (combined with proceeds from non-core asset sales) to fund their drilling & completion program through year-end 2018.

I am assuming the low end of their 2017 exit rate guidance (260,000 to 275,000 Boepd) for my 2018 assumptions. None of CLR's oil is hedged and differentials in North Dakota are high, so I am using rather low oil prices in my forecast. If oil prices do go higher, it will have a SIGNIFICANT impact on CLR's valuation.

I have lowered my valuation to $68.00/share, which compares to First Call's price target of $45.88. I do expect the First Call number to increase next week as analysts should increase their valuations due to the much higher production guidance give by the company.

CLR does not break out NGLs (they are included in ngas volumes), so my assumed ngas prices should be on the low side. SCOOP & STACK completions should ramp up high value NGLs.

By Ernest Scheyder

HOUSTON, Aug 9 (Reuters) - Continental Resources Inc , one of the largest U.S. shale oil producers, will fund future wells from cash flow and not take on any new debt, Chief Executive Harold Hamm said on Wednesday.

The vow from one of the shale industry's leaders and strongest advocates comes as prices mostly below $50 a barrel this year pressure oil companies to live within their means after overspending for years.

Heavy debt loads nearly decimated U.S. shale producers when oil prices started to tumble in 2014. The number of bankruptcies in the U.S. shale patch from 2014 through 2016 eclipsed the depths of the telecom bust of 2002 and 2003, a previous high-water mark.

Continental, which operates in North Dakota and Oklahoma, famously stopped hedging in late 2014, expecting oil prices to rebound. They didn't, and the company's debt load has jumped 15 percent to $6.54 billion.

But that appears to be at an end.

"Absolutely no new debt. That's part of our plan, the strategic plan going forward to knock our debt down," Hamm said on a conference call with investors.

The company will forgo some growth opportunities as it curtails spending and spends only as much as it takes in, Hamm said. The announcement came the day after Continental cut its 2017 capital spending plans and raised its production estimate, essentially promising it could do more with less.

"We actually have postponed some development in some very lucrative fields," said Hamm, an informal energy advisor to U.S. President Donald Trump.

Shares of Continental rose 6.4 percent to $34.50 in Wednesday trading.

Hamm also said he sees the U.S. West Texas Intermediate (WTI) crude oil contract regaining price "dominance" over Brent, the global benchmark. He cited rising U.S. crude exports and refiners' increasing ability to process the type of crude produced from shale.

WTI has traded at a slight discount to Brent for years, but if that dynamic were to flip, it would be a boon for Continental and its peers.

"In the meantime, we believe that the long-term oil supply cannot be sustained at $50 WTI. There simply won't be adequate capital investment long term at this price to adequately supply market demand growth," Hamm said. (Reporting by Ernest Scheyder; Editing by Paul Simao and Phil Berlowitz)

Wells Fargo Equity Research 8/8/2017: "Continental Resources, Inc. offers a deep inventory of low risk Bakken development opportunities complemented by significant exploration upside potential in the STACK and SCOOP plays in Oklahoma. However, given our cautious outlook for commodity prices, and CLR's significant crude beta, we believe shares are likely to perform inline with the group over the near term."