Energy Prospectus

CLR reported Q1 results after the markets closed on April 29. The CRUSHED my forecast.

$187.0 Million in Net Income in 1Q19, or $0.50 per Diluted Share

> $216.6 Million Adjusted Net Income in 1Q19, or $0.58 per Diluted Share < This compares to my forecast of $117.7 million Net Income, $0.31/share.

> Net cash provided by operating activities for first quarter 2019 was $721.5 million. < Compares to my Cash Flow from Operations of $675.8 million, $1.80/share.

> 193,921 Bopd Average Daily 1Q19 Oil Production; up 18% over 1Q18 < Compares to my forecast of 190,000 BOPD for Q1.
> 332,236 Boepd Average Daily 1Q19 Production; up 16% over 1Q18 < Compares to my forecast of 325,000 BOPD for Q1.

Bakken: 3 Strategic Step-Out Wells Deliver Excellent Results
- Initial Rates: MT: 1,680 Boepd (Baird); ND: 2,400 Boepd (Burian) and 2,440 Boepd (McClintock)
- SpringBoard: Oil Growth Ahead of Schedule; Avg. ~14,000 Net Bopd in April (28 Days)
- First 6 Woodford Wells Avg. Initial Rate per Well: 1,660 Boepd (1,245 Bopd); 75% Oil

STACK: Continues to Deliver Outstanding Results
- Tolbert 5-Well Cond. Unit: 18,700 Boepd Initial Rate; Avg per Well: 3,740 Boepd (1,180 Bopd)
- Lugene 3-Well Oil Unit: 9,270 Boepd Initial Rate; Avg per Well: 3,090 Boepd (1,540 Bopd)
- Blondie 1-6-7-18XHM 3-Mile Lateral Well Initial Rate: 3,400 Boepd (2,460 Bopd)

NONE of CLR's oil is hedges, so Q2 results are going to CRUSH the current First Call EPS and CFPS estimates.

"The Company realized approximately $13 million of cash gains from natural gas hedges in the first quarter. For the balance of 2019, natural gas is hedged 577,000 MMBtus per day at an average NYMEX Henry Hub price of $2.80."

Note that CLR reports natural gas and NGLs on a combined basis, so their realize price is much higher for "gas". In Q1 their gas + NGLs sold for $3.34/mcfe, including the cash settlements on their natural gas hedges.

If you believe Raymond James' forecast of WTI going to $75/bbl by Q4, then CLR is a "Screaming Buy" up to $60/share. My valuation ($80/share in today's newsletter) will be going higher.

Drew Lipke at Stephens rates CLR a BUY with a price target of $72. We should see a lot more upgrades and increased price targets for CLR this week. Their Q1 results beat everyone's forecast and none of their oil is hedged.