Upgrades for CLR - This is just the start
Posted: Tue Apr 30, 2019 9:14 am
Continental Resources, Inc. (CLR, $48.05, Buy; Target $82.00) by Derrick Whitfield at Stifel who is an outstanding analyst
CLR announces strong Q119 earnings and operational update
"We view this release as positive. The positives include: i) a beat on total equivalent and oil production volumes by 2.3% and 2.5% above consensus, respectively, ii) a beat on EBITDA of 8.2% above consensus due to higher than expected production and lower than expected LOE and G&A unit costs, iii) impressive rates from three strategic step-out wells (outperforming offsetting legacy wells by an average 74%), and iv) management raised SpringBoard Q319 guidance (increased by ~9%) and announced positive initial Woodford results (outperforming legacy parent well type curve). The only negative was higher than expected capex (~6% above consensus, in-line with Stifel). Net-net, the Q119 earnings and operations update were overwhelmingly positive. CLR checked all of the boxes for Q119 and reiterated FY19 guidance and shareholder-friendly messaging."
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My updated forecast/valuation model for CLR will be posted to the EPG website this afternoon. My valuation increases by $4 to $84/share.
Although CLR did not raise their full-year production guidance (yet), they are clearly going to exceed the high end of their oil production guidance. The significance of the three strategic step-out wells cannot be over-stated as they clearly have a lot more Tier One leasehold to develop in North Dakota. Plus, "SpringBoard" in Oklahoma is off to a great start.
CLR announces strong Q119 earnings and operational update
"We view this release as positive. The positives include: i) a beat on total equivalent and oil production volumes by 2.3% and 2.5% above consensus, respectively, ii) a beat on EBITDA of 8.2% above consensus due to higher than expected production and lower than expected LOE and G&A unit costs, iii) impressive rates from three strategic step-out wells (outperforming offsetting legacy wells by an average 74%), and iv) management raised SpringBoard Q319 guidance (increased by ~9%) and announced positive initial Woodford results (outperforming legacy parent well type curve). The only negative was higher than expected capex (~6% above consensus, in-line with Stifel). Net-net, the Q119 earnings and operations update were overwhelmingly positive. CLR checked all of the boxes for Q119 and reiterated FY19 guidance and shareholder-friendly messaging."
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My updated forecast/valuation model for CLR will be posted to the EPG website this afternoon. My valuation increases by $4 to $84/share.
Although CLR did not raise their full-year production guidance (yet), they are clearly going to exceed the high end of their oil production guidance. The significance of the three strategic step-out wells cannot be over-stated as they clearly have a lot more Tier One leasehold to develop in North Dakota. Plus, "SpringBoard" in Oklahoma is off to a great start.