Energy Prospectus

Continental Resources Announces Suspension Of Quarterly Dividend And Production Update

OKLAHOMA CITY, April 7, 2020 /PRNewswire/ -- In response to the demand destruction attributable to COVID-19, Continental Resources, Inc. (NYSE: CLR) ("Continental" or the "Company") today announced the following:

"Continental will continue to take decisive action to maximize cash flow generation, accomplish cost savings initiatives and prioritize the strength of our balance sheet," said Bill Berry, Chief Executive Officer. "Global crude oil and product demand is estimated to have been impacted by 30% due to COVID-19. Accordingly, we are reducing our production for April and May 2020 in a similar range."

Furthermore, the Board of Directors has made the decision to suspend the quarterly dividend until further notice. This is part of the Company's proactive strategy to manage cash flow in a challenging commodity price environment.
---------------------------
IMO this is a smart move as long as chocking back some wells without reducing ultimate recoveries is possible. When I worked at Hess we regularly would choke back gas wells in the summer to "rest them" for higher production during the winter heating season and higher gas prices. Most public companies won't do this because the CEOs are afraid of the market's reaction.

From TPH Morning Notes:
CLR Update
Suspending dividend and curtailing near-term production on COVID-19 demand impacts
Sector: NAm E&P | Ticker: CLR | Recommendation: HOLD | Target: $1 | Close: $9.49 < A price target of $1.00 seems "harsh" unless you think oil prices are stay under $30 forever.
Management announced this morning that given the global crude oil and product demand impact of ~30% from COVID-19, CLR will be reducing production for April and May 2020 in a similar range while also suspending the quarterly dividend (~$18MM in Q4’19 / ~$72MM annualized) until further notice. As CLR is unhedged on their oil production with significant exposure to regional prices in areas like the Bakken, this may be a prudent move as in-basin prices could be headed below cash operating cost in the coming months, and for producers that do not have FT barrels may soon be unable to find a home on pipe. We’d anticipate other E&Ps may be following suit through a combination of protracted frac holidays and shut-ins as prices are unlikely to generate the necessary returns to complete wells, with the latter possibly a necessary process to help to balance near-term oil S/D imbalances. < I definitely agree with the last sentence. Very few wells should be completed with WTI under $40.