CLR: Raymond James Updated price target - Dec 23

[dan_s]

Continental Resources Inc.
CLR-NYSE | $45.53
Outperform 2 | $60.00 target < Compares to my valuation of $68.00
John Freeman, CFA (RJA)

Updating Estimates Post Permian Closing; Reiterate Outperform
We’re updating estimates with Continental’s Permian acquisition now officially on the
books after closing earlier this week. CLR gains roughly 50 Mboe/d of production, split
70%/30% oil/gas, respectively. Following the acquisition, we’re now estimating FY22
production of 383 Mboe/d. Oil as a percentage of total production rises to ~53% in FY22,
compared to ~51% in FY21, stemming primarily from the added Permian oil production.
In terms of capital expenditures, our FY22 estimate of ~$2.1B (Street at ~$1.96B) assumes
healthy amount of oilservice cost inflation, while generating ~$2.4B FCF next year. CLR’s
FCF metrics align with RJ large cap averages, the company’s FY22 EV/EBITDA multiple of
~3.9x lands ~0.7x below the peer average as the market digests the Permian acquisition
and waits to see how CLR executes in this new operating region. Overall, we reiterate our
Outperform rating and our price target of $60/share