Continental Resources (CLR) Update - Dec 28

[dan_s]

Note below is from Truist Financial 12-28-2021

Continental Resources, Inc. (CLR, $44.94, Buy with Price Target of $72.00)
Meeting Highlights, “Adding Value” Philosophy Not Exclusively Capital Return; Spin Off Possible

"We met with Continental recently with the one of the primary messages being full cycle FCF that could be boosted by the recent Delaware purchase. The company remains bullish on oil prices allocating more upcoming activity toward those plays calling for YE22 leverage to be lower than pre-DE deal metrics while potentially creating significant value during the period. CLR believes it will not only advance the new upstream properties, but has multiple options for the minerals/infrastructure assets."
- Neal Dingmann

If you'd like to read Neal's full report, send me an email: dmsteffens@comcast.ne

[Fraser921]

I wonder what they would spin off?

Bahken? Ng businrss?

They are about 50 / 50. Ng and oil

[dan_s]

They could spin off their minerals into a public company like Viper Energy Partners (LP), which was created by Diamondback (FANG) or they could spin off their midstream/infrastructure assets, which is how Rattler Midstream (RTLR) was created.

The spin offs unlock value for shareholders and can be used to raise a lot of cash for CLR. I'm sure CLR would maintain control of the companies they spin off.

[Fraser921]

What does spinning off minerals mean?

They take the producing assets and then pay out a dividend? Interesting, people have a hunger for yield.

[dan_s]

It means creating a public company to hold their mineral interests. The public company raises cash by issuing equity through an IPO then pays CLR a combination of cash and equity shares for their minerals. Take a look at the relationship between Diamondback Energy (FANG) and Viper Energy Partners (VNOM).

In addition to the cash CLR would get on the spinoff of their minerals into the new company, they would get big quarterly dividends.