Continental Resources (CLR) Update - Jan 4

[dan_s]

TipRanks 1/3/2022: "Continental Resources price target lowered to $59 from $63 at Mizuho Securities."

CLR is trading at $48.01 at the time of this post. First Call's price target is $53.23.

I have updated my forecast/valuation model for CLR and my valuation goes up by $2 to $70/share. My valuation is more "forward looking" than most of the Wall Street Gang and I am forecasting higher realized commodity prices for 2022 and 2023. CLR reports natural gas and NGLs on a combined basis. My estimated realized prices for CLR are $5.00/mcfe for natural gas & NGLs and $77.00/bbl for crude oil. CLR's year-end reserve report should be impressive. From a 2021 exit rate of ~400,000 Boepd of production I am assuming 6% production growth in 2022.

CLR should have approximately $6 billion of operating cash flow in 2022 to fund an aggressive drilling program and leave $3 Billion of FCF from operations.

On 12/21/2021 CLR closed the acquisition of PXD's Delaware Basin assets, which added approximately 55,000 Boepd of production (70% oil) and a lot of running room in the Permian Basin. My valuation is just 4.5X annualized operating cash flow for 2021 to 2023. I believe that is a conservative valuation model for a company of this size and quality. If their Q4 results and 2022 guidance confirm my model assumptions, my valuation will go up because I will raise the valuation multiple.

NONE of CLR's oil is hedged, which adds more risk and a lot of potential upside.