Continental Resources (CLR) Update - Feb 12

[dan_s]

Wells Fargo Equity Research
Flash Comment — February 9, 2022

Continental Resources, Inc. (CLR)
CLR: Losing the Forest for the Leaves

Initial Thoughts
Bottom Line—Slightly Positive. After market close today, CLR announced a 15%increase to its quarterly dividend, which will now be $0.23/share (~1.7% annualized yield). This follows a ~33% increase to the base dividend with 3Q21 earnings. As we noted in our recent 4Q21 preview and PRB deal review, the company has been focused on opportunistically improving its cash return strategy, especially as it benefits from stronger commodity prices and improving operating leverage. This has been complemented by acquisitions in the Permian and Powder River Basins, with the latest acquisition from CHK done below PDP value. Thus, we were surprised to see the stock at one point trading ~44% lower in after market trading before recovering.

CLR also filed a Schedule 13-D disclosing a reduction in the holdings of founder and Chairman, Mr. Harold Hamm to ~86.5mm shares (or ~23.7% of shares outstanding) compared to ~77.5% prior. After reviewing the document and speaking with the company, we note that the stated purpose of the transaction is for 'estate planning purposes'. Specically, shares owned collectively by the Harold Hamm Family, LLC are being distributed pro-rata to its members that include Mr. Hamm and his descendants. The 'Dividend and Dissolution Agreement' appears to put restrictions on the ability of the members to sell or transfer their shares, and Mr. Hamm is still the Managing Shareholder of this group. Thus, we believe fears of a liquidation of Mr. Hamm's holdings (or regarding his health and well-being) seem unfounded.

Our Call
We see the indicated sell-off as overdone. It might distract from what should have been a positive update regarding cash returns. As such, we will look for the company's earnings release on February 14 and earnings conference call on February 15 for an update on its operations and financial plans for 2022 and beyond.

My current valuation of CLR is $72.00 per share.

TipRanks: "In the last 3 months, 16 ranked analysts set 12-month price targets for CLR. The average price target among the analysts is $59.56. The 16 price targets range from $44 to $80 per share."

[Fraser921]

>~44% lower in after market trading before recovering.

There was no way in hell this was down in after hours trading as reported by Bloomberg. I reviewed the after hour trading and there was nothing traded . Total fake news

[dan_s]

After-hours trading never indicates much anyway. It could have been one trade.
NEVER put in an "at the market" order in after hours trading.

I've only shorted a stock once and I was able to harvest a big gain in after-hours trading when someone put in a big sell order "at the market" after hours and I was able to close my short position at a $10/share gain. It was pure luck that I noticed the big drop in price after the markets closed. The next morning the stock was right back up.

[Fraser921]

https://investors.clr.com/2022-02-14-CO ... TE-RETURNS

Revenue Net Income per share

Dan's forecast 1,690 1.61

Actual's 1,739 1.79

Market after hours : Yawn

I don't see any disclosed hedges , they will have a blow out Q1 with $ 90 oil

They made a 25 m donation to OSU: Go cowboys!