Continental Resources (CLR) Update - April 18

[dan_s]

At the time of this post, CLR was trading at $65.52.

I have updated my forecast/valuation model for CLR using my current commodity price forecast. My valuation increases by $4 to $89/share.

Since April 1st, five energy sector analysts have adjusted their price targets to $72 (RBC Capital & KeyBanc) to $96 (Stifel Nicolaus).

If CLR's actual Q1 results and updated guidance for 2022 confirms my forecast model assumptions, it should deserve a higher valuation multiple. My current valuation is just 5X 2021-2023 annualized operating cash flow. Per my model, CLR's operating cash flow should increase from $11.50/share in 2021 to over $20/share in 2022.

A 12-month price target of $100 s/b justified.

None of CLR's liquids are hedged after 2021, but they do have ~20% of their dry gas hedged this year. CLR does produce a lot of NGLs, but they report dry gas and NGLs on a combined basis, making it a bit more difficult to forecast their average realized gas price.

My updated model will be posted to the EPG website this afternoon.