Continental Resources (CLR) Update - June 16

[dan_s]

Note received from Neal Dingmann at Truist Financial on 6-16-2022
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Continental Resources, Inc. (CLR): Let the Bidding Games Begin

Continental Resources announced it has received a $70/share take private offer from Harold
Hamm for the ~17% of shares owned by the public, representing an ~8.5% premium to
yesterday’s close. Importantly, the offer is not binding and the Board plans to evaluate the
offer before moving forward, which we expect is an intentional strategy to potentially open
the doors to competing bids from large cap public peers.

We would not be surprised if a process ultimately resulted in a sale given our forecast that the
company is worth at least our $95/share price target. It will be worth watching what activity
level a potential outside bidder would determine for the assets versus what the current
owner will run, however the letter to employees from Harold Hamm assuring little change to
compensation and operations somewhat lowers the expectation of a winning outside bid.

We think the offer has little read-through to our other E&P names with the slight exception
of Matador (MTDR, Buy) given the unique ownership structure of CLR shares. However, the
deal says more about the M&A market and differing views on oil prices, that the Hamm family
has not already had an outside bid prior to this announcement that adequately incorporated
the company’s likely more bullish view on the commodity into the valuation.

We expect the shares to trade with a very small discount or even a premium to the $70/
share offer in the near term as investors anticipate potential outside offers.