CLR's Analyst Day
Posted: Mon Sep 22, 2014 2:17 pm
Comments below from Morgan Stanley's Brian Lasky, dated September 21, 2014:
This week, Continental Resources held their Investor and Analyst Day and provided detailed overviews of their Bakken and SCOOP operations as well as their views on future production growth. CLR’s update included a number of developments:
> Bakken. CLR provided an overview on the state of the play. They believe that orderly development is currently underway with a steadily industry rig count, new infrastructure in place, and operators shifting from HBP (held by production) to full-field development. CLR is currently an industry leader in gas capture within the Bakken (~85%+) whereas other producers are struggling (60-70%) with getting their gas to market.
EURs were raised 25% and Continental is planning to run an average of 22 rigs and drill 204 wells in 2015.
However, well costs have escalated to an average of ~$10mm in 2015, up from $8mm in 2013 due to enhanced completion designs.
EUR = Estimated Ultimate Recovery
> SCOOP (Central Oklahoma). CLR plans to operate an average of 21 rigs in 2015 (currently running 19 operated SCOOP Woodford rigs). The company currently has three density projects underway (1 producing: Bean, and 2 drilling: Poteet and Good Martin). CLR slightly lowered their EURs in the condensate window (-3%) and the oil window (-30%) likely disappointing some investors. However, the company is continuing to aggressively pursue production within the area, given high returns and the
discovery of a new oil play within the basin.
> Springer Shale Discovery. This new discovery provides an extra leg of growth to the already compelling SCOOP development plan. The company believes that the play represents 447 MMBoe net unrisked resource potential to CLR with 127 net MMBoe in the oil fairway.
CLR has 118,000 net acres in the oil fairway and has 215 net locations (67% oil, 84% liquids in fairway).
From 11 CLR operated wells, the Springer has had a 3-day avg. IP of 700 BOEPD with an average lateral of ~4,000 ft. Additionally, CLR’s competitor, Newfield Exploration (NFX) also disclosed its position within the newly named Springer Play. Newfield also believes in the resource potential of the play, noting that early returns are competitive with SCOOP economics.
NFX currently has infrastructure in place to commence development of the play. NFX’s first operated well has a lateral length of <5,000 ft and had a 24-hr IP rate of ~1,950 BOEPD and a 10-day average of ~1,500 BOEPD (82% oil).
This is why I added NFX to the Sweet 16. I believe what's going on in Central Oklahoma will become a big story in 2015. - Dan
This week, Continental Resources held their Investor and Analyst Day and provided detailed overviews of their Bakken and SCOOP operations as well as their views on future production growth. CLR’s update included a number of developments:
> Bakken. CLR provided an overview on the state of the play. They believe that orderly development is currently underway with a steadily industry rig count, new infrastructure in place, and operators shifting from HBP (held by production) to full-field development. CLR is currently an industry leader in gas capture within the Bakken (~85%+) whereas other producers are struggling (60-70%) with getting their gas to market.
EURs were raised 25% and Continental is planning to run an average of 22 rigs and drill 204 wells in 2015.
However, well costs have escalated to an average of ~$10mm in 2015, up from $8mm in 2013 due to enhanced completion designs.
EUR = Estimated Ultimate Recovery
> SCOOP (Central Oklahoma). CLR plans to operate an average of 21 rigs in 2015 (currently running 19 operated SCOOP Woodford rigs). The company currently has three density projects underway (1 producing: Bean, and 2 drilling: Poteet and Good Martin). CLR slightly lowered their EURs in the condensate window (-3%) and the oil window (-30%) likely disappointing some investors. However, the company is continuing to aggressively pursue production within the area, given high returns and the
discovery of a new oil play within the basin.
> Springer Shale Discovery. This new discovery provides an extra leg of growth to the already compelling SCOOP development plan. The company believes that the play represents 447 MMBoe net unrisked resource potential to CLR with 127 net MMBoe in the oil fairway.
CLR has 118,000 net acres in the oil fairway and has 215 net locations (67% oil, 84% liquids in fairway).
From 11 CLR operated wells, the Springer has had a 3-day avg. IP of 700 BOEPD with an average lateral of ~4,000 ft. Additionally, CLR’s competitor, Newfield Exploration (NFX) also disclosed its position within the newly named Springer Play. Newfield also believes in the resource potential of the play, noting that early returns are competitive with SCOOP economics.
NFX currently has infrastructure in place to commence development of the play. NFX’s first operated well has a lateral length of <5,000 ft and had a 24-hr IP rate of ~1,950 BOEPD and a 10-day average of ~1,500 BOEPD (82% oil).
This is why I added NFX to the Sweet 16. I believe what's going on in Central Oklahoma will become a big story in 2015. - Dan