Summary from Morgan Stanley update on CLR I received 2-4-2015. - Dan
CLR reported in line 2014 production and 2015 production on track with guidance. YE-14 PDP reserves were slightly below our estimates.
The 2014 exit rate of 200 MBoe/d was in line with prior guidance from the company and is above our 1Q15 production estimate of 196 MBoe/d. We are lower primarily because we have risked production for potential harsh weather impacts in the Bakken. Importantly, this exit rate is just 2.5% below its guidance for full year 2015 production of 205 MBoe/d.
2014 production in line. Continental reported 2014 production of 174 MBoe/d (+28% YoY), in line with our estimates and consensus and consistent with guidance. This implies 4Q14 production of 192 MBoe/d (+5% QoQ).
PDP reserve growth +21%. 2014 PDP reserves grew 21%, which compares to our estimate of 38% and production growth of 28%. There is often significant noise in reserve reports from year to year. We will look for more color before drawing conclusions about the report's implications.
Raising our price target to $50 from $49. We are raising our price target primarily to reflect CLR’s 2014 proved reserve report and our estimated YE-2014 balance sheet. Our New PT equates to 13.8x 2015e EBITDA vs. 13.6x prior. Risks to our price target include well performance and weaker oil prices.
My Fair Value Estimate for CLR is $53.80. - Dan