Continental Resources (CLR)

[dan_s]

CLR reported good first quarter operational results. I will update my forecast model this afternoon. - Dan

Continental Resources Inc.: 1Q15: Impressive Update
Drew Venker, CFA – Morgan Stanley
May 7, 2015 2:33 AM GMT
CLR delivered a 1Q beat on production and lower op costs. Ops were impressive and 2015 exploration is off to a positive start w/ strong Cana results and Meramec drilling underway. < If you own GST you need to read what they are saying about SCOOP
Ops impress; resource potential even deeper; PT raised to $73 on lower costs. CLR announced an impressive operations update reflecting strong execution with both volumes and costs better than expectations. The update showed success expanding resource potential, through exploration and density pilots, which now looks even more deep than its already peer-leading level. Returns were enhanced though optimized completions and service cost reductions. We are raising our PT to $73 from $62 for current well costs, which are 15% below our prior assumptions.
Impressive ops update. CLR delivered a production beat and announced positive updates across its operations. These updates included positive results from 2 new spacing pilots in SCOOP and its first Woodford well in its JDA in NW Cana. The company also recently spud its first Meramec test.
Production beat on Bakken volumes. 1Q15 production of 207 MBoe/d (+7% QoQ) was above consensus at 200 MBoe/d (+4% QoQ) and MS at 200 MBoe/d (+4% QoQ). The beat was driven by stronger ND Bakken volumes.
Cost reductions ahead of mgmt expectations; guidance to be reevaluated by 2Q results. While costs are trending down ahead of mgmt's expectations, CLR left 2015 guidance unchanged. It will reevaluate 2015 plans given its strong operational results and will update 2015 guidance when it reports 2Q earnings if it deems any change warranted. We believe production guidance is biased upward, operating costs biased downward.
Strong first NW Cana well in the JDA. On the exploration front, the company completed its first well in its Northwest Cana Joint Development Agreement (JDA) area using a modern completion with impressive results. The Schantz 1-5-8XH in Blaine County IP'd at 14 MMcf/d during cleanup and continues to improve.