30% production growth for a company of this size is stunning!
ENID, Okla., Feb. 23, 2011 /PRNewswire/ -- Continental Resources, Inc. (NYSE:CLR - News) reported strong growth in crude oil and natural gas production for 2010. Total production of 15.8 million barrels of oil equivalent (MMBoe) for the year represented a 16 percent gain over production of 13.6 MMBoe for 2009.
"We achieved our 2010 production target and again reported strong growth in oil-concentrated proved reserves," said Harold Hamm, Chairman and Chief Executive Officer. "We're on track today for 30 percent production growth in 2011."
My updated Net Income and Cash Flow Forecast will be on the website this weekend. - Dan
CLR
Re: CLR--Upgrade from Global Hunter
"Mo' money for mo' drilling.
Summary: CLR executed an accretive equity offering when combined with an accelerated drilling program as part of an increased capital budget.
CLR plans to accelerate drilling in Bakken and Anadarko Woodford Shale plays. Given the weaker oil markets, we are taking this opportunity to
upgrade our rating from Neutral to Buy and increasing our price target to $78 from $71.
Highlights
Bloated budget. Continental Resources announced an increase in its capital budget for 2011 from $1.36 billion to $1.75 billion. The larger
budget is expected to be allocated to the Bakken Shale and Anadarko Woodford Shale plays as well as to cover rising oilfield service costs. CLR
was previously operating 23 rigs in the Bakken and plans to increase operated rigs to 30. Based on the change in budget and the accelerated
drilling program we expect production to grow 36% in 2011, compared with the previous target of 30%, and further grow 2012 production at a
similar rate with the rigs running for a full year at a similar budget.
Big deal. On March 9th CLR also announced the pricing of a public offering of 11.5 million shares at $68 per share including 9.7 million primary
shares and 830,000 secondary shares. The approximate $600 million in net proceeds will be used to fund the accelerated drilling program, to
repay the outstanding balance on the revolving credit facility, and general corporate purposes.
Updating estimates. With the increased capital budget and additional shares, our financial models are changing. We are revising our respective
2011 EPS, CFPS, and EBITDA estimates from $2.31, $5.93, and $1,097 million to $2,61, $6.37, and $1,250 million. Further, we are altering our
respective 2012 estimates from $3.10, $7.77, and $ 1,406 million to $4.96, $11.45 and $1,747 million.
Valuation. Our previous price target of $71 was predicated on 12.2x 2011 and 9.3x 2012 our prior EBITDA estimates. With the adjustments
above, $71 now equates to 11.0x 2011 and 8.0x 2012 estimates. We believe the downside in the stock should be $58 based on 9x EBITDA and
underlying NAV. Although the upside is largely dependent on oil prices and Bakken differentials, we are increasing our 12-month price target
to $78 predicated on 12x 2011 EBITDA and 8.7x 2012 EBITDA estimates. We are upgrading CLR from a Neutral to a Buy. CLR is currently
trading at 10x 2011 EBITDA. Historically, CLR has traded at 9x-15x which would imply $57-$98 per share based on our 2011 EBITDA estimates
and up to $80-$139 per share on our projected 2012 EBITDA. We forecast 2011 proved NAV to equate to $58.95 per share predicated on $90
oil and $5.50 natural gas prices." Michael Bodino, Lead Analyst
Summary: CLR executed an accretive equity offering when combined with an accelerated drilling program as part of an increased capital budget.
CLR plans to accelerate drilling in Bakken and Anadarko Woodford Shale plays. Given the weaker oil markets, we are taking this opportunity to
upgrade our rating from Neutral to Buy and increasing our price target to $78 from $71.
Highlights
Bloated budget. Continental Resources announced an increase in its capital budget for 2011 from $1.36 billion to $1.75 billion. The larger
budget is expected to be allocated to the Bakken Shale and Anadarko Woodford Shale plays as well as to cover rising oilfield service costs. CLR
was previously operating 23 rigs in the Bakken and plans to increase operated rigs to 30. Based on the change in budget and the accelerated
drilling program we expect production to grow 36% in 2011, compared with the previous target of 30%, and further grow 2012 production at a
similar rate with the rigs running for a full year at a similar budget.
Big deal. On March 9th CLR also announced the pricing of a public offering of 11.5 million shares at $68 per share including 9.7 million primary
shares and 830,000 secondary shares. The approximate $600 million in net proceeds will be used to fund the accelerated drilling program, to
repay the outstanding balance on the revolving credit facility, and general corporate purposes.
Updating estimates. With the increased capital budget and additional shares, our financial models are changing. We are revising our respective
2011 EPS, CFPS, and EBITDA estimates from $2.31, $5.93, and $1,097 million to $2,61, $6.37, and $1,250 million. Further, we are altering our
respective 2012 estimates from $3.10, $7.77, and $ 1,406 million to $4.96, $11.45 and $1,747 million.
Valuation. Our previous price target of $71 was predicated on 12.2x 2011 and 9.3x 2012 our prior EBITDA estimates. With the adjustments
above, $71 now equates to 11.0x 2011 and 8.0x 2012 estimates. We believe the downside in the stock should be $58 based on 9x EBITDA and
underlying NAV. Although the upside is largely dependent on oil prices and Bakken differentials, we are increasing our 12-month price target
to $78 predicated on 12x 2011 EBITDA and 8.7x 2012 EBITDA estimates. We are upgrading CLR from a Neutral to a Buy. CLR is currently
trading at 10x 2011 EBITDA. Historically, CLR has traded at 9x-15x which would imply $57-$98 per share based on our 2011 EBITDA estimates
and up to $80-$139 per share on our projected 2012 EBITDA. We forecast 2011 proved NAV to equate to $58.95 per share predicated on $90
oil and $5.50 natural gas prices." Michael Bodino, Lead Analyst