Continental Resources: Excellent Q2

Continental Resources: 2015 Q2
Continental Resources: 2015 Q2

The second quarter of 2015 delivered “excellent results” for Continental Resources, especially in light of the prevailing low crude prices.

Related: Continental Resources Aggressively Cuts Costs

Continental reported a Q2 net income of $0.4 million and anet production of 20.6 million Boe, or 226,547 Boe per day, a sequential increase of 10% from first quarter 2015 and 35% higher than second quarter 2014. This included 149,897 barrels of oil per day (66% of production) and 459.9 million cubic feet (MMcf) of natural gas per day (34% of production).

Jack H. Stark, COntinental’s President & Chief Operating Officer said, “Looking to the second half of 2015, we expect production will decline slightly in the third quarter and level off in the fourth quarter, reflecting a lower level spend that we have planned. Our year-end 2015 exit rate is projected to be 210,000 barrels to 215,000 barrels of oil per day and there may be some upside to this number as efficiencies continued to build.

Bakken Q2 Highlights Continental’s Bakken drilling program is focused on core leasehold in Williams, McKenzie, Mountrail and Dunn counties, targeting an average estimated ultimate recovery (EUR) of approximately 800,000 Boe per well. Other highlights include:

  • Production averaged 140,988 Boe per day an increase of 4% compared with first quarter 2015 and an increase of 30% compared with second quarter 2014.
  • Completed 56 net (159 gross) Middle Bakken and Three Forks wells
  • Operated an average of 10 rigs and three completion crews in the Bakken
  • The company estimates it has at least 10 years of drilling inventory, with wells averaging 775,000 Boe per well in EUR, in the core of the Bakken.
  • 95 gross operated Bakken wells drilled and waiting on first production, compared to 115 at the end of first quarter 2015


Continental Resources Aggressively Cuts Costs

Continental Resources: 2015 Q1
Continental Resources: 2015 Q1

Continental Resources announces first quarter results that highlights increases in production and reduced costs.

Related: Harold Hamm Gains More Bakken Acreage

In a press release on May 6th, Continental reported a net loss of $132.0 million for the first quarter of 2015 and a production increase to 206,829 boed.

Most impressive is the company’s drilling and completion costs , which fell by 15% since 2014 year end. The company expects to see service cost reductions of up to 20% by mid-year and further savings from drilling and completion efficiencies. One example of these efficiencies is the new company record for drilling in the Bakken as they report drilling the two-mile lateral portion of a well in three days, nearly four days faster than its average time to drill a lateral.

Bakken Highlights for First Quarter

  • Production averaged 135,538 Boe per day (39% increase over first quarter 2014)
  • Completed 66 net wells
  • Operated an average of 13 rigs in the Bakken, down from 19 rigs at year-end 2014
  • Significantly reduced its completion crew count
  • 115 gross operated Bakken wells drilled and waiting on first production (122 at year-end 2014)

Continental’s plans for Bakken moving forward

  • The Company plans to average 10 operated rigs through the remainder of 2015, based on current market conditions.
  • The Company expects to have approximately 90 gross operated Bakken wells drilled and waiting on first production at year-end 2015.
  • Approximately 60% of the wells in the 2015 program will be drilled on 660-foot to 880-foot inter-well spacing in the Middle Bakken and Three Forks reservoirs.
  • The Company's 2015 Bakken drilling program is targeting an average EUR of approximately 800,000 Boe per well.

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Harold Hamm Gains More Bakken Acreage

Harold Hamm Continental Resources
Harold Hamm Continental Resources

Continental Resources strengthened its position in North Dakota by winning the right to drill on an additional 160 acres located near the Fort Berthold Indian Reservation.

Continental’s Harold Hamm spent  2.3 million for the privilege at a state land auction last Friday, beating out the competition in the last 30 seconds of bidding. The funds from this sale are earmarked for educational uses around the state.

Low oil prices have caused companies to reduce spending for 2015 and order to wait out the pricing situation including EOGOccidental Petroleum  and ConocoPhillips.

Even as Continental announced it would slash its budget by 48%, CEO Harold Hamm remained publicly optimistic about his company's ability to navigate the rough waters.

Hamm commented that “We concluded 2014 with a strong fourth quarter performance, capping off another year of exceptional production and proved reserves growth (...) We believe that our momentum coming out of 2014 will allow us to grow our production 16% to 20% this year.

The Bakken continues to be the backbone of Continental’s operations. The company is the largest acreage holder in the Bakken and the second largest oil producer in the region. In February, Continental announced that Bakken production was up 30% over last year and overall output was expected to jump 20% for 2015.

Whiting Petroleum: Is It Up for Sale?

Whiting  Petroleum Reportedly Up For Sale
Whiting Petroleum Reportedly Up For Sale

Rumors have been swirling for weeks that Denver-based Whiting Petroleum might be up for sale and some companies may be biting.

Bloomberg reported on Friday that several companies are expressing interest in Whiting including Exxon Mobil Corp., Continental Resources Inc., Hess Corp. and Statoil ASA.

No one is talking openly about a possible deal including Whiting, who has not given any official statement about their intentions. All information has come from anonymous sources and people who are speculating about what the company may do.

Bloomberg quotes Phillip Jungwirth, an analyst with Bank of Montreal, who says that “Whiting is probably exploring a sale along with other strategic alternatives, including selling assets, raising debt and selling shares in order to address investor liquidity concerns.

Some believe that a full sale is unlikely due to the Whiting's heavy debt and that it is more probably that the company will sell off large pieces instead.

In early March, Whiting released its 2014 earning results with CEO James J. Volker boasting a strong year with record production and a string 2015 growth plan. A week later,  rumors started to surface the Whiting was looking around for other opportunities.

Whiting was founded in 1980 and became the largest Bakken/Three Forks producer in the Williston Basin after its acquisition of Kodiak Oil & Gas in June of last year.

Kinder Morgan Acquires Hiland

Hamm sells Hiland
Hamm sells Hiland

Kinder Morgan announced last week that it finalized the acquisition of Hiland Partners, a midstream firm founded by Harold Hamm, CEO of Continental Resources. The deal, reported at $3 billion, includes assuming almost $1 billion in debt.

Hiland primarily serves production from the Bakken Formation in North Dakota and Montana and by operating crude oil gathering/transportation pipelines and gas gathering/processing systems including roughly 1,225 miles of pipeline. Company officials anticipate retaining nearly all of Hiland’s approximately 430 employees.

We are delighted to establish a substantial midstream footprint in one of the most prolific oil producing basins in the United States,” said KMI Chairman and CEO Richard D. Kinder. “Hiland’s systems serve some of the Bakken’s largest and most successful producers, including Continental. We look forward to continuing to provide high quality midstream services to these producers and pursuing incremental growth opportunities in the basin.

Harold Hamm began contemplating the sale due to financial worries stemming from plummeting oil prices and a very public, and expensive divorce. Hamm reportedly sold the interest in order to gain the necessary cash for a $1 billion divorce settlement, one of the largest divorce tabs ever recorded. This acquisition is on the heels of a personal loan in December at the same time the company slashed its 2015 capex for the second time.

Related: More Budget Cuts for Continental Resources