| Continental Resources Increases Production in Second Quarter | ||||||||||||
Company Reports Record Wells in Middle Bakken and Three Forks/Sanish Zones in
ENID, Okla., "Technical data from the Mathistad 2-35H supports our belief that the
Middle Bakken and Three Forks/Sanish reservoirs are separate in this area of
the play," said For the second quarter of 2009, Continental reported net income of Net income for the second quarter of 2009 included a pre-tax property
impairment charge of Average daily production was 37,347 Boepd (barrels of oil equivalent per day) for the second quarter of 2009, 18 percent higher than production of 31,623 Boepd in the second quarter of 2008. Continental's second quarter 2009 results reflected a significant
year-over-year decline in crude oil and natural gas prices. The Company's
average realized sales price per barrel of oil equivalent was Crude oil price differentials averaged Total oil and natural gas sales were EBITDAX was At "We are pleased with our production growth year-over-year and the
continued reduction in drilling and completion costs in the second quarter of
2009," Mr. Hamm said. "Production expense also declined to "We're also drilling much more efficiently in Mathistad 2-35H Test "We are proud of our operating and financial achievements, but clearly the most significant milestone in the quarter was our successful Mathistad 2-35H test," Mr. Hamm said. Continental issued a separate press release today with additional detail on the Mathistad 2-35H. The companion well was drilled horizontally in the Middle Bakken (MB) zone approximately 50 feet above the horizontal of the Mathistad 1-35H. The Mathistad 1-35H was completed as a producing Three Forks/Sanish (TFS)
well in "This significant production difference is the strongest evidence that we stimulated new rock with the second well completion," Mr. Hamm said. "From a technical point of view, that is the only plausible explanation for this level of initial productivity." He noted that additional drilling will be required to establish the extent to which the reservoirs are separate across the play. "We are very encouraged by these early steps in delineating the Bakken shale play, especially with regard to developing the Middle Bakken and the Three Forks/Sanish reservoirs separately. Based on the results of the Mathistad 2-35H, we believe the reserve potential of the Bakken play just went up." The Company estimates that approximately half of its 439,000 net acres in
Operations Update The following table contains financial and operating highlights for the second quarter of 2009 compared to the second quarter of 2008.
Three months ended Six months ended
June 30, June 30,
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2009 2008 2009 2008
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Average daily production:
Oil (Bbl) 27,654 24,117 27,119 24,080
Natural gas (Mcf) 58,156 45,035 59,760 41,098
Oil equivalents (Boe) 37,347 31,623 37,079 30,930
Average prices: (1)
Oil ($/Bbl) $53.44 $118.28 $44.82 $104.43
Natural gas ($/Mcf) 2.60 8.82 2.79 8.25
Oil equivalents ($/Boe) 43.52 102.86 36.99 92.34
Production expense ($/Boe) (1) 7.14 9.32 7.19 8.83
General and administrative expense
($/Boe) (1) 2.78 3.55 3.04 3.14
EBITDAX (in thousands) 106,250 244,950 163,923 426,738
Net income (loss) (in thousands) 13,508 127,307 (13,105) 215,278
Diluted net income (loss) per share 0.08 0.75 (0.08) 1.27
(1) Average prices and per-unit production expense are calculated based
on sales volumes. Oil sales volumes were 35 MBbls less than oil
production for the three months ended
Continental is currently operating four drilling rigs - three in Red River Units Production in the Red River Units was 14,092 Boepd in the second quarter of 2009, accounting for 38 percent of Continental's production. The Company continues to convert producing wells to injector wells as part of its secondary recovery program in the Units. North North Continental participated in completing 28 gross wells (8.1 net) in In terms of Company-operated wells, Continental completed nine gross wells
(4.8 net) targeting the TFS zone in the play in the second quarter of 2009,
including the Kukla 1-21H in -- Kukla 1-21H (65% WI) in The Company also completed a second Middle Bakken well during the second
quarter of 2009, the Armstrong 1-24H (74% WI) in Arkoma Woodford Production in the Arkoma Woodford shale play was 4,235 Boepd in the second quarter of 2009, which was almost double that in the second quarter last year and which accounted for 11 percent of Continental's total production in the most recent quarter. Arkoma production declined slightly in the second quarter compared with the first quarter of 2009, reflecting reduced drilling activity since the beginning of the year in response to low commodity prices. The Company participated in 14 gross wells (2.0 net) during the second
quarter of 2009 and currently has one operated rig drilling in the play in
southeastern In June, the Company announced that it had entered into natural gas fixed
price and basis swaps for 600,000 MMBtu at an average price of Company Increases 2009 Capital Expenditure Budget Continental has increased its 2009 capital expenditures budget by 42
percent to Capital expenditures were Under its original "The revised budget will enable us to build production momentum as we enter 2010," Mr. Hamm said. "We have only one drilling rig on long-term contract, so if crude oil prices change significantly, we will be able to adjust." Conference Call Information Continental Resources will host a conference call on Dial in: (888) 679-8034 Conference Presentations Continental management is currently scheduled to present at the following research conferences:
Presentation materials will be available on the Company's web site on the day of each presentation. Continental Resources is a crude-oil concentrated, independent oil and
natural gas exploration and production company with operations in the Rocky
Mountain, Mid-Continent and Gulf Coast regions of the Forward-Looking Statements This press release includes forward-looking information that is subject to
a number of risks and uncertainties, many of which are beyond the Company's
control. All information, other than historical facts included in this press
release, regarding strategy, future operations, drilling plans, estimated
reserves, future production, estimated capital expenditures, projected costs,
the potential of drilling prospects and other plans and objectives of
management are forward-looking information. All forward-looking statements
speak only as of the date of this press release. Although the Company believes
that the plans, intentions and expectations reflected in or suggested by the
forward-looking statements are reasonable, there is no assurance that these
plans, intentions or expectations will be achieved. Actual results may differ
materially from those anticipated due to many factors, including oil and
natural gas prices, industry conditions, drilling results, uncertainties in
estimating reserves, uncertainties in estimating future production from
enhanced recovery operations, availability of drilling rigs and other
services, availability of crude oil and natural gas transportation capacity,
availability of capital resources and other factors listed in reports we have
filed or may file with the
Condensed Consolidated Statements of Operations
(in thousands, except per share amounts)
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Three months ended Six months ended
June 30, June 30,
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2009 2008 2009 2008
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Revenues:
Oil and natural gas sales $146,439 $297,619 $239,007 $523,044
Gain (loss) on mark-to-market
derivative instruments 890 (3,358) 890 (7,966)
Oil and natural gas service
operations 4,432 9,173 8,472 16,007
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Total revenues 151,761 303,434 248,369 531,085
Operating costs and expenses:
Production expenses 24,038 26,953 46,464 50,026
Production tax 11,629 17,695 18,451 30,470
Exploration expense 1,530 5,731 8,649 10,993
Oil and natural gas service
operations 2,694 6,468 5,097 10,698
Depreciation, depletion,
amortization and accretion 53,148 28,062 103,845 56,708
Property impairments 23,275 3,153 58,700 7,673
General and administrative(1) 9,351 10,276 19,635 17,807
Gain on sale of assets (85) (133) (221) (212)
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Total operating costs and
expenses 125,580 98,205 260,620 184,163
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Income from operations 26,181 205,229 (12,251) 346,922
Other income (expense):
Interest expense (4,723) (2,865) (9,310) (6,276)
Other 301 248 448 547
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(4,422) (2,617) (8,862) (5,729)
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Income (loss) before income
taxes 21,759 202,612 (21,113) 341,193
Provision (benefit) for income
taxes 8,251 75,305 (8,008) 125,915
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Net income (loss) $13,508 $127,307 $(13,105) $215,278
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Basic net income (loss) per share $0.08 $0.76 $(0.08) $1.28
Diluted net income (loss) per
share 0.08 0.75 (0.08) 1.27
Basic weighted average shares
outstanding 168,492 168,055 168,479 167,973
Diluted weighted average
shares outstanding 169,498 169,552 168,479 169,418
(1) Includes non-cash charges for stock-based compensation of
Non-GAAP Financial Measures EBITDAX represents earnings before interest expense, income taxes, depreciation, depletion, amortization and accretion, property impairments, exploration expense, unrealized derivative gains and losses, and non-cash compensation expense. EBITDAX is not a measure of net income or cash flow as determined by generally accepted accounting principles (GAAP). Management believes EBITDAX is useful because it allows them to more effectively evaluate the Company's operating performance and compare the results of its operations from period to period without regard to its financing methods or capital structure. The Company excludes the items listed above from net income in arriving at EBITDAX because as these amounts can vary substantially from company to company within its industry depending upon accounting methods and book values of assets, capital structures and the method by which the assets were acquired. EBITDAX should not be considered as an alternative to, or more meaningful than, net income or cash flow as determined in accordance with GAAP or as an indicator of a Company's operating performance or liquidity. Certain items excluded from EBITDAX are significant components in understanding and assessing a company's financial performance, such as a company's cost of capital and tax structure, as well as the historic costs of depreciable assets, none of which are components of EBITDAX. The Company's computations of EBITDAX may not be comparable to other similarly titled measures of other companies. The Company believes that EBITDAX is a widely followed measure of operating performance and may also be used by investors to measure its ability to meet future debt service requirements, if any. The Company's credit facility requires that it maintain a total debt to EBITDAX ratio of no greater than 3.75 to 1 on a rolling four-quarter basis. The credit facility defines EBITDAX consistently with the definition of EBITDAX utilized and presented by the Company. The following table represents a reconciliation of the Company's net income to EBITDAX.
Three months ended Six months ended
June 30, June 30,
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2009 2008 2009 2008
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(in thousands) (unaudited)
Net income (loss) $13,508 $127,307 $(13,105) $215,278
Unrealized derivative gain (890) - (890) -
Interest expense 4,723 2,865 9,310 6,276
Provision (benefit) for income
taxes 8,251 75,305 (8,008) 125,915
Depreciation, depletion,
amortization and accretion 53,148 28,062 103,845 56,708
Property impairments 23,275 3,153 58,700 7,673
Exploration expense 1,530 5,731 8,649 10,993
Equity compensation 2,705 2,527 5,422 3,895
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EBITDAX $106,250 $244,950 $163,923 $426,738
SOURCE Continental Resources |