Continental’s net income soars
Continental Resources earned total revenues of about $1.28 billion during the third quarter of 2018 as it grew its crude oil production during the period.
A third quarter earnings release posted by the company Monday after markets closed also showed it had boosted its net income significantly — earning $314 million, compared to about $10.6 million in the third quarter of the previous year.
Its top executives said Monday they expected those trends to continue as Continental closes out the year.
"With up to 70 of our forecast Bakken wells and up to 18 SpringBoard wells scheduled to be completed by year end, Continental anticipates a strong wave of oil-weighted production growth," CEO Harold Hamm said.
"Thanks to the quality of our oil assets, the ingenuity of our teams and the positive tail wind provided by our unhedged oil portfolio, Continental's strategic move to optimize capital-efficient, oil-weighted growth is enhancing shareholder value."
The company said it earned about $1.27 billion from sales of crude oil and natural gas during the third quarter of 2018, compared to about $705 million during the same period the year before.
The company also produced about 15.2 million barrels of oil during the quarter, compared to about 12.7 million barrels of oil in the third quarter of 2017. Continental's sales price for oil in the third quarter of 2018 was $65.78 a barrel, compared to $43.27 a barrel the same quarter a year ago.
Those results translated into almost $861 million in net cash from operating activities during the third quarter of
2018, compared to about $431 million the same time a year ago.
The company’s debt load in the third quarter was $5.94 billion.
“Our goal is to approach a total debt of $5 billion, or below,” said Rory Sabino, Continental’s vice president of investor relations. “That’s all driven by free cash flow.
“We have a very clear, strong road map to where we hope to be in 2019.”
Operational updates
Production from the company’s STACK play in northwest Oklahoma increased 58 percent in the third quarter of 2018, compared to the same time a year ago. The earnings release highlights results the company obtained during the quarter from three specific units within the play, each of which had been developed using multiple wells.
“The outstanding results from these units confirm both our unit
development model and the exceptional quality of our Meramec reservoirs, which are some of the thickest and most overpressured in STACK,” said Tony Barrett, Continental’s vice president of exploration.
Barrett said Continental has up to 65 units remaining to develop in the play’s oil and condensate windows. His remarks were reinforced by Sabino, who stressed the quality of Continental’s holdings in that play.
In south-central Oklahoma’s SCOOP, Continental said total production was up 10 percent in the third quarter of 2018, compared to the same time a year ago. Oil production jumped by 33 percent.
The company is operating 16 drilling rigs in SCOOP, with 14 of those focused on drilling wells in its SpringBoard project area. It plans to add an additional two rigs to its SCOOP area by year’s end.
Gary Gould, Continental’s senior vice president of production and resource development, said the project area is beginning to really deliver operational efficiencies “that will translate to significant
additional value for our shareholders,” he said.
Continental Resources’ production from its North Dakota Bakken Shale field hit a quarterly record, averaging 167,643 barrels of oil equivalent per day. The company said it completed 42 operated wells that posted an average initial 24-hour flow rate of 2,013 barrels per day.
The company is using eight rigs in the play, up two, compared to the second quarter of 2018.
“The performance and returns from the Bakken has been exceptional,” said Jack Stark, Continental’s president.
“Our entire 2017 Bakken program, which included 133 operated wells, paid out by the end of the third quarter 2018. Now, that’s capital efficiency.”
Another notable achievement for the company in the third quarter was that it closed its deal with Franco-Nevada to create a new strategic minerals partnership, bringing in about $215 million in net proceeds for Continental.
Continental’s stock closed Monday at $50.37 a share, down $3.17 for the day.