Continental Resources posts first-quarter loss
Continental Resources cited a 30% drop in the global demand for oil as a significant factor in a loss it posted for its first quarter on Monday.
In a release posted before markets opened, the company stated it lost about $186 million, or 51 cents per share, on total revenues of about $880.8 million.
In the first quarter of 2019, it posted a net income of about $187 million, or 50 cents per share, on total revenues of about $1.1 billion.
The company also revealed in its filing it curtailed oil production from the Bakken Shale field in North Dakota and Montana and its Anadarko Basin SCOOP and STACK fields in Oklahoma by 70% for May.
The company doesn't hedge any of its oil production to protect itself from rapid devaluations for the commodity.
“This has been an unprecedented global market environment, which has seen crude oil demand fall by approximately 30% due to the COVID-19 pandemic,” Bill Berry, the company's CEO, stated as part of the earnings release.
“Continental is committed to preserving value over volumes. Our assets are secure and we are confident that this deferred production will bring more value to our shareholders in the months to come,” he continued.
The company reported its first-quarter year-over-year total production climbed 9%, averaging 360,841 barrels of oil (equivalent) per day.
Officials said its natural gas production climbed 19%, while its oil production climbed by 3%.
“Our assets continued to deliver consistent and repeatable results in the first quarter,” Jack Stark, Continental's president and chief operating officer, stated as part of the release.
Stark noted that ongoing operational improvements were continuing to drive down the company's perbarrel costs.
Officials stated Continental Resources is running five drilling rigs and expects to cut that number by one between now and the end of this year.
It quit completing wells in its Bakken operational area, and only plans to use one stimulation crew to work on its Oklahoma wells during the remainder of the year.
The company reported Monday it took a non-cash impairment charge of $222.5 million, mainly involving non-core assets, during the first quarter of 2020 because of the significant decline in global crude pricing during the period.
“Additionally, the company recognized a $24.5 million impairment in first quarter 2020 to reduce the value of its crude oil inventory to estimated net realizable value at March 31,” the release stated.
As for the company's long-term debt, it currently has nearly $6 billionset to be retired between 2022 and 2044, with about $2.5 billion due between now and the end of 2023.
It currently has drawn $735 million on its $1.5 billion credit facility, including $500 million collected in March to boost its cash on hand.
Earlier this year, Continental announced it would cut its capital expenditures to about $1.2 billion for 2020. On Monday, it stated current expenses are tracking between 3% and 5% lower, realized through efficiency gains and other savings company officials have identified.
“Our first quarter results underscore the capital efficient and low cost nature of our assets,” Berry stated. “We remain keenly focused on preserving both our assets and shareholder value for better commodity prices in the future.
“I want to thank our teams for their safe, efficient and best-in-class operations during this time. We look towards a bright future for both Continental and the U.S. oil and natural gas industry.”