Continental Resources - Deferring New Production Growth Until They See Stronger Commodity Prices
OKLAHOMA CITY - Earlier this month, Continental Resources Inc., announced plans to spend approximately $300 to $350 million less than its previously approved capital budget for 2015 to better align spending with cash flow at current commodity prices. The Company plans to defer well completion activity, except for where it has contractual considerations or it accomplishes specific strategic objectives. Continental is also reducing its operated rig count in the Bakken from 10 to eight rigs by the end of the month.
“While we do not believe today’s low commodity prices are sustainable long term, we are committed to living within cash flow until they recover,” said Harold Hamm, Chairman and Chief Executive Officer. “We are reducing capital expenditures to protect our balance sheet and to preserve the value of our world-class assets until commodity prices improve.”
Continental continues to expect production growth of 19% to 23% for the year, compared with 2014, but now expects to exit the year with production in a range of approximately 200,000 to 215,000 barrels of oil equivalent (Boe) per day. The bottom end of the range is 10,000 Boe per day below its previously stated outlook, reflecting an increase of inventory from the previously expected 100 gross operated wells that are drilled but not yet completed at year-end 2015 to the current estimate of 160 gross wells drilled but not yet completed at year-end 2015.
“We continue to focus on achieving cash flow neutrality in the current environment,” said John Hart, Chief Financial Officer. “We believe it is in the interest of shareholders to defer new production growth until we see stronger commodity prices. We can achieve this objective due to our focus on costs, operating efficiencies and having a large portion of our high-potential leasehold already held by production,” he said.
Hart states that Continental Resources are pleased with their results year-to-date, and operating performance versus guidance remains strong, especially in terms of production growth and cost controls. He adds, “Annual production growth is expected to be toward the top end of our guidance range, even with deferred completions…We will continue to review our spending plans and update our outlook as appropriate.”
Continental Resources is a top independent oil producer in the lower 48 United States and a leader in America’s energy renaissance. Based in Oklahoma City, Continental is the largest leaseholder and one of the largest producers in the nation’s premier oil field, the Bakken play of North Dakota and Montana.