Continental Resources - $CLR.US

What’s Continental Resources Business Model?

Continental Resources, Inc., based in Oklahoma City, is focused on the exploration and production of on-shore oil-prone plays in the United States. The Company concentrates its leasehold and production strategies in the Bakken of North Dakota and Montana, as well as Oklahoma in its recently discovered SCOOP play and the Northwest Cana play.

What Continental Resources is doing in more details?

One of the top independent energy companies in the US, Continental Resources primarily focuses on exploration, development, and production of crude oil and natural gas in the country’s premier oil field, the Bakken of North Dakota, Red River units, and Montana. Additionally, the company has leading positions in two major plays near its home-base of Oklahoma?the SCOOP (South Central Oklahoma Oil Province) and STACK (Sooner Trend Anadarko Canadian Kingfisher). With around 1.6 million net acres of leased land to its name, Continental Resources maintains around 1,600 MMboe of proved reserves, more than 45% being crude oil. It reports a production average around 365,000 Boe per day from about 2,800 net producing wells.

Where Continental Resources is Operating?

Continental Resources divides up its operations by geography into the North, South, and East regions.

Its properties in the North region — largely the Bakken field — hold half of the company’s total proved reserves and account for approximately 55% of its daily production. Continental Resources is one of the largest leaseholders (around 800,000 net acres) of the Bakken in North Dakota and Montana.

The company’s South Region represents most of the other half of total proved reserves and accounts for around 45% of daily average production. The principal producing properties in the South region are in the SCOOP and STACK areas of Oklahoma.

The SCOOP play currently extends across Garvin, Grady, Stephens, Carter, McClain and Love counties in Oklahoma, where Continental Resources holds around 260,000 net acres under lease. The STACK play is in the Anadarko Basin of Oklahoma, where around 220,000 net acres are leased out to the company.

A majority of this leased area falls in the over-pressured portions of Blaine, Dewey and Custer counties that deliver superior production rates.

Where is the geographical reach of Continental Resources?

Headquartered in Oklahoma, Continental Resources has assets in three US regions: North (Kansas and west of the Mississippi River, including North Dakota Bakken, Montana Bakken, and the Red River); South (properties south of Nebraska and west of the Mississippi River including SCOOP and STACK resource plays); and East (undeveloped leasehold acreage east of the Mississippi River with no current drilling or production operations).

What is Continental Resources’ Sales and Marketing Strategy?

Continental Resources sells crude oil production to refining companies and midstream energy marketing companies. Its three major properties — Bakken, SCOOP, and STACK — are directly connected to pipeline gathering systems.

A small portion of its production is also distributed via trucks (either directly to a refinery or to a point on a pipeline system for further delivery) and railways connected to the several purchasers of Bakken productions.

The company’s natural gas production is sold under term contracts to midstream purchasers. These contracts typically include multi-year term agreements, many with acreage dedication.

Valero Energy Corporation is Continental’s biggest customer and the only one to account for nearly 15% of annual sales.

What is Continental Resources’ Sales and Marketing Strategy?

Continental’s revenue has been fluctuating for the last five years, with an overall growth of 73%.

In 2019, Continental’s revenue dipped 2% to $4.6 billion.

Net income declined 22% to $776 million.

Continental’s cash balance dropped $243.3 million to $39.4 million during 2019. Operating activities generated $3.1 billion while its investing activities used $2.8 billion and financing used $587.1 million.

What is Continental Resources Future Strategy?

Continental’s business strategies continue to be focused on increasing shareholder value by finding and developing crude oil and natural gas reserves at low costs that provide attractive rates of return. The principal elements of this strategy include:

Growing and sustaining a premier portfolio of assets focused on increasing shareholder value through free cash flow generation and shareholder capital return initiatives; generating corporate returns on capital employed that compete with the broader market through operational excellence, technical innovations, pad and row development, optimized completions, well productivity, and strategic mineral ownership; maintaining capital discipline, financial flexibility, and a strong balance sheet; and focusing on organic growth through disciplined capital investments.

What is Continental Resources’ Background?

In 1967 CEO Harold Hamm founded Continental’s Resources’ predecessor, Shelly Dean Oil Company. Continental Resources came into its current being in 1980 to explore for, develop and produce crude oil and natural gas properties.

Through the 1980s, its activities and growth remained focused primarily in Oklahoma. In the next two decades, the company expanded its activity into the North region of Bakken. Since 2010, the company has also expanded operations in the South, with increased operation in the SCOOP and STACK plays.

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