Continental Resources headquarters in downtown Oklahoma City, Wednesday, August 5, 2015. Photo by Doug Hoke, The Oklahoman
Continental Resources Inc. on Tuesday reported a second-quarter loss of $63.6 million even as it boosted production and raised its guidance for the year.
The Oklahoma City-based oil and natural gas company lowered its drilling budget because of lower-than-expected commodity prices, but executives said production still will increase.
"Continental remained disciplined and strategic with its capital spending during the quarter," CEO Harold Hamm said in a statement Tuesday. "The results have been exceptional, raising our production guidance for 2017 and lowering our guidance for operating costs."
Continental executives said they now plan to spend between $1.75 billion and $1.95 billion on capital expenditures this year, based on an estimated oil price of between $45 and $51 a barrel. The company began the year with an estimated budget of $1.95 billion, based on an estimated oil price of $55.
Despite lowering the spending plans, executives also increased their production guidance by 10,000 barrels of oil equivalent per day. The company now is expected to average within a range 230,000 to 240,000 equivalent barrels for the full year.
Continental is expected to finish the year with daily production in a range of 260,000 to 275,000 equivalent barrels a day, up from previous guidance of 250,000 to 260,000. The production increase is fueled by increased drilling efficiency and stronger-than-expected production from many of the wells, the company said.
"The continuous improvements we are achieving position Continental for even better results in 2018," Hamm said.
The second-quarter loss of $63.6 million translates to 17 cents a share, compared to a loss of $119 million, or 32 cents, in the second quarter of 2016. Adjusting for one-time items, the company had a loss of $1.8 million, or less than a penny a share, compared to an adjusted loss of $65.9 million, or 18 cents a share, one year ago.
Revenues increased to almost $661 million, up from $451 million in the year-ago period. Continental posted earnings before interest, taxes, depreciation, amortization and drilling expense of $479 million, down from $528 million in the year-ago quarter.
"Continental’s results through the first half of the year reflect strong outperformance and continued operating cost and capital expenditure discipline," Chief Financial Officer John Hart said in a statement.
Continental produced more than 226,000 barrels of oil per day in the second quarter, up from about 219,000 per day in the year-ago quarter. The company’s average sales price was $41.91 per barrel of oil and $2.63 per thousand cubic feet of natural gas, up from $38.38 oil and $1.31 natural gas in the year-ago quarter.
Continental completed 100 wells in the Bakken in the second quarter and finished the quarter with 205 drilled, uncompleted wells.
In the STACK, the company completed 36 new wells and plans to have nine operated rigs by the end of August. Continental completed eight SCOOP wells and has five rigs working in the area.
Also on Tuesday, Continental executives said they have agreed to two sales of leases in Oklahoma for a total of almost $148 million. The company said it will sell 6,590 net acres of noncore leases in Blaine County for $72.5 million and 26,000 acres in Atoka, Coal, Hughes and Pittsburg counties for $68 million. The company also is selling oil-loading facilities in Oklahoma for $7 million.
Continental shares slipped 42 cents, or 1.3 percent, to $32.44 Tuesday, but regained 17 cents, or 0.5 percent to $32.80 in aftermarket trading after the earnings announcement.