Continental becomes latest U.S. shale producer to cut budget

(Reuters) – Continental Resources Inc cut its 2017 capital budget on Tuesday, the latest U.S. shale oil producer to cut back on drilling and fracking equipment amid tepid crude prices.

The company, which is majority controlled by Chief Executive Harold Hamm, said it would spend $1.75 billion to $1.95 billion this year, down from a prior $1.95 billion target. Continental said it can be cash flow neutral – that is, spend as much as it makes – with oil prices between $45 and $51 per barrel.

By cutting its budget, Continental is following the direction of many of its U.S. shale peers, who have already cut more than $1.2 billion from their spending plans for the year.

Shares of Continental rose 1.1 percent to $32.80 in after-hours trading.

Yet even as it cut spending and said it would use fewer drilling rigs and fracking crews in North Dakota and Oklahoma – its two main areas of operations – Continental said its production this year would rise at the midpoint by about 4 percent to 230,000 to 240,000 barrels of oil equivalent per day (boe/d).

“The continuous improvements we are achieving position Continental for even better results in 2018,” Hamm said in a statement.

The company posted a net loss of $63.6 million, or 17 cents per share, compared with a net loss of $119.4 million, or 32 cents per share, in the year-ago quarter.

Excluding one-time items, Continental broke even during the quarter. By that measure, analysts expected a loss of a penny per share, according to Thomson Reuters I/B/E/S.

Production in the period rose about 6 percent to 226,213 boe/d.

The Oklahoma City-based company is slated to discuss its quarterly results on Wednesday with investors.

SOURCE: Business Insider (Reporting by Ernest Scheyder in Houston; Editing by Lisa Shumaker)

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