By Jack Money – NewsOK — Continental Resources reported Monday it earned a first-quarter net income of $187 million, or 50 cents per share, on earnings of about $1.1 billion.
Officials attributed another strong earnings period to increased production in the Bakken, SCOOP and STACK plays, lower-than-predicted production expenses and improved cycle times that sped up work to drill and complete wells. The company’s net income for the first quarter of 2018 was about $234 million.
“Continental’s outstanding first quarter 2019 results reflect our commitment to our formula for success,” Harold Hamm, chairman and CEO, said in the earnings release.
Top-line news in the company’s first-quarter results was its growth on overall and oil production from the plays where it is actively drilling and completing wells.
The company reported its total production for the quarter was 332,236 barrels of oil equivalent daily, up 16% compared to the first quarter of 2018. The company reported oil production for the quarter, which averaged 193,921 barrels daily, climbed by 18% using the same comparison.
The most notable jump in overall production was in the Bakken Shale, where the average daily production of oil and natural gas was 199,423 barrels of oil equivalent, compared to 161,356 barrels in the first quarter of 2018.
Year-over-year first quarter production also climbed in the SCOOP and STACK plays of the Anadarko Basin.
Continental officials attributed the strong production growth in the Bakken to 55 wells it brought into production during the quarter, including several “step-out” wells it had drilled to test optimized completion technologies.
These strategic step-outs provide further proof that our optimized completion technology is uplifting well performance across all of our Bakken leasehold, even into Montana,” Jack Stark, Continental Resources’ president, stated in the release.
“This is great news for our shareholders as the value of our Bakken inventory of approximately 4,000 wells continues to grow.”
As for activities in the SCOOP, the company stated oil production growth from Project SpringBoard is ahead of schedule, noting it averaged about 14,000 barrels daily during the first 28 days of April and that Continental Resources subsequently has revised its growth target for daily production there to 18,000 barrels in the third quarter.
The company said it has 39 producing wells in SpringBoard, currently is drilling there with nine rigs and has 33 wells waiting to be completed.
In the STACK play, Continental Resources brought nine wells into production during the first quarter of the year.
Continental Resources reported its average net price for oil sales was $50.05 a barrel and that its net price for natural gas sales was $2.56 per thousand cubic feet during the first quarter.
At the same time, its production expenses per barrel of oil equivalent during the first quarter was $3.59, below the $3.75 to $4.25 it had estimated for the period. General and administrative expenses also were lower than what the company had predicted, officials said.
Continental received an average crude oil price of $4.77 per barrel less than the New York Mercantile Exchange daily average for the period. The discount from the market price improved by nearly 50 percent from the final quarter of 2018.
As for natural gas, wellhead pricing during the first quarter was 60 cents per thousand cubic feet below the pricing at Henry Hub. However, the company received about $13 million in cash gains from its hedges on the fuel during the period, officials said.
For the balance of 2019, the company is hedging about 563 million cubic feet of natural gas daily at $2.80 a thousand cubic feet.
Continental Resources’ capital expenditures in the first quarter was $750 million, with $631 million of that used for drilling and completing wells. Officials said it spent $14.8 million to acquire leasehold and $51.3 million to acquire minerals, of which 80% was recouped from Franco-Nevada, and spent $53 million for workovers, recompletions and other projects.
Officials said improved efficiencies allowed it to spud and complete more wells during the quarter than had been planned without adding rigs or completion crews.
Continental Resources had about $264 million in cash at the end of the quarter and $5.77 billion in debt, with plans to reduce that by a half-billion dollars by the end of the year.
Hamm attributed the company’s success in the first quarter to well-laid plans.
“The combination of high-quality Bakken and Oklahoma assets with efficient, low-cost operations translates to strong corporate returns and sustainable cash flow generation,” he said.
BY JACK MONEY
BUSINESS WRITER JMONEY@OKLAHOMAN.COM
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