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|Continental Resources Announces First Quarter 2009 Results|
Net income included a pre-tax property impairment charge of
The 2009 impairment charge included
Continental continued to increase crude oil and natural gas production in
the first quarter of 2009. Average daily production was 36,808 Boepd (barrels
of oil equivalent per day) for the quarter, a 22 percent increase over the
first quarter of 2008 and a two percent increase over the fourth quarter of
2008. Total production for the first quarter of 2009 was 3.3 MMBoe, compared
with 2.8 MMBoe for the first quarter of 2008. Production grew despite the
continued reduction in drilling activity. Continental is currently operating
four drilling rigs, compared with 32 operated rigs in
"We are conserving cash and preserving the strength of our balance sheet,"
The Company's average sales price per barrel of oil equivalent was
Crude oil price differentials averaged
Despite increased production, total oil and natural gas sales fell to
Capital expenditures were
The following table contains financial and operating highlights for the first quarter of 2009 compared to the first quarter of 2008.
Three months ended March 31, ---------------------------- 2009 2008 ---- ---- Average daily production: Oil (Bopd) 26,578 24,043 Natural gas (Mcfd) 61,382 37,160 Oil equivalents (Boepd) 36,808 30,237 Average prices: (1) Oil ($/Bbl) $34.99 $90.55 Natural gas ($/Mcf) 2.98 7.55 Oil equivalents ($/Boe) 29.90 81.35 Production expense ($/Boe) (1) 7.24 8.33 EBITDAX (in thousands) 57,673 183,968 Net income (loss) (in thousands) (26,613) 87,971 Diluted net income (loss) per share (0.16) 0.52 (1) Average prices and per-unit production expense are calculated based on sales volumes. Crude oil production exceeded sales volumes in the first quarter of 2009 by 216 MBbls. Crude oil sales volumes exceeded oil production in the first quarter of 2008 by 19 MBbls. The following table presents average daily production for the Company's principal operating areas for the quarters ended
Continental generated its strongest production growth in the North Dakota
Bakken and the Arkoma Woodford plays in the first quarter of 2009. North
Red River Units
Production in the Red River Units was 14,162 Boepd in the first quarter of 2009, accounting for 39 percent of Continental's production. During the quarter, the Company continued to convert producing wells to injector wells as part of its secondary recovery program. Under this program, the Company expects production in the Units to peak in 2010.
Production in the Bakken Shale of
Increased Bakken production was concentrated in
Continental participated in completing 26 gross wells (7.4 net) in
In terms of Company-operated wells, Continental completed 12 gross wells (5.3 net) in the North Dakota Bakken in the first quarter of 2009, with all but one targeting the Three Forks/Sanish (TFS) zone in the play. Initial production for the TFS wells averaged 503 Boepd in seven-day test periods.
Among these wells, notable completions are shown below with production period test results in gross barrels:
-- Parrish 1-31H (46% WI) in
The Company's Middle Bakken (MB) zone well in the first quarter of 2009 was the Rossow 1-10H (52% WI) in Divide County, which produced 329 Boepd during its initial seven-day test period.
Since the beginning of the second quarter of 2009, Continental has participated in completing five notable wells in McKenzie County. Two were Company-operated wells that targeted the TFS zone:
Three other wells were drilled by
-- Iron Horse 31-2H (25% WI) -- 1,085 Boepd;
Significant Reservoir Test
Continental is currently drilling a Middle Bakken "companion well" to a TFS producing well in McKenzie County. The companion well, the Mathistad 2-35H, is being drilled with a lateral well bore in the MB zone approximately 60 feet above and 200 feet to the side of the existing Mathistad 1-35H well bore. The Mathistad 1-35H was completed in mid-2008, producing 1,260 Boepd from the TFS zone during its initial seven-day test period.
The Company will monitor pressures and performance of both wells during and after completion of the new well to determine whether the MB and TFS zones act as separate producing reservoirs in that part of the play. The Company believes the two zones are not in communication over most of the play, based on reservoir simulation and fracture modeling.
In the Montana Bakken, the Company continued to implement its 320-acre infield and field-extension program in the first quarter of 2009. Notable completions included the Mondalin 3-10H (71% WI) and the Stoney Butte Farms 3-17H (83% WI), which produced at 625 and 474 Boepd, respectively, in their initial seven-day test periods.
The Company also re-entered an existing open-hole producer well, Constance 2-18H, cleaned it out to total depth, installed a liner with swell packers, and then fracture-stimulated it using the plug-perforation technique. After almost three months of production, the well is still producing an incremental 150 Boepd. Other wells in Richland County are being reviewed for possible re-completion.
As previously announced, Continental also commenced a pilot carbon dioxide
injection project during the first quarter of 2009 to evaluate the potential
for enhanced recovery of oil in Richland County,
Production in the Arkoma Woodford shale play was 4,799 Boepd in the first quarter of 2009, accounting for 13 percent of Continental's total production. The Arkoma production volume was 153 percent higher than that for the first quarter of 2008 and 47 percent higher than fourth quarter 2008 production. The Company participated in 27 gross wells (4.4 net) during the first quarter of 2009. Continental currently has one operated rig in the Arkoma and one operated rig drilling in the Anadarko Woodford.
Conference Call Information
Continental Resources will host a conference call on
Dial in: (888) 680-0879
Continental management is currently scheduled to present
Continental Resources is a crude-oil concentrated, independent oil and
natural gas exploration and production company with operations in the Rocky
Mountain, Mid-Continent and Gulf Coast regions of the
This press release includes forward-looking information that is subject to
a number of risks and uncertainties, many of which are beyond the Company's
control. All information, other than historical facts included in this press
release, regarding strategy, future operations, drilling plans, estimated
reserves, future production, estimated capital expenditures, projected costs,
the potential of drilling prospects and other plans and objectives of
management are forward-looking information. All forward-looking statements
speak only as of the date of this press release. Although the Company believes
that the plans, intentions and expectations reflected in or suggested by the
forward-looking statements are reasonable, there is no assurance that these
plans, intentions or expectations will be achieved. Actual results may differ
materially from those anticipated due to many factors, including oil and
natural gas prices, industry conditions, drilling results, uncertainties in
estimating reserves, uncertainties in estimating future production from
enhanced recovery operations, availability of drilling rigs and other
services, availability of crude oil and natural gas transportation capacity,
availability of capital resources and other factors listed in reports we have
filed or may file with the
EBITDAX represents earnings before interest expense, income taxes, depreciation, depletion, amortization and accretion, property impairments, exploration expense, unrealized derivative gains and losses, and non-cash compensation expense. EBITDAX is not a measure of net income or cash flow as determined by generally accepted accounting principles (GAAP). Management uses EBITDAX to assess the operating results. Management believes EBITDAX is useful because it allows them to more effectively evaluate the Company's operating performance and compare the results of its operations from period to period without regard to its financing methods or capital structure. The Company excludes depreciation, accretion, amortization, property impairments, unrealized derivative gains and losses and non-cash compensation expense as these amounts can vary substantially from company to company within its industry depending upon accounting methods and book values of assets, capital structures and the method by which the assets were acquired. EBITDAX should not be considered as an alternative to, or more meaningful than, net income or cash flow as determined in accordance with GAAP or as an indicator of a Company's operating performance or liquidity. Certain items excluded from EBITDAX are significant components in understanding and assessing a company's financial performance, such as a company's cost of capital and tax structure, as well as the historic costs of depreciable assets, none of which are components of EBITDAX. The Company's computations of EBITDAX may not be comparable to other similarly titled measures of other companies. The Company believes that EBITDAX is a widely followed measure of operating performance and may also be used by investors to measure its ability to meet future debt service requirements, if any. The Company's credit facility requires that it maintain a total debt to EBITDAX ratio of no greater than 3.75 to 1 on a rolling four-quarter basis. The credit facility defines EBITDAX consistently with the definition of EBITDAX utilized and presented by the Company. The following table represents a reconciliation of the Company's net income to EBITDAX.
Three months ended ------------------ March 31, ---------- (in thousands) 2009 2008 ---- ---- (unaudited) Net income (loss) $(26,613) $87,971 Unrealized oil derivative loss 0 2,180 Income tax expense (benefit) (16,259) 50,610 Interest expense 4,587 3,411 Depreciation, depletion, amortization and accretion 50,697 28,646 Property impairments 35,425 4,520 Exploration expense 7,119 5,262 Equity compensation 2,717 1,368 ----- ----- EBITDAX $57,673 $183,968 ------- --------
SOURCE Continental Resources