Bearish Stock To Watch: Continental Resources, Inc. (NYSE: CLR)

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Continental Resources, Inc. (NYSE: CLR) stock fell over 3.8% in the pre-market session of Feb 17th, 2021 (Source: Google finance) after the company posted mixed results for the fourth quarter of FY 20. CLR has raised its capital budget and forecast a rise in its crude oil and natural gas output this year, building on a recent recovery in commodity prices from pandemic-led historic lows. Continental also said it acquired 130,000 net acres and about 9,000 barrels of oil equivalent per day of production in the Powder River Basin for $215 million, adding more oil weighted assets to its portfolio. Separately, rival Devon Energy Corp, which completed a merger with WPX Energy last month, also set a higher budget for 2021 and raised its previous production forecast due to better efficiency at its wells in the Delaware Basin. Further, the fourth quarter 2020 total production were of average 339,307 Boepd. The fourth quarter 2020 oil production were of average 176,639 Bopd. The fourth quarter 2020 natural gas production were of average 976.0 MMcfpd.

Moreover, the Company has achieved its 2020 completed well cost targets in both the Bakken and Oklahoma, with go forward well costs in the Bakken of approximately $690 per lateral foot, at a 10,000′ lateral length, and in Oklahoma of approximately $1,070 per lateral foot, at an 8,200′ lateral length. These all-in well costs include drilling and completion (D&C), full facilities and artificial lift. The cost savings are 70% to 80% structural and are being on the back of a reduction in drilling cycle times, stage counts, proppant volumes and stimulation days, as well as the optimization of artificial lift.

CLR in the fourth quarter of FY 20 has reported the adjusted loss per share of 23 cents, missing the analysts’ estimates for the adjusted loss per share of 6 cents, according to Zacks Investment Research. The company had reported the adjusted revenue of $837.6 million in the fourth quarter of FY 20, beating the analysts’ estimates for revenue of $769.7 million.

For 2021, the company projects a $1.4 billion in capital spending, up from a previous forecast of between $1.2 billion and $1.3 billion and average crude oil production to be in the range of 160,000 to 165,000 barrels per day, compared with 2020 production of 160,505 barrels per day. Continental expects to end 2021 with a working backlog of 135 gross operated wells in various stages of completion.

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