OKLAHOMA CITY, Feb. 26, 2020 /PRNewswire/ --
Full-Year 2019 Results
$775.6 Million (MM) in Net
Income, or $2.08 per Diluted
Share
• $838.7 MM
Adjusted Net Income, or $2.25 per
Diluted Share (Non-GAAP)
340,395 Boepd Average Daily Production, up 14% Year-over-Year
(YoY)
• 197,991
Bopd Average Daily Oil Production; up 18% YoY
$3.1 Billion (B) of Cash Flow
from Operations; $608 MM of Free Cash
Flow (non-GAAP)
$406 MM in Shareholder Capital
Return
• $190
MM Share Repurchases and $18 MM
Quarterly Dividend
• $442 MM Total Debt
Reduction; $198 MM Net Debt Reduction
(Non-GAAP)
No. 1 Oil Producer in Both the Bakken and Oklahoma
• Bakken:
148,416 Average Daily Oil Production up 14% YoY
• South: 41,695 Average
Daily Oil Production up 43% YoY
4Q19 Results
$193.9 MM in Net Income,
or $0.53 per Diluted
Share
• $203.6 MM
Adjusted Net Income, or $0.55 per
Diluted Share
365,341 Boepd Average Daily Production; up 13%
YoY
• 206,249 Bopd
Average Daily Oil Production; up 10% over 4Q18
2020 Capital Budget & Guidance
$2.9 B to $3.0 B of Cash Flow from Operations; $350 MM to $400 MM
of Free Cash Flow
• Budgeted at
$55 WTI and $2.50 HH; $5 Change
in WTI = Approx. $300 MM in Cash Flow
Targeting 4% to 6% Production Growth YoY Delivers Average
Approx. 10% CAGR for
2019-2020
• Large
Projects in 2020 Projected to Drive Double Digit Growth from FY
2020 to 4Q21
$2.65 B Capital Spend in 2020;
Flat Capital Spend YoY
• $2.2 B Drilling &
Completions; $125 MM for Mineral
Acquisitions ($100 MM Funded by
FNV)
• Approx. 20% Lower
Capital Spend in 2020 than Original Five Year Vision Estimate
• Approx. $700 MM Capital Spend in 2020 with First
Production Expected in 2021
Expect to Continue Delivering Lowest Cost Operations Amongst
Oil-Weighted
Peers
• $3.50 to
$4.00 LOE per Boe | $1.60
to $2.00 Total G&A per Boe
Continental Resources, Inc. (NYSE: CLR) (the "Company") today
announced its full-year 2019 and fourth quarter 2019 operating and
financial results, as well as its 2020 capital expenditures budget
and operating plan.
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The Company reported full-year 2019 net income of $775.6 million, or $2.08 per diluted share. The Company's net income
includes certain items typically excluded by the investment
community in published estimates, the result of which is referred
to as "adjusted net income." For full-year 2019, typically excluded
items in aggregate represented $63.1
million, or $0.17 per diluted
share. Adjusted net income for full-year 2019 was $838.7 million, or $2.25 per diluted share (non-GAAP). Net cash
provided by operating activities for full-year 2019 was
$3.12 billion and EBITDAX was
$3.45 billion (non-GAAP).
The Company reported net income of $193.9
million, or $0.53 per diluted
share, for the quarter ended December 31,
2019. In fourth quarter 2019, typically excluded items in
aggregate represented $9.7 million,
or $0.02 per diluted share, of
Continental's reported net income. Adjusted net income for fourth
quarter 2019 was $203.6 million, or
$0.55 per diluted share (non-GAAP).
Net cash provided by operating activities for fourth quarter 2019
was $803.8 million and EBITDAX was
$905.5 million (non-GAAP).
Adjusted net income, adjusted net income per share, EBITDAX,
free cash flow, net debt, net sales prices and cash general and
administrative (G&A) expenses per barrel of oil equivalent
(Boe) presented herein are non-GAAP financial measures. Definitions
and explanations for how these measures relate to the most directly
comparable U.S. generally accepted accounting principles (GAAP)
financial measures are provided at the conclusion of this press
release.
2019 Production Update
Full-year 2019 production increased 14% over full-year 2018,
averaging 340,395 barrels of oil equivalent per day (Boepd). 2019
oil production increased 18% over 2018, averaging 197,991 barrels
of oil per day (Bopd). 2019 natural gas production increased 10%
over 2018, averaging 854.4 million cubic feet per day (MMcfpd).
Fourth quarter 2019 total production increased 13% over fourth
quarter 2018, averaging 365,341 Boepd. Fourth quarter 2019 oil
production increased 10% over fourth quarter 2018, averaging
206,249 Bopd. Fourth quarter 2019 natural gas production increased
16% over fourth quarter 2018, averaging 954.6 MMcfpd.
The following table provides the Company's average daily
production by region for the periods presented.
|
|
4Q
|
|
4Q
|
|
FY
|
|
FY
|
Boe per
day
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
Bakken
|
|
194,156
|
|
183,836
|
|
194,691
|
|
167,800
|
South
|
|
163,552
|
|
131,088
|
|
137,579
|
|
121,265
|
All other
|
|
7,633
|
|
9,077
|
|
8,125
|
|
9,125
|
Total
|
|
365,341
|
|
324,001
|
|
340,395
|
|
298,190
|
2019 Operations Update
"Operationally, 2019 was an exceptional year. We met or exceeded
all of our guidance and delivered 18% oil production growth
year-over-year. We also consummated strategic trades, bolt-on
acquisitions and leasing in Continental-dominated core areas for
approximately $165 million, adding up
to 370 gross operated locations to our deep inventory position,"
said Harold Hamm, Executive
Chairman.
CLR Bakken: #1 Bakken Oil Producer; 148,416 Average Daily
2019 Oil Production up 14% over 2018
In 2019, Bakken oil production increased 14% over 2018,
averaging 148,416 Bopd. Bakken total production increased 16% over
2018, averaging 194,691 Boepd. During the year, the Company
completed 172 gross (119 net) operated wells with first production.
These 2019 Bakken program wells are performing in line with wells
completed in the Company's 2017 and 2018 Bakken programs, each of
which paid out in approximately one year. The 2019 program wells
are approximately 75% paid out, as of January 2020. The 2020 Bakken program is
projected to continue this performance trend.
CLR South: #1 OK Oil Producer; 41,695 Average Daily 2019 Oil
Production up 43% over 2018
In 2019, South oil production increased 43% over 2018, averaging
41,695 Bopd. South total production increased 13% over 2018,
averaging 137,579 Boepd. During the year, the Company completed 140
gross (98 net) operated wells with first production in the South.
In SCOOP, Project SpringBoard produced an average 25,006 net Bopd,
outperforming the Company's expectations announced in third quarter
2018 by 50%.
Year-End 2019 Proved Reserves
The Company's year-end 2019 proved reserves grew 6%
year-over-year to 1,619 MMBoe, as of December 31, 2019. These additions equate to a
reserve replacement ratio of 178% for 2019 (defined as total change
in proved reserves, excluding production, divided by production).
SEC prices used for calculating proved reserves were approximately
$10.00 less per barrel WTI and
$0.50 less per Mcf gas than the SEC
prices used in the prior year. The Company's proved reserves have
grown by 32% since December 31, 2015
and these additions equate to a four year reserve replacement ratio
of 198%.
2019 Financial Update
"In 2019, Continental maintained capital discipline and
generated strong corporate returns with an 11% return on capital
employed (ROCE). The Company also delivered $190 million in share repurchases, approximately
$200 million in net debt reduction
and the initiation of the Company's quarterly dividend," said
John Hart, Chief Financial
Officer.
|
|
Three Months
Ended
|
|
Year Ended
|
2019 Financial
Update
|
|
December 31,
2019
|
December 31,
2019
|
Cash and Cash
Equivalents
|
|
|
|
$39.4
million
|
Total Debt
|
|
|
|
$5.33
billion
|
Net Debt
(non-GAAP)(1)
|
|
|
|
$5.29
billion
|
Average Net Sales
Price (non-GAAP)(1)
|
|
|
|
|
Per Barrel of
Oil
|
|
$51.33
|
|
$51.82
|
Per Mcf of
Gas
|
|
$1.73
|
|
$1.77
|
Per Boe
|
|
$33.49
|
|
$34.56
|
Production Expense
per Boe
|
|
$3.31
|
|
$3.58
|
Total G&A
Expenses per Boe
|
|
$1.59
|
|
$1.57
|
Crude Oil
Differential per Barrel
|
|
($5.52)
|
|
($5.15)
|
Natural Gas
Differential per Mcf
|
|
($0.77)
|
|
($0.86)
|
Non-Acquisition
Capital Expenditures
|
|
$541.3
million
|
|
$2.66
billion
|
Exploration &
Development Drilling & Completion
|
|
$467.8
million
|
|
$2.2
billion
|
Leasehold
|
|
$18.1
million
|
|
$86.8
million
|
Minerals, of which
80% was Recouped from FNV
|
|
$10.3
million
|
|
$130.0
million
|
Workovers,
Recompletions and Other
|
|
$45.1
million
|
|
$198.3
million
|
|
(1) Net debt and net
sales prices represent non-GAAP financial measures. Further
information about these non-GAAP financial measures as well as
reconciliations to the most directly comparable U.S. GAAP financial
measures are provided subsequently under the header Non-GAAP
Financial Measures.
|
2020 Capital Budget & Guidance
"In 2020, Continental will prioritize maximizing shareholder
capital return in the form of share repurchases, debt reduction and
dividends. With our strong portfolio and disciplined approach to
value creation, we will continue to increase capital and corporate
returns for our shareholders," said Bill
Berry, Chief Executive Officer.
The 2020 capital budget is projected to generate $2.9 to $3.0
billion of cash flow from operations and $350 to $400
million of free cash flow for full-year 2020 at $55 per barrel WTI and $2.50 per Mcf Henry Hub. A $5 change per barrel WTI is estimated to impact
annual cash flow by approximately $300
million.
Annual crude oil production is projected to range between
198,000 to 201,000 Bopd. Annual natural gas production is projected
to range between 935,000 to 960,000 Mcfpd. The Company is targeting
4% to 6% annual production growth year-over-year, which is expected
to average an approximately 10% CAGR for 2019 and 2020. The Company
believes the projected growth range is appropriate given prevailing
market conditions and outperformance in 2019. Cumulative volumes
are projected to be on track with the Company's original Five Year
Vision estimates for 2019 and 2020.
The Company's 2020 capital expenditures budget is flat
year-over-year at $2.65 billion.
Estimated Capex spend is approximately 20% lower than the Company's
original Five Year Vision estimate for 2020. An estimated
$700 million of capital to be spent
in 2020 will not realize first production until 2021 as the Company
prioritizes large scale multi-pad development projects in SCOOP and
Bakken Long Creek.
Consequently, at year-end 2020, the Company expects to have a
working backlog of approximately 242 gross operated wells in
progress in various stages of completion, which is 12% higher than
year-end 2019. This includes 188 gross operated wells in the
Bakken, which is 42% higher than year-end 2019.
The Company is allocating approximately $2.2 billion to drilling and completion (D&C)
activities, of which approximately 60% is allocated to the Bakken
and approximately 40% to Oklahoma.
The non-D&C capital is planned to be primarily focused on
leasehold, mineral acquisitions, workovers and facilities.
The Company is allocating approximately $125 million to the previously announced mineral
royalty agreement. With a carry structure in place, $100 million of capital costs will be funded by
Franco-Nevada and the Company expects to earn 50% of total revenue
generated from this strategic relationship in 2020.
In 2020, the Company plans to deliver approximately 8% ROCE at
$55 WTI.
"Looking to 2020 and beyond, Continental expects to continue to
be the low cost leader among our oil-weighted peers as we maximize
performance and returns from our growing, high quality assets,"
said Jack Stark, President and Chief
Operating Officer.
The Company's full 2020 guidance, capital expenditures budget
and operating details can be found at the conclusion of this press
release.
The following table provides the Company's production results,
per-unit operating costs, results of operations and certain
non-GAAP financial measures for the periods presented. Average net
sales prices exclude any effect of derivative transactions.
Per-unit expenses have been calculated using sales volumes.
|
Three months ended
December 31,
|
|
Year ended December
31,
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
Average daily
production:
|
|
|
|
|
|
|
|
Crude oil (Bbl per
day)
|
206,249
|
|
186,934
|
|
197,991
|
|
168,177
|
Natural gas (Mcf per
day)
|
954,556
|
|
822,402
|
|
854,424
|
|
780,083
|
Crude oil equivalents
(Boe per day)
|
365,341
|
|
324,001
|
|
340,395
|
|
298,190
|
Average net sales
prices (non-GAAP), excluding effect from derivatives:
(1)
|
|
|
|
|
|
|
|
Crude oil
($/Bbl)
|
$
51.33
|
|
$
50.06
|
|
$
51.82
|
|
$
59.19
|
Natural gas
($/Mcf)
|
$
1.73
|
|
$
3.26
|
|
$
1.77
|
|
$
3.01
|
Crude oil equivalents
($/Boe)
|
$
33.49
|
|
$
37.13
|
|
$
34.56
|
|
$
41.25
|
Production expenses
($/Boe)
|
$
3.31
|
|
$
3.50
|
|
$
3.58
|
|
$
3.59
|
Production taxes (%
of net crude oil and gas sales)
|
8.1%
|
|
8.2%
|
|
8.3%
|
|
7.9%
|
DD&A
($/Boe)
|
$
16.45
|
|
$
16.41
|
|
$
16.25
|
|
$
17.09
|
Total general and
administrative expenses ($/Boe) (2)
|
$
1.59
|
|
$
1.65
|
|
$
1.57
|
|
$
1.69
|
Net income
attributable to Continental Resources (in
thousands)
|
$193,946
|
|
$197,738
|
|
$
775,641
|
|
$
988,317
|
Diluted net income
per share attributable to Continental Resources
|
$
0.53
|
|
$
0.53
|
|
$
2.08
|
|
$
2.64
|
Adjusted net income
(non-GAAP) (in thousands) (1)
|
$203,589
|
|
$201,686
|
|
$
838,723
|
|
$1,066,237
|
Adjusted diluted net
income per share (non-GAAP) (1)
|
$
0.55
|
|
$
0.54
|
|
$
2.25
|
|
$
2.84
|
Net cash provided by
operating activities (in thousands)
|
$803,812
|
|
$955,267
|
|
$3,115,688
|
|
$3,456,008
|
EBITDAX (non-GAAP)
(in thousands) (1)
|
$905,525
|
|
$850,640
|
|
$3,447,033
|
|
$3,623,373
|
|
(1) Net sales prices,
adjusted net income, adjusted diluted net income per share, and
EBITDAX represent non-GAAP financial measures. Further information
about these non-GAAP financial measures as well as reconciliations
to the most directly comparable U.S. GAAP financial measures are
provided subsequently under the header Non-GAAP Financial
Measures.
|
|
(2) Total general and
administrative expense is comprised of cash general and
administrative expense and non-cash equity compensation expense.
Cash general and administrative expense per Boe was $1.15, $1.18,
$1.15, and $1.25 for 4Q 2019, 4Q 2018, FY 2019 and FY 2018,
respectively. Non-cash equity compensation expense per Boe was
$0.44, $0.47, $0.42, and $0.44 for 4Q 2019, 4Q 2018, FY 2019 and FY
2018, respectively.
|
Fourth Quarter Earnings Conference Call
The Company plans to host a conference call to discuss full-year
2019 and 4Q19 results on Thursday, February
27, 2020 at 12:00 p.m. ET
(11:00 a.m. CT). Those wishing to
listen to the conference call may do so via the Company's website
at www.CLR.com or by phone:
Time and
date:
|
12 p.m. ET, Thursday,
February 27, 2020
|
Dial-in:
|
1-888-317-6003
|
Intl.
dial-in:
|
1-412-317-6061
|
Conference
ID:
|
8554062
|
A replay of the call will be available for 14 days on the
Company's website or by dialing:
Replay
number:
|
1-877-344-7529
|
Intl.
replay:
|
1-412-317-0088
|
Conference
ID:
|
10138250
|
|
|
The Company plans to publish a full-year 2019 and 4Q19 summary
presentation to its website at www.CLR.com prior to the start
of its conference call on Thursday, February
27, 2020.
About Continental Resources
Continental Resources (NYSE: CLR) is a top 10 independent oil
producer in the U.S. Lower 48 and a leader in America's energy
renaissance. Based in Oklahoma
City, Continental is the largest leaseholder and the largest
producer in the nation's premier oil field, the Bakken play of
North Dakota and Montana. The Company also has significant
positions in Oklahoma, including
its SCOOP Woodford and SCOOP Springer discoveries and the STACK
plays. With a focus on the exploration and production of oil,
Continental has unlocked the technology and resources vital to
American energy independence and our nation's leadership in the new
world oil market. In 2020, the Company will celebrate 53 years of
operations. For more information, please visit www.CLR.com.
Cautionary Statement for the Purpose of the "Safe Harbor"
Provisions of the Private Securities Litigation Reform Act of
1995
This press release includes "forward-looking statements" within
the meaning of Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934. All statements
included in this press release other than statements of historical
fact, including, but not limited to, forecasts or expectations
regarding the Company's business and statements or information
concerning the Company's future operations, performance, financial
condition, production and reserves, schedules, plans, timing of
development, rates of return, budgets, costs, business strategy,
objectives, and cash flows are forward-looking statements. When
used in this press release, the words "could," "may," "believe,"
"anticipate," "intend," "estimate," "expect," "project," "budget,"
"target," "plan," "continue," "potential," "guidance," "strategy,"
and similar expressions are intended to identify forward-looking
statements, although not all forward-looking statements contain
such identifying words.
Forward-looking statements are based on the Company's current
expectations and assumptions about future events and currently
available information as to the outcome and timing of future
events. Although the Company believes these assumptions and
expectations are reasonable, they are inherently subject to
numerous business, economic, competitive, regulatory and other
risks and uncertainties, most of which are difficult to predict and
many of which are beyond the Company's control. No assurance can be
given that such expectations will be correct or achieved or that
the assumptions are accurate. The risks and uncertainties include,
but are not limited to, commodity price volatility; the geographic
concentration of our operations; financial market and economic
volatility; the effects of any national or international health
crisis; the inability to access needed capital; the risks and
potential liabilities inherent in crude oil and natural gas
drilling and production and the availability of insurance to cover
any losses resulting therefrom; difficulties in estimating proved
reserves and other reserves-based measures; declines in the values
of our crude oil and natural gas properties resulting in impairment
charges; our ability to replace proved reserves and sustain
production; our ability to pay future dividends or complete share
repurchases; the availability or cost of equipment and oilfield
services; leasehold terms expiring on undeveloped acreage before
production can be established; our ability to project future
production, achieve targeted results in drilling and well
operations and predict the amount and timing of development
expenditures; the availability and cost of transportation,
processing and refining facilities; legislative and regulatory
changes adversely affecting our industry and our business,
including initiatives related to hydraulic fracturing; increased
market and industry competition, including from alternative fuels
and other energy sources; and the other risks described under Part
I, Item 1A. Risk Factors and elsewhere in the Company's Annual
Report on Form 10-K for the year ended December 31, 2018, and once filed, for the year
ended December 31, 2019, registration
statements and other reports filed from time to time with the SEC,
and other announcements the Company makes from time to time.
Readers are cautioned not to place undue reliance on
forward-looking statements, which speak only as of the date on
which such statement is made. Should one or more of the risks or
uncertainties described in this press release occur, or should
underlying assumptions prove incorrect, the Company's actual
results and plans could differ materially from those expressed in
any forward-looking statements. All forward-looking statements are
expressly qualified in their entirety by this cautionary statement.
Except as otherwise required by applicable law, the Company
undertakes no obligation to publicly correct or update any
forward-looking statement whether as a result of new information,
future events or circumstances after the date of this report, or
otherwise.
Readers are cautioned that initial production rates are subject
to decline over time and should not be regarded as reflective of
sustained production levels. In particular, production from
horizontal drilling in shale oil and natural gas resource plays and
tight natural gas plays that are stimulated with extensive pressure
fracturing are typically characterized by significant early
declines in production rates.
We use the term "EUR" or "estimated ultimate recovery" to
describe potentially recoverable oil and natural gas hydrocarbon
quantities. We include these estimates to demonstrate what we
believe to be the potential for future drilling and production on
our properties. These estimates are by their nature much more
speculative than estimates of proved reserves and require
substantial capital spending to implement recovery. Actual
locations drilled and quantities that may be ultimately recovered
from our properties will differ substantially. EUR data included
herein remain subject to change as more well data is analyzed.
Investor
Contact:
|
Media
Contact:
|
Rory
Sabino
|
Kristin
Thomas
|
Vice President,
Investor Relations
|
Senior Vice
President, Public Relations
|
405-234-9620
|
405-234-9480
|
Rory.sabino@clr.com
|
Kristin.thomas@clr.com
|
|
|
Lucy
Guttenberger
|
|
Investor Relations
Analyst
|
|
405-774-5878
|
|
Lucy.guttenberger@clr.com
|
|
Continental
Resources, Inc. and Subsidiaries
Consolidated
Statements of Income
|
|
|
Three months ended
December 31,
|
|
Year ended December
31,
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
Revenues:
|
In thousands,
except per share data
|
Crude oil and natural
gas sales
|
$1,185,980
|
|
$1,154,104
|
|
$4,514,389
|
|
$4,678,722
|
Gain (loss) on
natural gas derivatives, net
|
(4,436)
|
|
(19,394)
|
|
49,083
|
|
(23,930)
|
Crude oil and natural
gas service operations
|
13,590
|
|
14,584
|
|
68,475
|
|
54,794
|
Total
revenues
|
1,195,134
|
|
1,149,294
|
|
4,631,947
|
|
4,709,586
|
|
|
|
|
|
|
|
|
Operating costs and
expenses:
|
|
|
|
|
|
|
|
Production
expenses
|
111,203
|
|
104,258
|
|
444,649
|
|
390,423
|
Production
taxes
|
90,751
|
|
90,393
|
|
357,988
|
|
353,140
|
Transportation
expenses
|
61,080
|
|
49,028
|
|
225,649
|
|
191,587
|
Exploration
expenses
|
7,268
|
|
3,295
|
|
14,667
|
|
7,642
|
Crude oil and natural
gas service operations
|
6,614
|
|
4,205
|
|
33,230
|
|
21,639
|
Depreciation,
depletion, amortization and accretion
|
552,711
|
|
488,416
|
|
2,017,383
|
|
1,859,327
|
Property
impairments
|
19,348
|
|
38,494
|
|
86,202
|
|
125,210
|
General and
administrative expenses
|
53,465
|
|
49,201
|
|
195,302
|
|
183,569
|
Net gain on sale of
assets and other
|
(1,182)
|
|
(8,410)
|
|
(535)
|
|
(16,671)
|
Total operating costs
and expenses
|
901,258
|
|
818,880
|
|
3,374,535
|
|
3,115,866
|
Income from
operations
|
293,876
|
|
330,414
|
|
1,257,412
|
|
1,593,720
|
Other income
(expense):
|
|
|
|
|
|
|
|
Interest
expense
|
(64,981)
|
|
(69,441)
|
|
(269,379)
|
|
(293,032)
|
Loss on
extinguishment of debt
|
-
|
|
-
|
|
(4,584)
|
|
(7,133)
|
Other
|
516
|
|
1,016
|
|
3,713
|
|
3,247
|
|
(64,465)
|
|
(68,425)
|
|
(270,250)
|
|
(296,918)
|
Income before income
taxes
|
229,411
|
|
261,989
|
|
987,162
|
|
1,296,802
|
Provision for income
taxes
|
(35,303)
|
|
(62,868)
|
|
(212,689)
|
|
(307,102)
|
Net income
|
194,108
|
|
199,121
|
|
774,473
|
|
989,700
|
Net income (loss)
attributable to noncontrolling interests
|
162
|
|
1,383
|
|
(1,168)
|
|
1,383
|
Net income
attributable to Continental Resources
|
$
193,946
|
|
$
197,738
|
|
$
775,641
|
|
$
988,317
|
|
|
|
|
|
|
|
|
Net income per share
attributable to Continental Resources:
|
|
|
|
|
|
|
|
Basic
|
$
0.53
|
|
$
0.53
|
|
$
2.09
|
|
$
2.66
|
Diluted
|
$
0.53
|
|
$
0.53
|
|
$
2.08
|
|
$
2.64
|
Continental
Resources, Inc. and Subsidiaries
Consolidated Balance
Sheets
|
|
In
thousands
|
|
December 31,
2019
|
|
December 31,
2018
|
Assets
|
|
|
Cash and cash
equivalents
|
|
$
39,400
|
|
$
282,749
|
Other current
assets
|
|
1,167,615
|
|
1,129,612
|
Net property and
equipment (1)
|
|
14,497,726
|
|
13,869,800
|
Other noncurrent
assets
|
|
23,166
|
|
15,786
|
Total
assets
|
|
$
15,727,907
|
|
$
15,297,947
|
|
|
|
|
|
Liabilities and
equity
|
|
|
|
|
Current
liabilities
|
|
$
1,336,026
|
|
$
1,387,509
|
Long-term debt, net
of current portion
|
|
5,324,079
|
|
5,765,989
|
Other noncurrent
liabilities
|
|
1,959,451
|
|
1,722,588
|
Equity attributable
to Continental Resources
|
|
6,741,667
|
|
6,145,133
|
Equity attributable
to noncontrolling interests
|
|
366,684
|
|
276,728
|
Total liabilities and
equity
|
|
$
15,727,907
|
|
$
15,297,947
|
|
(1) Balance is net of
accumulated depreciation, depletion and amortization of $12.77
billion and $10.81 billion as of December 31, 2019 and December 31,
2018, respectively.
|
Continental
Resources, Inc. and Subsidiaries
Consolidated
Statements of Cash Flows
|
|
|
|
Three months ended
December 31,
|
|
Year ended December
31,
|
In
thousands
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
Net income
|
|
$
194,108
|
|
$
199,121
|
|
$
774,473
|
|
$
989,700
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
|
|
|
|
|
|
Non-cash
expenses
|
|
641,495
|
|
576,033
|
|
2,400,708
|
|
2,340,600
|
Changes in assets and
liabilities
|
|
(31,791)
|
|
180,113
|
|
(59,493)
|
|
125,708
|
Net cash provided by
operating activities
|
|
803,812
|
|
955,267
|
|
3,115,688
|
|
3,456,008
|
Net cash used in
investing activities
|
|
(518,029)
|
|
(756,689)
|
|
(2,771,956)
|
|
(2,860,172)
|
Net cash (used in)
provided by financing activities
|
|
(281,650)
|
|
71,319
|
|
(587,108)
|
|
(356,934)
|
Effect of exchange
rate changes on cash
|
|
7
|
|
(44)
|
|
27
|
|
(55)
|
Net change in cash
and cash equivalents
|
|
4,140
|
|
269,853
|
|
(243,349)
|
|
238,847
|
Cash and cash
equivalents at beginning of period
|
|
35,260
|
|
12,896
|
|
282,749
|
|
43,902
|
Cash and cash
equivalents at end of period
|
|
$
39,400
|
|
$
282,749
|
|
$
39,400
|
|
$
282,749
|
Non-GAAP Financial Measures
Non-GAAP adjusted net income and adjusted net income per
share attributable to Continental
Our presentation of adjusted net income and adjusted net income
per share that exclude the effect of certain items are non-GAAP
financial measures. Adjusted net income and adjusted net income per
share represent net income and diluted net income per share
determined under U.S. GAAP without regard to non-cash gains and
losses on derivative instruments, property impairments, gains and
losses on asset sales, and losses on extinguishment of debt as
applicable. Management believes these measures provide useful
information to analysts and investors for analysis of our operating
results. In addition, management believes these measures are used
by analysts and others in valuation, comparison and investment
recommendations of companies in the oil and gas industry to allow
for analysis without regard to an entity's specific derivative
portfolio, impairment methodologies, and property dispositions.
Adjusted net income and adjusted net income per share should not be
considered in isolation or as an alternative to, or more meaningful
than, net income or diluted net income per share as determined in
accordance with U.S. GAAP and may not be comparable to other
similarly titled measures of other companies. The following tables
reconcile net income and diluted net income per share as determined
under U.S. GAAP to adjusted net income and adjusted diluted net
income per share for the periods presented.
|
|
|
Three months ended
December 31,
|
|
|
|
2019
|
|
2018
|
In thousands,
except per share data
|
|
$
|
|
Diluted
EPS
|
|
$
|
|
Diluted
EPS
|
Net income
attributable to Continental Resources (GAAP)
|
|
$193,946
|
|
$
0.53
|
|
$
197,738
|
|
$
0.53
|
Adjustments:
|
|
|
|
|
|
|
|
|
Non-cash (gain) loss
on derivatives
|
|
16,915
|
|
|
|
(25,022)
|
|
|
Property
impairments
|
|
19,348
|
|
|
|
38,494
|
|
|
Gain on sale of
assets, net
|
|
(1,182)
|
|
|
|
(8,410)
|
|
|
Total tax effect of
adjustments (1)
|
|
(8,578)
|
|
|
|
(1,114)
|
|
|
Tax benefit from sale
of Canadian subsidiary
|
|
(16,860)
|
|
|
|
-
|
|
|
Total adjustments,
net of tax
|
|
9,643
|
|
0.02
|
|
3,948
|
|
0.01
|
Adjusted net income
(non-GAAP)
|
|
$203,589
|
|
$0.55
|
|
$
201,686
|
|
$0.54
|
Weighted average
diluted shares outstanding
|
|
368,825
|
|
|
|
374,525
|
|
|
Adjusted diluted net
income per share (non-GAAP)
|
|
$
0.55
|
|
|
|
$
0.54
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended December
31,
|
|
|
|
2019
|
|
2018
|
In thousands,
except per share data
|
|
$
|
|
Diluted
EPS
|
|
$
|
|
Diluted
EPS
|
Net income
attributable to Continental Resources (GAAP)
|
|
$775,641
|
|
$
2.08
|
|
$
988,317
|
|
$
2.64
|
Adjustments:
|
|
|
|
|
|
|
|
|
Non-cash (gain) loss
on derivatives
|
|
15,612
|
|
|
|
(13,009)
|
|
|
Property
impairments
|
|
86,202
|
|
|
|
125,210
|
|
|
Gain on sale of
assets, net
|
|
(535)
|
|
|
|
(16,671)
|
|
|
Loss on
extinguishment of debt
|
|
4,584
|
|
|
|
7,133
|
|
|
Total tax effect of
adjustments (1)
|
|
(25,921)
|
|
|
|
(24,743)
|
|
|
Tax benefit from sale
of Canadian subsidiary
|
|
(16,860)
|
|
|
|
-
|
|
|
Total adjustments,
net of tax
|
|
63,082
|
|
0.17
|
|
77,920
|
|
0.20
|
Adjusted net income
(non-GAAP)
|
|
$838,723
|
|
$2.25
|
|
$1,066,237
|
|
$2.84
|
Weighted average
diluted shares outstanding
|
|
372,538
|
|
|
|
374,838
|
|
|
Adjusted diluted net
income per share (non-GAAP)
|
|
$
2.25
|
|
|
|
$
2.84
|
|
|
|
(1) Computed by
applying a combined federal and state statutory tax rate of 24.5%
in effect for 2019 and 2018 to the pre-tax amount of adjustments
associated with our operations in the United
States.
|
Non-GAAP Net Debt
Net debt is a non-GAAP measure. We define net debt as total debt
less cash and cash equivalents as determined under U.S. GAAP. Net
debt should not be considered an alternative to, or more meaningful
than, total debt, the most directly comparable GAAP measure.
Management uses net debt to determine the Company's outstanding
debt obligations that would not be readily satisfied by its cash
and cash equivalents on hand. We believe this metric is useful to
analysts and investors in determining the Company's leverage
position since the Company has the ability to, and may decide to,
use a portion of its cash and cash equivalents to reduce debt. This
metric is sometimes presented as a ratio with EBITDAX in order to
provide investors with another means of evaluating the Company's
ability to service its existing debt obligations as well as any
future increase in the amount of such obligations. At December 31, 2019, the Company's total debt was
$5.33 billion and its net debt
amounted to $5.29 billion,
representing total debt of $5.33
billion less cash and cash equivalents of $39.4 million. At December
31, 2018, the Company's total debt was $5.77 billion and its net debt amounted to
$5.49 billion, representing total
debt of $5.77 billion less cash and
cash equivalents of $282.7 million.
From time to time the Company provides forward-looking net debt
forecasts; however, the Company is unable to provide a quantitative
reconciliation of the forward-looking non-GAAP measure to the most
directly comparable forward-looking GAAP measure of total debt
because management cannot reliably quantify certain of the
necessary components of such forward-looking GAAP measure. The
reconciling items in future periods could be significant.
Non-GAAP EBITDAX
We use a variety of financial and operational measures to assess
our performance. Among these measures is EBITDAX, a non-GAAP
measure. We define EBITDAX as earnings before interest expense,
income taxes, depreciation, depletion, amortization and accretion,
property impairments, exploration expenses, non-cash gains and
losses resulting from the requirements of accounting for
derivatives, non-cash equity compensation expense, and losses on
extinguishment of debt as applicable. EBITDAX is not a measure of
net income or net cash provided by operating activities as
determined by U.S. GAAP.
Management believes EBITDAX is useful because it allows us to
more effectively evaluate our operating performance and compare the
results of our operations from period to period without regard to
our financing methods or capital structure. Further, we believe
EBITDAX is a widely followed measure of operating performance and
may also be used by investors to measure our ability to meet future
debt service requirements, if any. We exclude the items listed
above from net income/loss and net cash provided by operating
activities in arriving at EBITDAX because these amounts can vary
substantially from company to company within our 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/loss or net cash provided by operating
activities as determined in accordance with U.S. 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. Our computations of EBITDAX may not be comparable to
other similarly titled measures of other companies.
The following table provides a reconciliation of our net income
to EBITDAX for the periods presented.
|
|
Three months ended
December 31,
|
|
Year ended December
31,
|
In
thousands
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
Net income
|
|
$
194,108
|
|
$
199,121
|
|
$
774,473
|
|
$
989,700
|
Interest
expense
|
|
64,981
|
|
69,441
|
|
269,379
|
|
293,032
|
Provision for income
taxes
|
|
35,303
|
|
62,868
|
|
212,689
|
|
307,102
|
Depreciation,
depletion, amortization and accretion
|
|
552,711
|
|
488,416
|
|
2,017,383
|
|
1,859,327
|
Property
impairments
|
|
19,348
|
|
38,494
|
|
86,202
|
|
125,210
|
Exploration
expenses
|
|
7,268
|
|
3,295
|
|
14,667
|
|
7,642
|
Impact from
derivative instruments:
|
|
|
|
|
|
|
|
|
Total (gain) loss on
derivatives, net
|
|
4,436
|
|
19,394
|
|
(49,083)
|
|
23,930
|
Total cash (paid)
received on derivatives, net
|
|
12,479
|
|
(44,416)
|
|
64,695
|
|
(36,939)
|
Non-cash (gain) loss
on derivatives, net
|
|
16,915
|
|
(25,022)
|
|
15,612
|
|
(13,009)
|
Non-cash equity
compensation
|
|
14,891
|
|
14,027
|
|
52,044
|
|
47,236
|
Loss on
extinguishment of debt
|
|
-
|
|
-
|
|
4,584
|
|
7,133
|
EBITDAX
(non-GAAP)
|
|
$
905,525
|
|
$
850,640
|
|
$
3,447,033
|
|
$
3,623,373
|
|
|
|
|
|
|
|
|
|
The following table provides a reconciliation of our net cash
provided by operating activities to EBITDAX for the periods
presented.
|
|
Three months ended
December 31,
|
|
Year ended December
31,
|
In
thousands
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
Net cash provided by
operating activities
|
|
$
803,812
|
|
$
955,267
|
|
$
3,115,688
|
|
$
3,456,008
|
Current income tax
provision
|
|
-
|
|
2
|
|
-
|
|
(7,776)
|
Interest
expense
|
|
64,981
|
|
69,441
|
|
269,379
|
|
293,032
|
Exploration expenses,
excluding dry hole costs
|
|
7,268
|
|
3,149
|
|
14,667
|
|
7,495
|
Gain on sale of
assets, net
|
|
1,182
|
|
8,410
|
|
535
|
|
16,671
|
Other, net
|
|
(3,509)
|
|
(5,516)
|
|
(12,729)
|
|
(16,349)
|
Changes in assets and
liabilities
|
|
31,791
|
|
(180,113)
|
|
59,493
|
|
(125,708)
|
EBITDAX
(non-GAAP)
|
|
$
905,525
|
|
$
850,640
|
|
$
3,447,033
|
|
$
3,623,373
|
Non-GAAP Net Sales Prices
Revenues and transportation expenses associated with production
from our operated properties are reported separately. For
non-operated properties, we receive a net payment from the operator
for our share of sales proceeds which is net of costs incurred by
the operator, if any. Such non-operated revenues are recognized at
the net amount of proceeds received. As a result, the separate
presentation of revenues and transportation expenses from our
operated properties differs from the net presentation from
non-operated properties. This impacts the comparability of certain
operating metrics, such as per-unit sales prices, when such metrics
are prepared in accordance with U.S. GAAP using gross presentation
for some revenues and net presentation for others.
In order to provide metrics prepared in a manner consistent with
how management assesses the Company's operating results and to
achieve comparability between operated and non-operated revenues,
we may present crude oil and natural gas sales net of
transportation expenses, which we refer to as "net crude oil and
natural gas sales," a non-GAAP measure. Average sales prices
calculated using net crude oil and natural gas sales are referred
to as "net sales prices," a non-GAAP measure, and are calculated by
taking revenues less transportation expenses divided by sales
volumes, whether for crude oil or natural gas, as applicable.
Management believes presenting our revenues and sales prices net of
transportation expenses is useful because it normalizes the
presentation differences between operated and non-operated revenues
and allows for a useful comparison of net realized prices to NYMEX
benchmark prices on a Company-wide basis.
The following tables present a reconciliation of crude oil and
natural gas sales (GAAP) to net crude oil and natural gas sales and
related net sales prices (non-GAAP) for the periods presented.
|
|
Three months ended
December 31, 2019
|
|
Three months ended
December 31, 2018
|
In
thousands
|
|
Crude oil
|
|
Natural
gas
|
|
Total
|
|
Crude oil
|
|
Natural
gas
|
|
Total
|
Crude oil and natural
gas sales (GAAP)
|
|
$1,024,432
|
|
$161,548
|
|
$1,185,980
|
|
$900,872
|
|
$253,232
|
|
$1,154,104
|
Less: Transportation
expenses
|
|
(51,332)
|
|
(9,748)
|
|
(61,080)
|
|
(42,373)
|
|
(6,655)
|
|
(49,028)
|
Net crude oil and
natural gas sales (non-GAAP)
|
|
$973,100
|
|
$151,800
|
|
$1,124,900
|
|
$858,499
|
|
$246,577
|
|
$1,105,076
|
Sales volumes
(MBbl/MMcf/MBoe)
|
|
18,956
|
|
87,819
|
|
33,593
|
|
17,149
|
|
75,661
|
|
29,759
|
Net sales price
(non-GAAP)
|
|
$51.33
|
|
$1.73
|
|
$33.49
|
|
$50.06
|
|
$3.26
|
|
$37.13
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended December
31, 2019
|
|
Year ended December
31, 2018
|
In
thousands
|
|
Crude oil
|
|
Natural
gas
|
|
Total
|
|
Crude oil
|
|
Natural
gas
|
|
Total
|
Crude oil and natural
gas sales (GAAP)
|
|
$3,929,994
|
|
$584,395
|
|
$4,514,389
|
|
$3,792,594
|
|
$886,128
|
|
$4,678,722
|
Less: Transportation
expenses
|
|
(191,998)
|
|
(33,651)
|
|
(225,649)
|
|
(162,312)
|
|
(29,275)
|
|
(191,587)
|
Net crude oil and
natural gas sales (non-GAAP)
|
|
$3,737,996
|
|
$550,744
|
|
$4,288,740
|
|
$3,630,282
|
|
$856,853
|
|
$4,487,135
|
Sales volumes
(MBbl/MMcf/MBoe)
|
|
72,136
|
|
311,865
|
|
124,113
|
|
61,332
|
|
284,730
|
|
108,787
|
Net sales price
(non-GAAP)
|
|
$51.82
|
|
$1.77
|
|
$34.56
|
|
$59.19
|
|
$3.01
|
|
$41.25
|
Non-GAAP Cash General and Administrative Expenses per
Boe
Our presentation of cash general and administrative ("G&A")
expenses per Boe is a non-GAAP measure. We define cash G&A per
Boe as total G&A determined in accordance with U.S. GAAP less
non-cash equity compensation expenses, expressed on a per-Boe
basis. We report and provide guidance on cash G&A per Boe
because we believe this measure is commonly used by management,
analysts and investors as an indicator of cost management and
operating efficiency on a comparable basis from period to period.
In addition, management believes cash G&A per Boe is used by
analysts and others in valuation, comparison and investment
recommendations of companies in the oil and gas industry to allow
for analysis of G&A spend without regard to stock-based
compensation programs which can vary substantially from company to
company. Cash G&A per Boe should not be considered as an
alternative to, or more meaningful than, total G&A per Boe as
determined in accordance with U.S. GAAP and may not be comparable
to other similarly titled measures of other companies.
The following table reconciles total G&A per Boe as
determined under U.S. GAAP to cash G&A per Boe for the periods
presented.
|
|
Three months ended
December 31,
|
|
Year ended December
31,
|
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
Total G&A per Boe
(GAAP)
|
|
$
1.59
|
|
$
1.65
|
|
$
1.57
|
|
$
1.69
|
Less: Non-cash equity
compensation per Boe
|
|
(0.44)
|
|
(0.47)
|
|
(0.42)
|
|
(0.44)
|
Cash G&A per Boe
(non-GAAP)
|
|
$
1.15
|
|
$
1.18
|
|
$
1.15
|
|
$
1.25
|
Non-GAAP Free Cash Flow
Our presentation of free cash flow is a non-GAAP measure. We
define free cash flow as cash flows from operations before changes
in working capital items, less capital expenditures, excluding
acquisitions, plus noncontrolling interest capital contributions,
less distributions to noncontrolling interests. Noncontrolling
interest capital contributions and distributions primarily relate
to our relationship formed with Franco-Nevada in 2018 to fund a
portion of certain mineral acquisitions which are included in our
capital expenditures and operating results. Free cash flow is not a
measure of net income or operating cash flows as determined by U.S.
GAAP and should not be considered an alternative to, or more
meaningful than, the comparable GAAP measure, and free cash flow
does not represent residual cash flows available for discretionary
expenditures. Management believes that this measure is useful to
management and investors as a measure of a company's ability to
internally fund its capital expenditures and to service or incur
additional debt. From time to time the Company provides
forward-looking free cash flow estimates or targets; however, the
Company is unable to provide a quantitative reconciliation of the
forward-looking non-GAAP measure to its most directly comparable
forward-looking GAAP measure because management cannot reliably
quantify certain of the necessary components of such
forward-looking GAAP measure. The reconciling items in future
periods could be significant.
The following table reconciles net cash provided by operating
activities as determined under U.S. GAAP to free cash flow for the
year ended December 31, 2019.
In
thousands
|
|
2019
|
Net cash provided by
operating activities (GAAP)
|
|
$
3,115,688
|
Exclude: Changes in
working capital items
|
|
59,493
|
Less: Capital
expenditures (1)
|
|
(2,661,794)
|
Plus: Contributions
from noncontrolling interest
|
|
109,137
|
Less: Distributions
to noncontrolling interest
|
|
(14,164)
|
Free cash flow
(non-GAAP)
|
|
$
608,360
|
|
|
|
(1) Capital
expenditures are calculated as follows:
|
|
|
In
thousands
|
|
2019
|
Cash paid for capital
expenditures
|
|
$
2,860,690
|
Less: Total
acquisitions
|
|
(147,398)
|
Plus: Change in
accrued capital expenditures & other
|
(54,761)
|
Plus: Exploratory
seismic costs
|
|
3,263
|
Capital
expenditures
|
|
$
2,661,794
|
Calculation of Return on Capital Employed (ROCE)
The following table shows the calculation of ROCE for 2019.
In
thousands
|
|
2019
|
|
|
|
Net income
attributable to Continental Resources
|
|
$
775,641
|
Impact from
derivative instruments:
|
|
|
Total gain on
derivatives, net
|
|
(49,083)
|
Total cash received,
net
|
|
64,695
|
Non-cash loss on
derivatives, net
|
|
15,612
|
|
|
|
Provision for income
taxes
|
|
212,689
|
Non-cash equity
compensation
|
|
52,044
|
Interest
expense
|
|
269,379
|
Loss on
extinguishment of debt
|
|
4,584
|
Adjusted
EBIT
|
|
$
1,329,949
|
|
|
|
|
|
|
Equity attributable
to Continental Resources - beginning of period
|
|
$
6,145,133
|
Total debt -
beginning of period
|
|
5,768,349
|
Capital employed -
beginning of period
|
|
11,913,482
|
|
|
|
Equity attributable
to Continental Resources - end of period
|
|
6,741,667
|
Total debt - end of
period
|
|
5,326,514
|
Capital employed -
end of period
|
|
12,068,181
|
|
|
|
Average capital
employed
|
|
$
11,990,832
|
|
|
|
ROCE
|
|
11.1%
|
Continental
Resources, Inc.
|
2020
Guidance
|
As of February 26,
2020
|
|
|
|
|
|
2020
|
|
|
|
Full-year average oil
production (Bopd)
|
|
198,000 to
201,000
|
Full-year average
natural gas production (Mcfpd)
|
|
935,000 to
960,000
|
Capital expenditures
budget
|
|
$2.65
Billion
|
|
|
|
Operating
Expenses:
|
|
|
Production expense per
Boe
|
|
$3.50 to
$4.00
|
Production tax (% of net oil
& gas revenue)
|
|
8.3% to
$8.5%
|
Cash G&A expense per
Boe(1)
|
|
$1.10 to
$1.40
|
Non-cash equity compensation
per Boe
|
|
$0.50 to
$0.60
|
DD&A per Boe
|
|
$15.00 to
$17.00
|
|
|
|
Average Price
Differentials:
|
|
|
NYMEX WTI crude oil (per
barrel of oil)
|
|
($4.50) to
($5.50)
|
Henry Hub natural gas (per
Mcf)
|
|
($0.50) to
($1.00)
|
|
(1) Cash G&A
is a non-GAAP measure and excludes the range of values shown for
non-cash equity compensation per Boe in the item appearing
immediately below. Guidance for total G&A (cash and non-cash)
is a projected range of $1.60 to $2.00 per Boe.
|
Continental
Resources, Inc.
|
2020 Capital
Expenditures
|
|
|
|
|
The following table
provides the breakout of budgeted capital expenditures:
|
|
|
|
|
|
($ in
Millions)
|
North
D&C
|
South
D&C
|
Leasehold,
Facilities, Other(1)
|
Capex
|
$1,368
|
$843
|
$439
|
|
1. Includes $125 million
allocated to minerals royalty acquisitions, of which $100 million
will be recouped from Franco-Nevada.
|
Continental
Resources, Inc.
|
2020 Operational
Detail
|
|
|
|
|
|
The following table
provides additional operational detail for wells expected to have
first production in 2020:
|
|
|
|
|
|
Asset
|
Average
Rigs
|
Gross Operated
Wells
|
Net Operated
Wells
|
Total Net
Wells(1)
|
North
|
9
|
177
|
122
|
154
|
South
|
10.5
|
126
|
84
|
91
|
Total
|
19.5
|
303
|
206
|
245
|
|
1. Represents projected net
operated and non-operated wells.
|
View original
content:http://www.prnewswire.com/news-releases/continental-resources-announces-full-year-2019-and-4q19-results-2020-capital-budget-and-guidance-301012059.html
SOURCE Continental Resources