OKLAHOMA CITY, Aug. 3, 2020 /PRNewswire/ --
Curtailed Operated Oil Volumes in 2Q20 Estimated to Generate
$90 Million in Incremental Cash Flow
from Operations at $40 WTI
• Approximately 55% of Oil Volumes (7.8
MMBo) Curtailed in 2Q20
• 202,815 Boepd Average Daily 2Q20
Production
2020 Full-Year Average Production of 155,000 to 165,000 Bopd
& 800,000 to 820,000 Mcfpd
• 3Q20 Average Production of 280,000 to
300,000 Boepd
• 2020 Exit Rate Production of 310,000 to
330,000 Boepd
Forecasting Approx. $1.3
Billion Annual Cash Flow from Operations and $200 Million Annual Free Cash Flow (FCF)
(Non-GAAP) in 2020 at $40
WTI
• $615
Million Cash Flow from Operations and $500 Million FCF in 2H20
Targeting Total Debt of $5.4
Billion to $5.5 Billion by
YE20
Low Cost Industry Leadership: Reinstating Original per Unit
Cost Guidance
• $3.58
Production Expense per Boe in 2Q20; in Line with Original Guidance
even with Production Curtailments
On Track for Previously Revised $1.2
Billion or Lower Capital Spend in 2020
• Est. $1.2
Billion D&C Maintenance Capital to Hold Production Flat
YoY in 2021
Operating Efficiencies Continue to Drive Year-Over-Year
All-In Well Costs Lower
• Bakken Completed Well Cost Decreased 12%
to $7.2 Million per Well (Approx. 70%
Structural)
• South Completed Well Cost Decreased 10%
to $9.5 Million per Well (Approx. 80%
Structural)
Continental Resources, Inc. (NYSE: CLR) (the "Company") today
announced second quarter 2020 operating and financial results.
Logo -
https://mma.prnewswire.com/media/95419/continental_resources_logo.jpg
The Company reported a net loss of $239.3
million, or $0.66 per diluted
share, for the quarter ended June 30,
2020. In second quarter 2020, typically excluded items in
aggregate represented a decrease of $16.4
million, or $0.05 per diluted
share, in Continental's reported net loss. Adjusted net loss for
second quarter 2020 was $255.7
million, or $0.71 per diluted
share (non-GAAP).
Adjusted net loss, adjusted net loss per share, EBITDAX, net
debt, free cash flow, 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.
"Continental has proactively responded to the unprecedented
events that have shaped the global commodity landscape in 2020. By
deferring volumes in the second quarter of 2020, we expect to
generate an estimated $90 million in
incremental cash flow from operations at $40 WTI. Combined with our strong asset position
and unmatched shareholder alignment, we believe Continental's
equity reflects an uncommon value," said Bill Berry, Chief Executive Officer.
Production Update
Second quarter 2020 total production averaged 202,815 Boepd.
Second quarter 2020 oil production averaged 95,174 Bopd. Second
quarter 2020 natural gas production averaged 645.8 MMcfpd. During
the second quarter, approximately 55% of the Company's operated oil
volumes were shut in, or approximately 7.8 MMBo.
The following table provides the Company's average daily
production by region for the periods presented.
|
2Q
|
|
2Q
|
|
YTD
|
|
YTD
|
Boe per
day
|
2020
|
|
2019
|
|
2020
|
|
2019
|
Bakken
|
88,822
|
|
194,014
|
|
145,162
|
|
196,704
|
South
|
107,083
|
|
128,777
|
|
129,547
|
|
126,568
|
All other
|
6,910
|
|
8,623
|
|
7,119
|
|
8,551
|
Total
|
202,815
|
|
331,414
|
|
281,828
|
|
331,823
|
Financial Update
"We have made tremendous strides to remain the low cost industry
leader amongst our oil-weighted peers. We are reinstituting per
unit cost guidance and expect LOE, G&A and DD&A per Boe to
be within our previous guidance, reflecting exceptional cost
management and capital efficiency," said John Hart, Chief Financial Officer. "While our
debt increased modestly due to the pandemic, it has not changed our
long-term strategy to continue focusing on debt reduction, with a
total debt target of $5.4 billion to
$5.5 billion by year end 2020."
|
|
Three Months
Ended
|
|
Six Months
Ended
|
2Q20 Financial
Update
|
|
June 30,
2020
|
June 30,
2020
|
Cash and Cash
Equivalents
|
|
|
|
$6.7
million
|
Total Debt
|
|
|
|
$5.74
billion
|
Net Debt
(non-GAAP)(1)
|
|
|
|
$5.74
billion
|
Average Net Sales
Price (non-GAAP)(1)
|
|
|
|
|
Per Barrel of
Oil
|
|
$16.35
|
|
$32.37
|
Per Mcf of
Gas
|
|
$0.12
|
|
$0.59
|
Per Boe
|
|
$7.88
|
|
$18.56
|
Production Expense
per Boe
|
|
$3.58
|
|
$3.60
|
Total G&A
Expenses per Boe
|
|
$2.30
|
|
$1.66
|
Crude Oil
Differential per Barrel
|
|
($7.54)
|
|
($6.66)
|
Natural Gas
Differential per Mcf
|
|
($1.58)
|
|
($1.26)
|
Non-Acquisition
Capital Expenditures
|
|
$190.8
million
|
|
$841.5
million
|
Exploration &
Development Drilling & Completion
|
|
$155.8
million
|
|
$699.8
million
|
Leasehold
|
|
$6.2
million
|
|
$25.5
million
|
Minerals, of which
80% was Recouped from FNV
|
|
$2.7
million
|
|
$23.3
million
|
Workovers,
Recompletions and Other
|
|
$26.1
million
|
|
$92.9
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.
|
Guidance Update
"Our updated 2020 guidance emphasizes our ongoing commitment to
shareholder value. This is driven by the strength of our assets,
the quality and flexibility of our operations and the outstanding
performance by our teams, companywide," said Jack Stark, President and Chief Operating
Officer. "Going forward, shareholder value remains our top priority
as we continue to drive down costs, maximize free cash flow and
focus on reducing debt."
The Company has updated its 2020 annual production guidance to
155,000 to 165,000 Bopd and 800 to 820 MMcfpd. The Company has
updated its third quarter 2020 production guidance to 280,000 to
300,000 Boepd and its 2020 exit rate production guidance to 310,000
to 330,000 Boepd. As of June 30,
2020, the Company has 215 wells in progress and expects to
end the year with 140. The Company expects to average 7.7 drilling
rigs and 2.5 stimulation crews in 2020.
Revised production guidance is forecasted to generate
approximately $1.3 billion of annual
cash flow from operations and $200
million of annual free cash flow at $40 per barrel WTI, with $615 million of cash flow from operations and
$500 million of free cash flow in the
second half of 2020. The Company believes it is essential to
prioritize the balance sheet and is targeting total debt of
$5.4 billion to $5.5 billion by year end 2020.
The Company maintains its commitment to low cost industry
leadership amongst oil-weighted peers. In spite of significant
production curtailments in the second quarter of 2020, the Company
is reinstating previously suspended per unit cost guidance metrics
in 2020. Production expense is expected to be $3.50 to $4.00 per
Boe in 2020. Total G&A expense, which is comprised of cash and
non-cash G&A expense, is expected to be $1.60 to $2.00 per
Boe in 2020. Continental expects 2020 guidance for DD&A of
$15.00 to $17.00 per Boe, reflecting strong well
productivity and capital efficiency.
The Company is on track to achieve its previously revised 2020
Capex guidance of $1.2 billion or
lower, a 55% decrease from original guidance of $2.65 billion. The Company continues to drive
maintenance capital lower and estimates $1.2
billion D&C maintenance capital or lower to hold
production flat year-over-year in 2021.
Bakken completed well cost has decreased 12% year-over-year to
$7.2 million per well, with
approximately 70% of these savings being structural and South
completed well cost has decreased 10% year-over-year to
$9.5 million per well, with
approximately 80% of these savings being structural. Both the
Bakken and South completed well costs include D&C and full
facilities costs, including artificial lift.
The Company's full 2020 guidance, capital expenditures budget
and operating details can be found at the conclusion of this press
release.
The following table provides the Company's production results,
per-unit operating costs, results of operations and certain
non-GAAP financial measures for the periods presented. Average net
sales prices exclude any effect of derivative transactions.
Per-unit expenses have been calculated using sales volumes.
|
Three months ended
June 30,
|
|
Six months ended June
30,
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
Average daily
production:
|
|
|
|
|
|
|
|
Crude oil (Bbl per
day)
|
95,174
|
|
193,586
|
|
147,922
|
|
193,753
|
Natural gas (Mcf per
day)
|
645,846
|
|
826,969
|
|
803,434
|
|
828,422
|
Crude oil equivalents
(Boe per day)
|
202,815
|
|
331,414
|
|
281,828
|
|
331,823
|
Average net sales
prices (non-GAAP), excluding effect from derivatives:
(1)
|
|
|
|
|
|
|
|
Crude oil
($/Bbl)
|
$
16.35
|
|
$
54.66
|
|
$
32.37
|
|
$
52.36
|
Natural gas
($/Mcf)
|
$
0.12
|
|
$
1.66
|
|
$
0.59
|
|
$
2.11
|
Crude oil equivalents
($/Boe)
|
$
7.88
|
|
$
36.03
|
|
$
18.56
|
|
$
35.79
|
Production expenses
($/Boe)
|
$
3.58
|
|
$
3.74
|
|
$
3.60
|
|
$
3.66
|
Production taxes (%
of net crude oil and gas sales)
|
7.8%
|
|
8.7%
|
|
8.7%
|
|
8.4%
|
DD&A
($/Boe)
|
$
16.07
|
|
$
16.14
|
|
$
16.25
|
|
$
16.37
|
Total general and
administrative expenses ($/Boe) (2)
|
$
2.30
|
|
$
1.57
|
|
$
1.66
|
|
$
1.58
|
Net income (loss)
attributable to Continental Resources (in
thousands)
|
$
(239,286)
|
|
$ 236,557
|
|
$
(424,950)
|
|
$
423,533
|
Diluted net income
(loss) per share attributable to Continental Resources
|
$
(0.66)
|
|
$
0.63
|
|
$
(1.17)
|
|
$
1.13
|
Adjusted net income
(loss) (non-GAAP) (in thousands) (1)
|
$
(255,702)
|
|
$ 219,136
|
|
$
(283,268)
|
|
$
435,746
|
Adjusted diluted net
income (loss) per share (non-GAAP) (1)
|
$
(0.71)
|
|
$
0.59
|
|
$
(0.78)
|
|
$
1.16
|
Net cash provided by
(used in) operating activities (in thousands)
|
$
(20,248)
|
|
$ 783,396
|
|
$
643,570
|
|
$
1,504,904
|
EBITDAX (non-GAAP)
(in thousands) (1)
|
$
36,013
|
|
$ 858,019
|
|
$
630,260
|
|
$
1,712,804
|
|
(1) Net sales prices,
adjusted net income (loss), adjusted diluted net income (loss) 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 $1.45, $1.17,
$1.04, and $1.18 for 2Q 2020, 2Q 2019, YTD 2020, and YTD 2019,
respectively. Non-cash equity compensation expense per Boe was
$0.85, $0.40, $0.62, and $0.40 for 2Q 2020, 2Q 2019, YTD 2020, and
YTD 2019, respectively.
|
Second Quarter Earnings Conference Call
The Company plans to host a conference call to discuss second
quarter 2020 results on Tuesday, August 4,
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, Tuesday,
August 4, 2020
|
Dial-in:
|
1-888-317-6003
|
Intl.
dial-in:
|
1-412-317-6061
|
Conference
ID:
|
8636766
|
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:
|
10146341
|
The Company plans to publish a second quarter 2020 summary
presentation to its website at www.CLR.com prior to the start of
its conference call on Tuesday, August
4, 2020.
About Continental Resources
Continental Resources (NYSE: CLR) is a top 10 independent oil
producer in the U.S. 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, 2019, our Form 10-Q for the quarter
ended March 31, 2020, 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
Unaudited Condensed
Consolidated Statements of Income (Loss)
|
|
|
Three months ended
June 30,
|
|
Six months ended June
30,
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
Revenues:
|
In thousands,
except per share data
|
Crude oil and natural
gas sales
|
$ 174,652
|
|
$1,137,425
|
|
$1,037,395
|
|
$2,247,009
|
Gain (loss) on
natural gas derivatives, net
|
(7,782)
|
|
53,448
|
|
(7,782)
|
|
52,324
|
Crude oil and natural
gas service operations
|
8,789
|
|
17,509
|
|
26,847
|
|
33,284
|
Total
revenues
|
175,659
|
|
1,208,382
|
|
1,056,460
|
|
2,332,617
|
|
|
|
|
|
|
|
|
Operating costs and
expenses:
|
|
|
|
|
|
|
|
Production
expenses
|
64,673
|
|
112,430
|
|
183,151
|
|
219,396
|
Production
taxes
|
11,067
|
|
93,866
|
|
82,291
|
|
180,306
|
Transportation
expenses
|
32,305
|
|
53,393
|
|
92,807
|
|
102,531
|
Exploration
expenses
|
1,960
|
|
3,090
|
|
13,597
|
|
4,927
|
Crude oil and natural
gas service operations
|
6,062
|
|
11,206
|
|
11,972
|
|
18,392
|
Depreciation,
depletion, amortization and accretion
|
290,298
|
|
485,621
|
|
826,994
|
|
980,641
|
Property
impairments
|
23,929
|
|
21,339
|
|
246,458
|
|
46,655
|
General and
administrative expenses
|
41,529
|
|
47,226
|
|
84,440
|
|
94,844
|
Net (gain) loss on
sale of assets and other
|
612
|
|
364
|
|
5,114
|
|
112
|
Total operating costs
and expenses
|
472,435
|
|
828,535
|
|
1,546,824
|
|
1,647,804
|
Income (loss) from
operations
|
(296,776)
|
|
379,847
|
|
(490,364)
|
|
684,813
|
Other income
(expense):
|
|
|
|
|
|
|
|
Interest
expense
|
(65,069)
|
|
(68,471)
|
|
(128,663)
|
|
(136,308)
|
Gain on
extinguishment of debt
|
46,942
|
|
-
|
|
64,573
|
|
-
|
Other
|
629
|
|
723
|
|
1,161
|
|
2,077
|
|
(17,498)
|
|
(67,748)
|
|
(62,929)
|
|
(134,231)
|
Income (loss) before
income taxes
|
(314,274)
|
|
312,099
|
|
(553,293)
|
|
550,582
|
(Provision) benefit
for income taxes
|
72,143
|
|
(75,649)
|
|
124,378
|
|
(127,639)
|
Net income
(loss)
|
(242,131)
|
|
236,450
|
|
(428,915)
|
|
422,943
|
Net loss attributable
to noncontrolling interests
|
(2,845)
|
|
(107)
|
|
(3,965)
|
|
(590)
|
Net income (loss)
attributable to Continental Resources
|
$(239,286)
|
|
$
236,557
|
|
$
(424,950)
|
|
$
423,533
|
|
|
|
|
|
|
|
|
Net income (loss) per
share attributable to Continental Resources:
|
|
|
|
|
|
|
|
Basic
|
$
(0.66)
|
|
$
0.63
|
|
$
(1.17)
|
|
$
1.14
|
Diluted
|
$
(0.66)
|
|
$
0.63
|
|
$
(1.17)
|
|
$
1.13
|
Continental
Resources, Inc. and Subsidiaries
Unaudited Condensed
Consolidated Balance Sheets
|
|
In
thousands
|
|
June 30,
2020
|
|
December 31,
2019
|
Assets
|
|
|
Cash and cash
equivalents
|
|
$
6,656
|
|
$
39,400
|
Other current
assets
|
|
421,734
|
|
1,167,615
|
Net property and
equipment (1)
|
|
14,312,982
|
|
14,497,726
|
Other noncurrent
assets
|
|
24,986
|
|
23,166
|
Total
assets
|
|
$14,766,358
|
|
$
15,727,907
|
|
|
|
|
|
Liabilities and
equity
|
|
|
|
|
Current
liabilities
|
|
$
610,114
|
|
$
1,336,026
|
Long-term debt, net
of current portion
|
|
5,740,554
|
|
5,324,079
|
Other noncurrent
liabilities
|
|
1,844,438
|
|
1,959,451
|
Equity attributable
to Continental Resources
|
|
6,196,144
|
|
6,741,667
|
Equity attributable
to noncontrolling interests
|
|
375,108
|
|
366,684
|
Total liabilities and
equity
|
|
$14,766,358
|
|
$
15,727,907
|
|
(1) Balance is net of
accumulated depreciation, depletion and amortization of $13.76
billion and $12.77 billion as of June 30, 2020 and December 31,
2019, respectively.
|
Continental
Resources, Inc. and Subsidiaries
Unaudited Condensed
Consolidated Statements of Cash Flows
|
|
|
|
Three months ended
June 30,
|
|
Six months ended June
30,
|
In
thousands
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
Net income
(loss)
|
|
$(242,131)
|
|
$236,450
|
|
$
(428,915)
|
|
$
422,943
|
Adjustments to
reconcile net income (loss) to net cash provided by (used in)
operating activities:
|
|
|
|
|
|
|
|
|
Non-cash
expenses
|
|
216,302
|
|
552,225
|
|
938,087
|
|
1,155,816
|
Changes in assets and
liabilities
|
|
5,581
|
|
(5,279)
|
|
134,398
|
|
(73,855)
|
Net cash provided by
(used in) operating activities
|
|
(20,248)
|
|
783,396
|
|
643,570
|
|
1,504,904
|
Net cash used in
investing activities
|
|
(312,204)
|
|
(804,674)
|
|
(1,018,943)
|
|
(1,557,745)
|
Net cash provided by
(used in) financing activities
|
|
(178,463)
|
|
(36,626)
|
|
342,629
|
|
(23,456)
|
Effect of exchange
rate changes on cash
|
|
-
|
|
15
|
|
-
|
|
30
|
Net change in cash
and cash equivalents
|
|
(510,915)
|
|
(57,889)
|
|
(32,744)
|
|
(76,267)
|
Cash and cash
equivalents at beginning of period
|
|
517,571
|
|
264,371
|
|
39,400
|
|
282,749
|
Cash and cash
equivalents at end of period
|
|
$
6,656
|
|
$206,482
|
|
$
6,656
|
|
$
206,482
|
Non-GAAP Financial Measures
Non-GAAP adjusted net income (loss) and adjusted net
income (loss) per share attributable to Continental
Our presentation of adjusted net income (loss) and adjusted net
income (loss) per share that exclude the effect of certain items
are non-GAAP financial measures. Adjusted net income (loss) and
adjusted net income (loss) per share represent net income (loss)
and diluted net income (loss) 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 gains 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 (loss) and adjusted net income (loss) per share should not
be considered in isolation or as an alternative to, or more
meaningful than, net income (loss) or diluted net income (loss) 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 (loss) and diluted net
income (loss) per share as determined under U.S. GAAP to adjusted
net income (loss) and adjusted diluted net income (loss) per share
for the periods presented.
|
|
Three months ended
June 30,
|
|
|
2020
|
|
2019
|
In thousands,
except per share data
|
|
$
|
|
Diluted
EPS
|
|
$
|
|
Diluted
EPS
|
Net income (loss)
attributable to Continental Resources (GAAP)
|
|
$(239,286)
|
|
$
(0.66)
|
|
$
236,557
|
|
$
0.63
|
Adjustments:
|
|
|
|
|
|
|
|
|
Non-cash (gain) loss
on derivatives
|
|
659
|
|
|
|
(44,778)
|
|
|
Property
impairments
|
|
23,929
|
|
|
|
21,339
|
|
|
Net (gain) loss on
sale of assets and other
|
|
612
|
|
|
|
364
|
|
|
Gain on
extinguishment of debt
|
|
(46,942)
|
|
|
|
-
|
|
|
Total tax effect of
adjustments (1)
|
|
5,326
|
|
|
|
5,654
|
|
|
Total adjustments,
net of tax
|
|
(16,416)
|
|
(0.05)
|
|
(17,421)
|
|
(0.04)
|
Adjusted net income
(loss) (non-GAAP)
|
|
$(255,702)
|
|
($0.71)
|
|
$
219,136
|
|
$
0.59
|
Weighted average
diluted shares outstanding
|
|
360,204
|
|
|
|
374,009
|
|
|
Adjusted diluted net
income (loss) per share (non-GAAP)
|
|
$
(0.71)
|
|
|
|
$
0.59
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six months ended June
30,
|
|
|
2020
|
|
2019
|
In thousands,
except per share data
|
|
$
|
|
Diluted
EPS
|
|
$
|
|
Diluted
EPS
|
Net income (loss)
attributable to Continental Resources (GAAP)
|
|
$(424,950)
|
|
$
(1.17)
|
|
$
423,533
|
|
$
1.13
|
Adjustments:
|
|
|
|
|
|
|
|
|
Non-cash (gain) loss
on derivatives
|
|
659
|
|
|
|
(30,592)
|
|
|
Property
impairments
|
|
246,458
|
|
|
|
46,655
|
|
|
Net (gain) loss on
sale of assets and other
|
|
5,114
|
|
|
|
112
|
|
|
Gain on
extinguishment of debt
|
|
(64,573)
|
|
|
|
-
|
|
|
Total tax effect of
adjustments (1)
|
|
(45,976)
|
|
|
|
(3,962)
|
|
|
Total adjustments,
net of tax
|
|
141,682
|
|
0.39
|
|
12,213
|
|
0.03
|
Adjusted net income
(loss) (non-GAAP)
|
|
$(283,268)
|
|
($0.78)
|
|
$
435,746
|
|
$
1.16
|
Weighted average
diluted shares outstanding
|
|
362,804
|
|
|
|
374,557
|
|
|
Adjusted diluted net
income (loss) per share (non-GAAP)
|
|
$
(0.78)
|
|
|
|
$
1.16
|
|
|
|
|
|
|
|
|
|
|
|
(1) Computed by
applying a combined federal and state statutory tax rate of 24.5%
in effect for 2020 and 2019 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 June 30, 2020, the Company's total debt was
$5.74 billion and its net debt
amounted to $5.74 billion,
representing total debt of $5.74
billion less cash and cash equivalents of $6.7 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 gains and
losses on extinguishment of debt as applicable. EBITDAX is not a
measure of net income/loss or net cash provided by/used in
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/used in
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/loss to EBITDAX for the periods presented.
|
|
Three months ended
June 30,
|
|
Six months ended June
30,
|
In
thousands
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
Net income
(loss)
|
|
$(242,131)
|
|
$236,450
|
|
$(428,915)
|
|
$
422,943
|
Interest
expense
|
|
65,069
|
|
68,471
|
|
128,663
|
|
136,308
|
Provision (benefit)
for income taxes
|
|
(72,143)
|
|
75,649
|
|
(124,378)
|
|
127,639
|
Depreciation,
depletion, amortization and accretion
|
|
290,298
|
|
485,621
|
|
826,994
|
|
980,641
|
Property
impairments
|
|
23,929
|
|
21,339
|
|
246,458
|
|
46,655
|
Exploration
expenses
|
|
1,960
|
|
3,090
|
|
13,597
|
|
4,927
|
Impact from
derivative instruments:
|
|
|
|
|
|
|
|
|
Total (gain) loss on
derivatives, net
|
|
7,782
|
|
(53,448)
|
|
7,782
|
|
(52,324)
|
Total cash (paid)
received on derivatives, net
|
|
(7,123)
|
|
8,670
|
|
(7,123)
|
|
21,732
|
Non-cash (gain) loss
on derivatives, net
|
|
659
|
|
(44,778)
|
|
659
|
|
(30,592)
|
Non-cash equity
compensation
|
|
15,314
|
|
12,177
|
|
31,755
|
|
24,283
|
Gain on
extinguishment of debt
|
|
(46,942)
|
|
-
|
|
(64,573)
|
|
-
|
EBITDAX
(non-GAAP)
|
|
$
36,013
|
|
$858,019
|
|
$ 630,260
|
|
$1,712,804
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The following table provides a reconciliation of our net cash
provided by/used in operating activities to EBITDAX for the periods
presented.
|
|
|
|
|
|
|
|
|
Three months ended
June 30,
|
|
Six months ended June
30,
|
In
thousands
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
Net cash provided by
(used in) operating activities
|
|
$
(20,248)
|
|
$783,396
|
|
$ 643,570
|
|
$1,504,904
|
Current income tax
provision (benefit)
|
|
-
|
|
-
|
|
(2,223)
|
|
-
|
Interest
expense
|
|
65,069
|
|
68,471
|
|
128,663
|
|
136,308
|
Exploration expenses,
excluding dry hole costs
|
|
1,903
|
|
3,090
|
|
7,281
|
|
4,927
|
Gain (loss) on sale
of assets and other, net
|
|
(612)
|
|
(364)
|
|
(5,114)
|
|
(112)
|
Other, net
|
|
(4,518)
|
|
(1,853)
|
|
(7,519)
|
|
(7,078)
|
Changes in assets and
liabilities
|
|
(5,581)
|
|
5,279
|
|
(134,398)
|
|
73,855
|
EBITDAX
(non-GAAP)
|
|
$
36,013
|
|
$858,019
|
|
$ 630,260
|
|
$1,712,804
|
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
June 30, 2020
|
|
Three months ended
June 30, 2019
|
In
thousands
|
|
Crude oil
|
|
Natural
gas
|
|
Total
|
|
Crude oil
|
|
Natural
gas
|
|
Total
|
Crude oil and natural
gas sales (GAAP)
|
|
$158,720
|
|
$15,932
|
|
$174,652
|
|
$1,005,146
|
|
$132,279
|
|
$1,137,425
|
Less: Transportation
expenses
|
|
(23,518)
|
|
(8,787)
|
|
(32,305)
|
|
(45,981)
|
|
(7,412)
|
|
(53,393)
|
Net crude oil and
natural gas sales (non-GAAP)
|
|
$135,202
|
|
$7,145
|
|
$142,347
|
|
$959,165
|
|
$124,867
|
|
$1,084,032
|
Sales volumes
(MBbl/MMcf/MBoe)
|
|
8,270
|
|
58,772
|
|
18,065
|
|
17,549
|
|
75,254
|
|
30,091
|
Net sales price
(non-GAAP)
|
|
$16.35
|
|
$0.12
|
|
$7.88
|
|
$54.66
|
|
$1.66
|
|
$36.03
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six months ended June
30, 2020
|
|
Six months ended June
30, 2019
|
In
thousands
|
|
Crude oil
|
|
Natural
gas
|
|
Total
|
|
Crude oil
|
|
Natural
gas
|
|
Total
|
Crude oil and natural
gas sales (GAAP)
|
|
$932,490
|
|
$104,905
|
|
$1,037,395
|
|
$1,916,264
|
|
$330,745
|
|
$2,247,009
|
Less: Transportation
expenses
|
|
(73,890)
|
|
(18,917)
|
|
(92,807)
|
|
(87,628)
|
|
(14,903)
|
|
(102,531)
|
Net crude oil and
natural gas sales (non-GAAP)
|
|
$858,600
|
|
$85,988
|
|
$944,588
|
|
$1,828,636
|
|
$315,842
|
|
$2,144,478
|
Sales volumes
(MBbl/MMcf/MBoe)
|
|
26,521
|
|
146,225
|
|
50,891
|
|
34,922
|
|
149,944
|
|
59,912
|
Net sales price
(non-GAAP)
|
|
$32.37
|
|
$0.59
|
|
$18.56
|
|
$52.36
|
|
$2.11
|
|
$35.79
|
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
June 30,
|
|
Six months ended June
30,
|
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
Total G&A per Boe
(GAAP)
|
|
$2.30
|
|
$1.57
|
|
$1.66
|
|
$1.58
|
Less: Non-cash equity
compensation per Boe
|
|
(0.85)
|
|
(0.40)
|
|
(0.62)
|
|
(0.40)
|
Cash G&A per Boe
(non-GAAP)
|
|
$1.45
|
|
$1.17
|
|
$1.04
|
|
$1.18
|
Non-GAAP Free Cash Flow
Our presentation of projected free cash flow is
a non-GAAP measure. We define projected 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 with Franco-Nevada 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.
Continental
Resources, Inc.
|
2020
Guidance
|
As of August 3,
2020
|
|
|
|
|
|
2020
Original
|
|
2020
Updated
|
|
|
|
|
Full-year average oil
production (Bopd)
|
198,000 to
201,000
|
|
155,000 to
165,000
|
Full-year average
natural gas production (Mcfpd)
|
935,000 to
960,000
|
|
800,000 to
820,000
|
Capital expenditures
budget
|
$2.65
Billion
|
|
$1.2
billion
|
|
|
|
|
Operating
Expenses:
|
|
|
|
Production expense per
Boe
|
$3.50 to
$4.00
|
|
$3.50 to
$4.00
|
Production tax (% of net oil
& gas revenue)
|
8.3% to
$8.5%
|
|
8.3% to
$8.5%
|
Cash G&A expense per
Boe(1)
|
$1.10 to
$1.40
|
|
$1.10 to
$1.40
|
Non-cash equity compensation
per Boe
|
$0.50 to
$0.60
|
|
$0.50 to
$0.60
|
DD&A per Boe
|
$15.00 to
$17.00
|
|
$15.00 to
$17.00
|
|
|
|
|
Average Price
Differentials:
|
|
|
|
NYMEX WTI crude
oil(2)(per barrel of oil)
|
($4.50) to
($5.50)
|
|
($5.50) to
($6.50)
|
Henry Hub natural
gas(3)(per Mcf)
|
($0.50) to
($1.00)
|
|
($0.75) to
($1.25)
|
|
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.
|
2.
|
Includes second half
2020 guidance of ($5.00) to ($5.50).
|
3.
|
Includes natural gas
liquids production in differential range. Includes second half 2020
guidance of ($0.50) to ($1.00).
|
2020 Capital
Expenditures
|
|
|
|
|
|
The following table
provides the breakout of budgeted capital expenditures:
|
|
|
|
|
|
($ in
Millions)
|
North
D&C
|
South
D&C
|
Leasehold,
Facilities, Other
|
|
Capex
|
$635
|
$315
|
$250
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
|
3.4
|
116
|
76
|
100
|
South
|
4.3
|
54
|
38
|
42
|
Total
|
7.7
|
170
|
114
|
142
|
|
|
|
|
|
|
|
|
|
|
1. Represents projected net
operated and non-operated wells with first production.
|
View original
content:http://www.prnewswire.com/news-releases/continental-resources-announces-second-quarter-2020-results-and-updates-guidance-301105016.html
SOURCE Continental Resources