Continental Resources Scales 52-Week High - Analyst Blog

Shares of leading Bakken oil producer, Continental Resources, Inc. CLR hit a 52-week high of $129.39 during Tuesday's trading session. However, the stock closed the session at $129.18, which reflects a solid return of 19.0% over the past six months. The average trading volume for the last three months aggregated 1,142,770 shares.

The upgrade comes on the back of significant growth following the company's success in the development of the Bakken and the South Central Oklahoma Oil Province (SCOOP) plays. The asset base has delivered and continues to provide stable returns and cash margins, which would enable the company to execute growth plans in the future.

Oklahoma City-based Continental is an independent exploration and production company focused on the Bakken, Cana and Niobrara shale plays. It has leases on nearly 1.1 million acres in the Bakken Shale region.

The company operates in the North, South and Eastern regions of the U.S. Its North region – north of Kansas and west of the Mississippi river – comprises North Dakota Bakken, Montana Bakken, the Red River units and the Niobrara play in Colorado and Wyoming. The first two hold the maximum promise for Continental Resources.

The Southern region includes Kansas and all properties south of Kansas and west of the Mississippi river, and comprises the Anadarko Woodford and Arkoma Woodford plays in Oklahoma.

Continental Resources expects to increase total crude oil and natural gas production in the range of 26% to 32% in 2014. The company also expects average daily production of 170,000–180,000 barrels of oil equivalent (Boe) per day, with an exit rate of approximately 200,000 Boe per day for Dec 2014. Of the total production, 70% is expected to be crude oil.

Continental's organic capital expenditure for 2014 is estimated at approximately $4.05 billion. The budget takes into account the ongoing trend of reduced well costs. The company has set a new goal to slash average operated Bakken completed well costs by 3% to 5% by the end of 2014.

The company's 2014 budget reflects 400 net well completions (1,090 gross), with 94% located in its two key operating areas, the Bakken in North Dakota and Montana and SCOOP. The 2014 well count represents a 22% increase over budgeted completions of 329 net wells in total for 2013.

Continental Resources currently carries a Zacks Rank #3 (Hold), implying that it is expected to perform in line with the broader U.S. equity market over the next one to three months. Meanwhile, one can consider better-ranked players from the industry such as Range Resources Corporation RRC, World Point Terminals, LP WPT and EOG Resources, Inc. EOG. While Range Resources and World Point sport a Zacks Rank #1 (Strong Buy), EOG holds a Zacks Rank #2 (Buy).