Continental Resources to Redeem Senior Notes - Analyst Blog

Leading Bakken oil producer, Continental Resources, Inc. CLR announced that it would redeem all outstanding 8.25% Senior Notes due 2019, on Jul 11, 2014. The aggregate principal amount of the notes is $300 million. The redemption price of the notes would equal 100% of their aggregate principal amount along with accrued but unpaid interest prior to the Redemption Date.  

Oklahoma City-based Continental Resources 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 Resources' organic capital expenditure for 2014 is estimated at $4 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.

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. Investors interested in the oil and gas sector could consider stocks like Athlon Energy Inc. ATHL, Ultra Petroleum Corp. UPL and Pembina Pipeline Corp. PBA. All these carry a Zacks Rank #1 (Strong Buy).
 

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