Continental Resources, Inc.
CLR increased its year-end 2012 proved reserves to 785 MMBoe (million
barrels of oil equivalent), a year-over-year gain of 54 percent. With the 2012
increase, Continental has grown proved reserves at a compound annual growth
rate of 45 percent since year-end 2009.
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Continental's 2012 proved reserves had a net present value discounted at 10
percent (PV-10) of $13.3 billion, a 45 percent increase over the PV-10 of $9.2
billion for proved reserves at year-end 2011.
Proved reserves growth in 2012 primarily reflected strong production growth in
the Bakken play of North Dakota and Montana, which Continental believes is the
nation's premier oil play. Continental is the largest producer and leaseholder
in the Bakken, with approximately 1.1 million net acres. The Company has also
accelerated production growth in its South Central Oklahoma Oil Province
(SCOOP), an oil- and liquids-rich play in Oklahoma.
Thirty-nine percent of Continental's total 2012 proved reserves, or 309.0
MMBoe, were proved developed producing (PDP), compared with 40 percent of
year-end 2011 proved reserves.
Crude oil reserves represented 72 percent of 2012 total proved reserves, a
significant increase over year-end 2011, when crude oil accounted for 64
percent of the Company's 508 MMBoe in proved reserves. The higher percentage
of crude oil proved reserves in 2012 was accomplished despite two crude-oil
concentrated divestitures.
Continental currently operates 85 percent of its total proved reserves,
compared with 86 percent at year-end 2011.
"We continue to increase our concentration in high-value, high-growth, crude
oil assets, especially in the Bakken," said Harold Hamm, Chairman and Chief
Executive Officer. "We are growing the value of our Bakken assets through
strategic acquisitions, exploration, and the expanded use of pad drilling,
which should improve efficiencies and translate into even better rates of
return."
Through acquisitions and leasing, Continental increased its Bakken leasehold
by 24 percent in the past year, from 915,863 net acres at year-end 2011 to
1,139,799 net acres at year-end 2012.
The Company is also leveraging the increased demand for high-quality Bakken
crude oil at U.S. refineries. "We have more than adequate pipe and rail
capacity out of the basin at this time, so we can move our production to the
most advantageous markets," Mr. Hamm said. "Realizing the Bakken's full
potential is essential to our five-year plan to triple production and proved
reserves by year-end 2017, while increasing operating margins."
Strong Production Growth
Continental's 2012 production totaled 35.7 MMBoe, a 58 percent increase over
production of 22.6 MMBoe for 2011, in line with the Company's production
growth guidance for 2012.
Estimated fourth quarter 2012 production was 9.8 MMBoe, or 106,831 Boe per
day, a 42 percent increase over fourth quarter production for 2011. The
Company deferred some fourth quarter well completions to stay within its
capital expenditure budget for 2012. Fourth quarter 2012 was the 19^th
consecutive quarter in which Continental has increased production compared
with the immediately previous quarter.
Based on continued production growth, as well as an acquisition and a
divestiture announced December 20, 2012, Continental's current production is
approximately 116,000 Boepd.
Increased Proved Reserves
Continental's 2012 proved reserves in the Bakken totaled 564 MMBoe, almost
double proved reserves in the play at year-end 2011. The Company's Bakken
proved reserves had a PV-10 of $9.9 billion at year-end 2012.
Other significant components of year-end 2012 proved reserves included the
SCOOP play in Oklahoma, with proved reserves of 63 MMBoe (PV-10 of $955
million) and the Red River Units, where proved reserves increased in the past
year to 78 MMBoe (PV-10 of $2.0 billion).
Exploration and development activity was the primary driver in the Company's
2012 proved reserves growth, adding 234 MMBoe of proved reserves in the year,
of which 27 percent were PDP and the remainder PUDs (proved undeveloped
reserves). In total, a reconciliation of 2012 proved reserves included:
• Exploration/development 234 MMBoe (63 MMBoe PDP, 171 MMBoe
PUDs)
• Acquisitions 82 MMBoe
• Divestitures (8) MMBoe
• Performance revisions 50 MMBoe
• De-booking (34) MMBoe
• Price revisions (11) MMBoe
• 2012 production (36) MMBoe
Year-end 2012 proved reserves included:
• PUD locations 1,763 gross (982 net)
• Bakken PUDs 86 percent of total net PUDs
Also notable was the fact that the Company for the first time booked proved
reserves in lower benches of the Bakken Three Forks formation, with the
recognition of three PDPs and 11 PUDs in 2012. Continental has completed two
wells in the Three Forks second bench and one well in the third bench.
Traditionally operators in the play targeted the Middle Bakken zone above the
Three Forks and only the first bench of the Three Forks zone.
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