Bakken, STACK drive Continental’s second quarter production

By Patrick C. Miller | August 15, 2017

Continental Resources Inc. passed a significant production milestone during the second quarter this year with individual days of output at 250,000 barrels of oil equivalent per day (boe/d).

"We're bringing on a lot of pad projects,” said Harold Hamm, chairman and CEO. “Looking ahead, given the anticipated timing of additional pad projects in the Bakken and STACK, we expect third quarter 2017 production will average 240,000 to 250,000 boe/d, with 58 percent of production being crude oil. The continuous improvements we are achieving position Continental for even better results in 2018."

Continental forecasts its production to reach 260,000 to 275,000 boe/d by year’s end, an increase of 24 to 31 percent above the fourth quarter of 2016. Second quarter production was up 6 percent over the previous quarter.

The company attributed the production bump to an increase in optimized completions, leading to increases in both estimated ultimate recoveries (EUR) and rates of return (ROR).

In the Bakken, ROR uplifted to 82 percent, based on new 1,100 MBoe type curve EUR. The STACK condensate type curve was 80 percent ROR, based on 2,400 MBoe EUR. The SCOOP Springer Cash 1-26H well yielded more than 100 percent ROR, 25 percent higher EUR.

Continental is adjusting its capital expenditures for 2017 to a range between $1.75 billion and $1.95 billion. This is expected to maintain cash neutrality at WTI prices between $45 and $51 per barrel for the year.

Adjustments to capital expenditures will be accomplished primarily by reducing completion crews and rigs. The rig count for the second half of the year is projected to average 18—14 rigs in Oklahoma and four in Bakken.

The company has reduced its Bakken completion crew count to four and has six crews in Oklahoma. As a result, Continental expects to exit 2017 with a drilled but uncompleted (DUC) inventory in the Bakken of approximately 160 gross operated wells, including approximately 35 already stimulated with first production expected in 2018.

Continental also announced a new record STACK well within the condensate window of the play. The company reported that it had agreed to sell its non-strategic leasehold and property for $147.5 million, using the proceeds to reduce debt.

For the quarter, Continental reported a net loss of $63.6 million (17 cents per diluted share). Net cash provided by operating activities for the quarter was $446.4 million with EBITDAX of $479.5 million.

"Continental remained disciplined and strategic with its capital spending during the quarter," Hamm said. "The results have been exceptional, raising our production guidance for 2017 and lowering our guidance for operating costs."