Continental explains 2020 shale plan

By Luke Geiver | February 27, 2020

Continental Resources will spend roughly $2.2 billion in 2020 to further develop its Williston Basin and SCOOP/STACK portfolio. The planned spending total is flat compared to the previous year, the Oklahoma City-based exploration and production company said. Despite a capex plan for 2020 that is nearly 20 percent below what Continental had previously scheduled through a five-year vision estimate, the company will still create double digit production growth from this year to next.

The company provided snapshot updates on operations.

CLR Bakken: #1 Bakken Oil Producer; 148,416 Average Daily 2019 Oil Production up 14 percent over 2018

In 2019, Bakken oil production increased 14 percent over 2018, averaging 148,416 Bopd. Bakken total production increased 16 percent over 2018, averaging 194,691 Boepd. During the year, the company completed 172 gross (119 net) operated wells with first production. These 2019 Bakken program wells are performing in line with wells completed in the company's 2017 and 2018 Bakken programs, each of which paid out in approximately one year. The 2019 program wells are approximately 75 percent paid out, as of January 2020. The 2020 Bakken program is projected to continue this performance trend.

CLR South: #1 OK Oil Producer; 41,695 Average Daily 2019 Oil Production up 43 percent over 2018 

In 2019, South oil production increased 43 percent over 2018, averaging 41,695 Bopd. South total production increased 13 percent over 2018, averaging 137,579 Boepd. During the year, the Company completed 140 gross (98 net) operated wells with first production in the South. In SCOOP, Project SpringBoard produced an average 25,006 net Bopd, outperforming the Company's expectations announced in third quarter 2018 by 50 percent.    

Year-End 2019 Proved Reserves

The Company's year-end 2019 proved reserves grew 6 percent year-over-year to 1,619 MMBoe, as of December 31, 2019. These additions equate to a reserve replacement ratio of 178 percent for 2019 (defined as total change in proved reserves, excluding production, divided by production). SEC prices used for calculating proved reserves were approximately $10.00 less per barrel WTI and $0.50 less per Mcf gas than the SEC prices used in the prior year. The Company's proved reserves have grown by 32 percent since December 31, 2015 and these additions equate to a four year reserve replacement ratio of 198 percent.

On 2020 expectations:

The 2020 capital budget is projected to generate $2.9 to $3.0 billion of cash flow from operations and $350 to $400 million of free cash flow for full-year 2020 at $55 per barrel WTI and $2.50 per Mcf Henry Hub. A $5 change per barrel WTI is estimated to impact annual cash flow by approximately $300 million.

On Bakken, Oklahoma Spending:

The company is allocating approximately $2.2 billion to drilling and completion (D&C) activities, of which approximately 60% is allocated to the Bakken and approximately 40% to Oklahoma. The non-D&C capital is planned to be primarily focused on leasehold, mineral acquisitions, workovers and facilities.