Continental Resources Business Practices

[ou48A]

Continental Resources Management Discusses Q1 2013 Results - Earnings Call Transcript - Seeking Alpha

Harold G. Hamm says Continental is on track to 35% to 40% total production growth in 2013

....CLR achieved record net production of 121,500 barrels of oil equivalent in the first quarter, a 42% increase over the first quarter of last year

[ou48A]

[ou48A]

The Wall Street Journal reports this project will be moving forward

Report Volume XXIV, Number 16 April 15, 2013

INDUSTRY NEWS (Enid, OK) – Hiland Crude, a subsidiary of Hiland Partners, is proposing a new pipeline that would cost $300 million – transporting crude from North Dakota’s Bakken field to eastern Wyoming.

The pipeline is expected to have a starting capacity of 50,000 bpd, but it could hold twice that amount. The 12-inch pipeline will stretch 500 miles, and the company is in talks with various landowners and Converse County officials in Wyoming to get the project underway.

Hiland already signed deals with some landowners along the Converse County line, and the company is hopeful for more cooperation.

If all goes well with negotiations, construction will begin this summer. The pipeline is expected to foster 180 jobs throughout its construction and three to five permanent positions.

The pipeline, known as Double H, will be fully operational by August of 2014. Most of the sections will only take three to four months to construct.

Double H will begin in Dore, North Dakota, stretching to Guernsey, Wyoming. From there, the pipeline will connect to the Pony Express pipeline—formerly a natural gas line that is being transformed into a passage for crude by Tallgrass Energy Partners, Oklahoma’s Enid News reports

Pony Express is being revamped to reach Cushing, Oklahoma—a city well known for its extensive oil trading and as the center for the settlement price for West Texas Intermediate on the New York Mercantile Exchange.

[Bellaboo]

I read in the business section of the DOK today that their divorce is in agreement.

[HangryHippo]

Here's a link to what I think Bellaboo is referencing:

Continental chief's divorce called 'no fault' | News OK

What does it mean to agree to a no-fault divorce?

[ou48A]

Exclusive: Billionaire Harold Hamm Hits Back Against WSJ Allegations

Exclusive: Billionaire Harold Hamm Hits Back Against WSJ Allegations - Forbes

[ou48A]

This could be a very big deal for CLR and others


Bakken: The Downspacing Revolution

Triangle Reports "No Communication" In a Downspacing Test:

On June 10, Triangle Petroleum (TPLM), a small-capitalization Bakken operator, reported its first quarter fiscal 2013 results and provided operational update. Some of the operational insights discussed by the company are quite notable. The most important is the confirmation of 160-acre downspacing feasibility in the deep portion of the Basin. The announcement may be a bellwether report which front runs a wave of downspacing test result releases by several larger operators expected later this year and in 2014.

Triangle is one of the first operators to report results of a high density drilling test in the Middle Bakken. According to the company's press release, its recent downspacing test indicates potential for 6 - 8 Middle Bakken wells per 1,280 acre spacing unit, which is equivalent to 213-160 acre density, "with no communication."

The "no communication" statement by Triangle is quite important. It suggests that there is little or no loss in well productivity and economics due to tighter development spacing. The positive downspacing resolution, if confirmed by further production history and tests by other operators, could essentially double well inventories in the most productive areas in the play, translating to significant economic value.

While many operators have initiated downspacing pilots, specific results in the majority of cases are yet to be reported. Continental Resources (CLR) deserves credit for coming forth, almost a year ago, with a high conviction view that high-density development patterns may be feasible in the Bakken with potentially little or no communication between wellbores. Continental has initiated an extensive pilot program to evaluate downspacing potential across its vast leasehold in the Bakken. One of Continental's comprehensive pilots is designed to test 160-acre downspacing (picture below). Results from the pilot will not be available until 2014.

Several other operators, including Whiting Petroleum (WLL), Oasis Petroleum (OAS), Kodiak Oil & Gas (KOG) and Halcon Resources (HK), to name a few, have followed Continental with their own, often quite comprehensive, evaluation programs.

: Is China Internet user growth slowing? - Seeking Alpha

[blangtang]

This could be a very big deal for CLR and others


Bakken: The Downspacing Revolution

Triangle Reports "No Communication" In a Downspacing Test:

On June 10, Triangle Petroleum (TPLM), a small-capitalization Bakken operator, reported its first quarter fiscal 2013 results and provided operational update. Some of the operational insights discussed by the company are quite notable. The most important is the confirmation of 160-acre downspacing feasibility in the deep portion of the Basin. The announcement may be a bellwether report which front runs a wave of downspacing test result releases by several larger operators expected later this year and in 2014.

Triangle is one of the first operators to report results of a high density drilling test in the Middle Bakken. According to the company's press release, its recent downspacing test indicates potential for 6 - 8 Middle Bakken wells per 1,280 acre spacing unit, which is equivalent to 213-160 acre density, "with no communication."

The "no communication" statement by Triangle is quite important. It suggests that there is little or no loss in well productivity and economics due to tighter development spacing. The positive downspacing resolution, if confirmed by further production history and tests by other operators, could essentially double well inventories in the most productive areas in the play, translating to significant economic value.

While many operators have initiated downspacing pilots, specific results in the majority of cases are yet to be reported. Continental Resources (CLR) deserves credit for coming forth, almost a year ago, with a high conviction view that high-density development patterns may be feasible in the Bakken with potentially little or no communication between wellbores. Continental has initiated an extensive pilot program to evaluate downspacing potential across its vast leasehold in the Bakken. One of Continental's comprehensive pilots is designed to test 160-acre downspacing (picture below). Results from the pilot will not be available until 2014.

Several other operators, including Whiting Petroleum (WLL), Oasis Petroleum (OAS), Kodiak Oil & Gas (KOG) and Halcon Resources (HK), to name a few, have followed Continental with their own, often quite comprehensive, evaluation programs.

: Is China Internet user growth slowing? - Seeking Alpha

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do you have a working link, that one is about something else...

give us some color on what is going on with Continental, that is a bit technical...

I'd like to think we are all ready to hear some stuff other than the gossipy CEO marriage drama stuff...

[ou48A]

-----------

do you have a working link, that one is about something else...

give us some color on what is going on with Continental, that is a bit technical...

I'd like to think we are all ready to hear some stuff other than the gossipy CEO marriage drama stuff...

Sorry, not sure what happened, but try this link.
Bakken: The Downspacing Revolution - Seeking Alpha

[HangryHippo]

I'm with blangtang, can you give us a less technical version of what this actually means for Continental?

[BoulderSooner]

I'm with blangtang, can you give us a less technical version of what this actually means for Continental?

Continental is the biggest player in the bakken

the article means that there might be a lot more (double in the best part) recoverable oil in the pay ..

[ou48A]

I'm with blangtang, can you give us a less technical version of what this actually means for Continental?

Basically this news means that they should be able to drill many more wells and produce far more oil in the same acreage positions.

Down spacing is the amount of space between well's.
The lack of communication they talk about basically means there are few if any underground holes or pathways for the oil to flow into different areas or to different wells. Hence the need to drill more wells to recover the oil. It means that the new wells should produce similar results as other nearby well’s that were very good wells.. This is great news for CLR and others.

The article says this could essentially double well inventories in the most productive areas in the play. I believe CLR is still the largest lease holder in the Bakken.

Exactly by how much is yet to be seen, but this should add a significant amount of value to CLR and to the other operators in the play.
Adding more take away pipeline capacity will also help the profitability of CLR.
Hope this helps.

[HangryHippo]

Basically this news means that they should be able to drill many more wells and produce far more oil in the same acreage positions.

Down spacing is the amount of space between well's.
The lack of communication they talk about basically means there are few if any underground holes or pathways for the oil to flow into different areas or to different wells. Hence the need to drill more wells to recover the oil. It means that the new wells should produce similar results as other nearby well’s that were very good wells.. This is great news for CLR and others.

The article says this could essentially double well inventories in the most productive areas in the play. I believe CLR is still the largest lease holder in the Bakken.

Exactly by how much is yet to be seen, but this should add a significant amount of value to CLR and to the other operators in the play.
Adding more take away pipeline capacity will also help the profitability of CLR.
Hope this helps.

Definitely, thanks ou48A.

[Pete]

More on the Hamm divorce and it's potential impact on CLR:

Special Report: Lack of a prenup imperils oil billionaire's fortune | Reuters

[HangryHippo]

I wish they'd had a prenup... I really wish we knew what the impact will wind up being on CLR. I hope it's not as treacherous as what has hit SandRidge or CHK.

[ou48A]

Legendary Investor Jim Rogers Suspects The American Energy Revolution Will Disappoint - Seeking Alpha

I'm a big believer in the long-term merits of investing in the companies that are big players in the North American unconventional oil revolution. What I'm not a big believer in is the idea that oil production in the United States is going to continue grow at the rates we have seen over the past year.

I also don't believe that increasing U.S. production is going to result in a long-term drop in the price of oil.

Why don't I think oil production in the United States can continue growing at the rapid pace we have experienced over the past year?



It is because last year's production surge was the result of a move of drilling rigs from natural gas to oil that can't be repeated again in the future:



The number of rigs drilling for oil in the United States went from 200 in 2009 to 1,400 by the start of 2012. That is the big driver of the increase in oil production in the United States.

That rig count has flattened and I believe it is soon going to start showing up in the production data.

As for why I don't think the growth in U.S. oil production can significantly lower the price of oil in the long term, the answer is very simple. These new sources of oil require oil prices of $80 plus for the production to be profitable. If the price of oil drops, producers are going to quickly lay down the drilling rigs. With first year decline rates on these tight oil wells that can be up to 60%, a decrease in rigs will quickly mean a decrease in production.

This week I read an interview with legendary investor and commodities bull Jim Rogers who seems to agree with my thinking:

Fusion: Many believe the U.S. shale revolution is going to solve our energy problems? Is it over-hyped ?
Rogers: Yes, I believe it is. Regarding natural gas, the fundamentals on the ground are not nearly as good as the hype. The number of rigs on the ground has gone down 75% the last couple of years, as the wells are very short-lived, and it takes an enormous amount of money to keep them up. A number of companies have had to lower estimates of their reserves. As for oil shale, typical wells deplete at 38 percent the first year. Thus you need a lot of drilling, money, and a high price to keep up production rates. All you have to do is go out in the oil patch. I believe the investment world will be disappointed with the notion that supply is so great that oil will collapse.

EOG Resources (EOG), the single largest producer of oil using horizontal wells in the United States, in its most recent presentation shows how production in the North Dakota Bakken play is now flattening:

(click to enlarge)

What Does This Mean For Investors?

If I'm right, oil prices of $90 plus are going to be the norm going forward. What I think this actually means is that investors should embrace these unconventional producers that have been responsible for North America's production growth.

Some of the top unconventional oil producers in the United States include:

- EOG Resources

- Continental Resources (CLR)

- Kodiak Oil and Gas (KOG)

The reason I like these unconventional producers is that I believe their "second wave" of production from these unconventional plays is going to be exceptionally profitable. By "second wave" I mean the secondary phase of production through downspacing and enhanced oil recovery (e.g., waterflooding).

The first or initial phase of production will involve making investments in roads, pipelines and other expensive infrastructure. The secondary phase of production will not require a good chunk of this spending as this infrastructure is already in place.

Every barrel produced through secondary production will be much more profitable than the barrels produced in the initial production phase. That means that cash that was previously needed for investments in infrastructure now becomes available for distribution to shareholders either through balance sheet improvement, dividends or share repurchases.

I'm invested in these unconventional oil producers for the long term. I believe that with each passing year, the acreage that these companies have locked up is going to prove more and more valuable.

Source: Legendary Investor Jim Rogers Suspects The American Energy Revolution Will Disappoint

[gurantula35]

Have a friend at continental who says they have been informed they may be moving to the chase tower soon because their isn't enough space.

[HangryHippo]

Is there any sort of timeline for the resolution of the Hamm divorce? I can't find if a court date has been set or what's going on now.

[ou48A]

CLR's Second quarter production averaged 135,700 Boepd, up 43% from the second quarter of 2012. This production growth and additional operating efficiencies resulted in record EBITDAX of $708 million, up 14% from the first quarter of 2013 and 68% higher than the second quarter of 2012.


Continental Resources, Inc. (CLR): Continental Resources Management Discusses Q2 2013 Results - Earnings Call Transcript - Seeking Alpha

This is very good news IMO for this OKC company

[Pete]

Just saw in a recent OKC Economic Development Trust that CLR now has 515 employees in OKC as of July 2013.

They added almost 200 jobs in the last 12 months.

[Pete]

Is there any sort of timeline for the resolution of the Hamm divorce? I can't find if a court date has been set or what's going on now.

While I was in town last week, I talked to someone who knows the Hamms very well and he said that the divorce was completely off.

[catch22]

While I was in town last week, I talked to someone who knows the Hamms very well and he said that the divorce was completely off.

Good he can get going on the tower now.

[HangryHippo]

While I was in town last week, I talked to someone who knows the Hamms very well and he said that the divorce was completely off.

How very interesting...

[adaniel]

This is her strategy. Just waiting for the stock price to get a little higher before she dumps him. Wait a bit longer=fatter payday.

Well played, Mrs. Hamm.

[Rover]

Apparently this isn't the first time for them. But, it gets more public as Continental grows. Must be tough to have your personal disputes carried out on newspapers and magazines across the country.