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NEWS RELEASE CONTINENTAL RESOURCES REPORTS THIRD QUARTER 2015 RESULTS New Wells in STACK: Ladd 1-8-5XH Flows 2,181 Barrels of Oil Equivalent (Boe) per Day (79% Oil), and Marks 1-9-4XH Flows 994 Boe per
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NEWS RELEASE CONTINENTAL RESOURCES REPORTS THIRD QUARTER 2015 RESULTS New Wells in STACK: Ladd 1-8-5XH Flows 2,181 Barrels of Oil Equivalent (Boe) per Day (79% Oil), and Marks 1-9-4XH Flows 994 Boe per Day (73% Oil) Positive Revisions to 2015 Guidance: Lower Cash Costs and Increased Production Debt and Credit Facility Changes Reduce Borrowing Costs While Increasing Liquidity Production for Third Quarter 2015 Averaged 228,278 Boe per Day Oklahoma City, November 4, 2015 Continental Resources, Inc. (NYSE: CLR) (Continental or the Company) today announced third quarter 2015 operating and financial results. Continental reported a net loss of $82.4 million, or $0.22 per diluted share, for third quarter Adjusted net loss for third quarter 2015 was $43.5 million, or $0.12 per diluted share. EBITDAX for third quarter 2015 was $472.2 million, compared with EBITDAX of $947.6 million for third quarter Definitions and reconciliations of adjusted net income and net loss, adjusted earnings per share and EBITDAX to the most directly comparable U.S. generally accepted accounting principles (GAAP) financial measures can be found in the supporting tables at the conclusion of this press release. This was another solid quarter s performance, said Harold Hamm, Chairman and Chief Executive Officer. As expected, we continue to deliver on cost controls and operating efficiencies, while maintaining our exploration focus. We continued in the third quarter to improve across the board in the key metrics we control faster drill times, lower completed well costs, and strong well results from enhanced completions. On the financial side, we remain focused on balancing capital expenditures with cash flow. We are very pleased with the performance of our two recent completions in STACK, said Jack Stark, President and Chief Operating Officer. Based on early results and our geologic model, we expect STACK will add significant value to the Company and to our shareholders Guidance Update; Increased Production at Lower Cost Based on continued strong well performance through the third quarter, the Company is increasing its production growth guidance to a range of 24% to 26% for 2015, compared with the earlier range of 19% to 23% growth over the previous year. Continental expects non-acquisition capital expenditures for fourth quarter 2015 will be in the range of $350 million to $400 million. Continental is lowering 2015 guidance for production expense, general and administrative (G&A) expense and non-cash equity compensation expense per barrel of oil equivalent (Boe) of production, reflecting increased operating efficiencies companywide. Overall, the guidance on select costs for 2015 has been reduced by a total of $0.85 to $1.05 per Boe of production. Production expense is now expected to be in a range of $4.00 to $4.50 per Boe for the year, production tax is expected to be in a range of 7.5% to 8.0% of oil and gas revenue, and G&A expense is expected to be in a range of $1.70 to $2.00 per Boe. Non-cash equity compensation is expected to be $0.65 to $0.75 per Boe for the year. In addition, Continental is tightening its 2015 guidance range for oil differentials to $7.00 to $9.00 per barrel below the NYMEX daily average compared with the previous range of $7.00 to $10.00per barrel. December 2014 Guidance August 2015 Guidance Updated 2015 Guidance Production growth 16% to 20% 19% to 23% 24% to 26% Production expense per Boe $5.50 to $6.00 $4.75 to $5.25 $4.00 to $4.50 Production tax (% of oil & gas revenue) 7.5% to 8.5% 7.5% to 8.5% 7.5% to 8.0% G&A expense per Boe $2.00 to $2.50 $1.75 to $2.25 $1.70 to $2.00 Non-cash equity compensation per Boe $0.75 to $0.95 $0.70 to $0.80 $0.65 to $0.75 Avg. price differential to NYMEX WTI crude oil (per barrel of oil) ($7.00) to ($10.00) ($7.00) to ($10.00) ($7.00) to ($9.00) A table with the Company s full 2015 guidance can be found at the conclusion of this release. Continental plans to publish 2016 guidance in late December 2015 or early January Cost Reductions and Efficiency Improvements Continental s drilling and completion costs for most operated wells have declined on average approximately 25% since year-end 2014, due to lower service costs and operational efficiency gains. For the Bakken play, the current estimated drilling and completion cost has decreased to $7.0 million per operated well, compared with $9.6 million per operated well at year-end At these lower costs and targeted estimated ultimate recovery (EUR) of 800 MBoe per well, the Company has cut its finding cost in half since year-end 2014, doubling its capital efficiency. For the Woodford condensate play, the current estimated drilling and completion cost has decreased to $9.6 million per operated well, compared with $12.2 million per operated well at year-end 2014, based on a 7,500-foot lateral in the Company s development areas of the South Central Oklahoma Oil Province (SCOOP). In the Northern Region during third quarter 2015, the Bakken drilling team set multiple new Continental performance records. For example, the Company reduced average drilling time for spud-to-total-depth (TD) by 15%, compared to the average for the first quarter. The average spud-to-td time in third quarter 2015 was 15.0 days for a two-mile lateral, compared to 17.6 days in the first quarter and 16.6 days in the second quarter of this year. The most significant efficiency achievement came in average days to drill horizontal laterals. The Bakken drilling team in third quarter 2015 set several new lateral drilling records, the most recent drilled being a 9,495-foot lateral in 2.4 days. The Bakken team continues to drive down lease operating expenses, with per-well lease operating expense down 30% in third quarter 2015, compared with fourth quarter Annualized, this represents approximately $40 million of savings to Continental. In the Southern Region during third quarter 2015, the drilling team also continued to set new Continental records, demonstrating the future potential for efficiency gains throughout the SCOOP and STACK plays. 2 Leveraging the knowledge gained on the Poteet and Honeycutt density pilots, the SCOOP team was able to drill the Vanarkel density pilot in half the time per well of the first multi-well project. On the Newy XH well, the SCOOP team set a Continental drilling record for spud-to-td in 47 days, a 30% reduction in drilling time compared to nearby wells. This well also set a new Oklahoma depth record with a total measured depth of 26,196 feet. On the Kalsu XH, the Northwest Cana drilling team set a new Continental record for its Joint Development Agreement (JDA) area, drilling spud-to-td in 40 days, a 50% reduction from nearby wells. Production Third quarter 2015 net production totaled 21.0 million Boe, or 228,278 Boe per day, a sequential increase of 1% from second quarter 2015 and 25% higher than third quarter Total net production for the third quarter included 147,472 barrels of oil (Bo) per day (65% of production) and million cubic feet (MMcf) of natural gas per day (35% of production). In third quarter 2015, sales volumes also totaled 21.0 million Boe, consistent with production for the quarter. Fourth quarter 2015 daily production is expected to decline compared with third quarter. Continental expects to exit December 2015 with production of approximately 210,000 Boe per day. Continental is currently operating 23 rigs, including 8 rigs in the Bakken and 15 rigs in Oklahoma. The Company has recently added two completion crews in Oklahoma, bringing the total crew count to three. In the Bakken, Continental currently has no completion crews active. The following table provides the Company s average daily production by region for the periods presented. 3Q 2Q 3Q YTD YTD Boe per day North Region: North Dakota Bakken 123, , , ,139 94,966 Montana Bakken 12,049 13,116 15,380 13,239 14,334 Red River Units 12,110 12,669 13,749 12,574 14,003 Other 992 1, , South Region: SCOOP 69,136 62,546 36,346 60,592 33,350 NW Cana 6,629 4,410 4,957 4,836 5,286 Arkoma 2,056 2,112 2,494 2,097 2,552 Other 1,746 1,987 2,460 1,982 2,368 Total 228, , , , ,696 STACK The Company continues to de-risk its leasehold position in the STACK play in Oklahoma. Continental recently completed its second and third STACK wells, the Ladd 1-8-5XH and the Marks XH. Both wells targeted the Meramec reservoir in Blaine County, northwest of the Ludwig XH, 3 the Company s initial STACK well. The Ladd tested at an initial production rate of 2,181 Boe per day (79% oil) from a 9,742-foot lateral. The Marks tested at an initial production rate of 994 Boe per day (73% oil) from a 10,092-foot lateral. Production from the previously announced Ludwig XH well continued to strengthen after it was initially reported last quarter, resulting in a 24-hour peak production rate of 2,782 Boe per day (76% oil). Continental and others continue to successfully expand the productive footprint of STACK west into Blaine, Dewey and Custer counties, where the STACK reservoirs are thicker, over-pressured, and are delivering superior production rates, said Mr. Stark. More than 95% of our acreage lies in these counties, and approximately 60% is held by production. The Company is drilling three additional STACK wells, with one well waiting on completion and expects to spud another two to three wells before year end. Continental has 146,300 net acres in the play. Continental currently has three operated drilling rigs in STACK. SCOOP Woodford and Springer In third quarter 2015, total SCOOP net production averaged 69,136 Boe per day, an increase of 11% sequentially compared with second quarter 2015 and 90% compared with third quarter SCOOP production represented 30% of the Company s total production in third quarter 2015, compared with 20% of Company production for third quarter During third quarter 2015, the Company completed 11 net (34 gross) operated and non-operated wells, while operating an average of eight rigs in SCOOP. Continental s activities in SCOOP are primarily focused on the Woodford formation and Springer formation, which is located approximately 1,000 to 1,500 feet above the Woodford. Current drilling is focused on the Woodford formation. Continental currently has 28 gross operated wells drilled and waiting on first production in SCOOP Woodford and Springer, compared to 22 at the end of second quarter 2015, reflecting the deferral of completion activities starting in third quarter The Company expects this total to increase to approximately 35 gross operated wells drilled and waiting on first production by year-end SCOOP Woodford In third quarter 2015, SCOOP Woodford net production averaged 57,933 Boe per day, a 9% increase sequentially over second quarter In third quarter 2015, the Company completed five net (27 gross) operated and non-operated Woodford wells in the play. Select initial test rates from recent SCOOP Woodford operated wells in Grady County include: The Early XH well tested at 1,448 Boe per day (66% oil), from 7,655 feet of completed lateral; The Triple H 1-30H tested at 1,037 Boe per day (68% oil), from 4,496 feet of completed lateral; 4 The Gentry XH tested at 17,018 Mcfe per day (85% gas), from 10,128 feet of completed lateral; and The Silver Stratton XH tested at 13,168 Mcfe per day (58% gas), from 10,036 feet of completed lateral. SCOOP Springer In third quarter 2015, SCOOP Springer net production averaged 11,203 Boe per day, an increase of 22% sequentially over second quarter The Company completed six net (seven gross) operated and nonoperated Springer wells in third quarter Select initial test rates from recent SCOOP Springer operated wells in Grady County include: The Walters West 1-34H well tested at 1,476 Boe per day (78% oil) from 4,669 feet of completed lateral; The Sawyer 1-23H well tested at 1,343 Boe per day (83% oil) from 4,718 feet of completed lateral; and The Jantz Family 1-33H well tested at 1,210 Boe per day (77% oil) from 4,377 feet of completed lateral. Northwest Cana Joint Development Agreement In third quarter 2015, Northwest Cana net production averaged 6,629 Boe per day. The Company completed two net (four gross) operated and non-operated wells in the JDA area in Blaine and Dewey counties in the third quarter. Select initial test rates from recent operated wells include: The Ireta 1-4-9XH well had a record initial production test rate of 16,659 Mcfe per day (100% gas) from 10,188 feet of completed lateral; and The Hook 1-21H well tested at 9,088 Mcfe per day (100% gas) from 4,856 feet of completed lateral. Continental currently has five operated drilling rigs in the JDA area. Bakken Continental s Bakken production averaged 135,609 Boe per day in the third quarter of 2015, an increase of 12% compared with third quarter 2014 and a decrease of 4% compared with second quarter The Company completed 35 net (160 gross) operated and non-operated Middle Bakken and Three Forks wells during third quarter Continental currently has 123 gross operated wells drilled and waiting on first production in the Bakken, compared to 95 at the end of second quarter This reflects the deferral of completion activities starting in third quarter 2015 and completed wells that have not commenced production. The Company expects to decrease this total to approximately 115 gross operated wells drilled and waiting on first production at year-end Financial Update In third quarter 2015, Continental s average realized sales price excluding the effects of derivative positions was $38.95 per Bo and $2.23 per Mcf, or $29.90 per Boe. Settlements of matured commodity derivative positions generated a $0.27 gain per Mcf of natural gas, resulting in a net gain on matured derivatives of $11.9 million, or $0.57 per Boe, for third quarter Based on realizations without the effect of derivatives, the Company s third quarter 2015 oil differential was $7.54 per barrel below the NYMEX daily average for the period. The realized natural gas price differential for third quarter 2015 was a negative $0.54 per Mcf. For third quarter 2015, production expense was $4.00 per Boe sold, compared with $4.39 per Boe for second quarter Other select operating costs and expenses for third quarter 2015 included production taxes of 7.6% on oil and natural gas sales; depreciation, depletion, amortization and accretion (DD&A) expense of $21.36 per Boe; cash G&A expense of $1.95 per Boe; and equity compensation expense of $0.61 per Boe. Non-acquisition capital expenditures for third quarter 2015 totaled approximately $540.0 million. Total capital expenditures for the quarter included $477.8 million in exploration and development drilling, $28.4 million in leasehold and seismic, and $33.8 million in workovers, recompletions and other. As noted earlier, Continental expects non-acquisition capital expenditures for fourth quarter 2015 will be in the range of $350 million to $400 million. As of September 30, 2015, Continental s balance sheet included approximately $17.0 million in cash and cash equivalents, and $7.1 billion in long-term debt. Today we increased the commitments on our revolving credit facility to $2.75 billion and termed out $500 million of revolving debt with a three-year unsecured term note at a current interest rate 1/8% lower than the revolver, said John Hart, Senior Vice President, Chief Financial Officer and Treasurer. These transactions reduce overall borrowing costs and demonstrate our ability to provide additional liquidity. After these transactions, we have $880 million of borrowings against the Company s unsecured credit facility, leaving availability of approximately $1.9 billion. He continued, I want to emphasize these transactions do not indicate plans to grow debt. Our focus remains on balancing capital expenditures with cash flows, and therefore not incurring additional debt. If low commodity prices persist in 2016, we have additional Bakken rigs coming off contract, so we can further reduce capital expenditures. We are concentrated on balance sheet strength and optionality, in preparation for a more favorable, long-term commodity price environment. The following table provides the Company s production results, average sales prices, per-unit operating costs, results of operations and certain non-gaap financial measures for the periods presented. Average 6 sales prices exclude any effect of derivative transactions. Per-unit expenses have been calculated using sales volumes. Three months ended September 30, Nine months ended September 30, Average daily production: Crude oil (Bbl per day) 147, , , ,954 Natural gas (Mcf per day) 484, , , ,453 Crude oil equivalents (Boe per day) 228, , , ,696 Average sales prices, excluding effect from derivatives: Crude oil ($/Bbl) $38.95 $85.49 $42.60 $89.02 Natural gas ($/Mcf) $2.23 $5.10 $2.39 $5.80 Crude oil equivalents ($/Boe) $29.90 $69.08 $33.18 $72.52 Production expenses ($/Boe) $4.00 $5.80 $4.45 $5.69 Production taxes (% of oil and gas revenues) 7.6% 8.3% 7.8% 8.1% DD&A ($/Boe) $21.36 $21.65 $21.36 $21.17 General and administrative expenses ($/Boe) $1.95 $1.82 $1.71 $2.08 Non-cash equity compensation ($/Boe) $0.61 $0.80 $0.67 $0.87 Net income (loss) (in thousands) ($82,423) $533,521 ($213,992) $863,293 Diluted net income (loss) per share ($0.22) $1.44 ($0.58) $2.33 Adjusted net income (loss) (in thousands) (1) ($43,512) $300,961 ($28,881) $850,402 Adjusted diluted net income (loss) per share (1) ($0.12) $0.81 ($0.08) $2.29 EBITDAX (in thousands) (1) $472,221 $947,635 $1,558,656 $2,590,980 (1) Adjusted net income (loss), adjusted diluted net income (loss) per share, and EBITDAX represent non-gaap financial measures. These measures should not be considered as an alternative to, or more meaningful than, net income (loss), diluted net income (loss) per share, or operating cash flows as determined in accordance with U.S. GAAP. Further information about these non-gaap financial measures as well as reconciliations of adjusted net income (loss), adjusted diluted net income (loss) per share, and EBITDAX to the most directly comparable U.S. GAAP financial measures are provided subsequently under the header Non-GAAP Financial Measures. Third Quarter Conference Call Continental plans to host a conference call to discuss third quarter results on Thursday, November 5, 2015, at 12 p.m. ET (11 a.m. CT). Those wishing to listen to the conference call may do so via the Company's website at or by phone: Time and date: 12 p.m. ET, Thursday, November 5, 2015 Dial-in: Intl. dial-in: Conference ID: A replay of the call will be available for 14 days on the Company s website or by dialing: Replay number: or Intl. replay Conference ID: Continental plans to publish a third quarter 2015 summary presentation to its website at prior to the start of its earnings conference call on November 5, Upcoming Conferences Members of Continental s management team will be participating in the following upcoming investment conferences: November 9, 2015 November 10, 2015 December 2, 2015 December 9, 2015 Robert W. Baird & Co. s 2015 Industrial Conference; Chicago Bank of America Merrill Lynch 2015 Global Energy Conference; Miami Cowen and Company s 5 th Annual Ultimate Energy Conference; NYC Capital One 10 th Annual Energy Conference; New Orleans Instructions regarding how to access the live and replay webcast for the Bank of America Merrill Lynch presentation and presentation materials for all conferences mentioned above will be available on the Company s website at on or prior to the day of the presentations. About Continental Resources Continental Resources (NYSE: CLR) is a top independent oil producer in the lower 48 United States and a leader in America s energy renaissance. Based in Oklahoma City, Continental is the largest leaseholder and one of the largest producers in the nation's premier oil field, the Bakken play of North Dakota and Montana. The Company also has significant positions in Oklahoma, including its SCOO
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