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CONTINENTAL RESRCES Reports Operating Results (10-Q)

August 09, 2012 | About:
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10qk

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CONTINENTAL RESRCES (CLR) filed Quarterly Report for the period ended 2012-06-30.

Continental Resources, Inc. has a market cap of $11.99 billion; its shares were traded at around $69.41 with a P/E ratio of 22.7 and P/S ratio of 7.3. Continental Resources, Inc. had an annual average earning growth of 18.2% over the past 5 years.

Highlight of Business Operations:

Our crude oil and natural gas revenues for the second quarter of 2012 increased 35% to $523.4 million due to a 74% increase in sales volumes partially offset by a 23% decrease in realized commodity prices when compared to the second quarter of 2011. For the six months ended June 30, 2012, crude oil and natural gas revenues were $1,075.7 million, a 50% increase from the comparable 2011 period due to a 72% increase in sales volumes partially offset by a 12% decrease in realized commodity prices.

Crude Oil and Natural Gas Sales. Crude oil and natural gas sales for the three months ended June 30, 2012 were $523.4 million, a 35% increase from sales of $388.8 million for the same period in 2011. Our sales volumes increased 3,616 MBoe, or 74%, over the same period in 2011 due to the continuing success of our drilling programs in the North Dakota Bakken field and Anadarko Woodford play. Our realized price per Boe decreased $18.17 to $61.69 for the three months ended June 30, 2012 from $79.86 for the three months ended June 30, 2011 due to lower commodity prices and higher crude oil differentials.

Production taxes and other expenses increased $15.7 million, or 47%, to $49.2 million during the three months ended June 30, 2012 compared to the three months ended June 30, 2011 primarily as a result of higher crude oil and natural gas revenues resulting from increased sales volumes. Production taxes and other expenses include charges for marketing, gathering, dehydration and compression fees primarily related to natural gas sales in the Oklahoma Woodford and North Dakota Bakken areas of $6.6 million and $2.7 million for the three months ended June 30, 2012 and 2011, respectively. The increase in other charges is primarily due to the significant increase in natural gas sales volumes in 2012. Production taxes, excluding other charges, as a percentage of crude oil and natural gas revenues were 8.1% for the three months ended June 30, 2012 compared to 7.9% for the three months ended June 30, 2011. The increase is due to higher taxable revenues coming from North Dakota, our most active area, which has production tax rates of up to 11.5% of crude oil revenues. Production taxes are generally based on the wellhead values of production and vary by state. Additionally, some states offer exemptions or reduced production tax rates for wells that produce less than a certain quantity of crude oil or natural gas and to encourage certain activities, such as horizontal drilling and enhanced recovery projects. In Montana and Oklahoma, new horizontal wells qualify for a tax incentive and are taxed at a lower rate during their initial months of production. After the incentive period expires, the tax rate reverts to the statutory rate. Our overall production tax rate is expected to further increase as we continue to expand our operations in North Dakota and as production tax incentives we currently receive for horizontal wells reach the end of their incentive periods.

Crude Oil and Natural Gas Sales. Crude oil and natural gas sales for the six months ended June 30, 2012 were $1,075.7 million, a 50% increase from sales of $715.3 million for the same period in 2011. Our sales volumes increased 6,763 MBoe, or 72%, over the same period in 2011 due to the continuing success of our drilling programs in the North Dakota Bakken field and Anadarko Woodford play. Our realized price per Boe decreased $9.32 to $66.31 for the six months ended June 30, 2012 from $75.63 for the six months ended June 30, 2011 due to lower commodity prices and higher crude oil differentials.

During the six months ended June 30, 2012 and 2011, we had cash flows used in investing activities (excluding asset sales) of $1,874.3 million and $826.4 million, respectively, related to our capital program, inclusive of dry hole costs. The increase in cash flows used in investing activities in 2012 was primarily due to our larger capital budget and drilling program for 2012 coupled with an increase in property acquisitions in the current period, most notably the February 2012 acquisition of producing and non-producing properties in North Dakota for $276 million. The use of cash for capital expenditures was partially offset by proceeds received from asset dispositions. Proceeds from the sale of assets amounted to $100.8 million for the first half of 2012, primarily related to our February 2012 disposition of certain Wyoming properties for proceeds of $84.4 million. Proceeds from the sale of assets amounted to $22.8 million for the first half of 2011, primarily related to our March 2011 disposition of certain Michigan properties for proceeds of $22.0 million.

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