Continental Resources (CLR, Financial) yet again delivered solid results in the third quarter. The company is seeing robust increase in the production. The improvement in the production clearly indicates that Continental is seeing good traction for its business in the market. Based on some key reason and facts, Continental Resources is confident of better performance in the coming quarters. Continental is extremely excited about the discovery of new oil which is known as Springer oil play in Oklahoma. Continental is expecting this to become its key growth driver in future.
A strong portfolio to deliver growth
Continental has a strong portfolio of high rate of return assets. These assets look in good shape, and it is showing some impressive increase in the production. The production remains robust. The company is hoping to achieve a capacity to produce 200,000 Boe per day the end of the fiscal year. This seems possible as the company’s October production averaged in excess of 187,000 Boe per day, which is better than the company’s expectations and if it continue to operate in such a way, Continental will reach a better level of financial stability on the back of it.
With the recent decline in oil prices, Continental is anticipating strong prospects on various key points which will also lead to good adjustment in its CapEx. The decline in oil prices will help the company improve its operational efficiencies. With the lower oil price, it can save good amount which it can use it to refine its operational performance. In addition, the softness in the domestic oil production growth will allow the global demand to keep pace at the lower oil prices per demand growth which will also avoid the oversupply of crude oil. This will strengthens its long term prospects.
While in the short term also, Continental expects the lower oil prices to improve in $80-$90 range which will also improve its position in the short term as well. Besides these initiatives, Continental is also defensive regarding the soon recovery of oil prices. To play safely it is making changes to its existing hedge book by monetizing practically all of its oil contracts for this year and 2015 as well as 2016. To be on a safer side, Continental has also posted a defensive outlook. It will keep its production to normal levels until recovery in oil prices. This adjustment will allow Continental to adapt current prices also generating strong growth.
Conclusion
Continental has an outstanding inventory which has a high rate of return. With this Continental has enough opportunities to drill over the next 20 years which is a good sign and it can be anticipated that Continental will gain enough market share in the coming years. These facts make Continental a good pick as of now, and investors should definitely include this stock in their portfolios.
