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Continental Resources Q4 Results Top Estimates, Boosts Production Outlook

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2/27/2013 10:02 PM ET

Oil and natural gas producer Continental Resources, Inc. (CLR: Quote) reported Wednesday a profit for the fourth quarter compared to a loss last year, which was weighed down by a hefty loss on derivative instruments. Production for the quarter surged 42 percent. Both adjusted earnings per share and quarterly revenues topped analysts' expectations.

"We completed 2012 with an excellent fourth quarter, and growth momentum continues in 2013. Production has increased, and realized oil prices have been strong as we market an increased share of our Bakken production to U.S. coastal markets," Chairman and CEO Harold Hamm said in a statement.

The Enid, Oklahoma-based petroleum liquids producer reported net income of $220.51 million or $1.19 per share for the fourth quarter, compared to a net loss of $112.06 million or $0.62 per share in the prior-year quarter.

Excluding items, adjusted net income for the quarter was $191.80 million or $1.04 per share, compared to $158.96 million or $0.88 per share in the year-ago quarter.

On average, 26 analysts polled by Thomson Reuters expected the company to report earnings of $0.87 per share for the quarter. Analysts' estimates typically exclude special items.

Total operating revenues for the quarter soared to $688.73 million from $114.11 million in the same quarter last year, and topped nineteen Wall Street analysts' consensus estimate of $655.12 million.

Net gain on derivative instruments was $9.64 million, compared to a loss of $402.54 million in the year-ago quarter. Production for the quarter surged 42 percent to a record of 106,831 barrels of oil equivalent per day (Boepd), with bakken production being 67,522 Boepd. Crude oil accounted for 72 percent of the company's production, and the balance being natural gas and natural gas liquids.

Continental's oil and natural gas sales grew 32 percent to $670.4 million from $508.3 million in the prior-year quarter. Blended sales price stood at $68.89 per barrel of oil equivalent (Boe), down from $72.60 per Boe in the year-ago quarter. Meanwhile, production expense increased to $5.90 per Boe from last year's $5.73 per Boe.

Continental's oil differential cost nearly halved to $3.21 per barrel from $6.24 per barrel in the third quarter of 2012.

The company also announced, a 54 percent increase in proved reserves to 785 million barrels of oil equivalent at December 31, 2012.

For fiscal 2012, the company reported net income of $739.39 million or $4.07 per share, sharply higher than $429.07 million or $2.41 per share in the prior year. Excluding items, adjusted net income for the year was $611.87 million or $3.36 per share, compared to $482.77 million or $2.71 per share in the year ago. Total operating revenues for the full year surged to $2.57 billion from $1.65 billion in the previous year.

Street was looking for full-year 2012 earnings of $4.07 per share on annual revenues of $2.38 billion.

Looking ahead to fiscal 2013, the company raised its production growth guidance to a range of 35 to 40 percent from the prior growth forecast of 30 to 35 percent.

Continental also has reduced its 2013 oil differential cost guidance range to $5 to $7 per barrel from the previous guidance of $8 to $11 per barrel as a result of its improved differential to NYMEX.

"Lower differentials and more efficient access to premium markets are key factors driving higher cash margins and profitability," President and Chief Operating Officer Rick Bott noted.

Further, the company noted that its total production in February 2013 is on track to exceed 120,000 Boepd.

"Improved differentials and lower operated well costs as we continue to drill and complete projects more efficiently point to continued strong cash flow in 2013," Hamm added.

CLR closed Wednesday's regular trading session at $83.97, up $1.62 or 1.97% on a volume of 0.83 million shares. The stock gained a further $3.98 or 4.74% in after-hours trading.

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by RTT Staff Writer

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