Thursday, oil and natural gas company Continental Resources, Inc. (CLR) reported a significant decline in profit for the second quarter, as revenues plunged from declines in crude oil and natural gas prices, as well as hefty operating costs, expenses and one-time charges.
Continental Resources' net income for the second quarter declined to $13.51 million or $0.08 per share from $127.31 million or $0.75 per share in the previous year.
Net income for the second quarter included a pre-tax property impairment charge of $23.27 million and mark-to-market gains on natural gas fixed price and basis swaps of $0.89 million. Excluding these non-cash items, Continental's net income was $27.1 million or $0.16 per share for the second quarter of 2009.
On average, 12 analysts polled by Thomson Reuters expected the company to report earnings of $0.10 per share for the quarter. Analysts' estimates typically exclude special items.
Total revenues for the quarter declined to $151.76 million from $303.43 million a year ago. Seven analysts had a consensus revenue estimate of $131.25 million for the quarter.
Oil and natural gas sales declined to $146.44 million from $297.62 million in the previous year. Revenue from oil and natural gas service operations declined to $4.43 million from $9.17 million last year.
Total operating costs and expenses increased to $125.58 million from $98.20 million a year ago. Depreciation, depletion, amortization and accretion charges for the quarter increased to $53.15 million from $28.06 million last year.
Average daily production was 37,347 barrels of oil equivalent per day or Boepd for the second quarter, up 18% from 31,623 Boepd in the second quarter of 2008.
The company's average realized sales price per barrel of oil equivalent or Boe was $43.52 for the second quarter of 2009, a decline of 58% from $102.86 per Boe last year. The average realized price for crude oil was $53.44 per barrel in the second quarter of 2009, while the average natural gas price was $2.60 per Mcf. Average prices for crude oil and natural gas were $118.28 per barrel and $8.82 per Mcf, respectively, in the second quarter last year.
For the six-month period, net loss was $13.10 million or $0.08 per share, compared to an income of $215.28 million or $1.27 per share in the same period of the previous year. Total revenues for the period declined to $248.37 million from $531.08 million last year.
In a separate release, the company reported the successful completion of the Mathistad 2-35H, a companion well designed to test its theory that the Middle Bakken and Three Forks/Sanish zones act as separate reservoirs in portions of the North Dakota Bakken shale play.
The Mathistad 2-35H tested at a seven-day initial production rate of 995 Boepd. This is the highest initial rate that the company has recorded from its Middle Bakken completions in North Dakota, and this high initial productivity indicates that it tapped into new, undrained reservoir rock with the companion well.
The company estimates that approximately half of its 439,000 net acres in North Dakota have the potential for the Middle Bakken and Three Forks/Sanish to produce independently. Continental controls a total of 605,000 net acres in the Bakken play in North Dakota and Montana.
CLR is currrently trading at $38.55, up 2.87 or 8.10%, on a volume of 1.68 million shares on the NYSE.
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