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Continental (CLR) Stock Surges 145.8% in a Year: Stock Surges

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Continental Resources, Inc. CLR shares have gained 145.8% year in the past year compared with 103.1% growth of the composite stocks belonging to the industry.

The Zacks Rank #2 (Buy) stock, with a market cap of almost $22.3 billion, witnessed a rise in the Zacks Consensus Estimate for 2022 earnings per share in the past 60 days.

Zacks Investment Research
Zacks Investment Research


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Let’s delve into the factors behind the stock’s price appreciation.

What’s Favoring the Stock?

The West Texas Intermediate crude price is currently trading at around $97 per barrel, a substantial improvement from a slump into the negative territory in April 2020. Owing to the easing of the coronavirus-led restrictions, the ongoing demand recovery will continue to support the strong momentum in oil prices.

Overall, improving oil prices are boons for Continental’s operations. The company boasts a premier position in the Bakken Play, which is ranked among the country’s largest onshore oilfields. It produces high-quality crude oil from the region. The company’s prolific Bakken field resources accounted for 51.5% of total production last year. Moreover, its operations in the SCOOP and STACK plays of Oklahoma generate huge profits.

Continental recently acquired properties in the Delaware Basin, marking its entry into the prolific Permian Basin. This will significantly boost its free cash flow. The acquisition has brightened the company’s long-term production outlook as it expects more than 1000 locations in the area.

For 2022, the company expects oil production of 195,000-205,000 barrels per day (Bbls/d). This suggests an improvement from 160,647 Bbls/d of oil production recorded in 2021. Also, it projects its natural gas production guidance at 1,040,000-1,140,000 Mcf/d. The potential rise in production level and high oil and gas prices are expected to improve the company’s profitability.

Continental has a strong focus on returning capital to shareholders. The board of directors announced a quarterly dividend payment of 23 cents per share, which increased 15% from 20 cents per share in the previous quarter. The company increased its existing share repurchase program to $1.5 billion, including $441 million worth of share repurchases to date.

With a strong presence across the prolific resources in the United States, Continental is poised for further upside in the coming days.

Other Key Picks

Investors interested in the energy sector might also look at the following companies that presently sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Centennial Resource Development, Inc. CDEV is an independent oil and gas exploration and production company. As of Dec 31, 2021, CDEV’s total proved reserves of 305 million barrels of oil equivalent increased 2.1% year over year.

Centennial Resource’s earnings for 2022 are expected to increase 191.3% year over year. At the end of fourth quarter, CDEV had a net debt to capitalization of 23.1%. In fact, the company’s debt-to-total capital ratio has persistently been lower than the industry since last year, reflecting lower debt exposure. This can provide it with financial flexibility for growth projects.

Imperial Oil Limited IMO is one of Canada’s largest integrated oil companies of Canada, mainly engaged in the oil and gas production, petroleum products refining and marketing and chemical business. Apart from low leverage for its industry, Imperial Oil has ample liquidity with cash and cash equivalents of C$1.5 billion.

Imperial Oil’s earnings for 2022 are expected to increase 113% year over year. IMO remains strongly committed to return money to investors via dividends. In fact, the company's board of directors recently approved a hike in quarterly dividend payment. The new payout of 34 Canadian cents is 26% above the prior dividend.

Equinor ASA EQNR is one of the premier integrated energy companies in the world, with operations spreading across 30 countries. At 2021-end, EQNR had estimated proved reserves of 5.356 billion BOE.

Equinor’s earnings for 2022 are expected to increase 56.8% year over year. For 2022, Equinor announced the increase of the share buy-back program of up to $5 billion. The energy major increased its quarterly dividend to 20 cents per share from the prior dividend of 18 cents.


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