Continental Resources, Inc. CLR recently announced that the company is planning to gradually restore curtailed production volumes. It provided a detailed update on voluntary output curtailments as crude prices are improving.
Several U.S. producers temporarily curtailed productions in the second quarter due to low oil prices and storage exhaustions. Energy demand destruction caused by coronavirus-induced lockdowns affected the prices. Gross domestic cuts are expected to reach 2 million barrels per day in June, per Rystad Energy.
Continental Resources previously announced plans of curtailing 70% production volumes in May. Curtailments are expected to continue in June as well. While it expects to bring some deferred output back online in July, 50% of its operated crude production will still likely be under the cap.
For June, total output is expected in the range of 150,000-160,000 barrels of oil equivalent per day (Boe/d). For the second quarter, production is estimated in the range of 200,000-205,000 Boe/d. In July, production will likely rise from June to 225,000-250,000 Boe/d due to recovery in crude prices. This will in turn boost the company’s profit levels.
However, it is to be noted that Continental Resources produced 331,414 Boe/d in second-quarter 2019. As such, its bottom line might shrink in second-quarter 2020 from the year-ago period due to low production and commodity price realizations. The Zacks Consensus Estimate for second-quarter 2020 loss per share is 64 cents, indicating more than 200% year-over-year decline. Notably, the upstream energy company expects to revisit its suspended guidance during second-quarter result announcement.
The stock has risen 130.3% since the beginning of the second quarter compared with 68.9% jump of the industry it belongs to.
Zacks Rank & Stocks to Consider
The company currently has a Zacks Rank of #3 (Hold). Some better-ranked players in the energy space include Chaparral Energy, Inc. CHAP, CNX Resources Corporation CNX and Concho Resources Inc. CXO, each holding a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Chaparral Energy’s bottom line for 2020 is expected to rise 57.8% year over year.
CNX Resources beat earnings estimates thrice and met once in the last four quarters, with average positive surprise of 111.5%.
Concho Resources has a positive earnings surprise of 4.9% in the last four quarters.
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