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Continental Resources (CLR) Misses on Q4 Earnings & Revenues

Zacks Equity Research

Continental Resources, Inc. CLR delivered fourth-quarter 2018 adjusted earnings of 54 cents per share, which missed the Zacks Consensus Estimate of 59 cents. Nevertheless, the bottom line increased from the year-ago quarter's earnings of 41 cents per share.
 

Continental Resources, Inc. Price, Consensus and EPS Surprise

 

Continental Resources, Inc. Price, Consensus and EPS Surprise | Continental Resources, Inc. Quote

 

Revenues of $1,149.3 million lagged the Zacks Consensus Estimate of $1,164 million. However, the figure improved from $1,047.2 million in the year-ago quarter.

The quarterly results were supported by higher production from the North Dakota Bakken as well as SCOOP and STACK regions. This was partially offset by lower oil equivalent price realizations and higher operating expenses.

Exploration and Production

Production from continuing operations averaged 324,001 barrels of oil equivalent per day (BOE/D) in the quarter, higher than 286,985 BOE/D in the year-ago quarter. Oil production in the quarter came in at 186,934 barrels per day (Bbls/d), higher than 168,066Bbls/d in the year-ago quarter.

Natural gas production jumped from 713,518 thousand cubic feet per day (Mcf/d) in fourth-quarter 2017 to 822,402Mcf/d in the fourth quarter of 2018.

In the North Region, production from the North Dakota Bakken was recorded at 177,358 BOE/D in the quarter, which rose from 161,008 BOE/D in the year-ago quarter. Production from Montana Bakken fell marginally to 6,478 BOE/D, while production from others grew marginally to 9,077 BOE/D year over year.

In the South Region, production from SCOOP increased to 67,244 BOE/D in fourth-quarter 2018 from 63,270 BOE/D in the prior-year quarter. Output from STACK rose to 62,947 BOE/D in the quarter under review from 56,129 BOE/D in the year-ago quarter.

Price Realization

Average realized price for oil was $50.06 a barrel, down from $51.16 in the prior-year quarter. Natural gas was sold at $3.26 per Mcf, down from $3.30 in the year-ago quarter. Crude oil equivalent price in the quarter fell to $37.13 per barrel from $38.27 in the prior-year quarter.

Total Expenses

Total operating expenses of $818.9 million in the fourth quarter rose from $737.7 million in the October-to-December quarter of 2017. Total production cost rose to $104.3 million from $84.4million in the year-ago quarter. Transportation costs in the quarter were $49.3 million, while the same were absent a year ago.

Exploration expenses increased to $3.3 million in the quarter from $2.8 million in the year-ago quarter. Production expense per barrel of oil equivalent in the fourth quarter of 2018 was $3.50, higher than the year-ago quarter’s tally of $3.17.

Capital Expenditure

In the fourth quarter of 2018, total capital expenditure (excluding acquisitions) came in at around $742.6 million, more than 80% of which was used in exploration and development drilling.

Balance Sheet

As of Dec 31, 2018, the company had total cash and cash equivalents of $282.7 million and debt of $5.8 billion (excluding current maturities), with a debt-to-capitalization ratio of 47.3%.

Guidance

Continental Resources’ 2018 capital spending (excluding acquisitions) is expected at $2.6 billion. For 2019, oil production is expected in the range of 190,000-200,000 barrels per day, while natural gas is expected in the band of 790,000-810,000 thousand cubic feet per day.

The company expects production expense for 2019 in the range of $3.75-$4.25 per BOE.

Zacks Rank & Key Picks

Currently, Continental Resources has a Zacks Rank #3 (Hold). Investors interested in the energy sector can opt for some better-ranked stocks as given below:

CrossAmerica Partners L.P. CAPL is involved in the wholesale distribution of motor fuels, consisting of gasoline and diesel fuel. The company delivered average positive earnings surprise of 436.7% in the last four quarters. The company currently holds a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

San Antonio, TX-based NuStar Energy L.P. NS is a midstream energy company. For 2019, its bottom line, which has witnessed three upside revisions over the past 30 days, is expected to grow 64.2% year over year. The company currently holds a Zacks Rank #2.

Madrid, Spain-based Repsol, S.A. REPYY is an integrated energy company. Its bottom line for 2019 is expected to increase 13.7% year over year. The company delivered average positive earnings surprise of 9% in the trailing four quarters. The stock currently has a Zacks Rank #2 (Buy).

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