Leading Bakken oil producer, Continental Resources Inc. (CLR) announced the pricing of its private placement of $1.5 billion of senior unsecured notes. The notes with a coupon rate of 4.5% are due in 2023. The offering is expected to close on Apr 5, 2013. Continental intends to use the net proceeds from the offering to repay its borrowings outstanding under its revolving credit facility and for general corporate purposes.
Oklahoma City-based Continental is an independent exploration and production (E&P) company focused on the Bakken, Cana and Niobrara shale plays. It has leases on nearly 1.1 million acres in the Bakken Shale region. As of Dec 31, 2012, the company had estimated proved reserves of about 784.7 million barrels of oil equivalent (MMBoe), with estimated proved developed reserves of 317.8 MMBoe, or 40% of the total estimated proved reserves. Crude oil comprised 72% of the total estimated proved reserves and daily production averaged 97,583 barrels of oil equivalent a day (Boe/d), reflecting a 58% increase over average production of 61,865 Boe/d for the year ended Dec 31, 2011.
The company operates in the North, South and Eastern regions of the U.S. Its North region is north of Kansas and west of the Mississippi river and comprises North Dakota Bakken, Montana Bakken, the Red River units and the Niobrara play in Colorado and Wyoming. The first two hold the maximum promise for Continental.
The Southern region includes Kansas and all properties south of Kansas and west of the Mississippi river, comprising the Anadarko Woodford and Arkoma Woodford plays in Oklahoma. The Anadarko and Arkoma Woodford plays are the second most important for the company.
In Dec 2012, the company sold the crude oil and natural gas properties in the East region. As of now, the remaining East region properties comprise undeveloped leasehold acreages east of the Mississippi River that are managed as part of the company’s exploration program.
Continental retains a Zacks #2 Rank (short-term Buy rating). Investors can also pick Zacks Ranked #2 Chesapeake Energy Corporation (CHK), Crimson Exploration Inc. (CXPO) or EPL Oil & Gas, Inc. (EPL) from the same sector.
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