We are upbeat about Continental Resources, Inc.’s CLR prospects and believe it is a promising pick right now.
The company currently has a Zacks Rank #2 (Buy) and a VGM Score of A. Our research shows that stocks with a VGM Score of A or B when combined with a Zacks Rank #1 (Strong Buy) or 2 offer the best opportunities for investors.
Let’s delve deeper to analyze the factors that make this upstream energy player an attractive investment option.
Foothold in Key Unconventional US Plays
Continental Resources operates in key unconventional plays in the United States. The assets that include resources like Bakken, STACK and SCOOP are among the prolific plays in the nation and will likely contribute to the company’s production growth.
In the Bakken, the company operates across 797,000 net reservoir acres. Notably, in the United States, Bakken is considered among the largest onshore oil plays, producing premium quality crude. Importantly, for drilling and completion activities in the Bakken through 2019, Continental Resources is planning to spend $1.1 billion.
The company also has a strong presence in Oklahoma-based STACK and SCOOP plays. In the STACK play, Continental Resources has 434,000 net acres, while in the SCOOP play, the upstream firm operates across 664,000 net reservoir acres. Continental Resources also plans to allocate $1.1 billion for its D&C activities in the Oklahoma resources in 2019.
Following its investments in the prolific unconventional resources in the United States, Continental Resources projects annual oil production growth in the band of 13% to 19% through 2019. The company added that through 2023 since 2019, it’s average compound annual production growth rate will likely be 12.5%.
Declining Debt & LOE
Over the years, the company has been reducing its debt load and plans to bring it down to $5 billion by 2019-end.
Moreover, the company is focused on reducing operating costs. From 2014 to 2018, Continental Resources successfully reduced its lease operating expenses by 36%, thereby boosting its bottom line.
Continental Resources, Inc. Price
Continental Resources, Inc. price | Continental Resources, Inc. Quote
Other Stocks to Consider
Other prospective players in the energy space are Apache Corporation APA, Ecopetrol S.A. EC and Anadarko Petroleum Corporation APC. All the stocks sport a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
Apache has average positive earnings surprise of 6.6% for the last four quarters.
Ecopetrol is likely to witness earnings growth of 25.3% through 2019.
Anadarko Petroleum has average positive earnings surprise of 6.6% for the last four quarters.
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