Continental Resources To Divest Non-Strategic Assets Again

Continental Resources Inc. (NYSE:CLR) declared a definitive purchase and sale agreement with an undisclosed buyer to divest non-strategic assets in Montana and North Dakota. The transaction is valued at $222 million but its completion is dependent on certain adjustments and customary closing conditions.

The to-be-sold properties include 68,000 net acres of leasehold located in western Williams County, ND along with 12,000 leasehold acres in Roosevelt County, MT. It is to be noted that those resources have a production capacity of 2,800 barrels of oil equivalent every day.

Harold Hamm, Chairman and Chief Executive Officer of the company revealed that the proceeds will likely help to lower debt and thereby strengthen balance sheet.

Most importantly, the divestiture marks the company’s third non-strategic property sale this year which helped to draw more than $600 million in proceeds. Earlier this month, Continental Resources inked an accord to divest 29,500 leasehold net acres that are based in the eastern SCOOP play in Oklahoma for a total consideration of $281 million. In May, the company entered into an accord to sell 132,000 net acres in the Washakie Basin in Wyoming for $110 million.

Continental Resources, based in Oklahoma City, is a leading upstream energy player. The company’s activities include exploration, development and production of oil and natural gas resources in the U.S. We appreciate the company’s high quality drilling inventory and strong balance sheet that has paved the way for future growth.

Despite all these positives, the company failed to release a better-than-expected second-quarter report. Continental Resources’ adjusted loss per share came at 18 cents that came in wider than the Zacks Consensus Estimate of a loss of 17 cents.

As a result, Continental Resources currently carries a Zacks Rank #3 (Hold), implying that the stock will perform in line with the broader U.S. equity market over the next one to three months.

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Some better-ranked players in the energy sector are Matador Resources Company (NYSE:MTDR) , Murphy USA Inc. (NYSE:MUSA) and North Atlantic Drilling Limited (NYSE:NADL) . Each of these players sport a Zacks Rank #1 (Strong Buy).