A month has gone by since the last earnings report for Continental Resources (CLR). Shares have lost about 5.8% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Continental Resources due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Continental Resources Misses on Q4 Earnings & Revenues
Continental Resources, Inc. 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.
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 increased 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 exploration 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. However, 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 increased 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
As of Feb 18, 2019, Continental Resources’ 2019 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, which is higher than 168,177 barrels per day attained in 2018. Natural gas is expected in the band of 790,000-810,000 thousand cubic feet per day compared to 780,083 thousand cubic feet per day in 2018.
The company expects production expense for 2019 in the range of $3.75-$4.25 per BOE.
Proved Reserves
As of Dec 31, 2018, the company posted proved reserves of crude and natural gas at 1.52 billion BOE, up 14% compared to the previous year. Of the total year-end 2018 proved reserves, 50% was oil and about 44% was classified as proved developed producing.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates flatlined during the past month.
VGM Scores
Currently, Continental Resources has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Continental Resources has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Continental Resources, Inc. (CLR): Free Stock Analysis Report
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