Oil price downturn is unsustainable, Hamm says

Oil price downturn is unsustainable, Hamm says

ROGER JORDAN, Associate Editor

OKLAHOMA CITY, Oklahoma – The recent downdraft in oil prices is unsustainable given the lack of fundamental changes in supply and demand, Continental Resources’ Harold Hamm has said.

Oil is currently trading in a bear market amid surging U.S. production, and, so far, OPEC’s leading producers have resisted calls to curb production.

According to Hamm, Continental has “elected to monetize nearly all of our outstanding oil hedges,” which will allow the company “to fully participate in what we anticipate will be an oil price recovery.”

“While awaiting this recovery, we have elected to maintain our current level of activity and plan to defer adding rigs in 2015," Hamm said in a statement announcing the company’s third-quarter results.

The move will reduce Continental’s 2015 capex, by $600 million, to $4.6 billion, which, the company says, should yield 23% to 29% production growth next year.

Continental reported an adjusted net income – which excludes items typically removed from published analyst estimates -- of $301 million during the third quarter.

The company also reported net production of 16.8 MMboe during the third quarter, which is 9% higher than the preceding quarter and 29% higher than third-quarter 2013.

This was the company’s “second consecutive quarter to grow production over 14,000 boed,” Jack Stark, Continental’s president and COO, said.

The company’s greatest production increases came from North Dakota’s Bakken formation and its 471,000 net acres in the South Central Oklahoma Oil Province (SCOOP).

Continental's Bakken production totaled 121,604 boed during the third quarter, a 12% increase on the second quarter and a 29% increase on third-quarter 2013.

While Continental’s net production from SCOOP averaged 36,346 boed last quarter, an increase of 6% from the preceding quarter and 81% above third-quarter 2013.

"We are well positioned with a world-class asset portfolio, strong balance sheet and a track record of operational execution. In the third quarter, our teams delivered yet another solid quarter of production growth, and delineation and development in our two key assets, the Bakken and SCOOP," Hamm said.