In releasing the 2010 second quarter earnings report to investors Thursday, Continental Resources CEO Harold Hamm compared his company to a Corvette firing on all cylinders, and his vision is to triple the size of Continental in the next five years.
“The people of Continental are doing a great job for shareholders, and our teams are performing at a high level,” Hamm said.
Hamm said Continental Resources’ second-quarter profit soared on higher commodity prices and a 12 percent increase in production. The company’s results far exceeded Wall Street’s expectations.
Production was 41,913 barrels of oil equivalent per day (Boepd) for the second quarter of 2010, a 12 percent increase over production of 37,347 Boepd for the second quarter of 2009 and 9 percent higher than production for the first quarter of 2010. Crude oil accounted for 75 percent of second quarter 2010 production.
Continental reported net income of $101.7 million, or 60 cents per diluted share, for the second quarter, which ended June 30. This compared with net income of $13.5 million, or 8 cents per diluted share, for the second quarter of 2009. Net income for the second quarter of 2010 included a pre-tax property impairments charge of $19.5 million, compared with an impairments charge of $23.3 million for the second quarter of 2009. Net income for the second quarter of 2010 also included a $33.1 million pre-tax gain on sale of assets.
Hamm noted three areas of production have been strong and growing for the company, including the Bakken Shale Play in North Dakota and Montana, the Anadarko-Woodford Basin in Oklahoma and the Niobara Shale Play in Colorado and Wyoming.
Hamm also noted on July 9, the company announced an increase in its 2010 capital expenditure budget by 53 percent to $1.3 billion, which included $400 million allocated for lease acquisition and retention. Continental currently has 27 operated drilling rigs, more than double the total at the beginning of the year. The company plans to have 32 operated drilling rigs by the end of the year
Production growth in the Bakken continued to trend higher in the second quarter, and it accounts for 43 percent of Continental’s total production. Continental reported a 93 percent increase in its North Dakota production, compared to the second quarter of 2009, and all the activity recently was noted as making that state the third largest oil producer in the nation.
“There is not an acre that we’ve bought that I would care to give back, based on our knowledge of the Bakken play,” Hamm said. “We accurately predicted this boom.”
Continental has built a commanding advantage in the Bakken.
In the Anadarko-Woodford, the company’s geological model indicated the play extended to the northwest and southeast of what was considered the core of the play in Canadian County.
“This is a prime resource opportunity that is much larger than we thought,” he said.
Hamm said the company is positive about major growth in the next five years.
“We’ve geared up for a multi-year period for exceptional increases in production and earnings,” Hamm said. “We’re adding teams to help us manage our growth. In 2011 you will see higher production and earnings growth. An oil-rich drilling inventory will propel us forward through 2015.
“As CEO I’m convinced we’re on track to create significant value,” he said. “I’m proud of what we accomplished at Continental, but I’m excited for what Continental is going to be. It’s like revving up an old Corvette and shifting gears.”