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Exploring Continental Resources' 2017 Action Plan

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Exploring Continental Resources' 2017 Action Plan PART 1 OF 15

Continental Resources’ Key 2017 Objectives: What’s Its Focus?

Key management objectives in 2017

In this series, we’ll focus on Continental Resources’ (CLR) key performance indicators, objectives, and strategies for 2017. Let’s begin by looking at one of CLR’s objectives for the year.

Continental Resources’ Key 2017 Objectives: What’s Its Focus?

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Continental’s main goal this year is to focus on its high rate of return plays, namely the Bakken, SCOOP (South Central Oklahoma Oil Province), and STACK (Sooner Trend Anadarko Canadian Kingfisher) plays. CLR’s total capex (capital expenditure) for 2017 is expected to be $2.0 billion. Of this, $1.7 billion is allocated toward drilling and completion expenses.

As we can see in the image above, Bakken drilling and completion expenditure makes up 50% of Continental’s total drilling and completion expenditure. STACK’s and SCOOP’s drilling and completion expenditures make up 22% and 14% of the company’s total drilling and completion budget, respectively.

According to CLR’s 4Q16 earnings release, its 2017 capex is “is focused on completing the Company’s deep inventory of uncompleted wells in North Dakota, additional drilling in the Bakken, and further STACK development, which will drive the 2017 increase in crude oil volumes as a percent of total production.”

Cash flow neutrality

CLR expects its 2017 capital to be cash-flow neutral in 2017 at ~$55 per barrel for WTI (West Texas Intermediate) and $3.14 per thousand cubic feet natural gas. CLR has also noted that at a full-year average of $60 per barrel for WTI, the company is likely to generate ~$200 million in additional cash.

CLR’s 4Q16 also noted that CLR plans to adjust its spending if need be, to remain cash-flow neutral for the year. The company will also focus on lowering its debt via the potential sale of its non-core assets.

Focus on the STACK and SCOOP plays

CLR is also focusing on its operations in the STACK and SCOOP plays in 2017. We’ll talk more about SCOOP’s and STACK’s positions in the next part of this series.

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