Based in Oklahoma City, Continental Resources (CLR) is an independent oil producer that operates in the US Lower 48. Continental Resources is the largest leaseholder and one of the largest producers in the Bakken Shale, located in North Dakota and Montana. It is one of the premier oil plays in the US. Other operators in the Bakken Shale include Whiting Petroleum (WLL), Hess (HES), and Triangle Petroleum (TPLM).
CLR, WLL, and HES make up 4.2% of the iShares US Oil & Gas Exploration & Production ETF (IEO). CLR also operates out of the SCOOP, STACK, and Northwest Cana plays.
CLR’s proved reserves
On December 31, 2015, Continental Resources’s (CLR) proved reserves totaled 1,226 MMboe (million barrels of oil equivalent). The company’s Northern Region segment, which includes the Bakken and the Red River units, accounted for approximately 58% of its estimated proved reserves on December 31, 2015.
The South region includes the SCOOP, STACK, Northwest Cana and Arkoma Woodford areas of Oklahoma, and it accounted for ~42% of its estimated proved reserves on December 31, 2015.
CLR is more leveraged to crude oil prices
In 2015, crude oil accounted for 66% of Continental Resources’s total production and 85% of its revenues. CLR’s annual 10-K filing noted that crude oil represented ~57% of its estimated proved reserves on December 31, 2015. So, CLR is more leveraged to crude oil prices as opposed to natural gas prices, meaning the company would have taken a big hit after crude oil prices started falling in 2014. On the flip side, it also means that a recovery in prices would benefit it significantly.
In this series, we will analyze how badly Continental Resources (CLR) was hit by weak oil prices, and what measures it has taken to counter this situation.