Continental Resources Increases EBITDAX 86 Percent to $411.9 Million for Fourth Quarter of 2011

Thursday, Feb 23, 2012

OKLAHOMA CITY, Feb. 22, 2012 /PRNewswire/ -- Continental Resources, Inc. (NYSE: CLR) reported EBITDAX of $411.9 million for the fourth quarter of 2011, an 86 percent increase over EBITDAX for the fourth quarter of 2010. The Company attributed the EBITDAX growth to strong oil and natural gas production growth.

For full-year 2011, the Company generated $1.3 billion in EBITDAX, a 61 percent increase over 2010. For the Company's definition and reconciliation of EBITDAX to net income, see "Non-GAAP Financial Measures" at the end of this press release.

Primarily due to an unrealized mark-to-market loss on derivatives, Continental reported a net loss of$112.1 million, or $0.62 per diluted share, for the fourth quarter of 2011. This included a $399.4 million pre-tax unrealized loss on mark-to-market derivative instruments, a $42.1 million pre-tax property impairment charge and a small pre-tax gain on sale of property. The combined effects of the non-cash, unrealized derivatives loss, property impairment charge and the gain on sale reduced net income by $1.50 per diluted share for the fourth quarter of 2011.

For the fourth quarter of 2010, Continental reported a net loss of $45.0 million, or $0.27 per diluted share.

For full-year 2011, Continental reported net income of $429.1 million, or $2.41 per diluted share. This included a small pre-tax unrealized gain on mark-to-market derivative instruments and a small pre-tax gain on sale of assets, more than offset by a pre-tax charge of $108.5 million for property impairments. The combined effects of the non-cash, unrealized derivatives gain, the gain on sale of assets, and property impairment charge reduced 2011 net income by $0.29 per diluted share.

For 2010, the Company reported net income of $168.3 million, or $0.99 per diluted share.

Continental's production averaged 75,219 Boepd (barrels of oil equivalent per day) for the fourth quarter of 2011, a 57 percent increase over production of 48,034 Boepd for the fourth quarter of 2010. Crude oil accounted for 72 percent of Continental's fourth quarter 2011 total production.

Full-year 2011 production was 22.6 million barrels of oil equivalent (MMBoe), a 43 percent increase over 2010 production of 15.8 MMBoe. Crude oil accounted for 73 percent of Continental's 2011 production.

"As we reported on January 25, 2012, production growth was very strong in late 2011 and in early 2012," said Harold Hamm, Chairman and Chief Executive Officer.

"With this momentum, we now expect to grow production in a range of 37 percent to 40 percent for the year," Mr. Hamm said. This compares to Continental's original 2012 production growth guidance of 26 percent to 28 percent.

"Since we set our 2012 budget in early November, cash flow has benefited from strong oil prices and generally moderate transportation costs. We are also experiencing operating efficiency and productivity gains. Specifically, wells recently completed in extension areas in the Bakken and the Anadarko Woodford, where we previously had little drilling experience, were stronger than expected. We had applied a risking factor in these extension areas, and actual results were instead equal to or better than typical Continental wells in our established areas in the Bakken and Anadarko Woodford."

Continental increased total proved reserves to 508 MMBoe at year-end 2011, as previously announced. This was 39 percent higher than proved reserves of 365 MMBoe for 2010.

Bakken Acreage Acquired

Continental Resources announced the acquisition of 23,161 net acres in Williams County, North Dakota, associated production of approximately 1,000 net Boepd, and eight wells that are drilled but not yet completed. The transaction was completed in February 2012 for $276 million. Continental will act as operator on 89 percent of the newly acquired acreage, most of which is already held by production. In total, the new acreage represents 29 operated spacing units for Continental.

The Company also announced the acquisition of leases covering an additional 12,017 net acres inFebruary 2012.

"These acquisitions are a great fit with our current Bakken position and are 100 percent ready to drill," Mr. Hamm said.

"Our goal is to add to and high-grade our strategic leasehold, concentrating on Bakken acreage where we will have a dominant working interest and operating control. Secondly, we're focused on developing high-liquids areas in the Anadarko Woodford where we can deliver the most attractive returns," he said. "We have opportunities to offset some of this investment by selling non-core assets, including acreage where we have a low working interest. The key driver in this process is growth that maximizes value-creation."

Additional Fourth Quarter 2011 Results

Oil and natural gas sales were $508.3 million for the fourth quarter of 2011, compared with $273.1 millionfor the same period of 2010.

Continental's average realized crude oil price was $89.24 per barrel in the fourth quarter of 2011, while the average realized natural gas price was $4.97 per Mcf, yielding a blended realized price of $72.60 per Boe. In the fourth quarter of 2010, the Company reported a blended realized price of $61.98 per Boe.

The Company's crude oil price differential was $5.00 per barrel and its natural gas price differential was a premium of $1.41 per Mcf for the fourth quarter of 2011, due to the liquids content of the gas.

Production expense was $5.73 per Boe for the fourth quarter of 2011, compared with $5.31 per Boe for the fourth quarter of 2010. General and administrative expense was $3.02 per Boe, compared with $3.09 per Boe for the fourth quarter of 2010.

To support consistent production growth and its capital program, Continental placed derivative financial instruments (price swaps and collars) representing approximately 16 million barrels of oil (MMBo) in 2012 and 15 MMBo in 2013. The Company also placed natural gas derivative financial price swaps representing 8,850,000 million Btus (MMBtus) in 2012 and 7,300,000 MMBtus in 2013. Details on these instruments will be reported in Continental's 2011 annual report on Form 10-K, which the Company plans to file in the next several days.

Capital expenditures for the fourth quarter of 2011 were $806 million, bringing full-year capital expenditures to $2.2 billion, including $178 million invested in lease and production acquisitions.

As of December 31, 2011, the Company's balance sheet included $53.5 million in cash and $1.25 billionin total long-term debt. Total long-term debt at year-end 2011 included $358 million in borrowings under Continental's revolving credit facility. Commitments under the facility were recently increased from $750 million to $1.25 billion.

SOURCE Continental Resources

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