Continental Reports Q4 and FY2012 Earnings

Earnings press release

Excerpt...

Continental Resources reported Bakken production of 67,522 Boepd for the fourth quarter of 2012, a 64 percent increase compared with the fourth quarter of 2011.

Bakken production as a percent of total production continued to increase over the past year, accounting for 63 percent of the Company's total production in the fourth quarter of 2012, compared with 55 percent in the fourth quarter of 2011.

Continental almost doubled its proved reserves in the Bakken in 2012, ending the year with 564 MMBoe in proved reserves at December 31, 2012.

The Company participated in 51 net (135 gross) operated and non-operated wells in the Bakken during the fourth quarter of 2012.

In terms of operated wells, Continental completed 42 net (55 gross) wells in the Bakken in the fourth quarter of 2012, with 30 net (42 gross) wells in North Dakota and the remainder in Montana.

Initial well results continue to meet Continental's expectations. In North Dakota, Company-operated wells completed during the fourth quarter averaged 1,187 Boepd, while Montana wells averaged 655 Boepd in their initial one-day test-periods. These results are consistent with the Company's estimated ultimate recovery (EUR) models of 603,000 Boe for North Dakota wells and 430,000 Boe for Montana wells.

Continental's Lower Three Forks exploratory program is underway with one well drilling and seven wells completing. The 2013 program, recently expanded to 20 wells, is designed to establish the productive extent of the lower Three Forks benches, building on the success of the Charlotte 2-22H and 3-22H wells, the initial producing wells in the second and third benches in the field, respectively.

Its most recent completion in this program was the Angus 2-9H-2 (85% WI), which flowed 1,556 Boepd at 3,200 psi in its initial one-day test period. The Angus 2-9H-2 is the Company's second well to be completed in the second bench of the Three Forks formation. The well is a significant step-out, located 27 miles northeast of the Charlotte 2-22H.

The Charlotte 2-22H has produced 108 MBoe in approximately 14 months. The Charlotte 3-22H (TF3) has produced 35 MBoe in its initial three months. The wells are performing in line with typical Bakken/Three Forks first-bench wells.

In the future, the Company expects to report quarterly on the exploratory Lower Three Forks program.

The Company's other Bakken exploration/appraisal initiative involves four pilot density projects to test 320-acre and 160-acre spacing in the Middle Bakken and first three benches of the Three Forks. The Company plans to complete 47 gross wells in the pilot density program, arrayed to help determine the optimum well spacing and pattern to maximize the ultimate recovery of oil from the multiple Bakken and Three Forks reservoirs.

Continental has initiated its first 320-acre pilot density project, with three wells currently being completed and two more being drilled. The 160-acre pilot and the next 320-acre pilot are scheduled to spud by mid-2013, with the third 320-acre pilot planned to spud in the third quarter of 2013.

"These are aggressive pilot projects over a wide area in the field," Mr. Bott said. "We plan to spend the next 18 months drilling and completing the 47 wells, with production coming on line starting in late 2013. All wells in the program should be producing in the first quarter of 2014.These exploration and appraisal programs should help determine the ultimate recovery of the field and drive valuations higher by accelerated de-risking and down-spacing."

Continental increased its Bakken acreage position to approximately 1,140,000 net acres at year-end 2012, up 24 percent from year-end 2011, solidifying its position as the largest leasehold owner in the play.

The Company plans to complete or participate in completing 226 net (558 gross) wells in the Bakken in 2013, including both operated and non-operated wells. The Company currently has 21 operated rigs in the play, with 16 drilling in North Dakota and five in Montana.