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Continental Plans Big MidCon Rig Cut; Gets 23% Oilier YOY as Bakken Drilling Increases

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Continental Resources reported its Q2 2019 results. Here are the highlights from its report / call:

Big Mid-Con Rig Reduction Planned

The company is currently running 25 rigs (up 4% YOY) comprised of 6 Bakken rigs and 19 SCOOP/STACK rigs.

However, the company reported that it plans to cut its rig count in the SCOOP/STACK to 12 due to efficiency gains (a decrease of 37%).

The company elaborated on it in their call:

In their call, the company said: "We have also achieved the efficiencies throughout the first-half of 2019 that will allow the reduction of drilling rigs from 19 rigs in SCOOP STACK to 12 rigs on early fourth quarter of 2019. This 37% reduction in our southern rig fleet was made possible by the step change in performance from our Springer and Woodford rig fleets in Project SpringBoard. I am proud that our teams can exceed production estimates with lower rig activity, that is operating and capital efficiency at its best."

Brian Singer: "Looking at the Anadarko basin down to 12 rigs by the end of the year. What would that get you from wells drilled and completed perspective? And then what level of activity would you expect to bring back or to return to in 2020, if there is any increase?"

Harold Hamm commented: "I'll just say that really, when you look at the efficiencies, again we're actually able to stay on track with what we put out there as our five-year vision. And with the even with a reduced rig count as we're talking about, because of the efficiency gains, we've experienced. And so, we started out in SpringBoard with a high number of rigs out there, just think it was around 14 I believe it was Pat. And keep in mind, we did that because we had to get out in front of the road development, you have to get the road drilled before you start completing it. And so, that was a key driver in getting as many rigs focused in SpringBoard as we did have initially. So again, welcome to the same in just where it will do with less."

Q2 Summary

- Well Activity (gross): Completed 57 wells in Q2 - down 26% YOY

• Bakken: Completed 35 gross (23 net) wells in Q2 - flat for gross wells / up 21% for net wells YOY

• SCOOP/STACK: Completed 22 gross (16 net) wells in Q2 - down 48% for gross wells / down 38% for net wells YOY 42/26

- Rigs: 25 rigs running - up 4% YOY

• Bakken: 6 rigs running - down 25% YOY

• SCOOP/STACK: 19 rigs running - up 19% YOY - however the company plans to cut its rig count in the play to 12 due to efficiency gains (a decrease of 37%)
  

- Q2 D&C Spending: $570 million - down 9% YOY

- Q2 Production: Production averaged 331.4 MBOEPD - up 17% YOY (Oil production grew 23% YOY to 193.6 BOPD / Gas production grew only 9% to 827 Mmcf/d)

• Bakken: 194 MBOEPD - up 23% YOY

• SCOOP: 71.5 MBOEPD - up 11% YOY

• STACK: 57.2 MBOEPD - up 11% YOY

Production Update: 2Q19 Average Daily Oil Production up 23% over 2Q18

Second quarter 2019 oil production increased 23% over second quarter 2018, averaging 193,586 barrels of oil per day (Bopd). Second quarter 2019 total production increased 17% over second quarter 2018, averaging 331,414 Boe per day (Boepd). Second quarter 2019 natural gas production increased 9% over second quarter 2018, averaging 827.0 million cubic feet per day (MMcfpd). The following table provides the Company's average daily production by region for the periods presented.

2019 Production Guidance Increased

The Company improved 2019 annual oil production guidance to 195,000 to 200,000 Bopd, versus previous guidance of 190,000 to 200,000 Bopd. The Company also increased natural gas production guidance to 820,000 to 840,000 MMcfpd, versus previous guidance of 790,000 to 810,000 Mcfpd. In addition, the Company is releasing 7 rigs in the South by year-end 2019 due to Springer & Woodford efficiency gains.