Rig counts might be lower for Oklahoma City’s Continental Resources, but founder and chairman Harold Hamm remains as confident as ever about the firm’s abilities to produce oil and do it with cost savings.
Continental generated $158 million in net income for the third quarter and Hamm spoke about the 20 percent oil production growth from 2018 to 2019 during a conference earnings call.
“The Bakken continues to be the premier U.S. oil shale play and we saw a single day of record historic production volumes in September, despite some weather impacts earlier in the month,” he said.
However, Hamm said Oklahoma also had what he called “exceptional oil rate results.”
“Oil production in the South is up 62% year-over-year, driven by the quality of our wells and Project SpringBoard and the two new oil units we brought online in the STACK. We also saw a record daily production in certain regions,” added Hamm.
He explained efficiency gains out of the SpringBoard in the SCOOP allowed the company to release seven rigs in the state.
“We can do more with less capital expense,” he said. “Continental will continue to be capital-disciplined and we are committed to our CapEx target for the year. We’re down now to 18 rigs with six rigs in the Bakken and 12 here in Oklahoma delivering the same well counts bested for 2019 with 10% pure rigs on average.”
While rig counts have plummeted in Oklahoma and other states in recent months and exploration and production companies are faced with financial challenges, Hamm is obviously optimistic about the way Continental Resources is dealing with the issues.
“Continental is strongly aligned with shareholders. We’re right-sized for the times and focused on positive cash flow,” he told investors and others. ” From a macro standpoint we believe we’re approaching the tipping point on the world supply balance on oil. It has been estimated that U.S. needs to be at about 809 rigs to balance our supply and demand. And we’re nearing that mark now we’re at 807.”
Hamm feels responsible oil and gas operators are exhibiting capital discipline to balance the market and the industry is adjusting to market conditions.
“While global financial market volatility may not be going away soon, Continental is focused on what we can control. We’re executing at a high level with the lowest cost, amongst our oil-weighted peers and feel confident about our ability to generate sustainable cash flow-positive growth through 2019 and beyond.”
As for any capital expenditure changes, Hamm doesn’t expect any and he wouldn’t talk about 2020 spending.
“We’re assessing our plan for 2020, looking at our normal scenarios and uses of capital,” he concluded.