Continental Resources CEO Discusses Q3 2010 Results – Earnings Call Transcript
Continental Resources, Inc. (
)
Q3 2010 Earnings Conference Call
November 4, 2010 10:00 AM ET
Executives
Harold Hamm – Chairman and CEO
Steve Owen – SVP, Land
Rick Muncrief – SVP, Operations
Jack Stark – SVP, Exploration
Jeff Hume – President and COO
Analysts
Subash Chandra – Jefferies & Co
Scott Wilmot – Simmons & Company
Scott Wilmot with Simmons & Company
John Freeman – Raymond James
Gil Yang – BofA Merrill Lynch
Andrew Coleman – Madison Williams
Presentation
Operator
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Continental Resources, Inc. Q1 2010 Earnings Call Transcript
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Continental Resources Inc. Q3 2009 Earnings Call Transcript
Good day ladies and gentlemen and welcome to the Continental Resources third quarter 2010 earnings conference call. This conference is being recorded.
Today’s call will include projections, assumptions and guidance that are considered forward-looking statements. Actual results will likely differ from those contained in our forward-looking statements. Please refer to the company’s filings with the Securities and Exchange Commission for additional information concerning these statements and risks.
Chairman and CEO, Harold Hamm, will begin this morning’s call and then we will conduct our question and answer period. Additional members of the management are available to answer your questions. And now I will turn the call over to Mr. Hamm.
Harold Hamm
Good morning, everyone. Thank you for joining us on our conference call today. We will abbreviate the presentation part of today’s call since less than 30 days ago we held our 2010 Investor Day, and discussed our operations and growth plans in some great detail in Oklahoma City. If you haven’t seen them, the slides remain available on our website.
We will take plenty of time to respond to your questions after these remarks this morning. In terms of new data for the quarter, we announced another strong increase in production for the third quarter of 2010. Average than normal was 45,000 Boe per day. This was a year-over-year increase of 20% and a consecutive quarter increase of 7% over the second quarter of 2010.
Production growth ramped up in the quarter. In September, we averaged 47,336 Boepd. Though you’ll see that we are well on our way to achieving production growth guidance for 2010 and as we announced October 12, we expect 2011 to be even stronger with production growth of 30%. Crude oil remains 75% of our production and North Dakota continues to drive the increase in overall production. North Dakota Bakken production was just over double in the third quarter compared with the same quarter, same period in 2009.
Along with strong well results overall, we also completed our first ECO-Pad project in North Dakota in the third quarter. The company’s first ECO-Pad project involves a Hegler 1-13H and 2-13H wells and the Arthur 1-12H and 2-12H wells. We targeted a Three Forks zone with Hegler 1-13 and the Arthur 1-12 and they produced 1,195 Boe and 849 Boe respectively.
As we noted in last night’s press release, both these wells were produced on a 22/64 choke with a Hegler flowing at 14,000 psi and the Arthur flowing at 1,150. The other paired wells in this four well project targeted Middle Bakken zone. The Hegler 2-12 produced 1,203 barrels of oil equivalent at 2,200 psi or an 18/64 choke and the Hegler 2-12 produced 1,103 Boe at 2,350 psi on a 18/64 choke. This tiff clearly demonstrates that the Middle Bakken and Three Fork tiff are separate and are communicating and is part of Dunn County.
As we’ve told you in the past, paired wells, the two Hegler wells for instance are drilled with a vertical separation about 50-foot parallel and offset 660 feet horizontally. This is a pattern on which we intent to develop the Bakken field in North Dakota. If you’d like to see a good visual of this, please take a look at the Bakken section of the October 12 slides.
Today we are operating 22 wells – 22 rigs in the Bakken. The Anadarko Woodford production is also continued to accelerate in the third quarter as you would expect. We generated 1,377 Boepd, a 28% increase over the second quarter of 2010. Anadarko production continues to ramp up, we’re now operating six rigs in the play. We’ve planned to add two more by year-end.
Last month we announced a key confirmation well in the Southeast Cana, the Dana number 1-29H which we are 78% in. This is in Grady County, Oklahoma. The Dana flowed at 2.5 million per day and 88 barrels of oil per day in its initial one day test period. This is by far one of the productive well completed in Southeast extension of the play.
As of today the Dana has been online for 76 weeks and its holding steady about 2.3 million cubic feet per day and 65 barrels oil per day at 900 pounds. Southeast Cana has an even higher liquids component in the Cana and the Northwest Cana which is why we’re so excited about it. Because of its 20% higher NGL gas content, Southeast Cana gas yields a 50% higher well ahead price. In addition it has a higher condensate yield at the well.
We expect to continue improving the productivity of wells in this area and are currently drilling another confirmation well in Southeast Cana. Before I leave to Anadarko, we mentioned last month at our Investors Day, that we have most of additional pay horizons in the supply, and that we were drilling a vertical Morrow
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Springer test with Rother 2-4 to see how productive this Springer sand might be.
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