NEW YORK (TheStreet) -- Continental Resources (CLR) - Get Report shares are up 2.9% to $39.05 in early market trading on Tuesday after the independent crude and natural gas production company announced plans to cut capital expenditures by 41% in 2015.
The company now plans to spend about $2.7 billion while increasing production by as much as 20% next year.
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The decrease in spending is due to the recent precipitous fall in oil prices, although CEO Harold Hamm said that the U.S. oil industry will be able to "adjust" to and withstand the recent downturn.
"The oil and gas industry has lowered the cost of gasoline to consumers in this country. It's been good for America, this increase in supplies that we have here. We don't want to see it all go for naught," said Hamm in a statement.
Crude prices in the U.S. are expected to hover around $63 a barrel in 2015, according to the U.S. Energy Information Administration.
TheStreet Ratings team rates CONTINENTAL RESOURCES INC as a Hold with a ratings score of C+. TheStreet Ratings Team has this to say about their recommendation:
"We rate CONTINENTAL RESOURCES INC (CLR) a HOLD. The primary factors that have impacted our rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its robust revenue growth, expanding profit margins and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including generally higher debt management risk, disappointing return on equity and a generally disappointing performance in the stock itself."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- CLR's very impressive revenue growth greatly exceeded the industry average of 6.7%. Since the same quarter one year prior, revenues leaped by 101.9%. Growth in the company's revenue appears to have helped boost the earnings per share.
- CONTINENTAL RESOURCES INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, CONTINENTAL RESOURCES INC increased its bottom line by earning $2.07 versus $2.03 in the prior year. This year, the market expects an improvement in earnings ($2.88 versus $2.07).
- The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market on the basis of return on equity, CONTINENTAL RESOURCES INC has underperformed in comparison with the industry average, but has exceeded that of the S&P 500.
- The debt-to-equity ratio of 1.20 is relatively high when compared with the industry average, suggesting a need for better debt level management. Along with the unfavorable debt-to-equity ratio, CLR maintains a poor quick ratio of 0.75, which illustrates the inability to avoid short-term cash problems.
- You can view the full analysis from the report here: CLR Ratings Report