NEW YORK (TheStreet) -- Continental Resources (CLR - Get Report) announced on Tuesday evening that it will reduce its 2015 capital spending in order to better align its spending with cash flow at current commodity prices.
The company is involved in the exploration and production of crude oil and natural gas. Many companies within the energy sector have been struggling to deal with the constant decline in the price of oil.
Continental is planning to spend approximately $300 million to $350 million less that its previously approved 2015 capital budget.
"While we do not believe today's low commodity prices are sustainable long term, we are committed to living within cash flow until they recover. We are reducing capital expenditures to protect our balance sheet and to preserve the value of our world-class assets until commodity prices improve," company CEO Harold Hamm said in a statement.
Shares of Continental Resources closed at $30.99 on Tuesday afternoon.
Separately, 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. Among the primary strengths of the company is its expanding profit margins over time. At the same time, however, we also find weaknesses including deteriorating net income, generally higher debt management risk and disappointing return on equity."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The gross profit margin for CONTINENTAL RESOURCES INC is currently very high, coming in at 79.23%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 0.05% trails the industry average.
- Despite the weak revenue results, CLR has outperformed against the industry average of 34.5%. Since the same quarter one year prior, revenues fell by 10.1%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- CONTINENTAL RESOURCES INC has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, CONTINENTAL RESOURCES INC increased its bottom line by earning $2.64 versus $2.07 in the prior year. For the next year, the market is expecting a contraction of 98.1% in earnings ($0.05 versus $2.64).
- Net operating cash flow has decreased to $394.62 million or 46.80% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.
- Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 61.48%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 100.00% compared to the year-earlier quarter. Although its share price is down sharply from a year ago, do not assume that it can now be tagged as cheap and attractive. The reality is that, based on its current price in relation to its earnings, CLR is still more expensive than most of the other companies in its industry.
- You can view the full analysis from the report here: CLR Ratings Report