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Continental Resources Raises Dividends Following a Quarter of Profit

As a recovery in economic activity and travel boosted oil prices to multi-year highs, shale producer Continental Resources Inc posted a fourth-quarter profit that surpassed Wall Street expectations.

In general, for the last three months of 2021, world crude oil prices averaged $80 per barrel as demand recovered from a pandemic-induced crash. Results of such a hike are pleasing to the eye: a barrel of crude in the U.S. is currently trading for close to $95 a barrel.

In response to this, Continental Resources' adjusted average net sales price in the fourth quarter rose to $55.27 per barrel of oil equivalent (boe) — easily doubling the numbers of the year prior.

After pumping out 160,600 barrels of oil per day (bopd) in 2021, the company set its full-year target to average between 195,000 to 205,000 bbl/d of oil. And in order to achieve this, purchased near the end of the last year Pioneer's Delaware Basin position in the Permian area (covering approximately 92,000 net acres in Pecos, Reeves, Ward, and Winkler Counties with net production of approximately 50,000 boe/d) will come in handy.

It is estimated that natural gas will be produced at a rate of 1.04 billion to 1.14 billion cubic feet per day (cfpd) in 2022.

Aiming to boost the rates, Continental already forecasted, that it will spend $2.3 billion in the coming year, including an increase of 15% in legacy costs in Bakken and Anadarko, as well as a rise of $500 million related to its Permian acquisition and the purchase of Chesapeake Energy assets in Wyoming.

To compare, in 2021 the company’s capital expenditures totaled just $1.56 billion.

And it’s not just a bunch of empty promises: last week Continental Resources raised its quarterly dividend by 15% to 23 cents per share. In addition, the company will increase its share repurchase program from $1 billion to $1.5 billion.

The market reported an adjusted net income for the Continental of $651 million, or $1.79 per share during the quarter, beating analysts' expectations per share by no small margin of 0.09 cents. While it may seem not that impressive, during the same period a year prior the company reported a loss of $82 million, or 23 cents per share — a great comeback!

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Targa Resources: $3.55 Billion Cash Transaction to Acquire Lucid Energy

On June 16 Targa Resources Corp. decided to acquire Lucid Energy Group, located in the Permian Basin, which is a part of Riverstone Holdings LLC and Goldman Sachs Asset Management. Firstly, Targa enlarged due to the recent “blot-on” acquisition of Southcross Energy in the Eagle Ford for $200 million and it will become bigger thanks to the $3.55 billion cash transaction. Targa’s financial position allowed it to utilize convenient opportunities to extend its company so it bought #Lucid using available cash and debt with an estimated pro forma year-end 2022 leverage around 3.5 times. According to Targa’s estimates, the acquisition of Lucid will increase the number of natural gas pipelines by 1,050 miles and add about 1.4 Bcf/d of cryogenic natural gas processing capacity in service or under construction located mainly in Eddy and Lea counties of New Mexico. The investment-grade producers source approximately 70% of current system volumes. According to the press release, a full-year standalone adjusted EBITDA is expected to be between $2.675 billion and $2.775 billion and reported year-end leverage ratio of about 2.7 times. Targa’s updated financial expectations assume NGL composite prices average $1.05 per gallon, crude oil prices average $100/bbl, and Waha natural gas prices average $6 per MMBtu for the remainder of 2022.

The ever-increasing demand for natural gas exports from the Gulf Coast started a race to further develop Permian Basin. Various companies, including Kinder Morgan and MPLX, are among those looking at building new pipelines in the region due to the demand spike. But Energy Transfer seems to edge past them into the lead since its project strikes as the most economical option for the basin outside of capacity expansions on existing pipelines and could essentially add 1.5-2 Bcf/d of transport capacity with just 260 miles of new pipe.

In order to sell its part of the sprawling Eagle Ford Shale acreage, Chesapeake Energy Corp. on January 18 concluded an agreement to trade its Brazos Valley region assets to WildFire Energy I LLC for $1.425 billion.

On January 6, Phillips 66 announced that it plans to acquire more than 43% of DCP Midstream LP for $3.8 billion, expanding the business in the oil & gas business.

On January 5 Northern Oil & Gas (NOG) concluded a deal to acquire working interests in Midland-Petro D.C. Partners LLC (MPDC)'s Mascot Project in the Midland Basin, according to a January 9 press release. Firstly estimated at $330 million in cash, the deal was signed with an additional 3.25% working interest added to the 36.7% agreed upon when the transaction was announced on October 19. NOG paid $29 million more for the additional interests, which now totalled 39.958%. Finally, the deal closed for $320 million in cash and $43 million in debt at signing in October with the finance of Minnetonka, Minn.-based NOG with cash on hand, operating free cash flow, and assistance from its revolving credit facility.

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