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Continental Resources Raises Dividends Following a Quarter of Profit
02/21/2022
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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Occidental's Asset Cuts After CrownRock's $12 Billion Deal
Occidental Petroleum is expanding its reach in the Midland Basin and targeting deeper drilling in the Barnett area through its significant $12 billion purchase of CrownRock LP. CrownRock, a collaboration between CrownQuest Operating LLC and Lime Rock Partners, is recognized for its prime land holdings in the Permian Basin. This acquisition brings over 94,000 net acres and 1,700 undeveloped drilling spots in the Midland Basin to Occidental's portfolio.
Vital Energy Raises Production Outlook and Capital Spending with Significant Permian Basin Acquisition
Vital Energy’s deal adds 24,000 net acres and 100 gross drilling locations in Texas, growing its Permian Basin footprint to around 198,000 net acres. Vital Energy is revising its projections for oil and gas production and capital spending upward following the successful acquisition of a substantial area in the Permian Basin. The company has gained around 24,000 net acres and 100 gross drilling locations in Texas. As a result of this deal, Vital Energy is now increasing its full-year production and capital spending guidance.
The Haynesville Shale play, located in northwestern Louisiana and eastern Texas, was recognized in March 2008. Petrohawk Energy Corp. and Chesapeake Energy Corp. had leased acreages in Louisiana, bringing fame to the region. The Haynesville Shale is crucial for meeting the rising demand for LNG exports from the Gulf Coast because of its location. It's expected that Haynesville will contribute about 13 Bcf/d to the overall growth in U.S. gas demand by 2030. However, drilling in Haynesville is more expensive and challenging due to the depth of its wells, especially when compared to areas like the Marcellus Shale.
Crude oil prices are on the verge of a significant rise, as per Helima Croft, a top commodities strategist at RBC Capital Markets. She highlights a looming shift in the oil market's supply-demand dynamics, forecasting a potential slowdown in global crude production. This slowdown might push Brent crude prices to $85 in the latter half of 2024.
In January 2024, the United States saw a mix of ups and downs in the number of active drilling rigs across its major oil shale regions and states. Starting with the shale regions, the Permian Basin led with a slight increase, reaching 310 rigs, which is 3 more than in December. The Eagle Ford in East Texas held steady with 54 rigs, unchanged from the previous month. Meanwhile, both the Haynesville and Anadarko regions saw a decrease by 2 rigs each, landing at 42 rigs. The Niobrara faced a larger drop, losing 4 rigs to settle at 27. On a brighter note, the Williston Basin and the Appalachian region saw increases of 2 and 1 rigs, respectively, resulting in counts of 34 and 41 rigs.