Posted 9/22/15 (Tue)
By Kevin Killough
Earlier this year, Continental Resources warned of a scale-back in operations if oil prices didn’t improve.
The company is now going through with that plan, reducing its capital budget by $300 million to $350 million less than the previously approved budget, according a statement released earlier this month.
They will also be scaling back their rig count in the Bakken from 10 to eight.
While the move speaks of a retreat, company executives explained it as a means to stay afloat until conditions improve, which they are still expecting to happen eventually.
“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,” said CEO Harold Hamm.
In its earnings conference call in August, the company had said it would scale back completion activities to eight operating rigs if the low commodity prices continued.
According to the statement on the reduction, this would increase the company’s expected inventory of uncompleted wells in the Bakken from 100 to 160.
“We believe it is in the interest of shareholders to defer new production growth until we see stronger commodity prices,” said CFO John Hart.
Despite the deferred completions, the company expects to increase production 200,000 to 215,000 barrels per day. This would constitute an increase of 19 percent to 23 percent over 2014.
At the lower end of that scale, the production rate would only be 10,000 barrels per day below previous expectations.
As with many companies in the Bakken operating with reduced commodity prices, Continental has reduced its drilling and completion costs significantly. It has also concentrated its activity in the core areas of the shale play, which includes Williams County.